Teaminvest Private Group Limited Annual Report 2022

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FY2022 Annual Report · Teaminvest Private Group Limited

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Teaminvest Private Group Limited (ASX: TIP)

ACN 629 045 736

ANNUAL
REPORT
Year ended
30 June 2022

Contents

About TIP Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

CEO’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Guidance for Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Guidance for TIPREPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Guidance for Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Audited Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

ANNUAL REPORT
Year ended 30 June 2022

Glass by DecoGlaze

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.About TIP Group

Noble purpose

Vision

Mission

info@tipgroup.com.au | www.tipgroup.com.au

Metalwork by Icon Metal

Transferring knowledge and wealth between generations.To build a society in which the knowledge and wealth we accumulate over a lifetime isn’t lost, forcing the next generation to learn (and earn) it all again.Transferring knowledge and wealth between generations.We invest the wealth and experience of successful people to develop the next generation of business leaders, enhancing the legacy of all.TIP Group is an ASX-listed financial institution focussed on transferring knowledge and wealth between generations. TIP aims to be the financial institution of choice for first-generation wealth, linking the knowledge and capital accumulated over their careers with the next generation of business leaders to achieve outstanding returns.From a private equity firm to a full-service financial institution

Group structure to 30 June 2022

Group structure from 1 July 2022

TIP Group

TIP Engineering

TIP Services

TIP Equity

TIP Wealth

TIP UK

Automation
Group

Graham Lusty
Trailers

Icon
Metal

Financial
Advisory

Corporate
Advisory

Broking

Funds
Management

Trustee &
Licensing

Asset
Management

Funds management

Private Equity

Corporate Advisory

East Coast
Traffic Control

TIP Residential
Group

TIP
Trustees

Teaminvest

Diversified Growth
Management

Automation
Group

Colour
Capital

East Coast
Traffic Control

Graham Lusty
Trailers

Icon Metal

Wood
& Lee

TIP Insurance
Services

Multimedia
Technologies

Colour
Capital

Multimedia
Technology

Teaminvest

TIP Residential
Group

Wood &
Lee

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.CEO’s Letter

A year of disruption delivered major benefits
The financial year ended 30 June 2022 (FY22) can be summed up in two words: ‘global disruption’.

The world began FY22 amidst the first truly global pandemic since the 1920’s and a tech boom delivering revenue

valuation multiples that exceeded the heady days of 2001. It ended with unprecedented supply constraints, the fastest

inflation in forty years, the first war in Europe in seventy years and an astronomic decline in the value of venture

investments. A pace of change not often seen in a decade!

As a global citizen the level of disruption we experienced has been tragic and disturbing. But as an investor in quality

businesses, it has proved a once-in-a-generation opportunity.

Our ability to seize opportunities saw Teaminvest Private Group Limited (TIP): achieve record Proportional Revenue of
$152.1m (up 5%); record Statutory Revenue of $92.7m (up 1%); secure a record number of new investments; and deliver

our maiden fully-franked half-yearly dividend of 0.25 cents per share. We have also declared our first fully-franked final

dividend of 0.30 cents per share, an increase of 20% on the half-year.

Disruption creates opportunities
Warren Buffett is quoted that the art of investing consists of ‘being fearful when

others are greedy; and greedy when others are fearful’. As disciples of Buffett,

we live and breathe this maxim.

Around the end of last financial year, I was asked about our reduced number

of external acquisitions since listing in May 2019. At the time I explained that

this had been due to three factors:

1. High market valuations made it difficult to find great medium-sized

businesses within our target valuation range of four to eight times historical

price to earnings ratios;

2. This meant it was more valuable to pay down debt and accumulate a war-

chest to support future acquisitions; and

3. We were building a pipeline of potential investments for when markets

returned to more reasonable values.

In FY22 the pendulum swung back. Over the course of the financial year

valuations dropped substantially:

• The ASX all-ordinaries dropped by 11%;

• The ASX all-tech index dropped by 36%; and

• By the end of the year most private company valuations were again

tethered to profits and not revenue or customers.

Consequently, we made a number of meaningful additions:

• On 30 June 2021 (the last day of FY21 and so our first act of FY22) we

acquired our former parent Teaminvest, a provider of investment education

services and the developer of the Conscious Investor software and related

intellectual property;

• In November we acquired a 70% stake in Diversified Growth Management,

the manager of the Teaminvest Diversified Growth Fund; and acquired a

50% stake in law firm Wood & Lee;

• In April we established TIP UK and made our first UK investment, a strategic

20% stake in Enhanced Trading Solutions;

• In June we launched the Co-Living Future Property Fund; and acquired our

first retail fund manager, Burman Invest.

Seven investments in the 12 months since 30 June 2021 as prices returned to

As an investor in

quality businesses,

FY22 has proved a

once-in-a-generation

opportunity.

While FY22 was transformative, TIP has not been immune to the challenges faced by the global economy. As flagged

our target band.

in our half-yearly report, the Sydney construction shutdown and flow-on effects caused a temporary decline in

Proportional EBITDA of 8% to $13.5m.

The effect of the construction shutdown, coupled with abnormal items of $21.9m (discussed on page 13), saw Statutory

NPAT decline to a loss of $17.8m. Operating NPAT was a profit of $4.2m for the year.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.Seizing opportunities has transformed us
In June 2021 we were a private equity business that operated a portfolio of engineering and services businesses

delivering tangible products and services. Compared to the “tech-bro’s” and venture capitalists sweeping up the rich list

Proportional Results
Proportional Results are the proportional revenue and EBITDA for our Group (Proportional Results, formerly called
Segment Results). Proportional Results are the sum of the proportion of each Portfolio Company’s revenue and EBITDA

with a mantra of “disrupt, grow or die”, TIP may have appeared decidedly pedestrian.

attributable to TIP Group. They are a non-IFRS measure which we find more useful for understanding operating

Our focus on growing profits, paying reasonable prices, husbanding cash, and self-funding our expansion of financial

services capability in old industries like value investing and trustee services felt very lonely. We often seemed to be the

From 1 July 2022 we report three segments: TIP Equity, TIP Wealth and TIP UK. However as most of the investments that

only ones in the room who wanted to ask “how will this actually make a profit?”

spurred this reorganisation occurred too late in FY22 to affect our financial results, our FY22 report maintains the old

performance than Statutory Comprehensive Income (SCI) reported in accordance with accounting standards.

reporting structure of ‘Engineering’ and ‘Services’.

But sticking to these principles during the ‘toppy’ market has enabled us to acquire significant assets since the beginning

of FY22 and by focussing our investments in wealth management and investment banking we have transformed TIP

from a private equity firm into a financial institution.

As of 1 July 2022, TIP now operates three divisions:

TIP Equity – our traditional private equity business, focused on investing in stable founder-led businesses who can
benefit from mentorship and capital. Equity is the engine room of our business and from 1 July is led by Tim Wong, who

brings a wealth of operational executive leadership to drive further growth.

TIP Wealth – our wealth management and investment banking business, focussed on harnessing the knowledge
and intellectual property accumulated by TIP to provide a home for first generation wealth. Wealth is led by Michael

Baragwanath and provides a platform for substantial growth through annuity-like revenues.

TIP UK – our British and European operations, leveraging off the methods, people and process we have developed
over the first ten years of our business operation in Australia. UK is led by Malcolm Rutherford and adds geographic

diversity to our growing portfolio of investments.

Note: For a reconciliation of Proportional Results to SCI, including abnormals, see page 15.

Group Proportional EBITDA before abnormals was down 8% to $13.5m, similar to FY20. While we regard revenue as less

important than profit (as the saying goes: “revenue is vanity while profit is sanity”), Proportional Revenue grew 5% to a

new record of $152.1m.

Our Portfolio Companies in areas other than construction grew steadily over FY22, and in five cases delivered a record

result. Those Portfolio Companies exposed to construction suffered due to the government imposed shutdown, supply

chain constraints and unprecedented material price inflation.

Sticking to these principles
during the ‘toppy’ market
has enabled us to acquire
significant assets.

Trailers by Graham Lusty Trailers

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.
New records
Teaminvest Pty Ltd (Teaminvest) (Services Division, 100% owned) continued to grow membership. Teaminvest
provides investor education for those who wish to learn to manage their own money wisely, in line with the principles

of Benjamin Graham and Warren Buffett. Their firm principles and collegiate environment provide a significant

MMT grew Revenue by 15% and EBITDA by 1% compared to FY21. This

outstanding business, founded by John Hassall and now led by Johan Meyer,

has been so successful that were it to be trading on the ASX at a similar P/E

multiple to listed competitors, our 30% share would be worth about the same

differentiator. Combined with a successful launch of Team USA (an extension to cover US markets) this increased

as TIP’s whole market cap at 30 June this year!

revenue by 12% and EBITDA by 30% to new records. The expanded team of facilitators, including some long-standing

members, has also injected new enthusiasm and wider perspectives.

Colour Capital (Services Division, 33% owned and equity accounted in SCI) delivered a fourth consecutive record

operating result by continuing to develop and support franchisees. Colour Capital operates the GJ Gardner home

building master franchises for NSW/ACT and WA, the Gold’s Gym’s business in Australia and New Zealand, and the

Raw Energy café’s business in Australia. Despite the disruptions to all three operating arms at various points during FY22

(first lockdowns, then natural disasters and finally inflation!) Colour Capital’s focus on assisting franchisees continues to

deliver results with revenue up 19% and EBITDA up 15% compared to FY21.

Our world-leading trailer engineering business Graham Lusty Trailers (GLT) (Engineering Division, 100% owned)
delivered a third consecutive record annual result. The team led by Graham and Fiona Lusty have a passion for

innovation, quality and efficiency – and this delivered record revenue (up 11% compared to FY21) and record EBITDA

(up 7%) despite cost inflation and significant labor and material shortages. GLT’s unique designs command a substantial

premium in the transport market, and their ongoing innovation cements their reputation as the “Rolls Royce” of bulk

haulage. A GLT trailer enhances customers’ profit so significantly that the order book now stretches over 18 months

despite utilising a second manufacturing facility to meet demand.

Multimedia Technology (MMT) (Services Division, 30% owned and equity accounted in SCI) achieved a third
consecutive record annual result. Despite the interruptions, disruptions, and stress caused by the coronavirus pandemic,

Five portfolio
companies
delivered a
record result.

Rounding out the list of records for FY22, our boutique insurance brokerage

Teaminvest Private Insurance Services (TIPIS) (Services Division, 50% owned)
grew revenue by 74% and EBITDA by 1,385% compared to FY21. While these

figures are off a low base, skewing the percentages, TIPIS is growing rapidly by

focusing on outstanding customer service and tailoring packages that deliver

superior coverage to business clients. Check what you are paying for your

business insurance and contact Blaize – you may be surprised just how much

more you can get for the same price.

Construction companies
After three consecutive years of record revenue and earnings, Icon Metal

(Engineering Division, 100% owned) was significantly affected by the

construction shutdown and associated coronavirus impact. Combined with

increased costs as Icon Metal invested to meet Tier-1 customer timelines

despite lost production hours and material price inflation, this resulted in a

$1.4m EBITDA loss prior to adding back abnormal costs. Icon’s decision to

prioritise customer delight over short-term profits has paid off, with the last few

months of FY22 returning to profitability while industry competitors continue to

face existential crises.

Teaminvest Private Residential Group (TIPRG) (Services Division, 100% owned),
was also affected by the coronavirus construction impacts, supply chain

disruptions and soaring building material inflation. FY22 revenue fell 35%

compared to FY21, and EBITDA dropped to a loss of $1.9m prior to adding

back abnormal costs. In response TIPRG has materially adapted its operating

model: shifting from a predominantly fixed cost manufacturing, construction

and logistics business to a predominantly variable cost design and project

management business. This change, combined with uncertainty in the

residential construction sector, has resulted in a non-cash impairment of

$17.4m. More on the divergence between economic and accounting goodwill

– and how understanding this can be used to enhance your returns - can be

Toughbook by Multimedia Technology

found on page 18.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.Statutory Comprehensive Income (SCI)
Unlike Proportional Results, which are compiled on a proportional ownership (i.e. operating) basis, SCI is calculated in

Reconciliation of Proportional Results to SCI
Because we own both wholly and partially owned businesses, comparing SCI and Proportional Results is not

accordance with the Australian accounting standards in force at any time. It encompasses consolidation accounting

always intuitive.

where we control a business, equity accounting where we own a substantial share and have significant influence

(typically between 20% and 50%), and investment accounting where we don’t have significant influence (typically less

than 20%).

While SCI is the official published result of the Group, shareholders should be aware of its limitations when using it to

understand operating performance. The table below sets out our SCI and a summary balance sheet.

Comparing SCI across periods
I again include a reconciliation of Statutory

NPAT with Operating NPAT (left).

This shows the after-tax effect of the

‘abnormal’ items in FY20, FY21 and FY22.

Positive abnormal items refer to one-off

costs that should be added back to compare

Operating NPAT, and negative items refer to

one-off gains that should be removed.

From the table you can see that Operating

As discussed on page 11, the key difference between Proportional Results and SCI is how the performance of partially

owned Portfolio Companies is recorded.

Proportional Results “look through” to derive

an attributable share. For example, where

we own 30% of a business, this means

recording 30% of revenue and EBITDA.

In contrast, SCI follows the accounting

standards in only considering revenue and

EBITDA from businesses we control. Where

we don’t control a business, revenue and

EBITDA is excluded.

Rather than proportionally appearing in

revenue and EBITDA, the performance of

non-controlled businesses affects the SCI

as follows:

• where we have significant influence, our

share of their profits after tax (but not

revenue or EBITDA) appears as “share of

profits of associates”; and

• where we don’t have significant influence,

our share of dividends received (but not revenue or profits) is included in “other income”.

A reconciliation of our SCI revenue and EBITDA to Proportional Revenue and EBITDA is provided above.

Explanation of abnormal items

Sydney coronavirus construction shutdown
As discussed in my HY22 letter, the unprecedented Sydney coronavirus construction shutdown materially impacted the

Note: Calculated on a ‘post-tax’ basis, assuming Group 30% marginal tax rate.

NPAT (not surprisingly given the nature of

and TIPRG posted a combined EBITDA loss of $4.3m, equivalent to $3.0m after tax.

NPAT is significantly less volatile than Statutory

performance of Icon Metal and TIPRG. From October to January as the disruption and costs flowed through, Icon Metal

accounting standards).

Our Operating NPAT declined by 40% to

$4.2m in FY22. This compares to a Statutory

NPAT decline of 442%.

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Transferring knowledge and wealth between generations.
This compares to a combined positive EBITDA of $1.2m ($0.8m after tax) delivered by these companies in the same

months of FY21. The total impact of the shutdown and its flow-on was therefore $5.5m at the EBITDA line ($3.8m after

Acquisition amortisation
When we acquire any business, the accounting standards require us to record

tax), although we have conservatively only classified the realised losses (and not the hypothetical foregone comparison

the fair value of all assets on acquisition.

gains) as the abnormal portion of the impact.

TIPRG non-operating charge
In response to the coronavirus and ongoing supply chain disruptions experienced by the residential construction sector,

we took the step in June 2022 of redesigning TIPRG from being “supply” focused to “design” focused.

We have increased capability in the

front-end of our service offering (design,

customer service, project management

and advice) and begun phasing out

the back-end service offerings (supply

chain management, construction and

direct manufacturing). We expect this will

enhance the parts of our business that

customers value most, while reducing

risk of supply chain disruption. It also has

the benefit of converting formerly fixed

to variable costs in line with our focus on

improving BESM (BESM is discussed in

more detail in the guidance documents

that follow this letter).

We believe these changes are good long-

term strategy and position the business

to grow in a disrupted industry, but they

come at a short-term cost. The change in

operating model, at the same time as a

poor financial year, has resulted in a write-

off of the entirety of goodwill ($16.6m)

and a write-down of other assets ($0.8m)

associated with the TIPRG business. A

$17.4m non-cash cost that affects our SCI

and balance sheet but not our operations.

In FY21 we acquired two businesses: Automation Group and Teaminvest. The

calculation of fair value was conducted by EverEdge Global, a global leader in

intellectual asset valuation. The exercise identified $22.0m of intangible assets,

including: technology ($6.7m); confidential information and know how ($5.9m);

goodwill ($3.9m); network and relationships ($2.2m); brand ($1.8m); customer

relationships ($0.5m); regulatory approval ($0.3m); formation costs ($0.3m);

software ($0.3m); and content ($0.2m).

Under the accounting standards, some of these assets (like goodwill,

brand and confidential information) are held on balance sheet and tested

for impairment each period. Others are treated like motor vehicles and

“amortised” (the term for the depreciation of an intangible asset) over periods

of three to 15 years.

With no impact on cash, and despite both Automation Group and Teaminvest

having a positive year (my letter has already covered the new records set by

Teaminvest), we have therefore incurred a $1.3m amortisation charge in FY22

and expect to incur similar amortisation charges in future years.

Just as we exclude “gains” from identifying intangible assets for Proportional

Results (see my FY20 and FY21 letters), so too are corresponding amortisation

“losses” excluded. What the accounting lords giveth, they taketh way.

In response to
the challenges
in residential
construction,
we redesigned
TIPRG from
being “supply”
focused to
“design”
focused.

Metalwork by Icon Metal

East Coast Traffic Control

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Transferring knowledge and wealth between generations.Glass by DecoGlaze

In a reporting season with more than the usual share of impairments due

to the confluence of covid, rising interest rates, soaring inflation and supply

chain disruptions, I thought it would be valuable for shareholders if I focus the

‘education’ section of this letter to explain the divergence between economic

and accounting goodwill: with a special focus on how understanding this can

help generate better returns.

Understanding goodwill can impact your investing returns
Impairments are almost certain to occur to companies in your portfolio over

time. When they do, they are likely to be sudden and large. Understanding

what they mean is therefore critical in making good investing decisions.

This is particularly important as most market analysts either exclude

impairments when presenting earnings (avoiding the fluctuation but potentially

failing to alert you of a major risk) or carry them in full (presenting the

appearance of volatility when none may exist).

Investors who understand the cause of impairments, and what they can tell us,

are likely to earn greater returns than those who ignore them completely or

panic on the news of a sudden drop in non-cash profits. For those interested

in seeing how the “Rules and Realities” of goodwill have always been of

importance to value investors, I refer you to the appendix Warren Buffett wrote

and attached to the 1983 Berkshire Hathaway shareholder letter, reproduced

in full following my report. The need to understand goodwill better hasn’t

The need to
understand
goodwill better
hasn’t changed
in 40 years.

One-off items last year (FY21)
During our comparison period the Group recorded one-off abnormal impacts from the:

• ECT long-term reward;

• Coastal Energy restructure and impairment; and

• Teaminvest acquisition.

If you would like more information about these abnormal items, greater detail can be found in the FY21 CEO letter.

changed in 40 years!

Education: the divergence of economic and accounting goodwill
Each reporting season the appearance of large, non-cash, impairment charges amongst some listed companies gives

To understand impairments, we need to understand goodwill
When we think of goodwill, most of us will have one of two competing images.

rise to a familiar argument.

In the one camp are those who argue that all impairments are meaningless and should be ignored when considering

the performance of a company (“cash is king!” is the old refrain). In the other camp are those who argue that

impairments are critical in determining performance (“the only part of underlying profit that is true is the use of the word

lying!” is the witty rejoinder).

Much of the argument arises because the two camps use different understandings of goodwill. Each is right… if only the

other would adopt their definition!

In the one camp will be those to whom the concept of goodwill is

synonymous with an accounting entry on a balance sheet. This camp

will correctly state that goodwill is the “amount by which the price of an

acquisition exceeds the value of the net identifiable assets”. Goodwill is an

accounting entry to ensure a “balance” sheet does just that.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.In another camp will be those to whom the concept of goodwill refers to the qualities of a business that allow it to

derive revenue and profit. It is the intellectual property, the business know-how, reputation, processes and the value

of the employees that work for it to deliver an outcome that delights customers and delivers returns. Goodwill is what

Warren Buffet terms the “moats” of a business.

Both are right.

Economic goodwill is a value that flows over time. Every action that delights customers and increases their willingness

to pay enhances economic goodwill, creating moats and increasing returns. Every action that disappoints customers

will reduce their willingness to pay and “impair” economic goodwill, weakening moats and reducing returns. For this

reason, US research house Ocean Tomo calculated that in 2020 more than 90% of the S&P 500’s market capitalisation

was made up of intangible assets (another synonym for economic goodwill), up from just 17% in 1975. Further illustrative

of this gulf, in 2018 the global insurer Aon calculated that $21tn of the value insured in the S&P 500 comes from intangible

assets, more than five times the same value of the tangible assets such as property, people and equipment insured at

these same companies.

In contrast, but equally correct, accounting goodwill is a static measure. Accounting goodwill is generated not by

delighting customers, developing patents, training staff or creating moats, but to preserve the balancing necessity of

the accounting identity at the time of acquisition.

The history of accounting goodwill
To understand how this divergence between the two “goodwills” occurred, a brief look at the history of accounting

is instructive.

As readers may know, in the 14th century the merchants of Florence introduced the concept of double-entry

accounting to the bankers of Europe. This standard, creating the system of debits and credits that remains the bane

of every first-year commerce student today, was vastly superior to the standard of accounting then in use since it

enabled a snapshot of an entity’s position to be created at any point in time that could be verified simply by seeing if

it “balanced” (i.e. the sum of all debits equalled the sum of all credits). From this invention came the “balance sheet”: a

summation of all these credits and debits into categories associated with specific assets and liabilities. Each balance

sheet entry represented the net credit or debit position of each “identifiable” item on the general ledger.

The power of the balance sheet was three-fold:

• Firstly, it provided a vastly improved system of verifying the position of an entity, vital for bankers in determining if

they wished to extend a loan.

• Secondly, it allowed the owner of an entity to see in table form where their capital was deployed: this amount was in

cash, this amount was in stock, and that amount was owing to those meddlesome Medici!

• Thirdly, it created the first accounting identity “Assets = Liabilities + Equity”, from which all further improvements to

the system of accounting were enabled. Without this identity, the concept of a profit and loss statement, or accrual

accounting, could not be possible.

All rules create exceptions
While the double-entry accounting system created a vastly improved system

of accounting it also had some limitations. One noticeable gap is that the

accounting identity that “Assets = Liabilities + Equity” doesn’t work when

trading non-tangible goods.

