EXCELSIOR CAPITAL LIMITED
Appendix 4D and Interim Financial Report
for 31 December 2019
ABN: 98 050 542 553
ASX CODE: ECL
EXCELSIOR CAPITAL LIMITED AND ITS CONTROLLED ENTITIES
APPENDIX 4D (rule 4.2A)
PRELIMINARY FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2019
RESULTS FOR ANNOUNCEMENT TO THE MARKET | |||||||||||
Movement | |||||||||||
from | |||||||||||
31 Dec 19 | Up/ | 31 Dec 18 | |||||||||
(All comparisons to half-year ended 31 December 2018) | $'000 | down | % | ||||||||
Revenue from ordinary activities | Up | 1% | |||||||||
29,747 | |||||||||||
Profit from ordinary activities after tax attributable to members | 1,908 | Down | -12% | ||||||||
Net comprehensive income for the period attributable to members | 2,242 | Up | 84% | ||||||||
Franked | |||||||||||
Amount | amount | ||||||||||
per | per | ||||||||||
DIVIDENDS | share | security | |||||||||
(cents) | (cents) | ||||||||||
Interim FY20 dividend declared | 2.00 | 2.00 | |||||||||
Final FY19 dividend paid | 3.00 | 3.00 | |||||||||
5.00 | 5.00 | ||||||||||
Previous corresponding period: | |||||||||||
Interim FY19 dividend declared | 3.00 | 3.00 | |||||||||
Final FY18 dividend paid | 3.00 | 3.00 | |||||||||
6.00 | 6.00 | ||||||||||
Record date for determining entitlements to the dividend | 8 March 2020 | ||||||||||
Date the interim dividend is payable | 25 March 2020 |
EXCELSIOR CAPITAL LIMITED AND ITS CONTROLLED ENTITIES
APPENDIX 4D (rule 4.2A)
PRELIMINARY FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2019
1) Previous corresponding period
The previous corresponding period is the half-year ended 31 December 2018.
2) Net tangible assets per security
Net tangible assets1 per security is $1.31 (31 December 2018: $1.30).
3) Explanation of results
This information should be read in conjunction with the Excelsior Capital Limited 2019 Annual Report and with any public announcements made in the period by the Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.
The information provided in this report contains all the information required by ASX Listing Rule 4.2A.
4) Details of entities over which control has been gained or lost during the year
Not applicable
5) Details of associates and joint venture entities
Not applicable
6) Set of accounting standards used for foreign entities in compiling this report
Not applicable
7) Audit
This report is based on the interim condensed consolidated half-year financial report which has been subject to a review by our auditors, Ernst & Young.
8) Commentary on results for the half-year
Revenue for the half-year was $29,745,999 (2018: $29,485,634) representing an increase $261,365 of 1% from previous corresponding period. This was largely a result of increase of sales volume in cable offset by lower sales volumes in Minto.
Consolidated profit after tax for the half year was $1,907,650 (2018: $2,159,353), down 12% on the previous corresponding half-year. This was largely the result of lower dividend received from investments from the previous corresponding period (refer note 2).
Danny Herceg | Leanne Catelan |
Non-executive Chairman | Executive Director |
Sydney | |
26 February 2020 |
- ROU asset and contract asset is excluded from the Net tangible asset.
EXCELSIOR CAPITAL LIMITED AND ITS CONTROLLED ENTITIES
APPENDIX 4D (rule 4.2A)
PRELIMINARY FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2019
Consolidated financial statements
Directors' report………………………………………………………………………………………………………………………..5
Auditors' independence declaration ……………………………………………………………………………………………….. 6
Interim consolidated statement of profit or loss……………………………………………………………………….…………. ..7
Interim consolidated statement of comprehensive income………………………………………………………………………. 8
Interim consolidated statement of financial position……………………………...………………………………………………. 9
Interim consolidated statement of changes in equity………………...………………………………………………………….. 10
Interim consolidated statement of cash flows………………………...……………………………………………………………11
Notes to the interim consolidated financial statements
About this report……………………………………………………………………………………………………………………….12
Segment information………………………………………………………………………………………………………………….13
Key numbers
- Revenue from contracts with customers….……………………………………………………………………………………14
- Investment income………………………………………………………………………………………………………………..14
- Impairment testing of goodwill………………………………..…………………………………………………………………15
Capital
- Dividends…………………………………………………………………………………………………………………………..16
- Earnings per share………………………………………………………………………………………………………………..16
Risk
- Fair value of financial instruments……………………………………………………………………………………………....17
- Variation of Contract ….......…………………………………………………………………………………………………....17
- Subsequent events…………………………………………………………………………………………………………….....18
- Financial dividend declared ……………………………………………………………………………………………………. 18
Other
10. Changes in accounting policies and disclosures………………………………………...…………………………………..18
Signed reports
Directors' declaration………………………………………………………………………………………………………………....20
Independent auditor's review report…………………………………………………………………………………………………21
DIRECTORS' REPORT
Your directors submit their report for the half-year ended 31 December 2019.
