Contents. Chairman s Report 01. Directors Report 03. Corporate Governance 06. Remuneration Report 07. Lead Auditor s Independence declaration 10

Transcription

1 Oceania Capital Partners Limited Annual Report 2018

2 Contents Chairman s Report 01 Directors Report 03 Corporate Governance 06 Remuneration Report 07 Lead Auditor s Independence declaration 10 Financial Statements 11 Director s declaration 37 Independent Auditor s Report 38 Shareholder information 42 Corporate Directory 43 Oceania Capital Partners Limited ABN

3 Chairman s Report This report relates to the financial year ended 31 March 2018 We have achieved positive performances in a number of our businesses in the 2018 financial year. The year also saw the successful expansion of our investment activities in the broadcast radio sector and the successful completion of the exit from a number of our investments. There have been a few unexpected bumps along the way and we are disappointed that we have not deployed as much capital into fresh underlying businesses as we had hoped, despite our intent and effort to do so. We are delighted to be paying a dividend for the first time in a number of years. It is a modest start for us and we hope to grow the amount over time as our investment capital is applied into other strong, profitable businesses. Our reported net asset value per share (after accounting for minority interests) as at 31 March 2018 was $2.79, which compares favourably to the net asset value as at 31 March 2017 of $2.66. The composition of the reported net asset value is depicted in the table below: Carrying value at 31 March 2018 $m $/share Basis for carrying value EON Broadcasting Consolidated carrying value EON 2CH Consolidated carrying value Crimsafe Consolidated carrying value Cash at OCP and listed shares Mark to market Other net assets During the year, we finalised our exit from our Baycorp and Cohort investments. Our remaining interest in Baycorp was realised for $18.2 million, which was consistent with our carrying value. We also entered into an agreement with Encore to extend the period during which Encore may lodge a warranty claim in relation to certain specified circumstances ( the Extended Warranty Period ). $1 million of the $18.2 million proceeds have been placed in escrow to support any liability arising from any such claim. The quantum of a claim that may arise during the Extended Warranty Period is not limited to the amount placed in escrow. Following our exit from Cohort in the prior financial year and the finalisation of the earn-out in the year under review we hold 7.8 million shares issued by the purchaser, Pureprofile Limited (ASX:PPL). This equates to a little over 6% of PPL s entire issued share capital. We make some observations below about each of our investments. CRIMSAFE As noted elsewhere in more detail, while the consolidated result for Crimsafe is down on the prior year, the revenue of the core business in Australia was up 6%. We remain confident in the strength of the brand and the superior product offering of Crimsafe, with Crimsafe being the leading provider of stainless steel security screens in Australia. Importantly, this business continues to relentlessly improve its product offering through continued research and development to position it well for the future with a focus on superior quality and superior safety features. The expansion of the business into the USA continues to have a negative effect on the financial results of the consolidated group but we believe that the product is well suited to the US market with there being no competing product in that market with an equivalent level of quality and protection. Crimsafe is working on growing our distribution in the US to facilitate the roll out of the product. We are also exploring expansion of the product into other jurisdictions where we believe the Crimsafe product is suitable for the relevant market. EON BROADCASTING: MIXFM AND SEAFM 92.7 MixFM and 919 SeaFM on the Sunshine Coast have had an impressive trading year, again delivering meaningful year on year increases in revenue and profit contribution. Our stations are the clear number 1 and 2 on the Sunshine Coast and our focus continues to be on ensuring that everything that is broadcast is high quality, entertaining, varied and, has a local focus. The data from Commercial Radio Australia tells us that more people listen to radio today than ever before and we believe that this trend is even more strongly observable in regional Australia, where much of the media that can be accessed is national and syndicated capital city programming. We offer a careful blend of local and national material. Besides the general positive level of growth in the Sunshine Coast Region, a key to the success of our stations in the 2018 financial year has been the stability and commitment of our dedicated team based in Maroochydore, which delivers what we believe to be among the best broadcast radio in regional Australia. Oceania Capital Partners Limited Annual Report

4 Chairman s Report EON 2CH It has been just over a year since our acquisition of the AM radio station 2CH in Sydney and its associated DAB+ digital radio spectrum. This investment was always viewed as a turnaround as we had to build an entire business around a radio licence and brand, with Macquarie Media having been forced to sell the station by ACMA following its merger with Fairfax Radio. Our support for this strategy was based on our experience with EON Broadcasting and the support of our very experienced management team. Like the Sunshine Coast, our strategy with 2CH is to make it local it is everything Sydney The 2CH listener demographic is largely over 55 years old and they are closely and actively connected to their station. We are working hard on continuing to support our loyal listeners while also growing the influence and reach of the station so that we can attract additional advertising revenue. There is clearly a balance that needs to be reached between gaining new listeners with different offerings and not losing the current listeners. Given the turnaround nature of the business, the sales effort required is significant and the success is gradual as it involves forming long term relationships with clients. But once on board with successful campaigns our clients become loyal and the revenue book builds over time and we are starting to see that build from what was really a standing start for the business. ****** Our objective is to create the environment in which our underlying businesses can prosper and grow by empowering and assisting the underlying management teams and we believe our approach is delivering results. We are, as always, grateful to the management and staff of our underlying businesses and we take this opportunity to thank them all for their hard work and dedication. Finally, we continue our efforts to expand our investment portfolio both in businesses related to our existing businesses and in new areas. This can be a difficult objective when markets are buoyant as we still subscribe to the old adage that much of the success of an investment is determined by the point and value at which you make the investment. Robert Moran Chairman 02 Oceania Capital Partners Limited Annual Report 2018