The first example that struck early accounting pioneers was that of art. Italy

of the 14th century quickly gave way to the Renaissance of the 15th century

and the explosion of art and art appreciation it entailed. When the same

Medici bankers elected to beautify their city with the works of Leonardo and

Michelangelo, the accounting identity just didn’t hold up. The value they were

being asked to pay for the newest fresco or statue, vastly exceeded the assets

expended in its creation!

Enter the “intangible asset”: the 15th century accountants attempt to tread the

fine line between preserving the identity and not angering the duke whose

profligate spending needed to be reflected in the accounts. Quickly severed

from employment (if not their shoulders) was the head of the young deacon

bookkeeper who told Pope Sixtus IV that the Sistine Chapel’s ceiling was worth

only the sum of the pigments and brushes used by the temperamental artist.

To understand
how divergence
between the
two “goodwills”
occurred, a
brief look at
the history of
accounting is
instructive.

Home designed by Home-Build Concierge

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Transferring knowledge and wealth between generations.This system, with its minor addition of intangible assets served its purpose well for another hundred years… until

the formation of stock markets in the early 17th century.

With the invention of the stock market our enlightenment accountants were faced with a new challenge: how

could they explain that people would be willing to purchase a share for more than the proportion of equity to

which it entitled the owner?

2. Do recent market transactions support the price paid for the business?
If not, a reduction in goodwill must be considered. This test ensures that

net assets can’t be inflated by overpaying. For example, Square (now Block)

announced a $39bn acquisition of Afterpay this year in the largest acquisition

in Australian history: and this test allows auditors to ask if that is still a “fair and

reasonable” reflection of value acquired in light of current market conditions.

Faced with being caught between either denying the reality or telling these early boards of directors that they

3. Do the profits of the business, valued on a discounted cashflow valuation

were crazy for overpaying, enterprising accountants developed the term “goodwill” to represent the gap. Rather

basis, exceed the amount paid?

than “overpaying”, these bewigged directors were paying for the “goodwill” of the business’ customers and

If not, the goodwill must be written down. This test determines if the business,

suppliers… a far nicer term to see in their report to “joint-stock holders”.

as it currently stands, justifies the value held on the company’s books.

And despite the odd-hiccough, the system worked well. As late as 1949, Benjamin Graham could advocate that

If any of these tests are failed, the reduction in goodwill is referred to as an

one of the key avenues to value investing was to pay less for a stock than the proportion of net tangible assets

impairment, reflected in the balance sheet as a reduced intangible asset value

it represented.

and in the P&L as an expense.

It has only been with the change in society from one based on land (agriculture) and fixed assets (industrial

machinery) that the amounts represented by these tweaks to the accounting identity, have caused material

divergence. Today as the studies by Aon and Ocean Tomo show, most businesses are worth far more than the

Accounting goodwill can only decrease; economic goodwill
ebbs and flows
Economic goodwill is derived by changes to a business that make it stronger

depreciated value of their identifiable assets (gone are the days when desks are worth more than the people at

or weaker. It is a measure that can increase or decrease over time and is

them!), and therefore most acquisitions of a business create an entry for accounting goodwill. An entry that isn’t

a function of strategic decision making. The test of economic goodwill is

just a small line to account for the exuberance of our 17th century brethren, but an entry that can represent the

whether a business will deliver appropriate returns to shareholders over the

majority of value acquired.

course of one or more economic cycles.

Impairments
The rise of accounting goodwill as a material item on balance sheets created a problem for accounting

regulators.

To ensure that management couldn’t game the system and increase the net assets of a company simply by

acquiring and overpaying for businesses (remember Enron?), regulators required that accounting goodwill – the

goodwill created from assets changing hands rather than moats delivering customer delight – is examined twice

a year. While the accounting standards list a detailed set of potential impairment indicators, they broadly fall into

three categories:

Contrastingly, accounting goodwill is a static measure that can only ever

decrease. It is usually tested by projecting results over half an economic cycle

(five years) and adding a terminal value based on the results in the fifth year.

Acounting goodwill thus looks at the business as it is today, and asks if the

price that was paid is justified in terms of:

a) Is it the same as what was acquired?

b) Does the current market cycle support comparable prices? and

c) Do short-term cashflow projections pay back the acquisition cost?

1. Do the operations that gave rise to the accounting entry still exist?
If not, the goodwill no longer exists. This test ensures management can’t grow net assets through financial

How can we use this to enhance returns?
The divergence between economic and accounting goodwill allows us to ask

trickery: buying businesses, creating goodwill, and then closing them without fanfare while keeping the inflated

five questions that can enhance our returns.

net asset figure.

Knowing
whether or not
an impairment
reflects a long-
term change
to economic
goodwill can
help a conscious
investor decide
if market
reactions
present a
buying or selling
opportunity.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.Question 1: Has economic goodwill risen or fallen?

A large carrying goodwill balance, or a large impairment, therefore tells us

No matter how well a business is run, accounting goodwill can never increase. It is therefore valuable to ask each

very little on its own. However, what is valuable to long-term investors is

reporting period: “have the moats of the business become stronger or weaker?”. With stronger moats, long-term profits

what the ratio of goodwill to equity can tell us about the risk appetite of

are likely to rise, and the value of the business exceed that shown on the balance sheet. With weaker moats, earnings

management. A risk averse management team is likely to generate a lower

are likely to decline in the long-term, and shareholders suffer decreasing returns.

ratio of goodwill to equity than one more accepting of risk.

Question 2: Is an impairment (or its absence) evidence of bad tactics or good strategy?

Question 4: Is an impairment a buying opportunity or the time to sell out?

Impairment testing risks rewarding bad tactics over good strategy. Good strategic decisions usually require sacrifice

Impairments are sudden. Because impairment testing utilises a short review

today for the chance to do better in future. However, impairment testing looks at the “here and now”: modelling out

horizon, small changes in input assumptions like growth rates, discount rates or

only half an economic cycle (five years). This can create a tension between good strategy and bad tactics – especially

comparable market prices, can generate large swings in outcome. One period

if good strategy will take time to deliver results. Kodak’s decision to hide their patent for a digital camera makes more

the business may pass an impairment test with flying colours, and the next it

sense when considered in this light: the board and executives who willingly propose incurring a large impairment by

may fail and be impaired with only a few tweaks to the forecasts.

disrupting a historically profitable business model tend to have less job security than those willing to kick the can down

the road.

Consider the situation of a business making $1m per annum of profit and

acquired for a multiple of ten. Under impairment testing, this business must

If we are confident economic goodwill has risen at the same time an impairment occurs, we can use this knowledge

be tested across the three criteria every six months: Is it the same? Do market

to pounce on a great purchase if Mr Market reacts negatively. Conversely, if economic goodwill has fallen without an

prices still support a $10m valuation? Do its profits justify the $10m price over

impairment, it may be a good time to look for alternative homes for our capital before Mr Market wakes up.

the next five years? It is quite feasible that a small change in market multiples

Question 3: What does the size of goodwill, or an impairment, tell us about attitude to risk?

Goodwill often accounts for more than 90% of the value of an acquisition. This means the size of an impairment is likely

on average to be 90% or more of the initial acquisition price. Such a figure is likely to dwarf any annual operating profits

or losses. For example, if a business is acquired for ten times profit and 90% goodwill, then a full impairment would be

on average nine times the profits generated in a normal year.

Printed splahback by DecoGlaze

or interest rates, or a short-term drop in profits, can cause the business to fail a

test it previously passed with ease (the recent rise in interest rates and spate of

tech impairments provides a graphic example).

Knowing whether or not an impairment reflects a long-term change to

economic goodwill can help a conscious investor decide if market reactions

present a buying or selling opportunity.

Question 5: Can an impairment tell us something about trustworthiness?

Very few acquisitions ultimately escape impairment regardless of long-

term performance. Few businesses remain substantially the same after

an economic cycle or two. Interest rates continually change. Mr Market is

bipolar. Over several economic cycles most businesses experience at least

one temporary downturn.

While impairments in general are to be expected, asking how a specific

impairment is disclosed helps an investor judge the trustworthiness of

management. Look at the language used in the CEO or Chair’s report, and

how remuneration in future years is structured. More than one company has

swept poor strategy under the rug by glossing over the “non-cash” nature of

impairments; and more than one executive has used a now lower comparison

period to increase remuneration when results return to normal.

Economic
goodwill will
almost certainly
exceed
accounting
goodwill.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.What does goodwill tell us about TIP Group?
TIP Group makes regular acquisitions and will regularly have new entries for accounting goodwill on our balance sheet.

We also tend to acquire medium-sized businesses which are subject to greater volatility than their larger peers1.

TIP Group therefore expects that:

Firstly, our economic goodwill will almost certainly exceed accounting goodwill. When we make a great acquisition,
we can never increase the amount at which it is held on our balance sheet. The moats may be stronger and the profits

larger but there can be no increase in the value assigned to it on our balance sheet.

In contrast, if an acquisition ever fails the impairment tests (even if only due to short-term uncertainty), we must

immediately decrease the carrying value which we assign to it and take an impairment.

Over time we expect this means our balance sheet will substantially understate the true economic value of our

business.

Secondly, TIP Group risks impairments. Each time TIP Group acquires a new business or makes a strategic change with
the aim of enhancing long-term value, the company risks a future impairment. This is a truism: with each acquisition,

and each strategic change, there is a greater likelihood that an individual impairment test fails in any period. Our job as

management is therefore threefold:

1. To acquire businesses which, over the long-term, increase economic goodwill beyond accounting goodwill. By

achieving a better than 50% success rate, TIP Group’s value will exceed our balance sheet position.

2. To maintain the internal fortitude to make good strategic decisions regardless of the risk of impairment. Good

strategy delivers compound returns. Avoiding an impairment can only save a one-off, non-cash, expense.

3. To be good stewards of shareholder capital. Good stewards of shareholder capital should be conservative and

impair goodwill immediately upon failing a test. By taking our medicine quickly, and not hiding it or obfuscating, we

build a culture that rewards executives for being honest and acting quickly. Businesses which kick the can down the

road, or obfuscate the underlying cause, are destined for long-term problems regardless of any short-term benefits.

1 We do this deliberately: being smaller might come with greater volatility, but it also allows us to generate increases in value from our contribution of
mentorship and capital support. If interested, see my 1H22 letter for more detail.

info@tipgroup.com.au | www.tipgroup.com.au

Metal fabrication by Icon Metal

Transferring knowledge and wealth between generations.TIP Group’s current goodwill
Below is a table summarising the current goodwill balances across our portfolio, along with the purchase price we paid

to acquire the asset and the returns generated from FY19 to FY22.

During the year:

• We acquired or established seven new Portfolio Companies (six if you

exclude Teaminvest, acquired on the last day of the previous year). These

increase our stock of valuable intellectual property and should generate

substantial and growing profits;

• Five of the ten Portfolio Companies we owned for the full year delivered

record earnings despite the challenges of a pandemic, rising inflation, rising

interest rates, material supply shortages, Ukraine war and trade restrictions;

and

• Our management and Selected Shareholders redesigned and improved

operations at our two construction businesses to increase future profitability,

while reducing future exposure to inflation and supply shortages.

FY23 promises to deliver significant growth. The expansion of our

geographical footprint, our increase in financial services offerings, and the

continued mentorship and development of our talented Portfolio Company

management, positions TIP Group strongly for the next twelve months.

FY23
promises
to deliver
significant
growth.

Year ahead
In my 1H22 letter I wrote:

“The second half of FY22 will require significant adjustment throughout the economy. As government stimulus reduces,

inflation rises and society learns to live with the coronavirus, our management teams will need vigilance to navigate their

businesses towards profitable opportunities and around potential pitfalls.

We are confident the majority of our outstanding Company management and boards will continue finding ways to

enhance and exploit their moats, while reacting quickly and decisively to any risks that arise.

As competitors find themselves in difficulty, we will be ready take advantage. When we get it wrong (as we sometimes

will), we will quickly accept our mistakes and change course.”

The second half of FY22 did just that. Inflation rose, society struggled to adapt to the “new normal” and we have

entered a period of economic upheaval. We made acquisitions as others became fearful, and our outstanding

management teams adapted and repositioned.

info@tipgroup.com.au | www.tipgroup.com.au

Home designed by Home-Build Concierge

Transferring knowledge and wealth between generations.
A final word
If you are excited by our noble purpose, and would like to participate in our unique organisation, please apply online

to become a Selected Shareholder. The knowledge you bring, and the value you add, will accelerate our future growth.

Best wishes,

Andrew Coleman

CEO

Teaminvest Private Group Limited

Long-term goals
FY22 marks 10 years since our inception in

January 2012.

In my very first presentation to potential

investors (many of whom still own shares and

act as Selected Shareholders) I ended on the

following slide reproduced to the right.

Our goal has never changed. We established

TIP to provide a mechanism for successful

people to generate outstanding returns

by mentoring and developing the next

generation of Australian businesses.

Our first ten years have done just that.

Profiting from Teaminvest Private

Access to private Wealth Winners®

Access to illiquid listed Wealth Winners®

Input to corporate governance

Helping to grow the companies in which you invest

“More enjoyable and profitable investing”

Our goal for the next ten years is to expand our business further into financial services both in Australia and abroad so

that we can continue to fulfil our mission of investing the wealth and experience of successful people to develop the

next generation of business leaders.

We have never deviated from this noble purpose. That focus has taken us from an idea in January 2012 to a listed

financial institution ten years later. I would be disappointed if our next ten years doesn’t result in a similar level of growth

in our scale and an impact on the business community. Especially now that we have brought so many exceptionally

talented executives into the team.

Echoing our goals from 2012, in my first public letter to the market in 2019 I wrote that:

“Looking forward ten years we want to develop and grow an ever-increasing portfolio of entrepreneurial CEOs who

think differently to their competition and enhance society while delivering outstanding profits. Whenever we look

at acquiring a new business, or mentoring an existing one, we do so through a lens of growing management and

business capability: our people and our moats.”

Just as my closing slide from 2012 rings true today, I expect this statement from 2019 will be equally as valid when I write

to you in 2030. The difference being that we should be closer to our vision of building a society where the knowledge

we accumulate over a lifetime isn’t lost, forcing the next generation to learn (and earn) it all again.

info@tipgroup.com.au | www.tipgroup.com.au

Teaminvest meeting

Transferring knowledge and wealth between generations.
Goodwill and its
Amortization: The Rules and
The Realities
By Warren Buffett, 1983 Berkshire

When a business is purchased,

means no amortization charges to

example close at hand. We’ll round

with conservative accounting and

accounting principles require that the

gradually extinguish that asset need

some figures, and greatly oversimplify,

no financial leverage. It was not the

purchase price first be assigned to the

be made against earnings.

to make the example easier to follow.

fair market value of the inventories,

fair value of the identifiable assets that

Hathaway letter to shareholders

are acquired. Frequently the sum of

This appendix deals only with

the fair values put on the assets (after

the deduction of liabilities) is less

The case is different, however, with

purchases made from November

economic and accounting Goodwill –

than the total purchase price of the

it must be amortized over not more

early in 1972 for $25 million, at which

1970 on. When these create Goodwill,

Blue Chip Stamps bought See’s

We’ll also mention some implications

receivables or fixed assets that

for investors and managers.

produced the premium rates of

than 40 years through charges – of

time See’s had about $8 million of

equal amount in every year – to the

net tangible assets. (Throughout

earnings account. Since 40 years is

this discussion, accounts receivable

the maximum period allowed, 40

will be classified as tangible assets,

years is what managements (including

a definition proper for business

Such a reputation creates a consumer

us) usually elect. This annual charge

analysis.) This level of tangible

franchise that allows the value of

to earnings is not allowed as a tax

assets was adequate to conduct the

the product to the purchaser, rather

return. Rather it was a combination

of intangible assets, particularly a

pervasive favorable reputation with

consumers based upon countless

pleasant experiences they have had

with both product and personnel.

not the goodwill of everyday usage.

For example, a business may be

well liked, even loved, by most of its

customers but possess no economic

goodwill. (AT&T, before the breakup,

was generally well thought of, but

possessed not a dime of economic

Goodwill.) And, regrettably, a business

may be disliked by its customers but

business. In that case, the difference is

assigned to an asset account entitled

“excess of cost over equity in net

assets acquired”. To avoid constant

repetition of this mouthful, we will

substitute “Goodwill”.

Accounting Goodwill arising from

deduction and, thus, has an effect on

business without use of debt, except

than its production cost, to be the

businesses purchased before

after-tax income that is roughly double

for short periods seasonally. See’s

major determinant of selling price.

possess substantial, and growing,

November 1970 has a special

that of most other expenses.

was earning about $2 million after

Consumer franchises are a prime

economic Goodwill. So, just for the

standing. Except under rare

moment, forget emotions and focus

circumstances, it can remain an asset

only on economics and accounting.

on the balance sheet as long as the

business bought is retained. That

That’s how accounting Goodwill

works. To see how it differs from

economic reality, let’s look at an

tax at the time, and such earnings

source of economic Goodwill.

seemed conservatively representative

Other sources include governmental

of future earning power in constant

franchises not subject to profit

1972 dollars.

Thus our first lesson: businesses

logically are worth far more than

regulation, such as television stations,

and an enduring position as the low

cost producer in an industry.

net tangible assets when they can

Let’s return to the accounting in

be expected to produce earnings

the See’s example. Blue Chip’s

on such assets considerably in

purchase of See’s at $17 million over

excess of market rates of return. The

net tangible assets required that a

capitalized value of this excess return

Goodwill account of this amount be

is economic Goodwill.

established as an asset on Blue Chip’s

In 1972 (and now) relatively few

businesses could be expected to

consistently earn the 25% after tax on

net tangible assets that was earned

by See’s – doing it, furthermore,

books and that $425,000 be charged

to income annually for 40 years to

amortize that asset. By 1983, after 11

years of such charges, the $17 million

had been reduced to about $12.5

million. Berkshire, meanwhile, owned

Our first lesson:
businesses
logically are
worth far more
than net tangible
assets.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.60% of Blue Chip and, therefore,

created by the 40% “purchased” in

not correspond to economic costs.

The answer is “yes” – even if both

Remember, however, that See’s

also 60% of See’s. This ownership

1983. Our amortization charge now

It is possible, of course, that See’s

businesses were expected to have

had net tangible assets of only $8

meant that Berkshire’s balance sheet

will be about $1.0 million for the

economic Goodwill will disappear. But

flat unit volume – as long as you

million. So it would only have had to

reflected 60% of See’s Goodwill, or

next 28 years, and $.7 million for the

it won’t shrink in even decrements or

anticipated, as we did in 1972, a world

commit an additional $8 million to

about $7.5 million.

following 12 years, 2002 through 2013.

anything remotely resembling them.

of continuous inflation.

finance the capital needs imposed

In 1983 Berkshire acquired the rest of

In other words, different purchase

Blue Chip in a merger that required

dates and prices have given us

purchase accounting as contrasted

vastly different asset values and

What is more likely is that the Goodwill

will increase – in current, if not in

constant, dollars – because of inflation.

To understand why, imagine the

effect that a doubling of the price

by inflation. The mundane business,

meanwhile, had a burden over twice

as large – a need for $18 million of

level would subsequently have on the

additional capital.

to the “pooling” treatment allowed

amortization charges for two pieces

That probability exists because

two businesses. Both would need to

for some mergers. Under purchase

of the same asset. (We repeat our

true economic Goodwill tends to

double their nominal earnings to $4

After the dust had settled, the

accounting, the “fair value” of the

usual disclaimer: we have no better

rise in nominal value proportionally

million to keep themselves even with

mundane business, now earning $4

shares we gave to (or “paid”) Blue

accounting system to suggest. The

with inflation. To illustrate how this

inflation. This would seem to be no

million annually, might still be worth

Chip holders had to be spread over

problems to be dealt with are mind

works, let’s contrast a See’s kind

great trick: just sell the same number

the value of its tangible assets, or $36

the net assets acquired from Blue

boggling and require arbitrary rules.)

of business with a more mundane

of units at double earlier prices and,

million. That means its owners would

Chip. This “fair value” was measured,

as it almost always is when public

companies use their shares to make

acquisitions, by the market value of

the shares given up.

But what are the economic realities?

One reality is that the amortization

charges that have been deducted

as costs in the earnings statement

each year since acquisition of See’s

The assets “purchased” consisted

were not true economic costs. We

of 40% of everything owned by

know that because See’s last year

Blue Chip (as noted, Berkshire

earned $13 million after taxes on

already owned the other 60%). What

about $20 million of net tangible

Berkshire “paid” was more than the

assets – a performance indicating

net identifiable assets we received

the existence of economic Goodwill

by $51.7 million, and was assigned to

far larger than the total original

business. When we purchased

assuming profit margins remain

have gained only a dollar of nominal

See’s in 1972, it will be recalled, it

unchanged, profits also must double.

value for every new dollar invested.

was earning about $2 million on $8

million of net tangible assets. Let

us assume that our hypothetical

mundane business then had $2

million of earnings also, but needed

$18 million in net tangible assets for

normal operations. Earning only 11%

on required tangible assets, that

mundane business would possess

little or no economic Goodwill.

But, crucially, to bring that about,

both businesses probably would

have to double their nominal

(This is the same dollar-for-dollar result

they would have achieved if they had

added money to a savings account.)

investment in net tangible assets,

See’s, however, also earning $4

since that is the kind of economic

million, might be worth $50 million if

requirement that inflation usually

valued (as it logically would be) on

imposes on businesses, both good

the same basis as it was at the time

and bad. A doubling of dollar sales

of our purchase. So it would have

means correspondingly more dollars

gained $25 million in nominal value

must be employed immediately in

while the owners were putting up

two pieces of Goodwill: $28.4 million

cost of our accounting Goodwill.

A business like that, therefore, might

receivables and inventories. Dollars

only $8 million in additional capital –

to See’s and $23.3 million to Buffalo

In other words, while accounting

well have sold for the value of its

employed in fixed assets will respond

over $3 of nominal value gained for

Evening News.

Goodwill regularly decreased from

net tangible assets, or for $18 million.

more slowly to inflation, but probably

each $1 invested.

While
accounting
Goodwill
regularly
decreased from
the moment
of purchase,
economic
Goodwill
increased in
irregular but
very substantial
fashion.