Directors
The names of the Company's directors in office during the half-year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.
- Ms Leanne Catelan
- Mr Michael Copeland (Appointed 23 September 2019; ceased on 10 January 2020)
- Mr Danny Herceg (Appointed 4 October 2019)
- Mr Oliver Schweizer (Appointed 13 January 2020)
- Mr Craig Green (Ceased 23 September 2019)
- Mr Michael Glennon (Ceased 4 October 2019)
Review and results of operations
The Group experienced an increase in revenue during the half-year which profits are down.
Revenue for the half-year was $29,745,999 (2018: $29,485,634) representing an increase of 1% from previous corresponding period. This was largely a result of increase of sales volume in cable offset by lower volumes in Minto.
Consolidated profit after tax for the half-year was $1,907,650 (2018: $2,159,353), down 12% on the previous corresponding half-year. This was largely the result of lower dividend received from investments from the previous corresponding period (refer note 2).
Rounding off of amounts
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191. The Company is an entity to which the legislative instrument applies.
Auditor's independence declaration
We have obtained an independence declaration from our auditors, Ernst and Young, which is included on the following page.
Signed in accordance with a resolution of the directors.
Danny Herceg | Leanne Catelan |
Non-executive Chairman | Executive Director |
Sydney, 26 February 2020 |
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 5 |
Ernst & Young | Tel: +61 2 9248 5555 |
200 George Street | Fax: +61 2 9248 5959 |
Sydney NSW 2000 Australia | ey.com/au |
GPO Box 2646 Sydney NSW 2001 |
Auditor's Independence Declaration to the Directors of Excelsior Capital Limited
As the lead auditor for the review of the interim financial report of Excelsior Capital Limited for the half year ended 31 December 2019, I declare to the best of my knowledge and belief, there have been:
- no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Excelsior Capital Limited and the entities it controlled during the financial period.
Ernst & Young
Jonathan Pye
Partner
26 February 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHS ENDED 31 DECEMBER
Note | |
Revenue from contracts with customers | 1 |
Investment income | 2 |
Other income
Changes in inventories of finished goods and costs to fulfil a contract Raw materials and consumables used
Employee benefits expense
Repairs, maintenance and consumables expense Occupancy expense
Travel and communication expense Freight and cartage expense Depreciation and amortisation expense Finance costs
Investment portfolio management and administration expenses Other expenses
Profit before tax
Income tax expense
PROFIT FOR THE PERIOD
Attributable to:
- Equity holders of the parent
- Non-controllinginterests
2019 2018
$'000 $'000
29,961 29,412
- 73
41-
- 2,086
(20,687) (22,141)
(3,322) (3,211)
- (122)
- (1,008)
- (151)
- (534)
(1,009) (185)
- -
- (266)
- (682)
2,472 3,271
-
(1,112)
1,908 2,159
1,942 2,244
-
(85)
1,908 2,159
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 7 |
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER
2019 | 2018 | |||||
Note | $'000 | $'000 | ||||
PROFIT FOR THE PERIOD | 1,908 | 2,159 | ||||
Other comprehensive income | ||||||
Other comprehensive income that will not be reclassified to profit or | ||||||
loss in subsequent periods (net of tax): | ||||||
Unrealised gain on non-current equity investments designated at FV | 334 | (942) | ||||
net of tax | ||||||
Realised loss on non-current equity investments designated at FV net | (418) | - | ||||
of tax | ||||||
Movement to Retained income | 418 | - | ||||
Other comprehensive (loss)/income, net of tax | 334 | (942) | ||||
TOTAL COMPREHENSIVE INCOME, NET OF TAX | 2,242 | 1,217 | ||||
Attributable to: | ||||||
Equity holders of the parent | 2,276 | 1,302 | ||||
Non-controlling interests | (34) | (85) | ||||
2,242 | 1,217 | |||||
2019 | 2018 | |||||
cents | cents | |||||
per share | per share | |||||
Earnings per share | ||||||
Basic and diluted | 5 | 6.70 | 7.27 | |||
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 8 |
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
Note | |
ASSETS | |
Current assets | |
Cash and cash equivalents | |
Trade and other receivables | |
Current tax receivables | |