5 Directors Report The Directors present their report together with the financial report of the Consolidated Entity, comprising Oceania Capital Partners Limited ( the Company or OCP ) and its controlled entities (together the Consolidated Entity ) for the year ended 31 March 2018 and the Independent Auditor s report thereon. DIRECTORS The following were the Directors of the Company throughout, and since the end of, the financial year: Robert Moran Michael Jacobson Brian Scheiner Non-Executive Chairman Executive Director Executive Director Details of the experience and qualifications of the Directors in office at the date of this report are: Robert Moran LLB, B.Ec, MAICD Non-Executive Chairman Robert Moran served as Managing Director of the Company until June 2014 and was appointed as Non-Executive Chairman in July He has been involved as a principal investor for over 17 years at a board and strategic level in a variety of businesses and sectors and taking an active involvement in the underlying businesses. He is experienced in investment banking activities, including financings, capital raisings, mergers and acquisitions and has practiced corporate and commercial law at a senior level. Robert continues to represent the Company s interests as a director of EON Broadcasting Pty Ltd ( EON ), Sunshine Coast Broadcasters Pty Ltd ( SCB ), EON 2CH Pty Ltd ( EON 2CH ) and Radio 2CH Pty Ltd ( Radio 2CH ). Robert previously represented the Company as non-executive Chairman of Signature Security Group (from January 2006 until 29 April 2011), as a director of isoft Group Limited (from November 2008 until 29 July 2011) and as director of Keybridge Capital Limited from January 2013 to February He also represented the Company s interests in Baycorp as a director of Baycorp Holdings Pty Limited and BC Holdings 1 Pty Limited ( BC Holdings ). Robert is also a director of Tag Pacific Limited (since 2002). Michael Jacobson B.Bus.Sci, CA (SA), CFA Executive Director Brian Scheiner BA, LLB, H DIP Advanced Company Law, H Dip Tax Executive Director Brian served as Non-Executive Director of the Company from March 2012 to June 2014, when he was appointed as an Executive Director of the Company. Prior to joining the Hosken Group, Brian had co-founded a successful corporate advisory business. Before that, he spent 10 years at one of the largest law firms in South Africa, where he was a full equity partner, practicing in the corporate and commercial department. He joined the Hosken Group in 2003 and served as an executive until He and his family then relocated to Australia. Brian re-joined the Hosken Group to jointly found HCI in Brian previously represented the Company as a director of Cohort. Brian currently represents the Company as a director of EON, SCB, EON 2CH, Radio 2CH and Crimsafe. COMPANY SECRETARY Lionel Baldwin CA (SA), B.Comm (Hons) Lionel joined the Hosken Group in 2002 where he held various executive positions in group finance. He has held directorships in several Hosken Group subsidiaries. In January 2011 he left South Africa to jointly found HCI. Lionel performs the role of Chief Financial Officer for the Company and represents the Company as a director of EON, SCB, EON 2CH, Radio 2CH and Crimsafe. DIRECTOR MEETINGS The number of Board meetings held and the number of meetings attended by each of the directors of the Company during the financial year were: BOARD MEETINGS DIRECTOR A B Michael Jacobson 6 6 Robert Moran 6 6 Brian Scheiner 6 6 A Number of meetings held during the time the director held office during the period. B Number of meetings attended. Michael served as Non-Executive Director of the Company from March 2012 to June 2014 when he was appointed as an Executive Director of the Company. Michael was an executive of Hosken Consolidated Investments Limited Group ( Hosken Group ), a public listed entity incorporated in South Africa and listed on the Johannesburg Stock Exchange. He joined the Hosken Group in 2003 and served as an executive until he left South Africa in January 2011 to jointly found HCI Australian Operations Pty Ltd, the Company s majority shareholder. As an executive in the Hosken Group, Michael held directorships in several Hosken subsidiaries, the larger ones being Tsogo Sun Holdings, Mettle and Seardel Investment Corporation. He also served on numerous audit and remuneration committees. Michael also served as Chief Executive Officer of Johnnic Holdings, which was a Johannesburg Stock Exchange listed property and gaming company. Michael is a non-executive director of Montauk Holdings Ltd, listed on the Johannesburg Stock Exchange. Michael previously represented the Company as a director of Baycorp Holdings Pty Limited, an alternate director of BC Holdings and a director of Cohort Holdings Australia Pty Ltd ( Cohort ). He is currently a director of Crimsafe Holdings Pty Ltd ( Crimsafe ). Oceania Capital Partners Limited Annual Report