After the merger, therefore, Berkshire

was left with a Goodwill asset for

See’s that had two components: the

the moment of purchase, economic

In contrast, we paid $25 million for

just as surely. And all of this inflation-

Goodwill increased in irregular but

See’s, even though it had no more

required investment will produce

very substantial fashion.

in earnings and less than half as

no improvement in rate of return.

$7.5 million remaining from the 1971

Another reality is that annual

purchase, and $28.4 million newly

amortization charges in the future will

much in “honest-to-God” assets.

The motivation for this investment is

Could less really have been more,

the survival of the business, not the

as our purchase price implied?

prosperity of the owner.

Remember, even so, that the owners

of the See’s kind of business were

forced by inflation to ante up $8

million in additional capital just to stay

even in real profits. Any unleveraged

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.business that requires some net

communications business. That

assets. Further assume the company

net tangible assets, excluding

Operations that appear to be winners

tangible assets to operate (and almost

business has required little in the

has internally developed some

any charges against earnings for

based upon perspective (1) may pale

all do) is hurt by inflation. Businesses

way of tangible investment – yet

magnificent consumer franchise, or

amortization of Goodwill, is the best

when viewed from perspective (2). A

needing little in the way of tangible

its franchises have endured. During

that it was fortunate enough to obtain

guide to the economic attractiveness

good business is not always a good

assets simply are hurt the least.

inflation, Goodwill is the gift that

some important television stations by

of the operation. It is also the best

purchase – although it’s a good place

And that fact, of course, has been

a great deal on tangible assets, say $5

operation’s economic Goodwill.

hard for many people to grasp. For

But that statement applies, naturally,

per share, or 25%.

years the traditional wisdom – long

only to true economic Goodwill.

• In evaluating the wisdom of

have excellent operating economics

We will try to acquire businesses that

keeps giving.

original FCC grant. Therefore, it earns

guide to the current value of the

to look for one.

on tradition, short on wisdom –

Spurious accounting Goodwill –

With such economics, it might sell

business acquisitions, amortization

measured by (1) and that provide

held that inflation protection was

and there is plenty of it around – is

for $100 per share or more, and it

charges should be ignored also. They

reasonable returns measured by (2).

best provided by businesses laden

another matter. When an overexcited

might well also bring that price in a

should be deducted neither from

Accounting consequences will be

with natural resources, plants and

management purchases a business

negotiated sale of the entire business.

earnings nor from the cost of the

totally ignored.

machinery, or other tangible assets

at a silly price, the same accounting

(“In Goods We Trust”). It doesn’t work

niceties described earlier are

that way. Asset-heavy businesses

observed. Because it can’t go

generally earn low rates of return

anywhere else, the silliness ends up

– rates that often barely provide

in the Goodwill account. Considering

enough capital to fund the inflationary

the lack of managerial discipline that

needs of the existing business, with

created the account, under such

nothing left over for real growth,

circumstances it might better be

for distribution to owners, or for

labeled “No-Will”. Whatever the term,

acquisition of new businesses.

the 40-year ritual typically is observed

In contrast, a disproportionate

number of the great business fortunes

built up during the inflationary years

arose from ownership of operations

and the adrenalin so capitalized

remains on the books as an “asset”

just as if the acquisition had been a

sensible one.

that combined intangibles of

* * * * *

lasting value with relatively minor

requirements for tangible assets. In

such cases earnings have bounded

upward in nominal dollars, and these

dollars have been largely available

for the acquisition of additional

businesses. This phenomenon has

been particularly evident in the

If you cling to any belief that

accounting treatment of Goodwill is

the best measure of economic reality,

I suggest one final item to ponder.

Assume a company with $20 per

share of net worth, all tangible

Assume an investor buys the stock at

$100 per share, paying in effect $80

per share for Goodwill (just as would

a corporate purchaser buying the

whole company). Should the investor

impute a $2 per share amortization

charge annually ($80 divided by 40

years) to calculate “true” earnings

per share? And, if so, should the new

“true” earnings of $3 per share cause

him to rethink his purchase price?

* * * * *

We believe managers and investors

alike should view intangible assets

from two perspectives:

At yearend 1983, net Goodwill on

our accounting books totaled $62

million, consisting of the $79 million

you see stated on the asset side of

our balance sheet, and $17 million

of negative Goodwill that is offset

against the carrying value of our

interest in Mutual Savings and Loan.

We believe net economic Goodwill

far exceeds the $62 million

accounting number.

business. This means forever viewing

purchased Goodwill at its full cost,

before any amortization. Furthermore,

cost should be defined as including

the full intrinsic business value – not

just the recorded accounting value –

of all consideration given, irrespective

of market prices of the securities

involved at the time of merger and

irrespective of whether pooling

treatment was allowed. For example,

what we truly paid in the Blue Chip

merger for 40% of the Goodwill of

See’s and the News was considerably

more than the $51.7 million entered

on our books. This disparity exists

because the market value of the

Berkshire shares given up in the

• In analysis of operating results –

merger was less than their intrinsic

that is, in evaluating the underlying

business value, which is the value that

economics of a business unit –

amortization charges should be

ignored. What a business can be

expected to earn on unleveraged

defines the true cost to us.

During inflation,
Goodwill is the
gift that keeps
giving.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.Glossary

Term
BESM

Company

Executives

Founders

Group

KPI

Definition

Break-even safety margin

Teaminvest Private Group Limited, ACN 629 045 736

The executive team of a Portfolio Company. Usually the
Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer.

The founders of a Portfolio Company.

The Company, TIP Group, each Portfolio Company and
their respective subsidiaries.

Key performance indicator.

Management

The management team of a Portfolio Company
encompassing the Executives and their managerial reports.

Portfolio Company

A private Australian business which the Company has (or,
historically, TIP Group’s members have) invested in.

Selected Shareholders

A Shareholder who has been selected by the Company
to participate in the Company’s investment process or
ongoing management.

Shareholder

A holder of shares in the Company.

SMaRT

SMEs

TIP Group

TIPBars

TIPRep

TIPTool

A full day meeting convened between a potential
investment’s board and management and attended by
select investors.

Small and medium-sized enterprises.

Teaminvest Private Group Limited.

The Teaminvest Private Board accounting reporting system,
a management tool used by the Company for assessing the
financial performance of Portfolio Companies.

A Selected Shareholder who has been nominated by the
Company (from time-to-time) to act as a nominee director
of a Portfolio Company.

A proprietary financial analysis tool used by the Company
for assessing the financial impact of various Portfolio
Company decisions.

Guidance for Investors

1.1 Our Noble Purpose
drives every decision we
make
We have long held the belief that

businesses perform best when they

act in the service of others. It is why

we started Teaminvest Private, and

why we developed our unique

Selected Shareholder model. Our

noble purpose, mission and vision are

core to who we are and what we do.

They are:

noble purpose increase: even if doing

this truism over and over. While the

so comes at a short-term cost.

market can move on momentum for

Our noble purpose is core to who we

are and what we do. As part owners

in our business, we trust all our

investors share our passion.

1.2 It takes time for share
prices to reflect intrinsic
value
Time is the enemy of poor

a while, in the end price must always

tend towards the formula “Price =

Earnings * P/E ratio”.

While P/E ratios can fluctuate wildly

for days, weeks, months or even a few

years, over the course of an economic

cycle they will (by definition) gravitate

towards the market average. In

Australia this has usually been around

businesses, and the friend of the

4x for a private company and 17.5x for

good business. Research by Dr John

a listed company.

Price (and Teaminvest) have proven

Noble purpose: Transferring
knowledge and wealth between

generations

Mission: We invest the wealth
and experience of successful

businesspeople to mentor and grow

the next generation of business

leaders, thereby enhancing the

legacy of all.

Vision: To build a society where
the knowledge and wealth we

accumulate over a lifetime isn’t lost to

retirement, forcing the next generation

to learn (and earn) it all again

It is core to our being that we will

never take an action that could be

detrimental to the long-term delivery

of our noble purpose. Similarly, we

are always prepared to invest in areas

that will see our ability to deliver our

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Transferring knowledge and wealth between generations.Therefore, the only way for a

stock at a price below what they

TIPReps and Strategy Committee will

• mentoring an already successful

CEO as they develop their

business;

• seeking more intellectual

stimulation than possible from

passive investing; or

• giving back to the Australian

business community.

Any shareholder may apply to

become a Selected Shareholder.

Before being accepted, they are

required to undertake a rigorous

selection process and must

demonstrate the appropriate

skills, alignment and acumen to

either participate in the investment

process, or to provide guidance

and mentorship. The role can be

highly rewarding, but it comes with

significant responsibilities as outlined

throughout this document.

Any business that grows
earnings consistently
will, over time, see a
corresponding increase in
share price and value.

To apply to be a Selected Shareholder,
please complete this online form.

company to dramatically increase

consider is the intrinsic value driven

keep a keen eye out for structural or

its share price in the long-term is

by our earnings. This however is up

long-term negative news that may be

through consistently increasing

to you: we don’t intend to intervene

a sign of an eventual Capital Killer™,

earnings. Any business that grows

in the market or put fluff pieces in

but we are human and could miss

earnings consistently will, over time,

the press: doing so would just be a

them or fail to act appropriately.

see a corresponding increase in share

distraction from our single focus of

price and value. Conversely. any

delivering our noble purpose and

company with declining profits will

growing our earnings over time.

have a decrease in value.

As investors you should therefore be

1.3 Portfolio approach
Diversification is a cost-effective way

aware that we measure, reward and

to reduce risks and improve returns

focus our executives on growing the

in financial markets. We consider it

1.5 Long-term
investments
In private equity, it takes several years

before we can begin to consider the

success of an investment. When you

choose to make an investment in

the Company, we suggest a similar

earnings generated by our Portfolio

Companies. We have no rewards

based on share price, P/E ratio or

“market reputation”. We do this

because, as long-term investors we

wise to spread our investments over

logic applies. Some shareholders

a portfolio of underlying companies,

may trade in-and-out of our shares

rather than investing in only one –

no matter how much we may like

regularly; however we believe value

creation has a different cadence and

the company and the management.

does not move daily. We consider an

want concrete earnings increases: not

Over time, this should provide better

the value gains driven by sentiment

returns at lower risk.

investment in the Company is best

held for the medium or long term.

that can come and go with the

newest fad.

You will also note that our letters

to investors will never talk about

moves made to “gain exposure” or

“increase institutional awareness”: but

they will talk about concrete steps

taken to increase profits generated.

This will mean that our share price

may, for long periods, deviate from

our intrinsic value as we focus on

profits not media exposure. This can

create great opportunities for those

investors who seek to increase their

holdings when Mr Market offers our

1.4 Risks and
opportunities over five
years
Companies do not commonly run for

1.6 Guidance for
Selected Shareholders
In addition to being a passive

shareholder of the Company,

five years without disappointments

Shareholders may apply to participate

or ‘bad’ news on the sector, their

directly in our investment process by

market or the general economy. Our

applying to be appointed a Selected

Portfolio Companies also expect

Shareholder. A Shareholder may wish

short-term disappointments and ‘bad’

to become a Selected Shareholder

news. Being smaller than our group as

for several reasons including:

a whole, they may experience larger

• passing their knowledge and

ups and downs than we do. Investing

experience to a younger

in the Company is not risk-free. We

generation;

expect our Investment Committee,

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Transferring knowledge and wealth between generations.Guidance for TIPREPS

2.1 Introduction
Investing in TIP Group opens

the opportunity for Selected

Shareholders to be a non-executive

board member (TIPRep) of a Portfolio

Company. The following section

provides guidance for shareholders

who may be interested in applying

for the role of TIPRep. It is not an

attempt to take into account legal

obligations as a board member. For

that, we refer you to the Australian

Institute for Company Directors, ASIC

and ASX Governance documents,

amongst others.

Our approach draws on how Warren

Buffett and Charlie Munger stimulate

the management of their private

businesses to grow profits organically

and via bolt-on acquisitions.

TIPReps are appointed to instil

our philosophy into our Portfolio

Companies. We expect them to

deliver:

1. A clear and obvious path to

significant capital gain over the

longer-term; while

2. Providing attractive periodic

dividends to the Company in return

for the funds we have invested

We expect TIPReps to transfer

Investing in TIP
Group opens
the opportunity
for Selected
Shareholders
to be a non-
executive board
member (TIPRep)
of a Portfolio
Company.

1.7 Ways Selected
Shareholders can
contribute to the Group
This section provides a detailed

overview of the Company’s

philosophy towards Selected

Shareholders. Participation as a

Selected Shareholder may involve:

Participating in SMaRT meetings:
Selected Shareholders may be

invited to participate in management

meetings with potential investments.

SMaRT meetings improve our initial

analysis on whether or not to invest

and, if an investment proceeds,

also improve how we manage the

Portfolio Company in future years.

The application of collective wisdom

at SMaRT meetings is a crucial stage

of the Group’s investment process.

Commercial due diligence: Selected
Shareholders may be invited to

participate as members of the

Commercial due diligence is

or interim executive to a Portfolio

designed to confirm the initial

Company. Once TIPReps understand

assessment of the SMaRT meeting, to

the most important profit-levers in

confirm there are no misunderstood

a particular business, (assisted by

or significant risks, and to confirm

our TIPBars reporting system), they

that Portfolio Company management

can assist our investments to deliver

are suitable for investment by the

outstanding returns.

Group. This committee forms a key

risk mitigation step for our investment
process.

Strategy days: Selected Shareholders
may be invited to attend strategy

days attended by the Board,

Company management, the

management of Portfolio Companies

and TIPReps. Strategy days are

designed to provide insights and

ideas for future growth.

Adviser, Consultant or Interim
Executive: Selected Shareholders
– depending on their professional

experience and mentoring skills

– can help increase value for the

Group by becoming a TIPRep or

1.8 Compliance with
policies
Selected Shareholders are required to

agree to be bound by all Company

policies including our investment

philosophy, confidentiality obligations

and the Company’s securities

trading policy. In particular, Selected

Shareholders will be subject to

the same trading restrictions that

apply to the Company’s Board and

management. An investor seeking

to become a Selected Shareholder

should seek their own advice before

applying to ensure they are familiar

with all relevant legal and compliance

obligations.

committee formed to conduct due

providing assistance in other ways,

diligence on a potential investment.

for example as an adviser, consultant

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Transferring knowledge and wealth between generations.proof of success of any Portfolio

confidentiality obligations and

Company and its TIPReps is delivering

securities trading policy.

on this expectation.

2.3 Preparation before
becoming a TIPRep

Application
If you have experience or other

wisdom to offer, please make your

interest known to the Company.

Following a formal selection process,

we may appoint you to the board of

one of our Portfolio Companies as a

TIPRep. TIPReps serve at the pleasure

of the Company and can be removed

or replaced at any time.

Compliance obligations
TIPReps are bound by the same

legal and compliance obligations

as Selected Shareholders. This

includes adherence to the

Company’s investment philosophy,

Desirable experience
While there is no set formula for a

great TIPRep, candidates should have

run a larger business (in terms of staff,

revenue and profits) than the business

on which they serve.

This enables them to better mentor

executives and grow the company.

TIPReps should enjoy thinking about

visionary opportunities as this is one

of the key roles of a board or mentor.

An understanding of accounting,

corporate law and governance are

valuable but not a prerequisite.

Prior participation in the
SMaRT and Due Diligence
Process
It is preferable for potential TIPReps to

have previously participated in SMaRT

One of the key
responsibilities
of a TIPRep is
to continually
seek ways to
strengthen
moats and
reduce risks.

wisdom and experience to our

skill set and grow the business in

executives – enabling them to

a visionary manner. It does not

grow as CEOs, generate increasing

include getting involved in day-to-

free cash, and materially increase

day decision making or short-term

the value of the business. This is

tactical considerations which are the

often accomplished by providing

role of executives. Executives are

an attractive vision to keep creative

responsible for delivering monthly

juices flowing and enthusiasm high.

results and, if TIPReps become

Strengthening moats and
reducing risks
One of the key responsibilities of a

TIPRep is to continually seek ways

to strengthen moats and reduce

risks. Strengthened moats allow the

business to increase profitability and

grow faster. Reduced risks ensure that

2.2 The role of a TIPRep
TIPReps have five roles for which they

concerned that executives are not

profits and dividends can continue to

delivering appropriately, they should

grow without undue stress. TIPReps

immediately notify the Strategy

would do well to remember that

are appointed and against which their

Committee so that TIP Group can

performance is judged. These are to:

look to enhance or replace the

the simplest way to reduce risk is to

improve the Break-Even Safety Margin

1. Mentor executives;

2. Allocate capital within the business;

3. Strengthen moats and reduce risks;

4. Ensure compliance with

all laws, regulations and

governance requirements; and

5. Deliver regular dividends to

TIP Group.

The best TIPReps are those who

regularly examine and improve

upon these objectives. TIPReps

who fail to do so will be replaced

over time as they are letting

themselves, our executives, and our

shareholders down.

Mentoring executives
TIPReps are responsible for mentoring

executives. Mentorship is distinct

from managing: it involves guiding,

educating and encourage executives

to think differently to enhance their

executive team rather than becoming

quasi-executives themselves. TIPReps

(BESM), and one of the key tasks of
a board is to ensure that the BESM

should ensure that they understand

continues to increase over time.

the distinction between acting

as a director or a member of the

executive team.

Allocating capital
TIPReps are responsible for examining

Ensuring compliance
One of the biggest risks to any

business is damage to reputation or

the advent of litigation. Ensuring a

culture of compliance to the highest

and approving capital allocation

possible standards helps to protect

within the business up to the amounts

each Portfolio Company and the

set out in the TIP Group Limits of

Group as a whole. As the saying goes:

Authority policy. Capital can be used

“it takes a lifetime to make a reputation,

in three main ways: funds for organic

and one oversight to ruin it”.

growth towards the long-term

strategy of building value; funds for

bolt-on acquisitions that can increase

future dividends and capital value;

and returning capital to TIP Group

via attractive dividends. TIP Group

expects that all companies should

deliver a combination of increased

value and attractive dividends

over time.

Delivering regular dividends
to TIP Group
When TIP Group agrees to acquire

a share of a business we do so on

the expectation it will deliver returns

to our shareholders for the use of

their funds, the effort they put in as

mentors, and the belief they place

in executives and TIPReps. The best

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Transferring knowledge and wealth between generations.and due diligence processes. This

remuneration packages, debt funding

many see financial record-keeping

can increase profits and enhance

enables them to better understand our

arrangements, vendor financing and

and reporting to a board as a

philosophy and the ways they can add

succession plans. TIPReps should

distraction. Since our formation

decision making - enhancing

company internal structures and

2. True leadership rarely extends
below one or two key executives:
SME’s rarely have top quality

value. We consider it advantageous

periodically review progress against

in 2012, we have learned that it is

creating an environment where the

executives below the C-level. This

for TIPReps to have participated in

the terms of acquisition and keep TIP

impossible for boards to add value

board can encourage profitable

is simply a function of their size:

the SMaRT and due diligence process

Group informed.

to Executives without the benefit

action based on forward looking

supremely talented people are

for the business to which they are

appointed. This provides a greater

understanding of the moats the

company should enhance (to drive

profits), the future risks the company

should mitigate or prepare for (to

avoid or minimise losses) and the

personalities involved. If a potential

TIPRep has not participated in the

specific SMaRT and due diligence,

we will usually require them to attend

board meetings as an observer before

we confirm their appointment.

SMaRT and Due Diligence
Reports
Before their first board meeting,

TIPBars and TIPTool
TIPReps must be familiar with TIPBars

and TIPTool, our two proprietary

financial analysis tools. TIPBars

provides a standardised set of board

financial reporting across the group.

It also contains built-in audit functions

to enhance the integrity of financial

reporting. TIPTool allows the board

to easily model alternative paths

for substantially increasing profits. If

substantially increasing profits were

easy, executives would already have

done so. TIPTool allows board and

management to have an accurate

and robust discussion about the most

TIPReps should review the SMaRT and

practical path to achieve their targets.

due diligence reports. These contain

analysis of the rationale behind our

investment, and the moats and risks

2.4 Common learnings
TIPReps have experienced the

identified. Knowledge of these is a

following common learnings:

pre-requisite to adding value as a

board member.

Terms of Acquisition
TIPReps should ensure they

1. You can’t have valuable board

meetings without best-practice
financial reporting: Many creative
entrepreneurs are wonderfully

of best-practice financial reporting.

projections, not just rear-view

unlikely to be attracted to a smaller

Worse, if there are concerns about

examination. This approach is best

organisation with limited career

the veracity of reporting, the board

available to Portfolio Companies

development opportunities. Therefore,

will quickly become dysfunctional,

who already have robust, audit

in order for the business to grow, or

and profits will decline as trust breaks

ready, systems in place with a highly

the founder to reduce their hours, a

down. TIPReps must therefore work

educated CFO leading discussions.

key requirement will be attracting the

TIPReps in this situation can

right kind of talent into the right roles.

immediately focus on TIPBars and

In particular we have found that:

TIPTool, confident that the forward-

looking analysis is meaningful for

strategic discussion.

a) Existing employees rarely have
the drive or skill required to step

up to C-level in an SME. This is a

function of self-selection, ambitious

and talented employees are unlikely

to address this concern as one of

their highest priorities by either:

a. Encouraging the Portfolio Company

to hand financial reporting over

to TIP Group head office. This will

ensure that Executives and TIPReps

can focus on strategy without being

concerned or distracted about

the preparation, and accuracy, of

financial reporting and the six-

monthly audit process. It is also

likely to be financially beneficial due

to the costs saved by harnessing

group economies of scale. Portfolio

Companies who were not already

audited for a number of years prior

to partnering with TIP Group, or

who don’t already have the benefit

of a highly educated, multi-person,

financial team will benefit most

understand the key acquisition

successful through inspiring and

from this approach; or

terms. These differ by company

motivating their staff to work

and may include performance

‘miracles’ and their clients to pay

hurdles, conditional payments,

highly for their products. However,

b. Showing how best-practice record

keeping, reporting and discussions

We have
learned that it
is impossible
for boards to
add value to
Executives
without the
benefit of
best-practice
financial
reporting.

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Transferring knowledge and wealth between generations.to remain in a business where they

cannot see opportunities for rapid

c) As we get older we forget just how
young we were when we first took

deal’. Working with a board may

also initially distract our Portfolio

advancement. In smaller businesses

a leadership role. Most successful

Companies. Together this may cause

this career path caps out by about

CEOs got their first real leadership

revenue and profits to disappoint.