Inventories | |
Other financial assets | 6 |
Non-current assets | |
Other financial assets | 6 |
Property, plant and equipment | 10 |
Deferred tax assets |
Goodwill
Intangible assets
TOTAL ASSETS
31 Dec 19 | 30 Jun 19 |
$'000 | $'000 |
12,097 4,751
10,648 13,329
60139
16,504 15,830
7,089 2,358
46,939 36,307
1,831 | 11,297 |
2,695 | 256 |
- | - |
6,850 | 6,850 |
1,593 | 1,751 |
12,969 | 20,154 |
59,908 | 56,461 |
LIABILITIES and EQUITY | |
Current liabilities | |
Trade and other payables | |
Lease Liabilities | 10 |
Provisions | |
Non-current liabilities | |
Provisions | |
Deferred tax liabilities | |
Lease Liabilities | 10 |
7,536 7,560
1,366-
705 695
9,607 8,255
- 76
- 298
1,090 | - |
1,515 | 374 |
TOTAL LIABILITIES
EQUITY
Issued capital
Retained earnings
Other components of equity
Equity attributable to equity holders of the parent Non-controlling interests
TOTAL EQUITY
11,122 8,629
28,270 28,270
20,344 19,690
164 (170)
48,778 47,790
-
42
48,786 47,832
TOTAL LIABILITIES AND EQUITY | 59,908 | 56,461 | |
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 9 |
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
Issued | Retained | Reserves | Attributable to | Non- | Total | |||||||
relating to | owners of the | controlling | ||||||||||
capital | earnings | |||||||||||
Financial | parent | interests | ||||||||||
Assets at | ||||||||||||
FVOCI | ||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||
As at 1 July 2018 | 31,687 | 17,248 | 287 | 49,222 | 13 | 49,235 | ||||||
Profit for the period | - | 2,244 | - | 2,244 | (85) | 2,159 | ||||||
Other comprehensive income | - | - | (942) | (942) | - | (942) | ||||||
Total comprehensive income | - | 2,244 | (942) | 1,302 | (85) | 1,217 | ||||||
Share buy-back | (3,417) | - | - | (3,417) | - | (3,417) | ||||||
Dividends paid | - | (941) | - | (941) | - | (941) | ||||||
Issue of convertible note (equity component) | - | - | - | - | 150 | 150 | ||||||
At 31 December 2018 | 28,270 | 18,551 | (655) | 46,166 | 78 | 46,244 | ||||||
As at 1 July 2019 | 28,270 | 19,690 | (170) | 47,790 | 42 | 47,832 | ||||||
Profit for the period | - | 1,942 | - | 1,942 | (34) | 1,908 | ||||||
Total comprehensive income | - | 1,942 | - | 1,942 | (34) | 1,908 | ||||||
Dividends paid | ||||||||||||
- | (870) | - | (870) | - | (870) | |||||||
Unrealised gain on non-current equity investments designated at FV net | ||||||||||||
of tax | - | - | 334 | 334 | - | 334 | ||||||
Realised loss on non-current equity investments designated at FV net of | - | - | (596) | (596) | - | (596) | ||||||
tax | ||||||||||||
Tax on Realised loss on non-current equity investments designated at | ||||||||||||
FV | - | - | 178 | 178 | - | 178 | ||||||
Movement to Retained income | - | (418) | 418 | - | - | - | ||||||
Issue of convertible note (equity component) | - | - | - | - | - | - | ||||||
At 31 December 2019 | 28,270 | 20,344 | 164 | 48,778 | 8 | 48,786 | ||||||
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 10 |
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER
Note
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Dividends received
Purchase of debt financial instruments
Proceeds from sale of debt financial instruments
Interest and other costs of finance paid
Income tax paid
Net cash (used in)/from operating activities
Investing activities
Payment for property, plant and equipment
Purchase of equity financial instruments
Proceeds from sale of equity financial instruments
Development expenditures
Net cash from investing activities
Financing activities Payment for share buy-back Payment of principal lease payments Proceeds from issue of convertible note Loan from related parties
Dividends paid4
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 31 December
2019 | 2018 |
$'000 | $'000 |
32,733 | 27,347 |
(27,375) | (26,224) |
58 | 66 |
73 | 269 |
(2,400) | - |
1,066 | - |
- -
- (1,205)
3,443 253
- (3)
(8,580) (7,040)
14,141 10,062
- (144)
5,419 2,875
- (3,417)
- -
- 150
47-
- (941)
(1,516) (4,208)
7,346 (1,080)
4,751 6,751
12,097 5,671
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 11 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS ABOUT THIS REPORT
Corporate information
The interim condensed consolidated financial statements of Excelsior Capital Limited and its subsidiaries (collectively, the Group) for the six months ended 31 December 2019 were authorised for issue in accordance with a resolution of the directors on 26 February 2020.