6 Directors Report ENVIRONMENTAL REGULATION The Company and its controlled entities were not subject to any specific environmental regulations during the period. OPERATING AND FINANCIAL REVIEW The principal activity of the Company during the current and prior reporting periods was investment. The Company has invested in operating businesses, whether privately owned or publicly listed, with decisions being based on the fundamental investment characteristics of the business. The primary objective has been on investing in businesses which have characteristics of resilience and will grow over the investment period, enabling a successful, profitable exit for the Company. The Consolidated Entity s principal investments at the end of the year were: 95% interest in EON Broadcasting Pty Limited ( EON ), the owner and operator of two commercial FM radio stations on the Queensland Sunshine Coast (increased to 98% on 3 April 2018). 85.5% interest in EON 2CH Pty Limited ( EON 2CH ), the owner and operator of a commercial AM radio station and associated DAB+ spectrum in Sydney. 97% interest in the Crimsafe Holdings Pty Ltd ( Crimsafe ), a provider of security screen products. During the year the Consolidated Entity disposed of its % interest in BC Holdings 1 Pty Ltd ( BC Holdings ), a receivables management company. SIGNIFICANT CHANGES IN STATE OF AFFAIRS Other than the changes noted above there were no other significant changes and events affecting the Consolidated Entity during the period under review and until the date of this report. Results of operations The net after tax profit of the Consolidated Entity for the year to 31 March 2018 was $4.2 million (2017: $7.9 million). The current period result includes: Interest income of $0.4 million (2017: $0.3 million). A $1.5 million downward (2017: $0.1 million downward) markto-market adjustment to the carrying value of shares held in Pureprofile Limited. A $0.5 million upward (2017: $0.9 million upward) mark-tomarket adjustment to the carrying value of other listed securities. A profit before tax contribution of $4.2 million from the operations of Sunshine Coast Broadcasters Pty Ltd (SCB) (2017: $3.5 million) A loss before tax contribution of $2.3 million from the operations of Radio 2CH Pty Ltd (2017: $0.2 million loss) A profit before tax contribution of $3.0 million from the operations of Crimsafe (2017: $4.0 million). A $3.1 million realised profit was recognised in relation to the Cohort earn-out. In the prior year a $2.1 million realised profit was recognised on the disposal of the Consolidated Entity s interest in Cohort. FINANCIAL POSITION At 31 March 2018 the Consolidated Entity had net assets of $99.1 million (2017: $95.1 million) and cash at bank of $29.2 million (2017 $17.9 million). At 31 March 2018 the Consolidated Entity s borrowings amounted to $9.4 million (2017: $11.6 million). These borrowings, which are non-recourse to the Company, relate to the bank borrowings of the following subsidiaries: EON Broadcasting Pty Ltd, secured over the assets of EON and SCB Crimsafe Holdings Pty Ltd, secured over the assets of the Crimsafe group of entities. EON Broadcasting Pty Ltd 95% EON reported revenue for the year of $12.3 million (2017: $11.1 million) and Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) of $4.5 million (2017: $3.9 million) from the operations of the radio stations Sea FM 91.9 and 92.7 Mix FM. EON 2CH Pty Ltd 85.5% EON 2CH reported revenue for the year of $1.9 million (2017: $0.3 million) and a Loss Before Interest Tax Depreciation and Amortisation of $2.2 million (2017: $0.2 million loss) from the operations of the Radio 2CH business. The investment in Radio 2CH was acquired by Consolidated Entity on 19 January 2017, accordingly the comparative figures are not directly comparable. Crimsafe Holdings Pty Ltd 97% Crimsafe reported revenue for the year of $39.1 million (2017: $37.5 million) and Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) of $3.6 million (2017: $4.6 million). BC Holdings 1 Pty Ltd During the year the Consolidated Entity disposed of its remaining % equity interest in BC Holdings and the associated stapled loan notes issued by BC Holdings, to Encore Capital Group, Inc ( Encore ). The Consolidated Entity received consideration of $18.2 million, which approximates the carrying value of this investment at the time of disposal. In addition, the Consolidated Entity entered into an agreement with Encore to extend the period during which Encore may lodge a warranty claim in relation to certain specified circumstances ( the Extended Warranty Period ). $1 million of the above proceeds have been escrowed until October 2018 to support any liability arising from any such claim. The quantum of a claim that may arise during the Extended Warranty Period is not limited to the amount placed in escrow. Cohort earn-out In the prior year the Consolidated Entity disposed of its interest in Cohort Holdings Australia Pty Ltd to ASX listed Pureprofile Limited ( PPL ). During the current year OCP received the following earn-out consideration in relation to the disposal: 4,444,444 shares in PPL on 8 November 2017, with a market value of $0.9 million ($0.21 per PPL share), and; $2.15 million in cash. The Consolidated Entity holds a total 7,777,778 PPL shares received in consideration for the Cohort disposal with a market value of $0.86 million ($0.11 per PPL share) at 31 March At 31 March 2018 these PPL shares were held in escrow. On 6 May 2018 these PPL shares were released from escrow. 04 Oceania Capital Partners Limited Annual Report 2018