5. Focus board time on delivering

to achieve the company’s Noble

the Noble Purpose, not working on
the day to day. Executives working
‘in the business’ rarely have time to

Purpose. By doing so you will get

most out of the board meeting and

drive double digit growth. Discussions

the age of 30, so most supremely

break in their 20’s, and by their 30’s

This can result in a downward spiral

think in a visionary way ‘outside of

will focus on major opportunities,

talented staff either move on to

were running teams of 30 or more.

unless (and until) TIPReps once

the business’. Day-to-day issues keep

new moats and mitigating risks, not

bigger companies, or remain only

Yet when we look for leadership hires

again make driving the profits of

them busy and are most likely to

the daily grind. A TIPRep who finds

if their ambition has declined. With

these same 20- and 30-year-olds (as

the business the core focus of the

be reported to the board. TIPReps

themselves involved in day-to-day

ambition being one of the three key

we once were) often appear brash,

Executive team.

should not involve themselves in

decision making, is doing a disservice

requirements for leadership success

uncultured and inexperienced, so

(the other two being passion and

we gloss over them for older hires.

intelligence), fishing in the existing

This plays into two traps: firstly, it

pool is likely to be unrewarding, and

means that we never hire the best

4. Vendor remorse is normal but
must be addressed head-on. It
is natural that after selling part of

may well be why the founder was

talent – because a supremely talented

their baby, founders and executives

attracted by TIP Group’s promise to

30-year-old who is passed over for

help “transfer knowledge and wealth

a role at your company is running

will wonder if they made the right

decision. If there is more than one

between generations”;

something far too large by 40 for us to

senior executive or founder, one

day-to-day business and instead

to executives and their fellow

should constantly work on focussing

shareholders.

Executives on the steps needed

b) When external hires are
considered, they are almost always

the wrong kind. One of the great

hiring fallacies is that we look to hire

people with already demonstrated

experience in the role for which they

are applying. This sounds seductive,

but it is a big mistake: someone

who has demonstrated success in a

role, is almost never looking to take

on the same role again in a smaller

organisation. The only reason they

would be prepared to take such a

role is if they know they had failed.

ever get them; and secondly it means

may feel regret more keenly, causing

we miss out on the well-documented

internal friction. TIPReps should

fact that ambition and passion decline

address this head on by discussing

from middle-age onwards. While a

the issue to give comfort, and

50-year-old is likely to know more than

immediately working on creating

a 25 year old, they are unlikely to be

a company-wide Noble Purpose,

prepared to throw themselves in with

Mission, Vision and Big Hairy

the ambition and passion required

Audacious Goal. By setting these

to drive transformational growth…

as a team early, we harness the

and they are certainly unlikely to

power of passion to drive results and

do so if they still report upwards to

overcome any fear or concern about

another Executive!

3. Distractions kill. A year may
elapse between when our Portfolio

the decision to sell. A clear path to

“growing their baby together” is the

fastest and most effective way of

motivating Executives and giving

comfort that they made the right

decision to partner with TIP Group.

Hiring “with experience” is almost

Companies approach a broker

certain to result in hiring the wrong

to market their business, to when

calibre of employee.

we finalise contracts and appoint

TIPReps. Sales and profits may

become secondary to ‘doing the

Focus board
time on
delivering the
Noble Purpose,
not working on
the day to day.

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Transferring knowledge and wealth between generations.2.5 Interacting with executives

Learn what ‘makes them
tick’
Before joining a board, TIPReps

in the business should already

know what is most important to

Keep in mind the executive
remuneration structure
Executive remuneration is set

Assist with succession
planning
Risks associated with key

Provide guidance on
growth planning
Most valuable is for TIPReps to

by the Strategy Committee and

management personnel are front-of-

assist Portfolio Company founders

measure: even if they may not always

follows TIP Group’s principles of

mind when the board interacts with

to develop a team of talented

should meet with Executives and

communicate it with clarity. TIPReps

other board members informally

would therefore be wise to ask lots

to learn ‘what makes them tick’.

of “Why” questions. “Why did we do

It is easier to mentor and build

X?”, “Why do you consider Y worth

handsomely rewarding performance,

management. This risk scores highly

reports who enjoy doing what our

and penalising failure. In particular,

in every SMaRT. TIPReps should

Portfolio Company founders enjoys

TIPReps should be aware that

ameliorate this risk by encouraging

least. This will free up the time of

executives are remunerated with

our Portfolio Company executives

our CEOs for strategic thinking to

profits with people we understand.

measuring?”, “Why do you think this

three components:

to delegate and to develop an

add value in conjunction with their

• A low base salary, of sufficient size

executive team. Within a few

board, rather than being immersed

years of investment in a Portfolio

in day-to-day management.

Company, the board and CEO should

have identified an appropriate

successor for an emergency - or

should the CEO retire.

Focus on BESM (Break-Even
Safety Margin)
A powerful way of reducing risks is

by increasing the gap between sales

Meeting in an informal setting allows

is a good or bad idea?”. Asking lots

a prospective TIPRep to see what

of Why questions (instead of What

interests and cultural values they

or How questions) is the fastest

to keep the lights on but small

enough that a poor performing

have in common with the Executives

way to build a deep and intuitive

Executive will quickly look for a job

(critical for mentoring and driving

understanding of the key drivers of

elsewhere;

profit) and their prospective fellow

the business. And as a board member

• A monthly bonus paid for every

directors (critical for defining long

you need that intuitive understanding

month that is profitable, to

term goals and maintaining passion

to better mentor the CEO and make

towards achieving them). You should

fast decisions.

also use this opportunity to find out

more about the business, discuss

moats and risks identified during

the SMaRT and Due Diligence, and

to find out what has already done

to strengthen moats and eliminate,

mitigate or manage risks. With a good

starting point a TIPRep is certain to

add more value than coming in blind

and learning on the job.

Understand the business
It takes time for a relative outsider

Focus on the Noble Purpose
and long-term goals
It is the responsibility of Executives

to ensure a profitable business every

month. Providing the Executives

are doing so, the key responsibility

of TIPReps becomes focussing

on mentoring and developing

executives to achieve the Noble

Purpose and long-term goals of the

Portfolio Company. TIPReps should

therefore spend the majority of their

to understand the most important

time with Executives focussed on

Key Performance Indicators (KPIs)

exploring how the company can

that drive profits. Executives with

grow its moats, reduce its risks and

a history of profitable leadership

deliver its Noble Purpose.

incentivise Executives to design

and operate the business in such a

way that it never loses money; and

• A share of the audited NPAT of the

business, providing an outsized

reward for stellar performance.

Any changes in remuneration for

Executives is therefore linked entirely

to their performance. TIPReps should

be aware of this, and take actions

that encourage the Executives to

achieve their monthly bonus every

month (e.g. focussing on BESM),

while ensuring a path to meaningful

long term profit growth. In this way

both the Executive and TIP Group’s

shareholders will win together.

A powerful way
of reducing risks
is by increasing
the gap
between sales
revenue and the
Break-even Point
of the business.

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Transferring knowledge and wealth between generations.revenue and the Break-even Point of

the most effective way to reduce

the board meeting, each CEO should

sold ‘part of their baby’ which they

Fortunately, financial terminology

the business. This increases the BESM

volatility is by increasing BESM.

provide the monthly TIPBars financial

loved and nurtured for years. Nothing

and detailed reporting are not a pre-

report plus a short explanation on any

will faster demotivate them, and

requisite for building a great niche

issues on which they seek input.

destroy the value of our investment,

business. However, they become

(Break-Even Safety Margin). Replacing

fixed costs with variable costs

increases BESM and reduces risk.

Focussing on increasing BESM is a key

hallmark of a successful business.

Consider the size of
companies and expected
volatility
Our Portfolio Companies are

predominantly SMEs. Missteps by

management or TIPReps can wipe

out short-term profits, while good

decisions can hugely lift short-term

profits. Even when long-term profits

are excellent, short-term profits may

vary between disappointing and

enthusing. Experience shows us that

Keep an eye on
trustworthiness
It is a pre-requisite that the executives

who manage the business are

trustworthy. If TIPReps are ever

Help our Portfolio
Companies grow
TIPReps should inspire, mentor, and

concerned that this is changing,

act as a sounding board for our

they should inform the Strategy

executives. They should regularly ask

Committee immediately and in the

themselves three questions: “What

strongest possible terms.

visionary ideas can we suggest to

substantially grow profits?” and

“How can we help make the CEO’s

role simpler?” and “How can we

assist the CEO make faster and more

Hold monthly board
meetings
Meetings should be face-to-face with

an option to join by teleconference.

If board meetings are taking full

days, chances are TIPReps are

becoming involved in issues best left

to management. A few days prior to

than giving the impression ‘the baby

more important as the business

is ugly and needs cosmetic surgery’. It

grows. TIPBars will provide financial

is natural for one or more executives

information most useful to TIPReps.

to initially experience some vendor

Executives can provide any other

remorse. This should dissipate

information they know is important.

once they realise we are working

Meetings can then focus on “what

towards growing the business and

can we do to build free cash and

substantially increasing profits.

profits” and testing this in TIPTool.

Don’t overfocus on financial
terminology
Executives of SMEs may appear

Leave instructing
management to the board
The board as a whole may instruct

TIPReps should
inspire, mentor,
and act as
a sounding
board for our
executives.

profitable decisions?”

unsophisticated in the use of financial

executives. Individual board

terminology or reporting procedures.

members should never do so.

Be Mindful they have sold
‘part of their baby’
Portfolio Company founders have

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Transferring knowledge and wealth between generations.2.6 Capital Management and Board Strategies

Dividends and cash buffers
The boards of our Portfolio

Companies have a responsibility

Focus on high margin
revenue
Market share is vanity, profits are

to return part of profits as free

sanity and free cash flow is reality!

cash to the Company via periodic

We acquire niche businesses that

dividends. This is covered in detail

make higher profits and generate

in the Group Distribution Policy.

more cash from increasing margins,

TIPReps should be familiar with this

than from chasing market share.

policy, and in particular its focus

This can be quickly tested using

Deal with causes not
symptoms
Niche businesses may experience

cash-flow challenges from time

to time. TIPReps and executives

must strengthen the businesses by

dealing with the cause of cash-flow

problems, rather than dealing with

symptoms. TIPTool can be useful for

this. Eliminating causes of cash-flow

challenges can add huge value to

on the mix between paying down

TIPTool. Good strategy often involves

any investment.

debt, reinvesting for growth and

turning away low-margin business.

paying dividends.

If a business is short of cash, the

chances are the margins are too low.

Leverage technology
Technology, data and online

In niche businesses, it’s often easier

connectivity are rapidly changing

to increase value through increasing

the world. Every business will be

margins than increasing size.

affected. Those that remain stuck in

Bolt-on acquisitions or
disposals of divisions
Each board should continually

monitor their markets for a substantial

increase of profitability via a bolt-on

acquisition. Conversely, they may

conclude that the business would

Moats and outside
circumstances
‘Circumstances beyond our control’

be more profitable after the disposal

are often blamed for a profit

of an unwanted division. Such major

downturn. TIPReps should look

capital allocation decisions should be

beyond this and seek ways the

referred to the Strategy Committee

company can increase profits even

for assistance.

More capital or debt
It is our philosophy that debt

increases risk. Boards should

avoid raising debt unless it is for

highly profitable organic growth

or accretive acquisitions. If debt is

needed, it must first be approved by

the Strategy Committee.

in a downturn. If profits disappoint,

and TIPReps can’t immediately find

a way to fix this, raise it with the

Strategy Committee quickly, so we

can brainstorm ways of benefiting

from adversity – whether real or

perceived. Outside influences can

the past find competitors able to offer

similar outcomes cheaper or faster, or

superior products at the same prices.

Those that embrace ‘modernisation’

benefit via higher margins. TIPReps

should continually seek to modernise

everything our Portfolio Companies

do to stay ahead, and to improve

margins against the competition. The

outcomes of any costs and margin

improvement can easily be checked

in TIPTool.

Use our tools
TIPBars and TIPTool allow the board

often be overcome by a concerted

to model the various alternative paths

effort to strengthen moats.

for substantially increasing profits.

TIPReps should frequently use TIPTool

Choosing the
best path to
profit is made
easier using
TIPTool.

to strengthen the business by testing

date, and how you can add further

the likely increased profits from the

value in the coming year.

choices of increased sales, decreased

fixed or variable costs, and increased

prices. No path is likely to be easy,

but choosing the best path to profit is

made easier using TIPTool.

2.7 Culture

Skills available
An incredible range of skills and

experiences are available from

Selected Shareholders. TIPReps

Comfort with executives
TIPReps and Portfolio Company

executives must get along well

professionally to be successful. If

a TIPRep is uncomfortable with

an executive for personal reasons

they should inform the Strategy

Committee and seek to be

replaced. If a majority of TIPReps are

uncomfortable with an executive,

they should inform the Strategy

should regularly contact the Strategy

Committee immediately so that we

Committee to seek advice about the

can replace that executive (if we

control the Portfolio Company) or

find a timely exit (if we are a minority

shareholder).

challenges they face.

We are all in it together
Boards of profitable niche businesses

work as a non-hierarchical team. To

maximise profits, board members

should ensure a culture of open, frank

and enjoyable cooperation between

executives (who know the business

very well), non-executives (who

know business principles well) and

the Strategy Committee.

Serving while you add value
TIPReps should stay on a board

while they remain enthusiastic about

the business and feel they can help

deliver excellent returns. When

considering whether to serve another

year on the same board, you should

assess how you have added value to

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Transferring knowledge and wealth between generations.provide advice. In particular, each

to ‘reporting’. A simple high-level

Portfolio Company is required to fill

target, accompanied by a report on

out a quarterly board self-assessment

the main variables (KPIs) contributing

3.1 The role of executives
Executives have four roles for which

enhancing cash flow which can then

be made available for reinvestment

they are appointed and against which

or delivering healthy dividends to

sheet (focussed on the performance

to the Break-Even Point (BEP) and the

their performance is measured. These

shareholders. Building a healthy

of the board) and a Quarterly Traction

approximate net profits at any level

are to:

cash buffer ensures executives can

Report (focussed on the performance

of sales above the BEP significantly

1. Deliver monthly profits;

sleep easily, knowing that they are

Making improvements
Businesses of the size of our Portfolio

Companies are unlikely to have the

resources to implement more than

one ‘improvement’ at any time. A

board that successfully implements

one substantial profit improvement in

any half-year has provided excellent

value. Asking a CEO to implement

of the company towards it’s Noble

improves profit generation in smaller

Purpose and growth targets).

niche companies. TIPBars and TIPTool

The Strategy Committee will use

automatically provide the BEP,

several ‘improvements’ simultaneously,

the performance of the Portfolio

Profit, and Break-even Safety Margin

risks overwhelming executives

and almost certainly ensuring the

‘improvements’ won’t happen.

Company, and the results of these

(BESM) for all possible scenarios. The

quarterly assessments to tweak the

Strategy Committee will work with

TIPRep mix to achieve the best results

each Portfolio Company to establish

Cash flow is king
The value of a business is in the cash

it generates. If the business is paying

attractive half-yearly dividends to

the Company, and earnings are

growing, TIPReps and executives are

doing an excellent job. However, if

this is not happening, then TIPReps

and management are letting down

shareholders and themselves. If the

TIPReps can’t see a way to deliver

attractive dividends, they should

request the help of the Strategy

for the Group.

Annual reports and
reporting to TIP Group
Each company must report regularly

to the Strategy Committee and

appropriate long-term profit and cash

flow targets via the Quarterly Traction

Report.

Strategy days
Twice yearly, TIPReps and executives

produce an annual report. While

are required to attend Strategy Days.

annual reports are not widely

Each Portfolio Company is expected

distributed, they are an important

to develop their plans for one or

strategic tool that disciplines each

more of the four ways for delivering

company to regularly set and track

shareholder value:

results against their targets. They are

1. Maximising half-yearly dividends;

also invaluable should we one day

2. Organic Growth or a new division

decide to raise capital for, divest,

using the current assets of the

Committee or request to be replaced.

or spin-out one of our Portfolio

business;

2.8 Reporting to TIP
Group

Strategy Committee
TIPReps report to the Strategy

Committee. The Strategy Committee

meets with each board on a quarterly

basis to assess performance and

Companies.

Budgets and cash flow
projections
While detailed budgets and cash

3. Bolt-on acquisitions or growth that

may require additional capital at

attractive returns;

4. Combining with another Portfolio

Company to enhance the returns

flow projections have been shown to

from each.

improve results in large corporations

they can be detrimental to profits in

smaller entrepreneurial companies

when they shift focus from ‘acting’

Guidance for Executives

protected from any unexpected

headwind. It also allows for healthy

dividends, which are the fastest way

for executives to gain promotion

within the group or receive a pay

rise. Conversely, an executive who

regularly “mines shareholders

wallets” will soon find themselves

without a role.

2. Manage the cash;

3. Develop a great culture; and

4. Increase BESM.

The best executives are those who

regularly work on fostering a high

performing culture to deliver growing

profits and margins. TIPReps are there

to mentor management to deliver

on these key goals, but ultimately it

is the responsibility of executives to

manage day-to-day operations and

deliver monthly profits.

Monthly profits
Good businesses are designed such

that they rarely make a loss in any

month. Great businesses are those

that never do. The primary role of

an executive is to ensure that the

business is designed and operated

such that monthly profits are

expected and delivered year in, year

out. Executives should seek guidance

from TIPReps and the Strategy

Committee if they are ever unsure

how better to ensure this.

Managing the cash
Cash flow is the lifeblood of any

business. Great executives look at

ways of not only growing profits but

Good
businesses are
designed such
that they rarely
make a loss
in any month.
Great businesses
are those that
never do.

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Just as it’s the role of TIPReps to

mentor and grow the skills of

This list won’t be complete and

strong economic moats. If the answer

larger premises often eat more profit

business running profitably every

some scores may not be accurate.

is ‘no’ then you can increase prices

than they generate. Property expense

month and every quarter. The

Executives should discuss these

and be proud of the strong moats

also adds risk since a mistake can be

Company trusts executives and

executives, it is the role of executives

moats with their board and make

you have built.

to mentor and grow the skills of

an accurate list. Then they can

their staff. Good executives look to

continually seek ways to maintain and

constantly improve and educate

strengthen moats – and find ways to

3.3 Capital
Management

their team: either by enhancing staff

develop new ones.

members’ existing skills or hiring high

achievers. A focus on mentorship

and the development of a high-

Test for economic moats
Warren Buffett tells the CEOs of his

performance culture is key to making

many businesses to frequently ask

the role of an executive less stressful,

themselves: “Would we have to call

and it is the simplest long-term path

a prayer meeting before increasing

to higher earnings.

prices to our customers?” Ask yourself

the same question. If the answer

is ‘yes’ then you have not yet built

Increasing BESM
The most effective way for executives

to increase profits while reducing

risk is by working to increase BESM.

Building a culture of understanding

BESM within an organisation will

allow younger managers to similarly

provide ideas to enhance the

business. Those executives who

regularly increase BESM will most

likely be offered larger roles within

the Group.

3.2 Economic Moats are
the Path to Higher Profits
Businesses generate attractive

returns when they build and maintain

economic moats. During the SMaRT

and Due Diligence, the Company

assessed and scored the promising

economic moats of the business.

time consuming to undo. A mistake in

TIPReps will take immediate action

hiring can be quickly reversed.

should a Portfolio Business ever fall

Capital for growth
The Company can provide

additional capital when executives

find opportunities to grow profits

into a loss. Fast action to bring the

business back to profit is always

better than delaying for discussion.

Capital for turnarounds
The Company has an aversion to

Capital allocation
A sure path to increasing returns is to

allocate capital to the most profitable

at attractive rates of return via

parts of the business. Minimise costs

geographic expansion, acquisition

providing capital to help a business

in those parts of the business that

of another business, or adding a

out of difficulty. Getting into financial

generate low profits or don’t directly

profitable division. When such an

distress is a key symptom of

generate income. For example,

opportunity offers outstanding returns

executives either failing to develop an

a good extra salesperson should

(greater than 15% per annum), please

appropriate BESM, being blindsided

generate more profit than cost, while

inform the Strategy Committee in a

by changes in their market, or a result

timely manner.

of a significant error in judgement.

Dividends matter
In order to make cash available for

the most profitable opportunities, the

Company looks to receive funds from

our investments via dividends. These

funds are then allocated to those

who can use them best. If you have

a profitable opportunity that requires

further investment, you should write

a succinct business case and put this

to the Strategy Committee. In this

way, opportunities can be compared

across the group and funds allocated

to those offering the best returns.

Fast action
The primary responsibility of a CEO

is to look after cash and keep the

Only where executives can

demonstrate a clear path to returning

a business to profitability and are

prepared to agree to strict conditions

around the use of cash, will Group

funds be made available. Asking

for cash to “save a business” is the

largest indicator of an executive team

that has failed in their role. While we

understand that everyone may make

mistakes, the decision to invest Group

money to save a once profitable

business is perhaps the most serious

decision the Strategy Committee can

make. In effect, it is asking those who

have performed well to use their hard

earned cash to subsidise the bad

decisions of another.

The most
effective way
for executives
to increase
profits while
reducing risk is
by working to
increase BESM.

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Transferring knowledge and wealth between generations.3.4 Financial Reporting

can be pulled to improve profits

most easily. When joining TIP Group,

The ‘perfect’ chief executive
It is virtually impossible to be the

Financial reporting and
TIPBars
The best financial reports help boards

each business is required to provide

‘perfect’ chief executive. A perfect

general ledger data for the previous

chief executive would have

12 months. This allows TIPBars

and CEOs make large improvements

and TIPTool to be implemented

in profits for the least effort. Before

immediately. Used properly, TIPBars

we invest, most executives use

and TIPTool can add considerably to

financial reports designed for

profit every year.

accountants and the tax office. These

focus on the past, but rarely point the

way to increasing profits. We have

developed TIPBars to improve profits

with the least amount of work, while

highlighting dangerous risks. TIPBars

is produced every month and shows

where each business is working

well financially, where hidden risks

may be lurking, and where financial

improvements should be made.