Excelsior Capital Limited (the Company) is a limited company, incorporated and domiciled in Australia, whose shares are publicly traded.
The registered office is located at:
18-20 Railway Road,
Meadowbank
NSW, Australia.
The Group is principally engaged in the design and distribution of electrical components and cables for resource infrastructure applications and the management of an investment portfolio.
Basis of preparation and changes to the Group's accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the six months ended 31 December 2019 have been prepared in accordance with AASB 134 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at 30 June 2019.
New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 June 2019, except for the adoption of new standards effective as of 1 July 2019. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The Group applies, for the first time, AASB 16 Leases. As required by AASB 134, the nature and effect of these changes are disclosed in Note 9.
The interim condensed notes to the financial statements
The notes include information which is required to understand the financial statements which are material and relevant to the operations, financial position and performance of the Group. Information is considered material and relevant if, for example:
- the amount in question is significant because of its size or nature;
- it is important for understanding the results of the Group;
- it helps to explain the impact of significant changes in the Group's business - for example, acquisitions and impairment write-downs; or
- it relates to an aspect of the Group's operations that is important to its future performance.
The notes are organised into the following sections:
Key numbers: provides a breakdown of individual line items in the financial statements that the Directors consider most relevant and where required, summarises the accounting policies, judgements and estimates relevant to understanding these line items;
Capital: provides information about the shareholder returns for the year;
Risk: discusses how the Group determines fair values of various financial assets and liabilities;
Unrecognised items: provides information about items that are not recognised in the financial statements but could potentially have an impact on the Group's financial position and performance; and
Other: provides information on items which require disclosure to comply with Australian Accounting Standards and other regulatory pronouncements, however, are not considered critical in understanding the financial performance or position of the Group.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 12 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEGMENT INFORMATION
The following table present revenue and profit information for the Group's operating segments for the six months ended 31 December 2019 and 2018, respectively:
ELECTRICAL | INVESTMENT | ||||||||||||||
COMPONENTS | PORTFOLIO | ||||||||||||||
31 Dec 19 | 31 Dec 18 | 31 Dec 19 | 31 Dec 18 | ||||||||||||
Six months ended 31 | $'000 | $'000 | $'000 | $'000 | |||||||||||
December 2019 | |||||||||||||||
Revenue | |||||||||||||||
External customers and other | |||||||||||||||
30,002 | 29,412 | 140 | 46 | ||||||||||||
income | |||||||||||||||
Total revenue | 30,002 | 29,412 | 140 | 46 | |||||||||||
Results | |||||||||||||||
Segment profit before tax | 3,498 | 4,292 | (921) | (457) | |||||||||||
ADJUSTMENTS AND
ELIMINATIONS
31 Dec 19 31 Dec 18
$'000 $'000
(140) | 27 |
(140) | 27 |
(105) | (564) |
CONSOLIDATED
31 Dec 19 31 Dec 18
$'000 $'000
30,002 | 29,485 |
30,002 | 29,485 |
2,472 | 3,271 |
The following table presents assets and liabilities information for the Group's operating segments at 31 December 2019 and 30 June 2019, respectively:
31 Dec 19 | 30 Jun 19 | 31 Dec 19 | 30 Jun 19 | 31 Dec 19 | 30 Jun 19 | 31 Dec 19 | 30 Jun 19 | |||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||
Assets | 35,375 | 38,090 | 16,577 | 15,983 | 7,956 | 2,390 | 59,908 | 56,463 | ||||||||||
Liabilities | (15,684) | (20,917) | (214) | (76) | 4,776 | 12,364 | (11,122) | (8,629) | ||||||||||
Adjustments and eliminations