7 Directors Report LIKELY DEVELOPMENTS AND PROSPECTS The Company will continue its policy of seeking to make investments in opportunities as identified by the Board of Directors and to add value to these over time. Disclosure of specific information regarding likely developments in the activities of the Company and the Consolidated Entity and the expected results of those activities is likely to result in unreasonable prejudice to the Consolidated Entity. Accordingly this information has not been disclosed in this report. DIVIDENDS No interim dividend was declared or paid during the year. Since the end of the financial year the directors have determined a final dividend of 3 cents per share totalling $1,056,947 (2017: $Nil). The dividend will be fully franked based on a corporate tax rate of 30%. SHARE CAPITAL There were no changes to the issued share capital of the Company during the year. EVENTS SUBSEQUENT TO REPORTING DATE Other than as disclosed elsewhere in this report, the directors are not aware of any other matter or circumstance that has occurred since the end of the financial year that has significantly affected or may significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in subsequent financial years. AUDIT AND NON-AUDIT SERVICES Details of amounts paid or payable to BDO, the Company s auditor, for audit services and non-audit services are set out in note 21 to the financial statements. Having considered the nature and value of non-audit services provided by BDO to the Consolidated Entity during the year under review, the directors are satisfied that the provision of these services is compatible with the general standard of independence for auditors imposed by the Corporations Act. LEAD AUDITOR S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 The lead auditor s independence declaration is set out on page 10 and forms part of the Directors Report for the year ended 31 March PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of the Court to bring proceedings on behalf of the Company or 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 any part of those proceedings. ROUNDING OF AMOUNTS The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in the Financial Report and Directors Report have been rounded off to the nearest thousand dollars, unless otherwise stated. This report is made in accordance with a resolution of the Directors. DIRECTORS INTERESTS Director s relevant interests in the shares of Oceania Capital Partners Limited (OCP) as at the date of this report: Directors Fully paid ordinary shares Michael Jacobson 2,222,701 Robert Moran 935,988 Brian Scheiner 2,281,430 Robert Moran Chairman Dated at Sydney this 23rd day of May 2018 REMUNERATION REPORT The Remuneration Report is set out on pages 7 to 9 and forms part of the Directors Report for the year ended 31 March INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company s Constitution provides that the Company may indemnify any current or former director, secretary or executive officer of the Company or of a subsidiary of the Company out of the property of the Company against every liability incurred by a person in that capacity (except a liability for legal costs) and against all legal costs incurred in defending proceedings, whether civil or criminal or of an administrative or investigatory nature, in which the person becomes involved because of that capacity. The Company has entered into Deeds of Access and Indemnity with each of the Officers. In accordance with the provisions of the Corporations Act 2001, the Company has a Directors and Officers Liability policy which covers all past, present or future directors, secretaries and executive officers of the Company and its controlled entities. The terms of the policy specifically prohibit disclosure of details of the amount of the insurance cover and the premium paid. The indemnification and insurances are limited to the extent required by law. Oceania Capital Partners Limited Annual Report

8 Corporate Governance Oceania Capital Partners Limited ( the Company ) is a publicly listed company that is governed by the regulations of the Corporations Act The Company is committed to achieving and demonstrating the highest standards of corporate governance. The Company has reviewed its corporate governance practices against the Corporate Governance principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2018 corporate governance statement is dated as at 22 June 2018 and reflects the corporate governance practices in place throughout the 2018 financial year. The 2018 corporate governance statement was approved by the board on 22 June A description of the Company s current corporate governance practices is set out in the group s corporate governance statement which can be viewed at 06 Oceania Capital Partners Limited Annual Report 2018