Audits
Upon joining TIP Group, each

Portfolio Company is required to

participate in the Company’s regular

audits. Rather than seeing this as an

imposition on executive time, each

Portfolio Company should see it

as a way of learning how to better

improve systems and processes so

that greater returns can be made

in the future. What seems like a

even Safety Margin (‘BESM’): whether

in company systems.

the business is becoming less risky

(as we prefer), or more risky (a

dangerous trend). Should the trend

show increasing risk, TIPBars shows

3.5 Building a Stronger
Executive Team
The Company can help each Portfolio

where you and your board can fix this

Company develop a stronger

well before the business loses money.

executive team. That way more can

Standard accounting usually highlights

be achieved with less time from

losses after the money is gone.

executives and board members. This

expertise in leadership, production,

general management, marketing,

sales, finance, administration,

accounting, people management

and business management. The

Strategy Committee can advise how

to surround the CEO with quality

executives reporting to them who

can add missing strengths.

Why an executive team
CEOs of outstanding niche businesses

live in a gruelling combination of

being the Chief ‘Enthusiasm’ Officer

and the Chief ‘Operating’ Officer.

As Enthusiasm Officer they must

inspire their team to greatness and

Operating Officer, they must ensure

work is efficient, of the highest

standard, and systems are scalable

for doubling and tripling volume and

profits. This is a gruelling task and

limits the growth of the organisation.

What to delegate to grow
As a business grows, these dual

roles become exhausting. As a first

step to working less hard for more

Break-even safety margin
TIPBars highlights the trend in Break-

frustration at first can add profound

inspire their clients to provide a good

value if used to address weaknesses

margin for their wonderful work. As

Easiest path to improve
profits
TIPTool allows board and executives

to quickly ascertain which levers

increases the value of the business;

produces bigger half-yearly profits

and dividends; allows executives and

profit, the CEO will benefit from

board to be more relaxed and makes

either an outstanding Operating

shareholders happier.

Officer to take off their shoulders

much of the thinking about day-to-

developing internal management,

day business, or they will benefit

do not despair. Several of our

from an ‘Enthusiasm’ Officer to

Selected Shareholders have extensive

reduce their role of thinking about

experience in building organisations

inspiring staff and customers to

around rapid management

maximise profits. In choosing which

development and can advise if

to delegate first, choose the role

asked. Similarly, if the business

they find less enjoyable. Once

has not had positive experience

the business becomes larger, the

recruiting external candidates, you

company may need one of each

are not alone. Several of our Selected

reporting to the CEO.

Shareholders have considerable

Functional executives
When a business grows at 20%

per year, after 10 years it will be six

times the size. To avoid executives

having to work impossibly harder,

experience in hiring executives for

entrepreneurial companies and can

advise if asked.

Replacing a successful CEO
If tempted to seek one person to take

the business eventually needs an

over from a successful CEO, including

executive (not simply a manager) to

all the thinking they do about the

take responsibility for each functional

business, ask two questions: “How

area: production, marketing,

easily will we find someone who can

sales, finance, administration and

handle both roles of Chief Enthusiasm

accounting. TIPReps and executives

Officer and Chief Operating Officer?”

should act before the CEO becomes

and “If a candidate seems capable of

overwhelmed by rapid growth.

handling everything superbly, why

Then look to promote or recruit an

aren’t they running their own business

executive to relieve some of the load

– one at least as big and profitable

and facilitate further expansion. Our

as ours?” It is likely that we will need

aim should be to make the business

several outstanding executives to

more profitable and less stressful.

replace a successful CEO: one to

Develop or recruit
Businesses develop a superior culture

when they develop and promote

internal candidates rather than

recruiting externally. If the business

has not had previous success with

provide enthusiasm and one or more

responsible for operations. Provided

the board does this while the

successful CEO is still engaged, they

will have time to mould their thinking

and ensure a smooth transition.

Businesses
develop
a superior
culture when
they develop
and promote
internal
candidates
rather than
recruiting
externally.

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Transferring knowledge and wealth between generations.and the ASX, is that of continuous

left to management.

profits without doing more work?” or

of the business?” If the answer is

3.6 Continuing Roles
and Responsibilities
As an executive, the role of profitably

running the business remains largely

unchanged after becoming part of

the Group. Executives gain access

to our tools, balance sheet, TIPReps

and Selected Shareholders, but they

are still responsible for the results of

the business. In exchange they are

expected to regularly report to their

board and follow the advice of the

Strategy Committee. The board and

Strategy Committee are there to help

mentor and guide executives to grow

the business but executives are still

responsible for ensuring results and

will be judged accordingly.

Reporting to a Board
Reporting to a board can be daunting

and immediate disclosure of all

material information. This means

that if executives become aware of

anything that could have a material

impact on the business, they must

immediately inform their board.

Where the board agrees, they must

immediately inform the Strategy

Committee who, in conjunction

with the Board of the Company,

will determine if the item requires

disclosure to the market.

3.7 Gaining most
benefit from a board
Our Portfolio Companies derive

most benefit from their board when

they share half-formed ideas, major

dilemmas and concerns, knowledge

of their business and why they run

for those not used to it. Executives

it as they do. Well briefed, TIPReps

should ask three questions before

can arrange a host of free contacts

including anything in a report to

with expertise the business could not

their board: “Could input from the

otherwise access.

board be helpful on this?”, “Could

this be financially material?” and

“Could this provide an opportunity to

substantially increase profits?” If the

answer is “yes” to any one of these

questions, include it in the meeting

agenda. If the answer to all three is

“no”, omit it.

Briefing the board
A week prior to the meeting,

executives should provide a report

from the CEO, including a short

explanation of any issues on which

they would like input, plus TIPBars

and any other important reports, so

everyone is properly briefed. If board

Continuous and immediate
disclosure
A key principle of the Company,

meetings regularly take longer than

half a day, executives are probably

involving the board in matters best

Forward looking discussion
TIPReps add most value when

executives use TIPBars and TIPTool

to provide a helicopter view of the

past month and then provide forward

looking key indicators to show where

the business is heading. These include

activity indicators driving sales or

revenue in coming months; sales

driving profits in coming months; and

“How could this business expand into

still ‘no’, ask: “Will this strengthen an

other business or geographic areas?”

economic moat or reduce a risk?” If

or “How could this business combine

the answer is still ‘no’ ask: “Why are

with another TIP Company to increase

we considering this?”

profits for both?” Executives should

ask their TIPReps for these ideas at

meetings so they can implement the

best one or two each year.

Governance
Governance is, and should be seen

Strategy Committee
Each quarter, executives and

TIPReps must present their board

self-assessment and Quarterly

Traction Report to the Strategy

Committee. Each company can use

actions building moats to improve

as, a powerful way to enhance the

this opportunity to ask the Strategy

future margins. The board adds most

performance of a company. Good

Committee for contacts or assistance

value when focused on factors that

governance grows sustainable

with any challenges they are facing.

improve these leading indicators.

profits rather than being a dead

The Strategy Committee is also

Governance
is, and should
be seen as, a
powerful way
to enhance the
performance of
a company.

Questions at board
meetings
TIPReps will ask challenging questions

to identify where and how they

can assist executives to generate

higher cash profits. The better they

understand the business, the more

they can make profitable suggestions;

and the more they will be able to

introduce executives to shareholders

who can add value. If questions get

into minutiae, say so: boards are most

valuable when focused on big picture

items that increase capital value.

Thinking in a visionary way
Until the CEO has built an executive

team to free up their time, they will

continue working in the business.

TIPReps will think along lines like:

“How could the business make larger

weight. To ensure good governance,

and assist our Companies to

develop sustainable profits, TIP

Group provides each board with

a ‘governance checklist’ as a

customisable template to keep track

of many regulatory and governance

requirements. The updated checklist

should be discussed at the meeting

following each calendar quarter.

3.8 Gaining most value
from the Company
Executives and board are

responsible to the Company and

our shareholders. When considering

any major decision, the board

should ask: “Will this increase the

regular dividends we pay to the

Company?” If the answer is ‘no’, ask:

“Will this increase the capital value

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Transferring knowledge and wealth between generations.likely to ask challenging questions

aimed at improving the business or

assessing performance.

Strategy days
TIP Group holds half-yearly strategy

days: one in February and the other

after the conclusion of the financial

year. Executives and TIPReps must

attend the Strategy Days. During the

day, each company presents their

plans for one (or more) of the four

Economies of scale
Through the Group, each business

has access to considerable buying

power. This can save money

on insurance, vehicle financing,

accounting, legal costs and other

services. If you are considering a

merger, acquisition or divestment, the

Company can save substantial legal,

accounting, secretarial, compliance

and distribution costs.

ways for delivering shareholder value:

3.9 Delivering value

1. Maximising profits and dividends

without sales growth;

2. Growth or a new division using the

Benchmark profitability
Portfolio Companies should

they have built at least one strong

connectivity are changing the world.

them to produce better quality

economic moat. If the answer is ‘no’,

All businesses will be affected. Those

work. When profits cease growing,

think: “How can we build at least

stuck in the past will find competitors

the best staff seek employment

one economic moat to increase our

offering similar outcomes cheaper

elsewhere, staff quality goes down

profit percentage?”

or faster, or superior products at

and output suffers. This makes it

Increasing margins or
increasing sales
Niche businesses increase profits

more via a small increase in margins,

than via a large increase in sales.

Executives can use TIPTool to see the

relative uplift in profits from increases

in margins, increases in sales and

reductions in costs. Test scenarios to

find the fastest way to increase profits

the same prices. Those embracing

imperative that executives continue

‘modernisation’ will thrive via higher

growing their profits.

margins. Modernise the business

to stay ahead of the competition

and improve margins. Use TIPTool

to check the improved profit from

higher margins after any planned

‘costs of modernisation’.

Profiting from inflation
Inflation is both an opportunity and

Sales team
To grow profits substantially, it is

almost certain the business will need

a dedicated sales team. Hire only

those who are highly enthusiastic.

Poor salespeople cost more than

any profit they generate. The right

salespeople generate far more profit

current assets of the business;

be among the most profitable

with the least additional work.

threat. Business inflation is generally

than they cost.

3. Bolt-on acquisitions or growth that

businesses: they were founded

may require extra capital;

by talented executives and have a

4. Working with another Portfolio

shareholder that can provide access

Company to enhance returns.

to expertise and capital. Over time,

Value from other Portfolio
Companies
The Company invests in an increasing

number of businesses,all of them

run by talented people. Portfolio

Companies should work together

to generate increased profits. This

can vary from being suppliers to

our Portfolio Companies should aim

to achieve Net Profit Margins of 10%

to 15% of revenue. Above 15% they

should feel proud. Below 10% they

are letting down the Company and

themselves.

Focus on building moats
Building economic moats enables

Fixed versus variable
expenses
The best businesses should never

record a loss. Reduce the risk of

losses by building the business

around a higher proportion of

variable expenses (which go up or

down as sales revenue goes up or

down) and a lower proportion of

fixed expenses. Fixed expenses such

as long leases on premises, increase

the risk of losses while reducing

one another, quoting together

businesses to earn more profits

flexibility for growth. For fastest

where a wider range of skill sets

than competitors. To test whether a

growth with lowest risk, minimise

is needed, sharing executive or

business has developed economic

fixed costs by converting them to

staff expertise, pooling marketing

moats the board should ask: “Can we

variable expenses.

ideas, or combining to create a

increase prices faster than inflation

larger company with more depth

without having to call a prayer

of management.

meeting?” If the answer is ‘yes’, then

The world is changing fast
Technology, data and online

above CPI. A business that doesn’t

develop and maintain economic

moats is hurt as input and labour

costs rise before the business can

3.10 Long Term Aims
The Company invests for many

years at a time. We aim to assist

increase prices. Businesses without

executives to grow profits and

moats grow weaker still. Some go

broke. Executives can ensure their

business thrives by strengthening

existing moats and building new

dividends attractively each year. For

new Portfolio Company founders, a

substantial way of increasing wealth

is by exchanging shares owned in

moats. This enables the business to

an underlying business for shares in

dominate its industry by increasing

the Company. At the right exchange,

prices faster than inflation, building a

this increases the value of both their

war chest, and seizing opportunities

shares and ours. It also improves

to acquire competitors.

Profit growth matters
When profits are growing quickly,

the best employees can see

opportunities for advancement

access to finance, adds liquidity and

makes it easier to buy competitors

and dominate the industry.

Succession planning
Although our executives plan to

and higher income. This motivates

continue leading our businesses for

Niche
businesses
increase profits
more via a small
increase in
margins, than via
a large increase
in sales.

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Transferring knowledge and wealth between generations.many years, a major responsibility

• the view of executives on how

for a calendar quarter, the company

of senior executives is to develop

the business is tracking.

board must immediately arrange a

a top-quality leadership team. A

quality executive team helps a

business grow faster and ensures it is

preserved should anything happen to

senior executives. To reduce risk, the

board should identify an emergency

successor and ensure that key staff

are aware of the decision so they can

act quickly and with reduced impact

if anything untoward occurs.

Reporting to the Strategy
Committee
The Strategy Committee will want to

know each quarter what the board

and executives have done to:

• strengthen the profit-enabling

moats of our business;

• reduce the likelihood or severity of

any risks to the business;

• increase the net profit of

Expertise available
TIPReps and Selected Shareholders

our business;

• increase dividends; and

meeting with the Strategy Committee

and Board of the Company. The

purpose of the meeting is to seek

advice or assistance, and discuss

what changes, if any, are necessary to

get the business back to acceptable

profit. We will be happier with the

Portfolio Company when they also

inform us how they have already

ensured the loss will not be repeated.

If acceptable changes are not made,

the Strategy Committee would

expect to replace the executives

are available to provide advice,

• make progress towards building

and TIPReps.

inspiration, and suggestions for

a stronger executive team.

Compliance and culture
Executives are expected to comply

with all of the Company’s corporate

governance policies, and to instil a

culture of acting entrepreneurially,

ethically and responsibly.

executives to build value beyond

what would be possible alone.

3.11 Reporting to TIP
and the company board
Each month, the company board will

want to know:

• sales revenue for the period

(month, quarter, year to date);

• profitability for the period;

• how this translated to free cash;

• how executives are building,

maintaining or strengthening

moats to improve margins;

• any OH&S issues - and that

they have been dealt with

appropriately; and

Bad news and good news
Material good and bad news

should be reported to the board

immediately. Good news so we can

share the success, and bad news

so that we can act quickly to solve

the problem. When communicating

bad news, a good executive team

will also provide potential ways

of addressing the problem. This

is so the board may act quickly in

advising the best path to mitigate

damage and turn the bad news into a

new opportunity.

Loss-making quarter
Should the business report a loss

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Home designed by Home-Build Concierge

Transferring knowledge and wealth between generations.Corporate Directory

Directors

Malcolm Jones - Chair

Andrew Coleman

Howard Coleman

Ian Kadish

Regan Passlow

Company secretary

Anand Sundaraj

Dean Robinson

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Transferring knowledge and wealth between generations.Audited Financial Statement

Teaminvest Private Group Limited

ABN 74 629 045 736

Annual Report - 30 June 2022

Teaminvest Private Group Limited
Contents
30 June 2022

Corporate directory
Directors’ report
Auditor’s independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report to the members of Teaminvest Private Group Limited

2
3
16
17
18
19
21
22
68
69

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Corporate directory
30 June 2022

Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Directors

Company secretary

Registered office

Share register

Auditor

Solicitors

Malcolm Jones - Chair
Andrew Coleman
Howard Coleman
Ian Kadish
Regan Passlow

Anand Sundaraj
Dean Robinson

Suite 302
80 Mount Street
North Sydney NSW 2060

Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford VIC 3067
Tel: 1300 850 505

KPMG
Level 38, Tower Three, International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000

Sundaraj & Ker
Level 36, Australia Square
264 George Street
Sydney NSW 2000

Stock exchange listing

Teaminvest Private Group Limited shares are listed on the Australian Securities
Exchange (ASX code: TIP)

Website

http://www.teaminvestprivate.com.au

Corporate Governance Statement The directors and management are committed to conducting the business of

Teaminvest Private Group Limited in an ethical manner and in accordance with
the highest standards of corporate governance. Teaminvest Private Group
Limited has adopted and has substantially complied with the ASX Corporate
Governance Principles and Recommendations ('Recommendations') to the extent
appropriate to the size and nature of its operations.

The Group’s Corporate Governance Statement, which was approved by the
Board of Directors at the same time as the Annual Report, sets out the corporate
governance practices that were in operation during the financial period and
identifies and explains any Recommendations that have not been followed. The
Corporate Governance Statement for the year ended 30 June 2022 and the
Group’s corporate governance policies can be found on the Company’s website at
https://www.teaminvestprivate.com.au/investor-information.

The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'Group') consisting of Teaminvest Private 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 Teaminvest Private Group Limited during the whole of the financial year and
up to the date of this report, unless otherwise stated:

 Malcolm Jones - Chair

Andrew Coleman
 Howard Coleman

Ian Kadish
 Regan Passlow

Principal activities
During the financial period the principal continuing activities of the Group consisted of investing in Australian privately-
owned businesses.

Dividends
On 17 February 2022, the company declared a maiden dividend of 0.25 cents per share. On 24 August 2022 the
company declared a dividend of 0.30 cents per share for payment on 14 October 2022.

Review of operations
The profit after tax excluding impairment, amortisation of intangible assets and gain on bargain purchase of the group
for the year was $1,104,000 (30 June 2021: Profit of $4,366,000). The impairment charge after tax for the year was
$17,442,000 (30 June 2021: $4,260,000), a tax gain on bargain purchase of $Nil (30 June 2021: $3,734,000) and the
amortisation of intangibles after tax was $1,435,000 (30 June 2021: $309,000). The loss for the Group after providing
for income tax amounted to $17,733,000 (30 June 2021: Profit of $5,201,000).

The Group has achieved mixed results this year leading to a loss. Some individual subsidiaries were negatively
impacted by the construction shutdown and supply chain disruptions. The inflationary environment driven by these
events subsequently impacted cost structures which were exposed to fixed price contracts. TIP Residential Group
was exposed to residential construction and fixed price contracts and has been significantly impacted resulting in
impairment of assets in the business. Icon Metal was exposed to fixed price contracts and negatively impacted due
to the Sydney construction shutdown impacting their profits. The remainder of the group, due to strength of
management have been able to capitalise on the opportunities presented by the pandemic and have grown revenue
and managed overheads to be able to increase profits.

Refer to the 'CEO report' for further details of operations and commentary on the results.

Significant changes in the state of affairs

On 12 November 2021, the Group acquired 70% of the shares in Diversified Growth Management Pty Ltd for nil
consideration. The acquisition intends to leverage the Company’s FY20 investment in TIP Trustees Limited in line with
our strategy to develop a financial services division. Refer to note 34 to the financial statements for further information.

On 12 November 2021, the Group acquired 50% of the shares in Wood & Lee Pty Ltd for a total of $200,000
consideration. This acquisition was a strategic decision to enable the growth of our services division, through an
innovative founder who is a leading voice in the legal profession, with a strong international client base.

In March 2022, the Group entered into the UK market via an 80% investment into TIP Group (UK) Pty Ltd. The UK
arm is a private equity firm domiciled in the UK under the leadership of Malcolm Rutherford.

On 15 June 2022, the Group acquired 100% of the shares in Burman Investment Management Ltd for a total of
$212,020 consideration. This acquisition was a strategic move to acquire the company that is a manager of a retail
fund that furthers our strategy to develop a financial services division. Refer to note 34 to the financial statements for
further information.

There were no other significant changes in the state of affairs of the Group during the financial year.

info@tipgroup.com.au | www.tipgroup.com.au

Transferring knowledge and wealth between generations.Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Matters subsequent to the end of the financial year
From 1 July 2022, the Group has restructured the reporting divisions. The group now consists of the following
divisions:






TIP Private Equity, which consists of the majority of the current companies under control and any future
acquisitions not in the TIP Wealth division.
TIP Wealth, which will provide a range of financial services.
TIP UK, this division will provide financial services and private equity to the UK.

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
Refer to the 'CEO letter' for details of likely developments and expected results of operations.

Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Information on directors

Name:
Title:
Qualifications:
Experience and expertise:

Malcolm Jones
Independent Chair
FCA
Malcolm has experience in managing large organisations. He has held
positions as a Member of the Group Management Board Zurich Financial
Services in Switzerland, CEO Zurich Financial Services Asia Pacific, CEO
Zurich Financial Services Australia Ltd, CEO NRMA Ltd & NRMA Insurance
Ltd and CEO State Government Insurance commission of South Australia

Prior to these executive roles Malcolm was a Partner at Ernst & Young where
he had worked for 18 years

Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interest in options:
Contractual rights to shares:

None
None
None
2,260,519
None
None

Name:
Title:
Qualifications:
Experience and expertise

Andrew Coleman
Managing Director and Chief Executive Officer ('CEO')
B.Ec (Hons)
Andrew is a Co-Founder of Teaminvest Private and is responsible for sourcing,
structuring and overseeing investments and general management. Prior to
joining Teaminvest Private, Andrew worked in Sydney as an investment
banker for Credit Suisse. Andrew advised and assisted clients on significant
corporate deals in Australia and internationally with a specific focus on mergers
and acquisitions and capital raising activity. He is also a co-author of 'Relative
Performance Incentives and Price Bubbles in Experimental Asset Markets'
published in the Southern Economic Journal.

Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interest in options:
Contractual rights to shares:

None
None
Member of the strategy committee and investment committee
6,829,634
None
None

Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Name:
Title:
Qualifications:
Experience and expertise:

Howard Coleman
Non-Executive Director
BSc in Physics
Howard has over 40 years’ experience as a founder and CEO in the areas of
language and
sales, marketing, publishing, consumer
mathematics education in Australia, South Africa and the UK. Howard has held
Board positions in a number of private companies in several countries. His
background and experience are invaluable for assessing the strengths and
weaknesses of companies. This particularly applies to identifying their future
risks, and the ability and strategies of the board and senior management to
deal with them.

finance, and

is a graduate of the Harvard Business School Owner/President
He
Management Program and completed the Australian Institute of Company
Directors’ program for company directors. Howard has regularly appeared as
a guest commentator on Sky Business and Ausbiz.

Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interest in options:
Contractual rights to shares:

None
None
Member of the strategy committee
18,435,244
None
None

Name:
Title:
Qualifications:
Experience and expertise:

Ian Kadish
Independent Non-Executive Director
MBBCH MBA
Experience and expertise: Ian has significant public company board and
executive experience as CEO and Managing Director of ASX listed Integral
Diagnostics Limited; CEO and Managing Director of ASX listed Pulse Health
Group; CEO and Managing Director of private equity owned Healthcare
Australia Limited and Executive Director of JSE listed Network Healthcare
Holdings Limited. In addition to his public company experience, he has served
as a senior executive and board member of large private businesses owned
and operated by private equity and listed equity, including CEO of Laverty
Pathology, Chief Operating Officer of Greencross Vets Limited, and Co-
founder and Non-Executive Director of Digital Healthcare Solutions.