Finance costs, certain employee benefits and operating expenses are not allocated to individual segments as these are managed on an overall group basis. These are included in adjustments and eliminations in the segment disclosures.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 13 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS KEY NUMBERS
1. Revenue from contracts with customers
Segments:
Type of goods or service
Sale of electrical components and cables
Total revenue from contracts with customers
Geographical markets
New South Wales
Victoria
Queensland
- Brisbane
-
Rockhampton
Western Australia
Total revenue from contracts with customers
Timing of revenue recognition
Goods transferred at point in time
Total revenue from contracts with customers
2. Investment income
Realised and unrealised (losses)/gains on current financial assets Dividends received
Interest received
Electrical Components
31 Dec 19 31 Dec 18
$'000 $'000
29,961 29,412
29,961 29,412
7,449 7,810
4,175 3,156
5,762 4,555
5,669 5,068
6,906 8,823
29,961 29,412
29,961 29,412
29,961 29,412
31 Dec 19 | 31 Dec 18 |
$'000 | $'000 |
- (262)
73 269
5866
- 73
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 14 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS KEY NUMBERS
3. Impairment testing of goodwill
The Group performed its annual impairment test in June and when circumstances indicated that the carrying value may be impaired.
The Group's impairment test for goodwill is based on value-in-use calculations.
The key assumptions used to determine the recoverable amount for the different cash generating units were disclosed in the annual consolidated financial statements for the year ended 30 June 2019.
The Group considers the relationship between its market capitalisation and its book value, among other factors, when reviewing for indicators of impairment. As at 31 December 2019, the market capitalisation of the Group was below the book value of its equity, indicating a potential impairment of goodwill.
As a result, management performed an impairment test as at 31 December 2019 for the Electrical Components segment, which is the cash generating unit (CGU) with goodwill. The Investment Portfolio segment did not have any goodwill.
Electrical Components CGU
The Group used the CGU's value-in-use to determine the recoverable amount, which exceeded the carrying amount.
The projected cash flows were updated to reflect the increased demand for products and a pre-tax discount rate of 15.2% (30 June 2019: 15.9%) was applied.
Cash flows beyond the five-year period have been extrapolated using a 2.5% growth rate (30 June 2019: 2.5%). All other assumptions remained consistent with those disclosed in the annual financial statements for the year ended 30 June 2019.
As a result of the updated analysis, management did not identify an impairment for this CGU to which goodwill of $6.9 million is allocated.
Sensitivity to changes in assumptions
With regard to the assessment of value-in-use of the Electrical Components unit, there are no significant changes to the sensitivity information disclosed in the annual consolidated financial statements for the year ended 30 June 2019.
Growth rate assumptions
Rates are based on published industry research. These have been updated for the current economic outlook.
Discount rate
The discount rate has been adjusted to reflect the current market assessment of the risks specific to the Electrical Components unit and was estimated based on the cost of equity for the Group. Note, the Group carries no debt.
Further changes to the discount rate may be necessary in the future to reflect changing risks for the industry and changes to the cost of equity.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 15 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS CAPITAL
4. Dividends
During the half-year, Excelsior Capital Limited made the following dividend payments:
31 Dec 19 | 31 Dec 18 | ||
$'000 | $'000 | ||
Fully paid ordinary shares | |||
Final HY20 dividend: 3.0 cents per share (FY19: 3.0 cents per share) | 870 | 941 | |
On 26 February 2020, the directors declared a fully franked interim dividend of 2.0 cents per share to the holders of fully paid ordinary shares in respect of the half-year ended 31 December 2019, to be paid to shareholders on 25 March 2020. This dividend has not been included as a liability in this financial report. The total estimated dividend to be paid is $579,889.