9 Remuneration Report Audited This remuneration report, which forms part of the Directors Report and is audited, sets out information about the remuneration of the Consolidated Entity s key management personnel for the year ended 31 March Principles used to determine the nature and amount of remuneration 2 Key management personnel 3 Business performance 4 Details of key management personnel remuneration 5 Equity instruments and disclosures of key management personnel 1 PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION The Consolidated Entity s remuneration policies are designed to align the remuneration of executives with the interests of OCP shareholders. The Board of OCP determines remuneration policies and practices and has responsibility for the remuneration packages and other terms of employment for all key management personnel of the Company. The remuneration arrangements of key management personnel employed by investee entities that are members of the Consolidated Entity are governed by the Remuneration Committee or Board of the relevant member entity. The remuneration policies applied by remuneration committees or boards of those entities are consistent with those of the Company, except as may be required to satisfy the business needs of those entities. Executive remuneration and other terms of employment are reviewed annually by the relevant remuneration committee or board, having regard to the performance goals set at the start of the year, results of the annual appraisal process, relevant comparative information, and, if necessary, independent expert advice on market compensation levels. As well as a base salary, remuneration packages may include superannuation, retention arrangements, termination entitlements, performance related bonuses, long term incentive arrangements and fringe benefits. Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the Consolidated Entity s operations and achieving the Company s strategic objectives. Payment of any performance related bonuses is linked to the achievement of individual objectives which are relevant to meeting the Consolidated Entity s overall goals. In establishing the level of any performance related bonus for an employee, the relevant remuneration committee or board considers the results of a formal annual performance appraisal process. Fixed remuneration Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any fringe benefits tax charges related to non-financial employee benefits) as well as employer contributions to superannuation funds. Performance linked remuneration Performance linked remuneration is designed to reward key management personnel for meeting or exceeding key performance objectives, comprising both corporate and personal objectives. Performance linked remuneration is in the form of cash bonuses. Non-executive director s remuneration Fees and payments to non-executive directors of the Company reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors fees and payments are reviewed annually by the Board. Remuneration of non-executive directors of the Company is determined by the Board within the maximum amount approved by shareholders from time to time. The maximum amount currently stands at $1,000,000 per annum in aggregate for all Non-Executive Directors of the Company. During the current year the level of remuneration of non-executive directors (inclusive of superannuation) was set at $120,000 per annum for the Non-Executive Chairman. The Company s Constitution also allows the Company to remunerate the non-executive directors for any additional or special duties undertaken at the request of the Board. During the year ending 31 March 2018 fees totalling $18,000 were paid in respect of additional services provided by Robert Moran (2017: $18,000). Directors fees are paid in cash. Voting and comments made at the Company s last Annual General Meeting The Company received 99% of yes votes on its Remuneration Report for the financial year ending 31 March The Company did not receive any specific feedback on its Remuneration Report at the Annual General Meeting. 2 KEY MANAGEMENT PERSONNEL The directors and other key management personnel of the Consolidated Entity at the end of the financial year under review were: Non-Executive Director Robert Moran Chairman Executive Directors Michael Jacobson Brian Scheiner Other Senior Executive Lionel Baldwin - Company Secretary and Chief Financial Officer Remuneration and other terms of employment for executives are formalised in service agreements or letters of employment. Participation in long term incentive plans are separately documented in accordance with applicable plan rules. Oceania Capital Partners Limited Annual Report

10 Remuneration Report Audited 3 BUSINESS PERFORMANCE The tables below set out summary of the Consolidated Entity s earnings business performance as measured by a range of financial indicators for the last five financial periods to 31 March For further discussion on financial performance, refer to the review of operations section in the Directors Report. 31 March March March March March 2014 $ 000 $ 000 $ 000 $ 000 $ 000 Profit (Loss) after net financing cost/income, income tax, depreciation and amortisation (from continuing operations) 4,213 7,926 4,949 2,988 (4,853) Profit (Loss) attributable to shareholders of Oceania Capital Partners Limited 4,472 7,811 4,854 2,943 (4,883) Basic earnings per share (cps) (13.83) Share price at period end (cps) DETAILS OF KEY MANAGEMENT PERSONNEL REMUNERATION Details of the nature and amount of remuneration of each director of the Company from OCP and each of the following named Company and relevant group executives who receive the highest remuneration are: a) : Post- Other Short-term employment long-term Annual and Performance long-service based Cash salary Cash bonus Superannuation leave Total percentage of $ $ $ $ $ remuneration Non-executive directors Robert Moran i) 138, ,000 Executive Directors Michael Jacobson 270,012 45,000 29,988 6, ,105 15% Brian Scheiner 265,092 45,000 34,908 6, ,105 15% Other executive Lionel Baldwin 205,762 35,363 29,988 5, ,793 15% 878, ,363 94,884 17,890 1,117,003 i) Paid to a body corporate related to Robert Moran in relation to fees for his service as Non-Executive Chairman and additional services provided to the Company. b) For the year ended 31 March 2017: Post- Other Short-term employment long-term Annual and Performance long-service based Cash salary Cash bonus Superannuation leave Total percentage of $ $ $ $ $ remuneration Non-executive directors Robert Moran i) 138, ,000 Executive Directors Michael Jacobson 270,012 45,000 29,988 4, ,637 15% Brian Scheiner 265,092 45,000 34,908 4, ,637 15% Other executive Lionel Baldwin 205,762 35,363 29,988 3, ,072 15% 878, ,363 94,884 13,233 1,112,346 i) Paid to a body corporate related to Robert Moran in relation to fees for his service as Non-Executive Chairman and additional services provided to the Company. 08 Oceania Capital Partners Limited Annual Report 2018