Ian holds a Master's of Business Administration ('MBA') from the Wharton
Business School at the University of Pennsylvania, United States of America,
and a Bachelor of Medicine and Surgery from the University of Witwatersrand,
South Africa. In addition to his executive career in the United States, South
Africa and Australia, Ian has also worked as a consultant for McKinsey and as
an advisor to boards on executing and integrating mergers and acquisitions.

Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interest in options:
Contractual rights to shares:

Integral Diagnostics Limited (ASX: IDX)
None
Chairman of the strategy committee
292,603
None
None

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Transferring knowledge and wealth between generations.Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Name:
Title:
Qualifications:
Experience and expertise

Regan Passlow
Non-Executive Director
MA, Mgmt
Regan has worked as an executive director for nearly 40 years for both
national and multi-national companies. His focus has been primarily on
strategic business development, administration and back-office systems.

He has over 40 years’ experience in senior management and governance roles
in private organisations. He is the former co-founder of WebProfit.com.au, a
business established in the 1990’s to provide executives of small and medium-
sized enterprises ('SMEs') with strategic advice on the use of the Internet and
e-commerce. He is also the co-founder of retail lender EM Finance Corporation
and a founding director of Teaminvest, Teaminvest Private and EM
Commercial Finance. He has historically chaired the investment committee
and has held directorships on five portfolio companies.

Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interest in options:
Contractual rights to shares:

None
None
Chairman of the investment committee and member of the strategy committee.
3,696,531
None
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
Anand Sundaraj is a corporate lawyer with over 20 years’ experience and is currently a principal at Sundaraj & Ker, a
Sydney-based law firm. Anand specialises in advising on mergers and acquisitions, and capital raisings for both
publicly listed and privately held entities. He also advises on funds management and general securities law matters
including listing rule compliance and corporate governance.

Dean Robinson is the CFO and Company Secretary. He is responsible for overseeing financial strategy and
operations including sourcing, structuring and overseeing investments and general management. Dean worked as a
Director of Mergers and Acquisitions with KPMG. In this role, he led the growth and development of the Greater
Western Sydney team. Dean holds a Master’s in Applied Finance from Macquarie University Applied Finance Centre
and a Senior Executive MBA from University of Melbourne.

Teaminvest Private Group Limited
Directors’ report
For the year ended 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:

Malcolm Jones
Andrew Coleman
Howard Coleman
Ian Kadish
Regan Passlow*

Full Board

Attended
12
12
12
12
11

Held
12
12
12
12
12

Investment Committee
Attended
-
21
-
-
21

Held
-
22
-
-
22

Strategy Committee
Held
12
12
12
12
12

Attended
12
12
11
12
4

Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
*Regan Passlow joined the strategy committee from January 2022

Audit Committee
The Company has established an Audit Committee which has three members, two of whom are independent
(including an independent Chair):

Dr Ian Kadish, independent chair of the committee;

-
- Mr Malcolm Jones, independent member of the committee; and
- Mr Regan Passlow, non-executive member of the committee.

The number of meetings of the Audit Committee held during the year ended 30 June 2022, and the number of
meetings attended by each director were:

Malcolm Jones
Ian Kadish
Regan Passlow

Audit Committee

Attended
3
3
3

Held
3
3
3

Risk and Compliance Committee
Attended
3
2
2

Held
6
6
6

Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.

Risk and Compliance Committee
The Company has established a Risk and Compliance Committee which has seven members comprising Mr Dean
Robinson, the CFO of the Company and chair of the committee, and six Selected Shareholders. The Risk and
Compliance Committee’s function is to continuously review the risk, compliance framework and corporate governance
policies of the Group’s Portfolio Companies to inculcate and improve operations. The Risk and Compliance
Committee meets on a monthly basis.

Nomination and Remuneration Committee
The Company has not constituted a Nomination and Remuneration Committee given the nature and scale of the
Group’s operations. The Board as a whole fulfils the functions normally delegated to a Nomination and Remuneration
Committee.

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Transferring knowledge and wealth between generations.Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

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.

Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Company, directly or indirectly, including all directors.

The remuneration report is set out under the following main headings:

 Principles used to determine the nature and amount of remuneration
 Details of remuneration
 Service agreements
 Share-based compensation
 Additional information
 Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration
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 ('the Board') ensures that executive reward satisfies the following key
criteria for good reward governance practices:

clarity and transparency;


 performance linkage / alignment of executive compensation;
 acceptability to shareholders; and


competitiveness and reasonableness.

The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives.
The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is
to attract, motivate and retain high performance and high quality personnel. The Board determines its remuneration
policies having regard to the Company’s earnings and the consequences of the Company’s performance on
shareholder wealth.

The Board has structured an executive remuneration framework that it considers is market competitive and
complementary to the reward strategy of the Group.

The reward framework is designed to align executive reward to shareholders' interests. The Board considers that it
should seek to enhance shareholders' interests by:

 having economic profit as a core component of plan design;


focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as well as focusing the executive on key non-financial
drivers of value; and

 attracting and retaining high calibre executives.

Additionally, the reward framework seeks to enhance executives' interests by:

rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and



 providing a clear structure for earning rewards.

In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.

Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The chair's fees are determined independently to
the fees of other non-executive directors based on comparative roles in the external market. The chair is not present
at any discussions relating to the determination of their own remuneration. Non-executive directors do not receive
share options or other incentives.

The annual non-executive directors' fees currently agreed to be paid by the Company are set out below:

Director Director's fees
Malcolm Jones $100,000 per annum (including superannuation).
Howard Coleman $70,000 per annum (including superannuation).
Ian Kadish $70,000 per annum (including superannuation).
Regan Passlow $70,000 per annum (including superannuation).

Each non-executive director has agreed with the Company that half of their remuneration will be accrued but not paid
during each financial year. If shareholder approval is received at the annual general meeting following the end of each
financial year, this accrued remuneration will be issued as ordinary shares. If shareholder approval is not received, the
accrued remuneration will be paid as cash.

Australian Securities Exchange ('ASX') listing rules require the aggregate non-executive directors' remuneration be
determined periodically by a general meeting. The maximum aggregate non-executive directors' remuneration
approved by the Constitution is $500,000. Any changes to this amount will be approved by shareholders in the annual
general meeting.

Executive remuneration
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by
the Board based on individual and business unit performance and the overall performance of the Group. The Fixed
remuneration is set below comparable market remunerations. A greater percentage of total executive remuneration is
available through short term and long term incentives based on performance.

The executive remuneration and reward framework has four components:

 base pay and non-monetary benefits;

short-term performance incentives;

share-based payments; and
 other remuneration such as superannuation, annual leave and long service leave.

The combination of these comprises the executive's total remuneration.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by
the Board based on individual and business unit performance, the overall performance of the Group and comparable
market remunerations.

Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.

The short-term incentives ('STI') program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance
indicators ('KPI's') being achieved. The KPI for the period ended 30 June 2021, in relation to Andrew Coleman and
Dean Robinson STI of $50,000 was awarded for successfully growing the Group, enabling a positive collaborative
environment and steering the Group through hard economic times. The profit targets for the period ended 30 June
2022 were not met and no bonus has been awarded.

Consolidated entity performance and link to remuneration

The incentives to the executives is based on Net Profit After Tax as described below.
An annual bonus equal to 3.5% of the Company’s audited comprehensive income per annum (before expensing the
cost of the bonus) comprising:

 50% to be paid in cash (Cash Component); and
 50% to be issued as shares in the Company (Share Component).

The bonus is to be determined twice each financial year, after the reviewed Half Year Result and after the audited Full
Year Result.

Use of remuneration consultants
During the financial period ended 30 June 2022, the Group did not engage the use of remuneration consultants.

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Details of remuneration
The key management personnel of the Group consisted of the following directors of Teaminvest Private Group
Limited:

 Malcolm Jones - Independent Chair
 Howard Coleman - Non-Executive Director

 Regan Passlow - Non-Executive Director
 Andrew Coleman - Managing Director and Chief Executive Officer ('CEO')

Ian Kadish - Independent Non-Executive Director

And the following person

 Dean Robinson - Chief Finance Officer ('CFO')

Amounts of 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

Cash
salary and
fees

Cash
bonus

Annual
leave

Superannuation

Long-term
benefits

Long
service
leave

Share-based payment

Equity
unsettled

Bonus
settled

Bonus
unsettled

Total

45,455

31,818

9,091

6,364

45,455

31,818

100,000

70,000

200,000

15,384

20,507

3,334

239,225

200,000

540,909

16,863

20,507

32,247

69,197

3,334

140,909

237,370

786,596

30 June
2022

Non-
Executive
Directors:
Malcolm
Jones
Howard
Coleman

Ian Kadish

Regan
Passlow

Executive
Directors:
Andrew
Coleman

Other Key
Management
Personnel:

Dean
Robinson

* share based payments represent half of non-executive directors' remuneration and half of executive director and
other key management personnel's bonuses, that have been accrued and not paid during the financial year. These
payments are to be settled in share based payments subject to Board approval and shareholder vote at the AGM. If
approval is not granted, these will be paid in cash.

Short-term benefits

Post-
Employment
benefits

Cash
salary and
fees

Cash
bonus

Annual
leave

Superannuation

Long-term
benefits

Long
service
leave

Share-based payment

Equity
unsettled

Bonus
settled

Bonus
unsettled

Total**

45,662

31,964

8,676

6,073

45,662

31,963

200,000

97,858

15,385

23,338

3,333

97,858

200,000

97,858

15,385

541,552

195,716

30,770

23,338

73,571

97,858

3,333

337,268

100,000

70,000

437,772

434,439

1,182,210

30 June
2021

Non-
Executive
Directors:
Malcolm
Jones
Howard
Coleman
Ian Kadish
Regan
Passlow

Executive
Directors:
Andrew
Coleman

Other Key
Management
Personnel:

Dean
Robinson

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Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:

Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Share-based compensation

Name:
Title:
Agreement commenced:
Term of agreement:
Details:

Malcolm Jones
Independent Chairperson
13 December 2019
Ongoing
$100,000 per annum (including superannuation)

Howard Coleman
Non-Executive Director
1 March 2019
Ongoing
$70,000 per annum (including superannuation)

Ian Kadish
Non-Executive Director
26 February 2019
Ongoing
$70,000 per annum (including superannuation)

Regan Passlow
Non-Executive Director
1 March 2019
Ongoing
$70,000 per annum (including superannuation)

Andrew Coleman
Managing Director and Chief Executive Officer
26 February 2019
Ongoing
$220,507 per annum (including superannuation). Employment notice is 3 months.

Dean Robinson
Chief Finance Officer
1 November 2018
Ongoing
$220,507 per annum (including superannuation)

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Leave entitlements are accrued on top of the annual salary.

Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2022 are set out below:

Issue Date

Number of Shares

Issue Price Total Value

30 June 2022
Shares issued to KMP

30 June 2021
Shares issued to KMP

Shares issued to directors

27/10/2021

28/10/2021

04/09/2020

04/12/2020

343,784

$0.569

195,720

248,639

$0.569

141,476

74,691

$0.575

42,962

2,080,181

$0.529

1,100,000

107,416

$0.529

56,803

There were no options over ordinary shares granted to or vested by directors and other key management personnel
as part of compensation during the year ended 30 June 2022.

Additional disclosures relating to key management personnel

Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:

Ordinary shares
Malcolm Jones
Howard Coleman
Ian Kadish
Regan Passlow
Andrew Coleman*
Dean Robinson

Balance at
the start of
the year

2,169,359
17,173,795
236,459
3,622,448
12,250,092
1,078,455
36,530,608

Received
as part of
remuneration

Additions

Other*

80,207
56,144
56,144
56,144
171,892
171,892
592,423

-
1,123,898
-
-
-
122,664
1,246,562

10,953
81,407
-
13,043
(5,592,350)
6,235
(5,480,712)

Balance at
the end of
the year

2,260,519
18,435,244
292,603
3,691,635
6,829,634
1,379,246
32,888,881

*In the current year, this consists of shares received as part of the dividend reinvestment plan and for, Andrew Coleman, an indirect
shareholding no longer being required to be recognised. Previously the Teaminvest Private Group Limited shares held by The
Teaminvest Diversified Growth Fund were considered to be indirectly held by Andrew Coleman as a director on Diversified Growth
Management Pty Ltd. When this was acquired by the Group in November 2021, he ceased to be considered as indirectly holding
these shares.

This concludes the remuneration report, which has been audited.

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Teaminvest Private Group Limited
Directors’ report
For the year ended 30 June 2022

Shares under option
There were no unissued ordinary shares of Teaminvest Private Group Limited under option outstanding at the date of
this report.

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.

Shares issued on the exercise of options
There were no ordinary shares of Teaminvest Private Group Limited issued on the exercise of options during the year
ended 30 June 2022 and up to the date of this report.

Auditor
KPMG continues in office in accordance with section 327 of the Corporations Act 2001.

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

Andrew Coleman
Managing Director and Chief Executive Officer
24 August 2022
Sydney

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.

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 29 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 29 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 Group, acting as advocate for the Group or jointly
sharing economic risks and rewards.

Officers of the Company who are former partners of KPMG
There are no officers of the Company who are former partners of KPMG, the auditor of the Group.

Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

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Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001

To the Directors of Teaminvest Private Group Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of Teaminvest Private
Group Limited for the financial year ended 30 June 2022 there have been:

ii.

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.

KPM_INI_01
KPMG

Kevin Leighton

Partner

Sydney

24 August 2022

PAR_SIG_01

PAR_NAM_01

PAR_POS_01

PAR_DAT_01

PAR_CIT_01

Teaminvest Private Group Limited
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2022

Revenue

Revenue from contracts with customers

Share of profits of associates accounted for using the equity method

Other income

Interest revenue calculated using the effective interest method

Expenses

Raw materials and consumables used

Employee benefits expense

Depreciation

Amortisation

Impairment of assets

Impairment of receivables

Net loss on disposal of property, plant and equipment

Occupancy expense

Other expenses

Finance costs

(Loss)/Profit before income tax

Income tax benefit/(expense)

(Loss)/Profit after income tax benefit for the year attributable to
the owners of Teaminvest Private Group Limited

Note

30 Jun 2022
$'000

30 Jun 2021
$'000

7, 16

92,673

2,674

894

(39,206)

(43,919)

(2,948)

(2,050)

(17,442)

(183)

(84)

(669)

(8,180)

(331)

91,443

2,867

6,803

261

(40,332)

(39,524)

(2,869)

(4,260)

(360)

(627)

(7,212)

(399)

(18,764)

5,791

991

(590)

(17,773)

5,201

Other comprehensive income for the year, net of tax

Total comprehensive (loss)/ income for the year attributable to
the owners of Teaminvest Private Group Limited

Attributable to

Equity holders of the parent

Non-controlling interest

Basic earnings per share

Diluted earnings per share

(17,773)

5,201

(17,751)

(22)

Cents

(13.52)

5,201

Cents

4.46

4.43

© 2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks
used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
17

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Teaminvest Private Group Limited
Consolidated statement of financial position
For the year ended 30 June 2022

Assets

Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Income tax
Prepayments and other deposits
Total current assets

Non-current assets
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangibles
Total non-current assets

Total assets

Liabilities

Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Income tax
Employee benefits
Provisions
Contingent consideration
Total current liabilities

Non-current liabilities
Lease liabilities
Deferred taxes
Employee benefits
Total non-current liabilities

Total liabilities

Net assets

Equity
Issued capital
(Accumulated losses)/retained profits
Capital Contribution

Total equity attributable to the equity holders of the Parent

Non-controlling interest
Total equity

Note

30 Jun 2022
$'000

30 Jun 2021
$'000

9
10
11
12

14
15
16

17
18
19
20
8
21

23
8
24

6,426
8,577
10,545
10,688
369
1,819
38,424

23,804
411
5,694
2,956
44,868
77,733

12,346
8,959
8,049
8,379
-
938
38,671

21,412
111
5,618
3,606
63,044
93,791

116,157

132,462

14,520
7,660
586
1,573
-
2,379
307
-
27,025

2,057
5,005
557
7,619

34,644

81,513

88,301
(7,069)
229

81,461
52
81,513

13,780
4,877
1,323
1,997
191
2,168
193
258
24,787

2,694
5,996
377
9,067

33,854

98,608

87,597
11,011
-

98,608
-
98,608

The above statement of financial position should be read in conjunction with the accompanying notes
18

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1

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Transferring knowledge and wealth between generations.

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Teaminvest Private Group Limited
Consolidated statement of cash flows
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Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Dividends received

Interest received

Other revenue

Interest and other finance costs paid

Income taxes (paid)/refunded

Net cash from operating activities

Cash flows from investing activities

(Net payments for)/net cash acquired from business combinations

Payments for investment in associates

Payments for other financial assets

Payments for property, plant and equipment

Payments for intangibles

0
2

Proceeds from disposal of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

(Repayments)/proceeds from borrowings

Repayment of lease liabilities

Loans to related and other parties

Repayment of invoice discounting

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Note

30 Jun 2022
$'000

30 Jun 2021
$'000

101,088

(100,069)

92,745

(92,311)

1,310

377

(324)

(560)

1,822

(85)

(1,023)

(300)

(2,251)

(107)

517

(3,249)

(422)

(2,541)

(1,145)

(70)

(4,178)

(5,605)

12,031

653

261

3,947

(399)

500

5,396

1,188

(74)

(2,622)

(468)

(1,881)

(2,269)

(35)

(2,261)

1,254

10,777

Cash and cash equivalents at the end of the financial year

6,426

12,031

Represented by:

Cash and cash equivalents

Less: bank overdraft

6,426

12,346

(315)

12,031

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The above statement of cash flows should be read in conjunction with the accompanying notes
21

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 1. General information

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 2. Significant accounting policies (continued)

The financial statements cover Teaminvest Private Group Limited as a Group consisting of Teaminvest Private Group
Limited ('Company' or 'parent entity') and the entities it controlled at the end of, or during, the period (referred to in these
financial statements as the 'Group'). The financial statements are presented in Australian dollars, which is Teaminvest
Private Group Limited's functional and presentation currency.

Teaminvest Private Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia.
Its registered office and principal place of business is:

Suite 302, 80 Mount Street
North Sydney, NSW 2060

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 24 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.

(a) New or amended Accounting Standards and Interpretations

Several other amendments and interpretations apply for the first time in FY22, but do not have an impact on the
financial report of the Group. These are as follows:
− AASB 2019-3 Amendments to AASB 7, AASB 9 and AASB 139 Interest Rate Benchmark Reform on Hedge
Accounting
− AASB 2021-3 Amendments to AASs
– COVID-19-Related Rent Concessions beyond 30 June 2021

(b) Australian Accounting Standards issued but not yet effective

A number of new accounting standards (including amendments and interpretations) have been issued but were not
effective as at 30 June 2022. The following are the pronouncements that the Group has elected not to early adopt in
these financial statements:
− Amendments to AASB 101: Classification of Liabilities as Current or Non-current
− Amendments to AASB 3: Reference to Conceptual Framework
− Amendments to AASB 9: Fees in the ’10 per cent’ test for derecognition of financial liabilities
− Amendments to AASB 108: Definition of Accounting Estimates
− Amendments to AASB 1 and AASB Practice Statement 2: Disclosure of Accounting Policies
− Amendments to AASB 116: Property, Plant and Equipment: Proceeds before Intended Use
− Amendments to AASB 137: Onerous Contracts – Costs of Fulfilling a Contract

The above are not expected to have a significant impact on the Group’s financial statements in the year of their initial
application.

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, unless otherwise stated.

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 39.

Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Teaminvest Private
Group Limited as at 30 June 2022 and the results of all subsidiaries for the period 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.

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 2. Significant accounting policies (continued)

Reportable and operating segments
Reportable and 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.

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.

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.

Sale of goods
Revenue from the design, manufacture and installation of the products listed below is typically recognised at the point
in time when the customer obtains control of the goods, which is generally at the time of installation or delivery.

 glass splashbacks, glass bathroom walls and toughened mirrors; and

 automation and remote monitoring products

semi-trailers.

Revenue from the design, development and installation of electrical network extensions and upgrades work in exchange
for a fixed fee is recognised over time.

Rendering of services
Revenue from a contract to provide logistic support services at a fixed price is recognised at a point in time when the
services are rendered and items are delivered.

Revenue from the design, development and installation of architectural metal work in exchange for a fixed fee is
recognised over time as is the provision of traffic management services. Due to the high degree of interdependence
between the various elements of these projects, they are accounted for as a single performance obligation. The
performance obligation is based on the 'output method', where progress is measured against internally predetermined
project milestones, being the most faithful depiction of the transfer of goods and services to each customer based on
historical experience. As the performance obligation is generally completed within 12 months, the Group has used the
practical expedient not to adjust the for the effects of financing. The revenue from subscription and education services
is recognised over the respective deemed benefit period.

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.

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.

Teaminvest Private Group Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in
neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

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.

Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.

Deferred tax assets and liabilities are always classified as non-current.

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 2. Significant accounting policies (continued)

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. For the statement of cash flows presentation
purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current
liabilities on the statement of financial position.

Property, 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 property, plant and equipment
(excluding land) over their expected useful lives as follows:

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.

Leasehold improvements
Plant and equipment
Plant and equipment under lease
Motor vehicles

over the term of the lease
1-10 years
2-5 years
4-10 years

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.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group
has yet to issue an invoice. Contract assets are treated as financial assets for impairment purposes.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the
assets, whichever is shorter.

An item of property, 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.

Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'first in
first out' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an
appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where
applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after
deducting rebates and discounts received or receivable.

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.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.

Associates
Associates are entities over which the Group has significant influence but not control or joint control. Investments in
associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the
associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive
income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes
in the Group's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount
of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from
associates reduce the carrying amount of the investment.

When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.

The Group discontinues the use of the equity method upon the loss of significant influence over the associate and
recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value
of the retained investment and proceeds from disposal is recognised in profit or loss.

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.

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. Indefinite life
intangible assets are not amortised and are subsequently measured at cost less any impairment. 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.

Confidential information
This is proprietary information developed within an acquired business and consists of know-how, internal financial
information and equations supporting proprietary software. This is not amortised and is tested annually for impairment.