5. Earnings per share
31 Dec 19 | 31 Dec 18 | ||
Profit attributable to ordinary equity holders of the parent ($'000) | |||
1,942 | 2,244 | ||
WANOS¹ used in the calculation of basic and diluted EPS (shares, thousands)2 | 28,994 | 30,864 | |
Earnings per share | |||
Basic (cents per share) | 6.70 | 7.27 | |
- Weighted average number of shares
- There were no options or performance rights granted during the half-year.
5.1 Calculation of WANOS
5.1.1 Basic EPS
Six months to 31 December 2019
The number of Excelsior shares issued:
- From 1 July 2019 to 31 December 2019
The number of Excelsior ordinary shares on issue of 28,994,469 multiplied by the ratio of days outstanding (184/184).
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 16 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. Fair value of financial instruments
This note provides information about how the Group determines the fair value of various financial assets.
6.1 Fair value of financial assets that are measured at fair value on a recurring basis
All of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of those financial assets are determined (in particular, the valuation technique(s) and inputs used).
The following table provides the fair value measurement hierarchy of the Group's financial assets as at 31 December 2019 and 30 June 2019:
Fair | ||
value | Fair value measurement using | |
hierarchy | ||
Financial assets at FVPL | ||
Current | ||
Quoted hybrid securities | Level 1 | Quoted prices in active markets |
Financial assets at fair value through OCI | ||
Non-current | ||
Quoted equity shares | Level 1 | Quoted prices in active markets |
Unquoted equity shares | Level 3 | Significant unobservable inputs |
31 Dec 19 30 Jun 19
$'000 $'000
7,089 2,358
1,131 10,597
700 700
1,831 11,297
There were no transfers between Level 1 and Level 2 fair value measurements during the period, and no transfers into or out of Level 3 fair value measurements during the six months ended 31 December 2019.
6.2 Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
6.3 Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)
The directors consider that the carrying amounts of financial assets recognised in the consolidated financial statements approximate their fair values.
7. Variation of Contract
Following the resignation of Michael Glennon from the Board of Excelsior Capital Limited on 4 October 2019, the Company renegotiated the Investment Mandate Agreement with Glennon Capital Pty Limited to continue the agreement only until the end of the initial term. The expiry date of the agreement is 29 December 2021.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 17 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. Subsequent events
On 13 January 2020 the Company announced that Mr Oliver Schweizer was appointed to the Board as non-executive Director as a replacement for Mr Michael Copeland who resigned on 10 January 2020. The Company also advised that Mr Dion Cohen was appointed as Company Secretary.
9. Financial interim dividend declared
The Board of Excelsior Capital Limited declared a fully-franked interim dividend of 2.0 cents per share. The Record Date is 8 March 2020. The payment date will be 25 March 2020. The dividend has not been provided for in this financial report.
10. Changes in accounting policies and disclosures
10.1 New and amended standards and interpretations
AASB 16 Leases
AASB 16 was issued in January 2016 and it replaces AASB 117 Leases, AASB Interpretation 4 Determining whether an Arrangement contains a Lease, AASB Interpretation-115 Operating Leases-Incentives and AASB Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117.
The standard includes two recognition exemptions for lessees - leases of 'low-value' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees are also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
AASB 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees to make more extensive disclosures than under AASB 117.
The Group has adopted AASB 16 using the first variation of the modified retrospective approach, where the right- of-use-asset at the date of initial application (1 July 2019) is measured at an amount equal to the lease liability, using an incremental borrowing rate (IBR). Comparative figures are not restated.
The Group has elected to apply the standard to contracts that were previously identified as leases applying AASB 117 and AASB Interpretation 4.
The Group has elected to use the exemptions proposed by the standard on lease contracts for which:
- the lease terms ends within 12 months as of the date of initial application; and
- lease contracts for which the underlying asset is of low value. The Group has leases of certain office equipment (i.e., personal computers, printing and photocopying machines) that are considered of low value of less than $10,000.