11 Remuneration Report Audited c) Indemnities and Insurance Amounts disclosed for remuneration of key management personnel exclude insurance premiums paid by the Consolidated Entity during the period ended 31 March 2018 in respect of directors and officers liability insurance contracts as the contracts do not specify premiums paid in respect of individual directors and officers. Information relating to the insurance contracts is set out in the Directors Report. Disclosure of the total amount of the premium and the nature of the potential liabilities in respect of the policy is expressly prohibited by the policy. d) Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements or letters of appointment. These agreements may provide for the provision of performance related cash bonuses and other benefits. Other major provisions of the agreements relating to remuneration are set out below. All arrangements with executives may be terminated early by either party, subject to applicable notice periods and termination payments as detailed below. Michael Jacobson, Executive Director, Oceania Capital Partners Limited Michael Jacobson has been employed as an Executive Director since 1 July From 1 March 2012 to 30 June 2014 he served as a Non-Executive Director of the Company. Michael s current employment arrangements comprise: A base remuneration package of $300,000 per annum including superannuation. Next annual review March Notice period of 3 months. Brian Scheiner, Executive Director, Oceania Capital Partners Limited Brian Scheiner has been employed as an Executive Director since 1 July From 1 March 2012 to 30 June 2014 he served as a Non-Executive Director of the Company. Brian s current employment arrangements comprise: A base remuneration package of $300,000 per annum including superannuation. Next annual review March Notice period of 3 months. Lionel Baldwin, Chief Financial Officer and Company Secretary, Oceania Capital Partners Limited Lionel Baldwin has been employed by the Company since 1 May Lionel s current employment arrangements comprise: A base remuneration package of $235,750 per annum including superannuation. Next annual review March Notice period of 3 months. 5 EQUITY INSTRUMENTS DISCLOSURES OF KEY MANAGEMENT PERSONNEL The number of shares in the Company held, during the financial period, by key management personnel of the Consolidated Entity, including by their personally related entities, are set out below: Balance at Balance at Ordinary shares 1 April Purchases 31 March 2018 Directors Michael Jacobson 2,222,701 2,222,701 Robert Moran 935, ,988 Brian Scheiner 2,281,430 2,281,430 Executives Lionel Baldwin 607, , Directors Michael Jacobson 972,701 1,250,000 2,222,701 Robert Moran 935, ,988 Brian Scheiner 1,031,430 1,250,000 2,281,430 Executives Lionel Baldwin 250, , ,144 This concludes the Remuneration Report which has been audited. Oceania Capital Partners Limited Annual Report

12 Tel: Fax: Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF OCEANIA CAPITAL PARTNERS LIMITED As lead auditor of Oceania Capital Partners Limited for the year ended 31 March 2018, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Oceania Capital Partners Limited and the entities it controlled during the period. Arthur Milner Partner BDO East Coast Partnership Sydney, 23 May 2018 BDO East Coast Partnership ABN is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN , an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 10 Oceania Capital Partners Limited Annual Report 2018

13 Financial Statements CONTENTS Financial statements Consolidated Income Statement 12 Consolidated Statement of Other Comprehensive Income 13 Consolidated Balance Sheet 14 Consolidated Statement of Changes in Equity 15 Consolidated Cash Flow Statement 16 Notes to the financial statements About this report 17 Results for the year 1 Segment information 18 2 Income 19 Income taxes 3 Income taxes 20 Assets 4 Cash and cash equivalents 22 5 Trade and other receivables 22 6 Inventories 23 7 Property, plant and equipment 23 8 Goodwill and other intangible assets 24 9 Other financial assets 25 Capital 10 Share capital Reserves Dividends Earnings per share Borrowings 28 Risk 15 Financial risk management Impairment of non-financial assets 32 Group structure 17 Subsidiaries 33 Unrecognised items 18 Commitments and contingencies Events after the reporting date 34 Other 20 Parent entity disclosures Auditor s remuneration Related party transactions Other accounting policies 36 Oceania Capital Partners Limited Annual Report

14 Consolidated Income Statement Note $ 000 $ 000 Revenue from sales 2 53,390 48,951 Other income 2 1, Total revenue 54,462 49,875 Profit on sale of financial assets 3,145 2,030 Share of profit of jointly controlled entities 577 Fair value adjustment of financial assets (938) 847 Total operating income 56,669 53,329 Raw materials and inventory (21,943) (20,535) Due diligence and transaction costs (186) (333) Broadcast production costs (1,110) (901) Employee benefits expense (12,703) (10,492) Selling costs (1,995) (1,731) Promotions and marketing (4,525) (3,360) Administration and other operating expenses (6,981) (5,371) Depreciation 7 (677) (497) Financing costs (507) (628) Profit before income tax 6,042 9,481 Income tax expense 3 (1,829) (1,555) Profit for the year 4,213 7,926 Attributable to: Equity holders of the parent entity 4,472 7,811 Non-controlling interests (259) 115 Profit for the year 4,213 7,926 Earnings per share attributable to equity holders of the parent Cents Cents Basic earnings per share Diluted earnings per share Oceania Capital Partners Limited Annual Report 2018