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 2. Significant accounting policies (continued)

Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite useful life of 10 years.

Lease liabilities (cont.)
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.

Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 10 and 15 years.

Finance costs
Finance costs are expensed in the period in which they are incurred.

Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of 5 years.

Technology based intangible assets
These consist of unpatented software, processes and accumulated data acquired in a business combination. They are
amortised over the period of their expected benefit, being a useful life of 15 years.

Networks and relationships
Networks and relationships acquired in a business combination are amortised on a straight-line basis over the period of
their expected benefit, being 6 years.

Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that it 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.

Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when
a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to
consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.

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

Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it
is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time
value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase
in the provision resulting from the passage of time is recognised as a finance cost.

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.

Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based payments
Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange
for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the
amount of cash is determined by reference to the share price.

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.

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 2. Significant accounting policies (continued)

Fair value measurement (cont.)
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.

Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Teaminvest Private 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.

Comparative information
Comparatives have been restated, where appropriate, to conform to changes in presentation in the current year and to
enhance comparability. There was no net effect on the net asset position.

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.

Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling
interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at
either fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs are capitalised
as value in use cost.

On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's
operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing
investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is
less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference
is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of
the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the
consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer
receives all the information possible to determine fair value.

When two or more entities combine through an exchange of equity interests, AASB 3 requires one of the entities to be
deemed the acquirer under a reverse acquisition. In a ‘reverse acquisitions’, the issuing entity is the deemed to be the
acquiree (legal parent) and the acquirer is deemed to be the subsidiary. In identifying the acquirer in a reverse acquisition
the consideration is given in facts and circumstances including (a) the relative voting rights in the combined entity after
the business combination; (b) the existence of a large minority voting interest in the combined entity if no other owner
or organised group of owners has a significant voting interest; (c) the composition of the governing body of the combined
entity; (d) the composition of the senior management of the combined entity and (e) the terms of the exchange of equity
interests. The acquirer is usually the combining entity whose relative size (measured in, for example, assets, revenues
or profit) is significantly greater than that of the other combining entity or entities.

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 3. Critical accounting judgements, estimates and assumptions (cont.)

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.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 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.

Revenue recognition over time
For performance obligations satisfied over time, management uses judgement to select a method for measuring its
progress towards complete satisfaction of that performance obligation. In exercising that judgement, management
selects a method that depicts its performance in transferring control of goods or services to the customer. For the
provision of architectural metal work, management has determined that progress should be measured by internally
predetermined project milestones (an output method). Specifically this method involves estimating the progress towards
satisfying performance obligations within the contract and contract costs expected to be incurred to satisfy the
performance obligations.

Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact
of the COVID-19 pandemic and forward-looking information that is available

Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors
that affect inventory obsolescence.

Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property,
plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less
than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will
be written off or written down.

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.

Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated
tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period
in which such determination is made.

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.

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 4. Operating segments

Identification of reportable and operating segments
The Group is organised into two reportable segments based on whether it manufactures ('Engineering') or provides
services ('Services'). These reportable segments 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. Further details are as follows:

Segment name

Description

Engineering segment

Services segment

The engineering segment includes three wholly-owned subsidiaries of the Group: Lusty
TIP Trailers Pty Ltd; Icon Metal Pty Ltd and Automation Group Investments Pty Ltd.
The services segment includes seven wholly-owned subsidiaries; East Coast Traffic
Controllers Pty Ltd, Teaminvest Private Residential Group Pty Ltd, TIP Trustees Limited,
Coastal Energy Pty Ltd, Burman Investment Management Limited, Coliving Future
Property Fund Pty Ltd and Teaminvest Pty Ltd and two majority owned subsidiaries
Diversified Growth Management Pty Ltd and TIP Group (UK) Pty Ltd. Five associate
entities: Colour Capital Pty Ltd, Multimedia Technology Pty Ltd, Enhanced Trading
Solutions Pty Ltd, Wood and Lee Pty Ltd and Teaminvest Private Insurance Services Pty
Ltd.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

The information reported to the CODM is on a monthly basis.

Intersegment transactions
There were no material intersegment transactions.

Intersegment receivables, payables and loans
There were no intersegment receivables, payables and loans.

Major customers
During the period ended 30 June 2022, the Group had sales to a construction customer that amounted to $10,803,783
(2021: $13,250,249).

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 4. Operating segments (continued)

30 June 2022

Revenue
Sales to customers
Other revenue
Total

EBITDA

Depreciation and amortisation expense
Interest revenue
Government grants
Finance costs
Impairment of assets
Corporate overheads
Loss before income tax
Income tax
Loss after income tax

Assets
Segment assets
Unallocated assets:
Income tax refund
Corporate assets

Total assets

Liabilities
Segment liabilities
Unallocated liabilities:
Deferred tax liability
Corporate liabilities

Total liabilities

Engineering
$'000

Services
$'000

61,332
549
61,881

30,273
518
30,791

Total
$'000

91,605
1,068
92,673

2,707

4,198

6,905

(4,998)
7
301
(331)
(17,442)
(3,206)
(18,764)
991
(17,773)

60,578

54,606

115,184

369
604
116,157

19,915

8,389

28,304

5,005
1,335
34,644

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Transferring knowledge and wealth between generations.Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 4. Operating segments (continued)

Teaminvest Private Group Limited
Notes to the consoldiated financial statements
For the year ended 30 June 2022

Note 5. Revenue from contracts with customers

30 June 2021

Revenue
Sales to customers
Other revenue
Total

EBITDA

Depreciation and amortisation expense
Interest revenue
Other income
Gain on business combinations
Government grants
Finance costs
Impairment of assets
Corporate overheads
Profit before income tax
Income tax
Profit after income tax

Assets
Segment assets

Unallocated assets:
Corporate assets

Total assets

Liabilities
Segment liabilities

Unallocated liabilities:
Provision for income tax
Deferred tax liability
Contingent consideration
Corporate liabilities

Total liabilities

Engineering
$'000

Services
$'000

Total
$'000

Revenue from contracts with customers

64,210
286
64,496

26,259
371
26,630

90,469
657
91,126

5,111

3,922

9,033

Sale of goods
Rendering of services

Other revenue
Other sales revenue

Revenue

30 Jun 2022
$'000

30 Jun 2021
$'000

41,700
49,905
91,605

1,068

92,673

39,805
50,664
90,469

974

91,443

Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:

(2,869)
261
317
3,734
2,522
(399)
(4,294)
(2,514)
5,791
(590)
5,201

30 June 2022

Geographical Regions

Australia

55,865

70,774

126,639

Timing of Revenue recognition

5,823
132,462

Goods transferred at a point in time
Goods transferred over time
Services transferred at a point in time
Services transferred over time

18,067

7,625

25,692

191
5,996
258
1,717
33,854

30 June 2021

Geographical Regions

Australia

Timing of Revenue recognition

Goods transferred at a point in time
Goods transferred over time
Services transferred at a point in time
Services transferred over time

Engineering
$'000

Services
$'000

Total
$'000

61,332

30,273

91,605

39,416
306
295
21,315

2,737
-
11,961
15,575

42,153
306
12,256
36,890

61,332

30,273

91,605

Engineering
$'000

Services
$'000

Total
$'000

64,210

26,259

90,469

35,486
6,902
604
21,218

4,319
-
9,647
12,293

39,805
6,902
10,251
33,511

64,210

26,259

90,469

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 6. Other income

Gain on bargain purchase

Government grants

Reimbursement of expenses

Other

Net gain on disposal of property, plant, and equipment

Other Income

Note 7. Expenses

30 Jun 2022
$'000

30 Jun 2021
$'000

301

517

894

3,734

2,522

368

6,803

Profit before income tax includes the following specific expenses:

30 Jun 2022
$'000

30 Jun 2021
$'000

Depreciation

Leasehold improvements

Plant and equipment

Motor vehicles

Buildings right-of-use assets

Plant and equipment right-of-use assets

Motor vehicles right-of-use assets

Total depreciation

Amortisation

Patents and trademarks

Customer contracts

Technology based intangible assets

Network & Relationships

Other intangible assets

Total amortisation

603

527

1,292

416

470

360

1,419

2,948

2,428

283

447

361

898

2,050

249

343

Total depreciation and amortisation

4,998

2,771

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 7. Expenses (cont.)

Impairment

Property, plant and equipment

Right-of-use-assets

Intangible assets

Impairment of assets

Finance costs

Interest paid on borrowings

Interest paid on lease liabilities

Finance costs expensed

Leases

Minimum lease payments

Short-term lease payments

Low-value assets lease payments

Note 8. Income tax

Income tax (benefit)/expense

Current tax

Deferred tax - origination and reversal of temporary differences

Adjustment recognised for prior periods

Aggregate income tax (benefit)/expense

30 Jun 2022
$'000

30 Jun 2021
$'000

(411)

(421)

(16,610)

(17,442)

(4,260)

176

155

331

159

240

399

30 Jun 2022
$'000

30 Jun 2021
$'000

(991)

208

590

(208)

590

Numerical reconciliation of income tax (benefit)/expense and tax at the statutory rate

(Loss)/profit before income tax (benefit)/expense

(18,764)

5,791

Tax at statutory rate of 30%

(5,629)

1,737

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 8. Income tax (cont.)

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Impairment of intangible assets

Gain on bargain purchase

Other non-taxable income

Share of profits - associates

Non-deductible expenses

Adjustment recognised for prior periods

Income tax (benefit)/expense

5,461

(536)

(821)

535

(991)

(1,120)

(258)

(860)

1,299

798

(208)

590

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 9. Current assets – cash and cash equivalents

Cash on hand

Cash at bank

Cash on deposit

30 Jun 2022
$'000

30 Jun 2021
$'000

4,416

2,006

6,426

12,081

261

12,346

Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement
of cash flows as follows:

Deferred tax
Deferred tax liability comprises temporary differences attributable to:

Note 10. Current assets - trade and other receivables

30 Jun 2022
$'000

30 Jun 2021
$'000

Balances above

Bank overdraft

Balance as per statement of cash flows

6,426

12,346

(315)

12,031

Amounts recognised in profit or loss:

Tax losses
Allowance for expected credit losses
Rights-of-use
Contract liabilities
Employee benefits
Provision for warranties and claims
Accrued expenses
Retention receivable
Prepayments
Contract assets
Inventories
Intangible assets
Property, plant, equipment
Other

1,680
(56)
76
1,238
908
85
(39)
(446)
(168)
(2,562)
(11)
(5,319)
(120)
(272)

767
36
66
802
795
40
(18)
(683)
(54)
(1,558)
(11)
(5,781)
(125)
(272)

Trade receivables

Allowance for expected credit losses

Loan receivable

Receivable from employees

Receivable from related parties

Deferred tax liability

(5,005)

(5,996)

Other receivables

Movements:
Opening balance
Credited/(charged) to profit or loss
Additions through business combinations
Other

Closing balance

(5,996)
991
-

(6)
(590)
(5,128)
(272)

(5,005)

(5,996)

30 Jun 2022
$'000

30 Jun 2021
$'000

7,404

(93)

7,311

1,262

(5)

9,259

(398)

8,861

8,577

8,959

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 10. Current assets – trade and other receivables (continued)

Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 12. Current assets – inventories

Expected
credit loss
rate
30 June
2022

Expected
credit loss
rate
30 June
2021

Carrying Amount
30 June
2022

30 June
2021

Allowance for expected
credit losses
30 June
2022

30 June
2021

Raw materials - at cost
Work in progress - at cost
Finished goods - at cost

30 Jun 2022
$'000

30 Jun 2021
$'000

5,173
2,569
2,946

10,688

3,687
2,531
2,161

8,379

Consolidated
Not overdue (less than 1 month)

Between 1 to 3 months

Between 3 to 6 months

Over 6 months

%
-

10.30%

39.20%

% $'000
-

6,436

11.45%

61.12%

559

233

176

7,473

1,407

110

269

Movements in the allowance for expected credit losses are as follows:

7,404

9,259

$'000

378

398

Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed

Closing balance

Note 11. Current assets - contract assets

Contract assets

Opening balance
Additions
Transfer to trade receivables
Reclassifications

Closing balance

30 Jun 2022
$'000

30 Jun 2021
$'000

398
183
(9)
(479)

302
400
(77)
(227)

398

30 Jun 2022
$'000
10,545

30 Jun 2021
$'000
8,049

8,049
48,202
(45,384)
(322)

10,545

9,033
35,904
(36,386)
(502)

8,049

Note 13. Non-current assets - investments accounted for using the equity method

Investment in associates

30 Jun
2022
$'000

30 Jun
2021
$'000

23,804

21,412

Reconciliation
Reconciliation of the Group’s carrying amounts at the beginning and end of the current and previous financial year are
set out below:

Opening carrying amount

Profit after income tax

Additions

Dividends received

Closing carrying amount

30 Jun
2022
$'000

30 Jun
2021
$'000

21,412

19,124

2,674

1,028

(1,310)

2,867

(653)

23,804

21,412

Name

Principal place of
business/Country of
incorporation
Australia
Colour Capital Pty Ltd
Multimedia Technology Pty Ltd
Australia
Teaminvest Private Insurance Services Pty Ltd Australia
Australia
Wood & Lee Pty Ltd
United Kingdom
Enhanced Trading Solutions Pty Ltd

Ownership interest

30 Jun 2022
%

30 Jun 2021
%

33%
30%
50%
50%
16%

33%
30%
50%
-
-

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 14. Non-current assets - property, plant and equipment

Land - at cost

Leasehold improvements
Less: Accumulated depreciation

Plant and equipment - at cost
Less: Accumulated depreciation

Motor vehicles - at cost
Less: Accumulated depreciation

30 Jun 2022
$'000
-

30 Jun 2021
$'000
54

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(117)

397

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(1,236)

3,271

2,748
(722)

2,026

5,694

673
(138)

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(1,026)

3,019

2,596
(586)

2,010

5,618

Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:

6
4

Land
$'000

Leasehold
Improvements
$'000

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Equipment
$'000

Motor
Vehicles
$'000

Balance at 1 July 2020
Additions through business combinations
Additions
Disposals
Impairment of assets
Depreciation expense

Balance at 30 June 2021
Additions through business combinations
Additions
Disposals
Impairment of assets
Depreciation expense
Balance at 30 June 2022

54
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2,010
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(11)
(527)
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Total
$'000

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 15. Non-current assets - right-of-use assets

Land & Buildings - right-of-use
Accumulated depreciation and impairment

Plant & Equipment -right-of-use
Accumulated depreciation and impairment

Motor Vehicles-right-of-use
Accumulated depreciation and impairment

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 16. Non-current assets – intangibles

30 Jun 2022
$'000

30 Jun 2021
$'000

5,079
(2,123)

2,956

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43
(43)

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(2,912)

3,533

93
(35)

43
(28)

3,606

Goodwill at cost less impairment

26,086

42,279

30 Jun 2022
$'000

30 Jun 2021
$'000

Patents and trademarks - at cost
less: accumulated amortisation

Customer Contracts - at cost
less: accumulated amortisation

561
(142)
419

3,420
(1,168)
2,252

575
(95)
480

3,420
(884)
2,536

Brand at cost

1,756

Additions to the right-of-use assets during the period were $1,480,311. The Group impaired right of use assets with a
carrying value of $421,356 within Teaminvest Private Residential Group Pty Ltd.

Confidential Information & Know How - at cost

The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of between 1 to 5
years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the
leases are renegotiated. The Group also leases plant and equipment under agreements of between 1 to 5 years. The
Group leases office equipment under agreements of less than 1 year. These leases are either short-term or low-value,
so have been expensed as incurred and not capitalised as right-of-use assets.

Set out below are the carrying amounts of lease liabilities and the movements during the period:

Technology - Website - at cost
less: accumulated amortisation

Network & Relationships
less: accumulated amortisation

30 Jun 2022
$'000

30 Jun 2021
$'000

Other intangibles
less: accumulated amortisation

Opening balance
New leases entered into during the year
Lease payments
Closing balance

Lease liabilities included in the statement of financial position:

Current (Note 20)
Non-current (Note 23)

4,691
1,480
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3,630

1,573
2,057
3,630

5,172
1,788
(2,269)
4,691

1,997
2,694
4,691

5,926

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(447)
6,255

2,166
(361)
1,805

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(570)
369

5,926

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-
6,702

2,166
-
2,166

1,390
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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 16. Non-current assets – intangibles (continued)

Impairment testing
Goodwill has been allocated to the cash-generating units ('CGUs') as follows:

Goodwill allocated to engineering segment:
Icon Metal

Lusty TIP Trailers

Automation Group Investments

Engineering segment

Goodwill allocated to services segment:
East Coast Traffic Controllers

Teaminvest Private Residential Group

Burman Investment Management Limited

Diversified Growth Management Pty Ltd

Services Segment

30 Jun 2022
$'000

30 Jun 2021
$'000

8,595

10,462

3,689

22,746

3,057

119

164

3,340

8,595

10,462

3,689

22,746

3,057

16,476

19,533

Teaminvest Private Residential Group has been negatively impacted by COVID, supply chain issues and other effects
in the current year. In light of the adverse effects on the company operations and outlook, the value in use of this CGU
was significantly below its carrying value and impairment of goodwill and other intangible assets has been recognised
to the value of $16,610,000.

The recoverable amount of each CGU’s goodwill has been determined by a value-in-use calculation using a discounted
cash flow model, based on management approved budget for the year ended 30 June 2023 and the application of a
growth rate for a 5 year projection period, together with a terminal value. The discount rate used in the value-in-use
calculation is based on each CGU’s weighted average cost of capital. This post tax discount rate is applied to post tax
cash flows.

The key assumptions were used in the discounted cash flow models for the period subsequent to management's
approved budget:

2022
Revenue
CAGR*
%

6.48%
6.40%
6.10%

2022
Discount
rate (post-
tax)
%
8.81%
9.52%
10.26%

Icon Metal
Lusty TIP Trailers
Automation Group Investments

East Coast Traffic Controllers
Teaminvest Private Residential**
Group
* Compound annual growth rate over the forecast period
** TIPRG forecasts show decline in revenue over the forecast period.

9.87%
13.93%

8.00%
N/A

2022
Terminal
growth
rate
%
2.75%
2.75%
2.75%

2.75%
2.75%

2021
Revenue
CAGR
%

5.61%
4.56%
7.64%

4.94%
8.13%

2021
Discount
rate (post-
tax)
%
9.56%
8.36%
9.23%

2021
Terminal
growth
rate
%
2.75%
2.75%
2.75%

8.23%
9.03%

2.75%
2.75%

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 16. Non-current assets – intangibles (continued)

Key assumption
Revenue growth rate

Discount rate

Terminal growth rate

Approach used to determine values
Revenue projections are extracted from the most recent
approved budget, strategic plans or forecasts that relate
to the CGU. For each CGU, the CAGR for revenue over
the forecast period has been determined based on
expectations of future performance in the markets that the
businesses operate in. These assumptions are based on
expectations of market growth, demand and operational
performance over the periods from FY23 – FY27.

The post-tax discount rate reflects management’s
estimate of the time value of money and the relevant
CGU’s weighted average cost of capital. A post-tax
discount rate is used which is applied to post-tax
cashflows.

Management have estimated that the terminal growth
rate will be in line with the Reserve Bank of Australia
('RBA') expected gross domestic products ('GDP') growth
projection range.

Other than the impairment recognised for Teaminvest Private Residential Group, based on the above the recoverable
amount exceeds the carrying amount and therefore, goodwill is not considered to be impaired.

Sensitivity
Should these key assumptions, judgements and estimates noted above change, the recoverable amount may
decrease. Sensitivity analysis has been carried out and the recoverable amount of the CGU would equal its
carrying amount if the key assumptions were to change as follows:

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 17. Current liabilities - trade and other payables

Trade payables

Accrued expenses

GST payable

Other payables

Refer to note 27 for further information on financial instruments.

Note 18. Current liabilities – contract liabilities

Contract Liabilities

Opening Balance

Payments received in advance

Additions through business combinations

30 Jun 2022
$'000

30 Jun 2021
$'000

6,891

5,889

1,061

679

7,009

4,682

981

1,108

14,520

13,780

30 Jun 2022
$'000

30 Jun 2021
$'000

7,660

4,877

14,214

3,117

11,012

1,919

Transfer to revenue - from advance payments received during the period

(11,431)

(11,171)

Closing Balance

7,660

4,877

2022
Revenue
CAGR
decreases to
%

5.82%
5.78%
5.10%

6.98%
-

Icon Metal
Lusty TIP Trailers
Automation Group Investments

East Coast Traffic Controllers
Teaminvest Private Residential Group

2022
Discount rate
increases to
%

2021
Revenue CAGR
decreases to
%

2021
Discount rate
increases to
%

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 $7,605,000 as at 30 June 2022 (30 June 2021 $4,877,000) and is expected to be recognised
as revenue in future periods as follows:

13.21%
11.64%
11.46%

21.13%
-

7.10%
3.75%
7.50%

5.70%
6.00%

10.60%
10.10%
11.00%

9.90%
10.60%

Consolidated
Within 6 months

6 to 12 months

Total

30 Jun 2022
$'000

30 Jun 2021
$'000

7,313

347

7,660

2,564

2,313

4,877

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 19. Current liabilities – borrowings

Note 22. Non-current liabilities - borrowings

Bank overdraft
Bank Loans
Invoice discounting
Payable to other parties

Refer to note 27 for further information on financial instruments.

Note 20. Current liabilities - lease liabilities

Lease liability
Lease liability (under AASB 16)

Refer to note 27 for further information on financial instruments.