The impact of AASB 16 adoption resulted in the grossing up of the asset (right of use assets in Property, plant and equipment) and liabilities (lease liabilities) by $2,455,766.
The following table represents a reconciliation between the lease commitments as of 30 June 2019 and the lease liability as of 1 July 2019.
$'000 | |
Total operating lease commitments disclosed | 3,658 |
at 30 June 2019 | |
Recognition exemptions: | |
• Leases of low value assets | 32 |
Operating lease liabilities before discounting | 3,626 |
Discounted using incremental borrowing rate | 477 |
Total lease liabilities recognised at 1 July | 3,149 |
2019 |
In discounting the lease liability, the Company used an IBR of 5%. This rate was determined by reference to a Bank Default rate set out in a Facility agreement offered to the Company in 2018, adjusted to take account of movements in interest rates over the period.
Due to the adoption of AASB 16, the Group's operating profit improved by $46,776, while its interest expense increased by $66,077. This is due to the change in the accounting for expenses of leases that were classified as operating leases under AASB 117.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 18 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10.1 New and amended standards and interpretations (continued)
AASB 16 Leases (continued)
The impact in Depreciation and Amortisation, in the Profit
- Loss for the six months ended 31 December 2019, was $712,304. This also represents a decrease of $46,776 in Occupancy expenses.
The Company has also applied the following practical expedients:
- Used hindsight to determine lease term, assessing an extension option as being reasonably certain of exercise when the standard adoption. To this end, Company assessed negotiations in place and confirmed the leases certain of extension; and
- Opted to not reassess whether a contract is, or contains, a lease at the date of initial application.
10.2 Standards issued but not yet effective
Australian Accounting Standards and Interpretations that are issued, but are not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these new standards and interpretations, if applicable, when they become effective.
AASB Interpretation 23 Uncertainty over Income Tax Treatment
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of AASB 112 and does not apply to taxes or levies outside the scope of AASB 112, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:
- whether an entity considers uncertain tax treatments separately;
- the assumptions an entity makes about the examination of tax treatments by taxation authorities;
- how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and
- how an entity considers changes in facts and circumstances.
The Group does not apply significant judgement in identifying uncertainties over income tax treatments. Since the Group does not operates in a complex multinational environment, it assessed that this Interpretation did not have impact on its interim financial report.
Upon adoption of the Interpretation, the Group considered whether it had any uncertain tax positions, however, given there are no particularities in the business (i.e. transfer pricing), it was concluded that the interpretation did not have an impact on the interim financial report.
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 19 |
SIGNED REPORTS
DIRECTORS' DECLARATION
EXCELSIOR CAPITAL LIMITED AND ITS CONTROLLED ENTITIES
The directors declare that:
- in the directors' opinion there are reasonable grounds to believe that the Company and its subsidiaries (collectively the Group) will be able to pay its debts as and when they become due and payable; and
- in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.
Signed in accordance with a resolution of the Directors made pursuant to s.303(5) of the Corporations Act 2001.
On behalf of the Directors
Danny Herceg
Non-executive Chairman
Sydney, 26 February 2020
EXCELSIOR CAPITAL LIMITED INTERIM FINANCIAL REPORT 2019 | 20 |
Ernst & Young | Tel: +61 2 9248 5555 |
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Sydney NSW 2000 Australia | ey.com/au |
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Independent Auditor's Review Report to the Members of Excelsior Capital Limited
Report on the Half Year Financial Report
Conclusion
We have reviewed the accompanying half year financial report of Excelsior Capital Limited (the Company) and its subsidiaries (collectively the Group), which comprises the condensed statement of financial position as at 31 December 2019, the condensed statement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half year financial report of the Group is not in accordance with the Corporations Act 2001, including:
- giving a true and fair view of the consolidated financial position of the Group as at 31 December 2019 and of its consolidated financial performance for the half year ended on that date; and
- complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Directors' Responsibility for the Half Year Financial Report
The directors of the Company are responsible for the preparation of the half year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half year financial report that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the half year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group's consolidated financial position as at 31 December 2019 and its consolidated financial performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
Ernst & Young
Jonathan Pye
Partner
Sydney
26 February 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Excelsior Capital Limited published this content on 26 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 February 2020 06:32:08 UTC