15 Consolidated Statement of Other Comprehensive Income Note $ 000 $ 000 Profit for the year 4,213 7,926 OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations (19) 43 Total other comprehensive income (loss) for the period, net of income tax (19) 43 Total comprehensive income for the year 4,194 7,969 Attributable to: Equity holders of the parent entity 4,453 7,853 Non-controlling interests (259) 116 Total comprehensive income for the year 4,194 7,969 Oceania Capital Partners Limited Annual Report

16 Consolidated Balance Sheet Note $ 000 $ 000 ASSETS Current assets Cash and cash equivalents 4 29,243 17,918 Trade and other receivables 5 9,484 8,617 Inventory 6 8,139 6,529 Other financial assets 9 22,520 14,756 Current tax assets 32 Total current assets 69,418 47,820 Non-current assets Other receivables 5 1, Other financial assets 9 19,504 Property, plant and equipment 7 4,330 3,382 Intangible assets 8 46,790 46,790 Deferred tax assets Total non-current assets 52,572 71,005 Total assets 121, ,825 LIABILITIES Current liabilities Trade and other payables 5,692 4,706 Borrowings 14 1,598 4,208 Current tax liabilities Employee benefits Total current liabilities 8,613 9,837 Non-current liabilities Borrowings 14 7,798 7,368 Employee benefits Deferred tax liabilities 3 6,273 6,273 Total non-current liabilities 14,263 13,918 Total liabilities 22,876 23,755 Net assets 99,114 95,070 EQUITY Share capital , ,359 Reserves 11 25,666 25,685 Accumulated losses (170,872) (175,344) Equity attributable to owners of Oceania Capital Partners Limited 98,153 93,700 Non-controlling interests 961 1,370 Total equity 99,114 95, Oceania Capital Partners Limited Annual Report 2018

17 Consolidated Statement of Changes in Equity Foreign Exchange Non- Contributed Equity translation Accumulated controlling Total Equity reserve reserve losses Total interests equity Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 April ,359 25,690 (47) (183,155) 85, ,666 Profit for the year 7,811 7, ,926 Other comprehensive income Total comprehensive income for the year 42 7,811 7, ,969 Transactions with owners in their capacity as owners Issue of shares by subsidiary Balance at 31 March ,359 25,690 (5) (175,344) 93,700 1,370 95,070 Balance at 1 April ,359 25,690 (5) (175,344) 93,700 1,370 95,070 Profit for the year 4,472 4,472 (259) 4,213 Other comprehensive income 11 (19) (19) (19) Total comprehensive income for the year (19) 4,472 4,453 (259) 4,194 Transactions with owners in their capacity as owners Dividend paid by subsidiary (150) (150) Balance at 31 March ,359 25,690 (24) (170,872) 98, ,114 Oceania Capital Partners Limited Annual Report

18 Consolidated Cash Flow Statement Note $ 000 $ 000 Cash flows from operating activities Receipts from customers 57,617 52,759 Payments to suppliers and employees (54,716) (48,860) Interest received Income taxes paid (1,847) (1,541) Net cash inflow from operating activities 4 1,308 2,605 Cash flows from investing activities Proceeds from sale of other financial assets 633 Dividends received Payments for purchase of property, plant and equipment (1,626) (594) Loans advanced (135) Payments for purchase of other financial assets (5,891) (4,492) Proceeds on disposal of interest in BC Holdings 17,188 Proceeds on disposal of interest in Cohort 2,463 9,375 Payment for acquisition of 2CH, net of cash acquired (5,265) Net cash inflow from investing activities 12, Cash flows from financing activities Shares issued by subsidiary 435 Dividend paid by subsidiary (150) Repayment of borrowings (2,179) (1,882) Payment of interest and borrowing costs (507) (627) Net cash outflow from financing activities (2,836) (2,074) Net increase in cash and cash equivalents 11, Cash and cash equivalents at the beginning of the year 17,918 17,165 Cash and cash equivalents at the end of the year 4 29,243 17, Oceania Capital Partners Limited Annual Report 2018