Note 21. Current liabilities - employee benefits

Annual leave
Long service leave

30 Jun 2022
$'000
-
-
-
586

30 Jun 2021
$'000
315
422
(35)
621

586

1,323

30 Jun 2022
$'000
-
1,573

30 Jun 2021
$'000
495
1,502

1,573

1,997

30 Jun 2022
$'000

30 Jun 2021
$'000

1,858
521

2,379

1,693
475

2,168

Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities
Bank overdraft
Bank loan
Invoice discounting

Used at the reporting date
Bank overdraft
Bank loan
Invoice discounting

Unused at the reporting date
Bank overdraft
Bank loan
Invoice discounting

Note 23. Non-current liabilities - lease liabilities

Lease liability

Lease liability (under AASB 16)

Note 24. Non-current liabilities - employee benefits

Long service leave

30 Jun 2022
$'000

30 Jun 2021
$'000

5,000
-
-

5,000

-
-
-

5,000
-
-

5,000

2,150
2,154
500

4,804

315
422
(35)

702

1,835
1,732
535

4,102

30 Jun 2022
$'000

30 Jun 2021
$'000

2,057

372

2,322

2,694

30 Jun 2022
$'000

30 Jun 2021
$'000

557

377

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 25. Equity - issued capital

Ordinary shares - fully paid

Movements in ordinary share capital

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

30 Jun
2022
Shares

30 Jun
2021
Shares
131,730,901 130,499,310

30 Jun
2022
$'000
88,301

30 Jun
2021
$'000
87,597

Note 26. Equity – dividends

Details

Date

Balance
Issue of ordinary shares for bonuses
Issue of ordinary shares for settlement of share based
payments
Issue of ordinary shares related to business combinations
Issue of ordinary shares for directors' fees'
Balance

01-Jul-21 130,499,310
343,784
27-Oct-21
74,691
28-Oct-21

564,477
28-Oct-21
28-Oct-21
248,639
30-Jun-22 131,730,901

Issue
Price

0.569
0.575

0.575
0.569

$'000

87,597
196
43

325
141
88,301

Ordinary Shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which
those shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited
amount authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.

Share buy-back
There is no current on-market share buy-back.

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 actively looking for accretive
acquisitions to grow in alignment with the Groups investment mandate.

The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.

30 Jun
2022
$'000

30 Jun
2021
$'000

Franking credits available for subsequent financial years based on a tax rate of 30%

3,104

2,339

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

Note 27. Financial instruments

Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and
liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case
of interest rate and ageing analysis for credit risk.

Risk management is carried out by senior finance executives ('finance') in conjunction with the Risk and Compliance
committee ('RCC'). Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance
reports to the Board on a monthly basis.

Market risk

Foreign currency risk
The Group is not exposed to any significant foreign currency risk.

Price risk
In the current year. the Group was exposed to price risk on the fixed price contracts within one of the operating
subsidiaries. In light of the current inflationary environment, contracts are negotiated to include provisions to vary prices.

Interest rate risk
The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the
Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.

As at the reporting date, the Group had the following variable rate borrowings outstanding:

30 June 2022
Weighted average
interest rate
%

Balance
$'000

30 June 2021
Weighted average
interest rate
%

Balance
$'000

Bank overdraft and bank loans

0.00%

4.23%

702

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 27. Financial instruments (cont.)

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 27 – Financial instruments (cont.)

An analysis by remaining contractual maturities in shown in 'liquidity risk' below.

For the Group, the bank overdraft and loans outstanding, totalling $Nil (2021: $702,000), are principal and interest
payment loans. An official increase/decrease in interest rates of 100 (2021:100) basis points would have an
adverse/favourable effect on profit before tax of $Nil (2021: $7,020) per annum. The percentage change is based on
the expected volatility of interest rates using market data and analysts' forecasts.

Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets
is the carrying amount, net of any expected credit losses of those assets, as disclosed in the statement of financial
position and notes to the financial statements. The Group does not hold any collateral.

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. 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 one year.

Liquidity risk
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.

Financing arrangements
Unused borrowing facilities at the reporting date:

Bank overdraft
Bank loan
Invoice discounting

30 Jun 2022
$'000
5,000
-
-

5,000

30 Jun 2021
$'000
1,835
1,732
535

4,102

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to
the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time.

Remaining contractual maturities
The following tables detail the Group's remaining contractual 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. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.

The cash flows in the maturity analysis below are not expected to occur significantly earlier than contractually disclosed
above.

30 June 2022

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Bank loans

Bank overdraft

Invoice discounting

Lease liability

Total non-derivatives

30 June 2021

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Bank loans

Bank overdraft

Invoice discounting

Other loans

Lease liability

Carrying amount 1 year or less

Between 1 and
2 years

Between 2 and

5 years Over 5 years

Remaining
contractual
cashflows

$'000

6,891

7,629

6,891

7,629

1,573

16,093

1,646

16,166

1,359

793

6,891

7,629

3,799

18,319

Carrying amount 1 year or less

Between 1 and
2 years

Between 2 and

5 years Over 5 years

Remaining
contractual
cashflows

$'000

7,009

6,771

7,009

6,771

422

315

(35)

621

495

422

315

(35)

621

495

164

1,139

1,254

208

1,287

1,440

7,009

6,771

621

422

315

(35)

867

3,996

19,966

Lease liability (AASB 16)

Total non-derivatives

1,502

17,100

1,570

17,100

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 28. Fair value measurement

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 31. Related party transactions

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their
fair values due to their short-term nature.

Parent entity
Teaminvest Private Group Limited is the parent entity.

Note 29. Remuneration of auditors

Subsidiaries
Interests in subsidiaries are set out in note 35.

During the financial year the following fees were paid or payable for services provided by KPMG, the auditor of the
Company:

Associates
Interests in associates are set out in note 13.

Audit Services - KPMG
Audit or review of financial statements

Other services - KPMG
Tax compliance services

30 Jun 2022
$'000

30 Jun 2021
$'000

230

181

261

206

Note 30. Contingent liabilities

The Group has given bank guarantees of $1,517,489 as at 30 June 2022 (2021: $1,368,643).

Key management personnel
Disclosures relating to key management personnel are set out in note 33 and the remuneration report included in the
directors' report.

Transactions with related parties
The company secretary, Sundaraj and Ker, where Anand Sundaraj is a partner, received payments from the company
to the total of $161,322 (30 June 2021: $89,872) for the services they performed.

Receivable from and payable to related parties

Consolidated

Current receivables:
Receivables from other related parties

Current payables:
Payables to other related parties

Loans
Loans to/(from) related parties

Note 32. Key management personnel disclosures

30 Jun 2022
$'000

30 Jun 2021
$'000

1,145

Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:

Consolidated

Short-term employee benefits
Post employment benefits
Long-term benefits
Share based payments

Note 34. Business Combinations

30 Jun 2022
$'000
573
69
3
141

30 Jun 2021
$'000
768
74
3
337

787

1,182

Acquisition of Diversified Growth Management Pty Ltd
On 12 November 2021, the Group acquired a 70% interest in Diversified Growth Management Limited from a related
party, Wealth Winning Investments Pty Ltd, for nil consideration. On the date of acquisition, the company had a
market value of $256,590. This company operates in the services segment of the Group. The acquired business
contributed revenue of $169,493 and a loss after tax of $31,423 for the period 12 November 2021 – 30 June 2022. If
the acquisition had occurred at the beginning of the period, the revenue contribution to the Group would have been
$361,128 and loss after tax of $87,899. Net assets of $92,129, including cash of $127,000, were acquired and
Goodwill of $164,362 has been recognised. The values identified in relation to the acquisition are finalised as at 30
June 2022

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Transferring knowledge and wealth between generations.

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

No intangible assets, other than goodwill, have been identified.

Note 35. Interests in subsidiaries

Acquisition of Burman Investment Management Limited
On 15 June 2022, the Group acquired 100% of the shares in Burman Investment Management Limited for the initial
purchase price of $212,020. This operates in the Services segment of the Group. The acquired business contributed
revenues of $Nil and profit after tax of $Nil to the Group for the period on 30 June 2022. If the acquisition occurred on
1 July 2021, the full year contributions would have been revenues of $106,553 and a loss after tax of $34,272. The
values identified in relation to the acquisition are provisional as at 30 June 2022.

Cash and cash equivalents
Trade and other receivables
Intangible assets
Trade payables and other payables
Deferred tax liability
Net (liabilities)/assets acquired
Non-controlling interest measured at fair value
Goodwill/(gain on bargain purchase)
Acquisition-date fair value of the total consideration transferred

Representing:
Cash purchase price
Adjustment to equity

Diversified
Growth
Management Pty
Ltd
Fair value
$'000
127
74
-
(90)
(18)
93
(28)
164
229

Burman
Investment
Management
Limited
Fair value
$'000
-
33
60
-
-
93
-
119
212

-
229
229

212
-
212

The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in
accordance with the accounting policy described in note 2:

Principal place of business 30 Jun 2022 30 Jun 2021

Ownership interest

Name
Teaminvest Private Pty Ltd

Coastal Energy Pty Ltd

East Coast Traffic Controllers Pty Ltd

Icon Metal Pty Ltd

Lusty TIP Trailers Pty Ltd

TIP Trustees Limited

Teaminvest Private Residential Group Pty Ltd

Automation Group Investments Pty Ltd

Automation Group Limited

Radtel Engineering Pty Ltd

Teaminvest Pty Ltd

Teaminvest Australia Pty Ltd

Diversified Growth Management Pty Ltd

Conscious Investor

Teaminvest Limited (NZ)

Teaminvest Australia Pty Ltd

TIP Group (UK) Pty Ltd

Country of incorporation
Australia

Australia

New Zealand

Australia

New Zealand

Australia

United Kingdom

Burman Investment Management Limited

Australia

%
100%

100%

70%

100%

80%

100%

%
100%

100%

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 36. Reconciliation of profit/(loss) after income tax to net cash from/(used in) operating activities

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 38. Share-based payments

Details of shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2022 and 30 June 2021 are set out below:

Profit/(loss) after income tax (expense)/benefit for the year

(17,773)

5,201

30 Jun 2022
$'000

30 Jun 2021
$'000

Issue Date

Number of Shares

Issue Price Total Value

30 June 2022
Shares issued to KMP

30 June 2021
Shares issued to KMP

Shares issued to directors

27/10/2021

28/10/2021

04/09/2020

04/12/2020

343,784

$0.569

195,720

248,639

$0.569

141,476

74,691

$0.575

42,962

2,080,181

$0.529

1,100,000

107,416

$0.529

56,803

Adjustments for:
Depreciation
Amortisation
Impairment
Share of profits from associates
Dividends received
Gain on bargain purchase
Change in operating assets and liabilities:

Changes in trade and other receivables
Changes in contract assets
Changes in inventories
Changes in prepayments
Changes in trade and other payables
Changes in contract liabilities
Changes in tax liabilities
Changes in deferred taxes
Changes in employee benefits
Changes in provisions
Working capital adjustments from business combinations

2,948
2,050
17,442
(2,674)
1,310
-

1,599
(2,496)
(2,309)
(882)
786
2,783
(560)
(991)
390
114
85

7,129
285
653
(95)
(2,867)
(3,734)

(562)
984
(1,767)
-
(710)
1,760
(1,979)
189
807
462
(360)

Net Cash from operating activities

1,822

5,396

Note 37. Earnings per share

30 June 2022
$'000

30 Jun 2021
$'000

Profit after income tax attributable to the owners of Teaminvest Private Group Limited

(17,751)

5,201

Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:

Shares issued for bonuses and fees

Number
131,327,141

Number
116,701,908

652,892

Weighted average number of ordinary shares used in calculating diluted earnings per share

131,327,141

117,354,800

Basic earnings per share
Diluted earnings per share

Cents
(13.52)
(13.52)

Cents
4.46
4.43

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Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 39. Parent entity information

Teaminvest Private Group Limited
Notes to the consolidated financial statements
For the year ended 30 June 2022

Note 40. Events after the reporting period

Set out below is the supplementary information about the parent entity (Group Costs).

Statement of profit or loss and other comprehensive income

No 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.

Loss after income tax

30 Jun 2022
$'000

(13,958)

30 Jun 2021
$'000

(6,444)

Total comprehensive loss

(13,958)

(6,444)

Total current assets

Total assets

Total current liabilities

Total liabilities

Equity

Issued Capital

Accumulated loss

Total Equity

30 Jun 2022
$'000

110

30 Jun 2021
$'000

5,354

64,141

77,895

386

394

463

894

88,301

(24,554)

87,597

(10,596)

63,747

77,001

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had guarantees of $1,517,489 in relation to the debts of its subsidiaries as at 30 June 2022
($1,368,643 as at 30 June 2021).

Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.

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, or fair value should a bargain purchase be acquired in
the parent entity.
Investments in associates 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.

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Teaminvest Private Group Limited
Directors’ declaration
For the year ended 30 June 2022

In the directors' opinion:



the attached consolidated 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 consolidated 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;

Independent Auditor’s Report

the attached consolidated 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

To the shareholders of Teaminvest Private Group Limited

there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.

Report on the audit of the Financial Report

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.

Opinion

On behalf of the directors

Andrew Coleman
Managing Director and Chief Executive Officer

24 August 2022
Sydney

We have audited the Financial Report of
Teaminvest Private Group Limited (the
Company).

In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:

•

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

complying with Australian Accounting
Standards and the Corporations Regulations
2001.

The Financial Report comprises:

•

Consolidated statement of financial position as at
30 June 2022

Consolidated statement of profit or loss and
other comprehensive income, consolidated
statement of changes in equity, and consolidated
statement of cash flows for the year then ended

• Notes including a summary of significant

accounting policies

• Directors' Declaration.

The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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 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 the Independence Standards) (the Code) that are relevant to our audit
of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with
these requirements.

© 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks
used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.

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Key Audit Matters

The Key Audit Matters we identified
are:

• Revenue recognition

• Carrying value of goodwill

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.

Revenue recognition

Refer to note 5 of the Financial Report ($93.1m AUD)

The key audit matter

How the matter was addressed in our audit

Recognition of revenue is a key audit matter
due to:

•

The significance of revenue to the financial
statements; and

The large number of contracts, across
businesses operating in different
industries, providing a range of products
and services for a wide range of customers
which have differing contractual terms and
numerous different performance
measurement events. This results in
judgment being applied to determine the
appropriate revenue recognition policy to
be applied, defining the performance
obligations and determining the stage of
completion of and period over which “over
time” revenue is recognised. Significant
audit effort is therefore required to assess
the appropriateness of revenue recognition
and gather sufficient audit evidence.

Our procedures included:

• We updated our understanding of the Group’s

revenue streams and the processes for
recognising revenue for rendering of services
(over time) and sale of goods (at a point in time);

• We evaluated the appropriateness of the Group’s
accounting policies for revenue recognition for
each significant revenue stream against the
requirements of AASB 15 Revenue from
contracts with customers and our understanding
of the business;

• We selected a sample of contracts for testing,
across businesses, industries and customer
types, focusing on key revenue streams where
revenue is recognised over time. For each
contract selected, we read the contract terms
and conditions to evaluate the individual
characteristics and terms of each contract and
the measurement of the performance obligations
including the appropriateness of the Group’s
method of measuring performance to date;

• We tested, on a sample basis, over time revenue
transactions, to progress claims certificates,
management’s assessment of progress against
project plans or the time elapsed for service
agreements. We obtained signed contracts and
checked the performance milestones met to date
against the service revenue recognised. We also
tested that related contract assets and liabilities
were appropriately recognised in accordance with

Australian Accounting Standards;

• We tested, on a sample basis, transactions
recognising revenue at a point in time to
purchase orders, sales invoices and delivery
dockets;

• We selected a sample of transactions recognising
revenue over time, from immediately before and
immediately after year end. We compared the
year in which the revenue was recognised by the
Group to the terms of the underlying contract and
project plan;

• We selected a sample of transactions recognising
revenue at a point in time, from immediately
before and immediately after year end. We
compared the year in which the revenue was
recognised by the Group to the terms of the
contract or purchase order and the date of
delivery; and

• We assessed the disclosures in the financial

report against the requirements of the accounting
standard and using our understanding obtained
from our testing.

Carrying value of goodwill

Refer to note 16 of the Financial Report ($26.1m)

The key audit matter

How the matter was addressed in our audit

A key audit matter for us was the Group’s
annual testing of goodwill for impairment, given
the size of the balance, being 32% of total
assets prior to impairment and the degree of
judgement involved in the significant forward-
looking assumptions the Group applied in their
value in use models, including:

•

Forecast cash flows and the growth rates
(including terminal growth rates) applied to
those forecasts in light of market
conditions in the current year and impacts
of COVID-19. These conditions increase
the possibility of goodwill being impaired,
plus the risk of inaccurate forecasts or a
wider range of outcomes for us to
consider; and

Working with our valuation specialists, our
procedures included:

• We considered the appropriateness of the value-
in-use method applied by the Group to perform
its annual impairment testing of goodwill against
the requirements of the relevant accounting
standards;

• We assessed the integrity of the value in use
models used, including the accuracy of the
underlying calculation formulas;

• We inquired with management to understand the
impact of COVID-19 to the Group, the impact to
the FY22 results, and implications for forecasting;

• We compared the forecast cash flows and capital
expenditure contained in the value in use models
to Board approved FY23 budgets. For subsequent

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•

nature and vary according to the conditions
and environment in which the specific Cash
Generating Unit (CGU) operates. The Group
operates in various industries and therefore
different discount rates are assessed for
each CGU. This drives additional audit
effort in challenging the assumptions used
by the Group in determining the discount
rate for each CGU. We involve our
valuations specialist with the assessment.

The carrying amount of the net assets of
the Group exceeded the Group’s market
capitalisation at year end, increasing the
possibility of goodwill being impaired. This
further increased our audit effort in this key
audit area;

The Group has a large number of operating
businesses during the year necessitating
our consideration of the Group’s
determination of CGUs, based on the
smallest group of assets to generate
largely independent cash inflows;

The Group uses complex models to
perform their annual testing of goodwill for
impairment. The models are largely
manually developed, and use historical
performance and a range of internal and
external sources as inputs to the
assumptions. Complex modelling,
particularly those containing judgmental
allocations of corporate costs to CGUs,
using forward-looking assumptions tend to
be prone to greater risk for potential bias,
error and inconsistent application.

These conditions necessitate additional
scrutiny by us, in particular to address the
objectivity of sources used for
assumptions, and their consistent
application; and

• We independently developed a discount
rate range considered comparable using
publicly available market data for
comparable entities, adjusted by risk
factors specific to the Group businesses
and the industries they operate in.

years, we have compared growth rates applied to
historical results, market indicators and
management’s plans for the business;

• We challenged the Group’s forecast cash flow
and growth assumptions in light of market
conditions. We assessed key assumptions such
as what the Group considers as its future
business model. We used our knowledge of the
Group, business and customers, and our industry
experience. We sourced authoritative and
credible inputs from our specialists;

• We assessed the Group’s underlying

methodology and documentation for the
allocation of corporate costs to the forecast cash
flows in the value in use model, for consistency
with our understanding of the business and the
criteria in the accounting standards;

• We assessed the Group’s determination of its
CGUs based on our understanding of the
operations of the Group’s business, how
independent cash inflows were generated,
against the requirements of the relevant
accounting standards;

• We considered the sensitivity of the models by
varying key assumptions, such as the Group’s
forecast growth rates, terminal growth rates and
discount rates, within a reasonably possible
range. We considered the interdependencies of
key assumptions when performing the sensitivity
analysis and what the Group consider to be
reasonably possible. We did this to identify those
CGUs at higher risk of impairment and to focus
our further procedures;

• We assessed the Group’s reconciliation of
differences between the year-end market
capitalisation and the carrying amount of the net
assets and the application of an appropriate
control premium;

• We recalculated the impairment charge against

the recorded amount disclosed; and

• We assessed the disclosures in the financial

report using our understanding obtained from our
testing and against the requirements of the
accounting standards.

Other Information

Other Information is financial and non-financial information in Teaminvest Private Group Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.

We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors are responsible for:

•

preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001

implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error

assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

•

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 Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They 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 the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.

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Shareholder information

The shareholder information below was applicable as at 12 August 2022.

Distribution of equitable securities
Analysis of equitable security holders by size of holding:

Report on the Remuneration Report

Opinion

Directors’ responsibilities

In our opinion, the Remuneration
Report of Teaminvest Private Group
Limited for the year ended 30 June
2022, complies with Section 300A of
the Corporations Act 2001.

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 responsibilities

We have audited the Remuneration Report included in pages 8
to 13 of the Directors’ report for the year ended 30 June 2022.

Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.

1 to 1000
1,001 – 5,001
5,011 – 10,000
10,001 – 100,000
100,001 and over

Number of
ordinary
shares

Number of
ordinary
shareholders
24,616
43
385,232
126
634,477
72
271
11,853,356
165 118,833,220
677 131,730,901

Percentage

0.02%
0.29%
0.48%
9.00%
90.21%
100.00%

PM_INI_01
KPM

_INI_01

KPMG

Holding less than a marketable parcel

12,816

Kevin Leighton

Partner

Sydney

24 August 2022

Equity security holders

Name

ELECTRONIC MARKETING PTY LTD
MR ANDREW COLEMAN
CS FOURTH NOMINEES PTY LIMITED
V MARK PTY LTD
ONE FUNDS MANAGEMENT LIMITED
CROOKS PTY LTD
PRICE VALUE PTY LIMITED
REGAN GEORGE PASSLOW
PRIBULA FAMILY PTY LTD
G & E PROPERTIES PTY LTD
POULTNEY PTY LTD
BNP PARIBAS NOMINEES PTY LTD
LE GRAND PTY LTD
BAXTERO PTY LIMITED
MR MALCOLM OLIVER THOMPSON + MS ELIZABETH THOMPSON
MALONGA PTY LTD
MR MALCOLM MURRAY JONES + MRS LYNNETTE ANNE JONES
ROBERT BREIT
PENMARK SUPER PTY LTD
MR GREGORY NORMAN KOPP

Number
Held

% of total
shares
issued

14,764,914
6,829,634
6,723,198
6,555,345
5,665,984
4,363,049
3,089,814
2,676,277
2,471,709
2,025,960
1,900,000
1,642,477
1,633,395
1,531,015
1,498,144
1,491,923

1,428,463
1,380,628
1,318,546
1,235,979
70,226,454

11.21%
5.18%
5.10%
4.98%
4.30%
3.31%
2.35%
2.03%
1.88%
1.54%
1.44%
1.25%
1.24%
1.16%
1.14%
1.13%

1.08%
1.05%
1.00%
0.94%
53.31%

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Shareholder information

Substantial shareholders

Howard Coleman
Mark Moreland
Andrew Coleman
Graham Lusty

Securities subject to escrow

Ordinary Shares

Number Held

18,435,244
8,242,945
6,733,198
6,829,634

% of total
shares
issued
13.99%
6.26%
5.11%
5.18%

Type of escrow
Nil

Escrow period
Nil

Number of shares
Nil

Voting rights
The voting rights attached to equity securities are set out below:

Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.

Performance rights
Performance rights do not have voting rights.

Corporate Office:

Level 3,80 Mount Street
North Sydney NSW 2060

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