19 Notes to the Financial Statements: About this Report This consolidated financial report for the year ended 31 March 2018 comprises Oceania Capital Partners Limited ( the Company ) and its subsidiaries (together referred to as the Consolidated Entity ) and the Consolidated Entity s interest in associates and jointly controlled entities. The principal accounting policies adopted in the preparation of the consolidated financial report are set out below, and have been consistently applied by each entity in the Consolidated Entity to all periods presented, unless otherwise stated. Oceania Capital Partners Limited is a limited liability company incorporated and domiciled in Australia. The company is a forprofit entity for the purposes of preparing financial statements. The principal activity of the Company is investment. The Company has invested in operating businesses, whether privately owned or publicly listed, with decisions being based on the fundamental investment characteristics of the business. The primary focus is on investing capital in businesses which will grow over the investment period, enabling a successful profitable exit for the Company. The Company, either directly or through subsidiary entities, has invested in a number of businesses, including those that operate in the financial services, commercial radio broadcasting, digital lead generation, security screens, healthcare technology and security industries. The investment in the security industry was exited in April The investment in the healthcare technology industry was exited in July The investment in the digital lead generation industry was exited in October The investment in the financial services industry was exited in January The financial statements were approved by the Board of Directors on 23 May Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASB) adopted by the Australian Accounting Standards Board and the Corporations Act 2001, as appropriate for profit oriented entities. The consolidated financial report of the Consolidated Entity complies with International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board. Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for the following which are measured at fair value: derivative financial instruments financial assets The methods used to measure fair values are discussed further in note 9. Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Company s functional and presentational currency and the functional currency of the entities in the Consolidated Entity at balance date. Rounding The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191. In accordance with that Instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand dollars unless otherwise stated. Key judgements and estimates In the process of applying the Consolidated Entity s accounting policies management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes: 3 Income taxes 6 Inventories 7 Property, plant and equipment 8 Intangible assets 9 Other financial assets 16 Impairment of non-financial assets Basis of consolidation The consolidated financial statements comprise the financial statements of the Consolidated Entity. A list of controlled entities (subsidiaries) at year end is contained in note 17. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated. Subsidiaries are consolidated from the date on which control is obtained to the date on which control is disposed. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Foreign currency The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Australian dollars at foreign exchange rates ruling at balance date. The income and expenses of foreign operations are translated into Australian dollars at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case revenues and expenses are translated at exchange rates at the dates of the transactions). Any exchange differences arising on translation are taken directly to the foreign currency translation reserve in equity. Transactions in foreign currencies are initially translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items that are outstanding at reporting date are translated at the foreign exchange rate prevailing at that date. Foreign exchange gains and losses arising on translation are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the exchange rates prevailing at the dates the fair value was determined. Other accounting policies Significant and other accounting policies that summarise the measurement basis used and are relevant to the understanding of the financial statements are provided throughout the notes to the financial statements. Oceania Capital Partners Limited Annual Report

20 Notes to the Financial Statements: Results for the Year 1 Segment information Operating segments are determined based on the industry sectors in which the Consolidated Entity has invested, which is consistent with the business plan to invest in operating businesses. The primary operating segments during the year ended 31 March 2018 were: Financial Services: receivables management Commercial Radio Broadcasting: operation of AM & FM radio stations Digital lead generation: online lead generation and marketing Security screens: supply of door and window security screens Segment information is disclosed in a manner that reflects the management information reviewed by the Chief Operating Decision Maker and on a financial reporting basis to reflect that the Consolidated Entity does not fully own and, therefore, does not consolidate all the businesses in which it has invested. The Consolidated entity operates materially in one geographical area being the Asia Pacific region. Segment revenues and results The following is an analysis of the Consolidated Entity s revenue and results from operations by reportable segment. Segment revenue Segment profit (loss) $ 000 $ 000 $ 000 $ 000 Commercial radio broadcasting 14,208 11,415 1,818 3,194 Security screens 39,182 37,536 2,992 3,951 Digital lead generation 1,485 2,291 Unallocated 1,254 1,436 53,390 48,951 7,549 10,872 Interest income Central administration and employee costs (1,860) (1,709) Profit before tax from continuing operations 6,042 9,481 Segment profit reported above represents revenue generated from external customers. There were no inter-segment sales in the current period (2017: Nil). Segment profit represents the profit earned by each segment without allocation of central administration costs and directors salaries, investment income, finance costs and income tax expense. The share of equity accounted profits of joint ventures is allocated to the relevant segment. Segment assets and liabilities $ 000 $ 000 Segment assets Commercial radio broadcasting 31,345 31,257 Financial services 18,170 Security screens 42,041 38,635 Total segment assets 73,386 88,062 Unallocated 48,604 30,763 Total assets 121, ,825 Segment liabilities Commercial radio broadcasting 8,231 8,752 Security screens 14,255 14,669 Total segment liabilities 22,486 23,421 Unallocated Total liabilities 22,876 23,755 For the purposes of monitoring segment performance and allocation resources between segments: 1) all assets are allocated to reportable segments other than current and deferred tax assets. Goodwill is allocated to reportable segments, and; 2) all liabilities are allocated to reportable segments other than current and deferred tax liabilities. 18 Oceania Capital Partners Limited Annual Report 2018