Byggfakta Group
Annual Report 2013

Plain-text annual report

annual report 2013 AnnuAl RepoRt 31 December 2013Bell Financial Group limited ABN 59 083 194 763 Contents ExEcutivE chairman’s rEport opErating and Financial rEviEw dirEctors’ rEport (including corporatE govErnancE statEmEnt and rEmunEration rEport) lEad auditor’s indEpEndEncE dEclaration statEmEnt oF proFit or loss statEmEnt oF comprEhEnsivE incomE statEmEnt oF Financial position statEmEnts oF changEs in Equity statEmEnt oF cash Flows notEs to thE Financial statEmEnts dirEctors’ dEclaration indEpEndEnt auditor’s rEport sharEholdEr inFormation dirEctory 02 04 06 23 24 25 26 27 28 29 64 65 67 69 Bell Financial Group 01 Bell FinanCial Group limited (asX: BFG) is a leadinG australian Full serviCe BrokinG and FinanCial advisory Firm with a stronG traCk reCord oF providinG hiGh quality, proFessional adviCe to private, institutional and Corporate investors. Bell has 13 oFFices coverinG australia anD oFFices in honG KonG anD lonDon. 02 ExEcutivE chairman’s rEport last year i suGGesteD our Business woulD improve throuGh 2013, enDinG 5 very DiFFicult years. that DiD in Fact happen. low worlD- wiDe interest rates have increaseD the attraction oF risK assets with commensurate BeneFits to Businesses liKe ours. executive chairman’s report 03 last year i suggested our business would improve through 2013, ending 5 very difficult years. that did in fact happen. low world- wide interest rates have increased the attraction of risk assets with commensurate benefits to businesses like ours. net after tax profit for the year was $6.8 million, up from the previous year's loss of $3.2 million. with one exception, in 2013 all our businesses generated revenues significantly higher than for 2012. as a result we have been able to declare a final dividend of 1.5 cents per share making a total payout for the year of 2.5 cents. the other part of our retail offering which has adapted to changing market conditions is our online broker Bell direct. this is the technology platform we built from scratch, starting in 2007. last year for the first time Bell direct recorded a small pre-tax profit and we're excited. apart from the major banks, Bell direct is the biggest player in the space. now we are at break-even the operational leverage is huge; in this business all our marginal revenues drop to the bottom line (and are likely to stick there). the platform is highly scalable and also highly saleable to the large intermediaries as a white label product. it is possible that very little value is attributed to this part of BFg since it is under the radar, partly because it's a start up business and partly because it's (only) a 51% owned subsidiary, despite the fact BFg has the right to go to 100% ownership. i have no doubt that as a standalone business Bell direct would attract a significant valuation. i am confident that in time the market will come to recognize this. Finally i would like to acknowledge the contribution of uBs for the role they played in the long and mutually rewarding research and distribution arrangement that we first entered into in 2001. these days there are not many market agreements that have stood the test of time as that one did. our managing director alastair provan will now give you more detail about last year's performance. Colin m. Bell Executive chairman Bell Financial group ltd as i've said before the tough times were good for BFg in the sense that they forced us to streamline our business and get the company 'match fit'. this result demonstrates that point. From an operational point of view, we have great leverage to better markets and improving revenues. after we cover costs, 50% of marginal revenues drop to the bottom line (pre-tax) so we have a high conversion rate of earnings to free cash flow (and dividends, given our consistent payout policy). the main risks we face today comprise the ever present market risk, the relatively new collection of regulatory and compliance risks and the risk that we do not constantly adapt to changing client requirements. there is not a lot we can do about market risk except for preserving the strength of our balance sheet. other than debt in the margin lending business we operate on a cash in the bank basis. regulatory and compliance risks for retail brokers today are high and our policy is to spend as much time and effort as is needed to ensure we are always a compliant market participant and that we continually try to fulfil our 'know your client' obligations. we believe we are on top of these challenges but we know the job is never done. as far as being in front of the curve and adapting to changing client requirements, we think we are in good shape. our institutional business has a transparent remuneration structure like no other in the market and partly as a result, is able to punch way above its weight. in the full service retail market we think we are perfectly positioned to meet all the needs of our very large client base. last week we announced our new research and distribution deal with citi. Because they are a huge global bank with no local retail distribution, we think this new deal has ingredients which could be transformational for Bell potter. 04 opErating and Financial rEviEw i am pleased to report a welcome return to profitability with the Group recording a full year after-tax profit of $6.8 million for Financial year 2013, a significant improvement on last year’s $3.2 million after-tax loss. top line revenues improved by 17% to $159 million while overheads, excluding commissions paid to advisers, were down 7% ($5 million) largely due to the extensive cost reduction exercise undertaken mid-way through 2012. market conditions remained challenging throughout the year. daily turnover was patchy, although an improvement on 2012, and capital market flows stronger but slightly erratic. the continuing low interest rate investment in australia and a significantly lower australian dollar were market positives while weakness in the resources sector and constant speculation regarding the sustainability of chinese growth were negatives which capped market gains. the australian all ordinaries index rose 15% over the course of the year, primarily lead by the banks, which reflected well in the values of client portfolios. revenues in our retail division grew on average by 12%. daily brokerage increased by 18% over the previous year in line with improved investor confidence and better market turnover. the value of Funds under advice, mainly sponsored holdings, increased through a combination of new investment and higher prices as did recurring revenue from our portfolio administration service platform. our wholesale division benefited from better volumes. our sydney institutional desk, with the support of our internal research team, has developed a reputation as a market leader in the small / mid cap australian Equities space. our hong Kong desk which has now been operating for a little more than 12 months is gaining good traction with its expanding asian client base. once again london made a solid contribution, particularly in relation to the distribution of new issues. our Equity capital markets team had a much better year. revenues were up 32% as a result of a higher number of completed transactions particularly in the second half of the year. the team has a strong pipeline of carry over transactions for 2014. our cash and margin lending business once again performed well in a tough market. the loan book grew by 17% to $172 million despite investors remaining cautious. the cash book was steady throughout and margins across the whole business were maintained in a very competitive environment. this business continues to be managed conservatively with an average loan to value ratio (lvr) of 32%. no bad debts were incurred during the period. Bell Financial group currently owns 51.23% of Bell direct. the business has grown strongly with revenues up 30% year on year, 50,000 active trading accounts and $3.5 billion in sponsored holdings. Bell direct was close to break-even over the full year and is well positioned to move to sustainable future profitability and contribute to the group’s bottom line. BalanCe sheet we have a strong balance sheet and cash position. the business carries no debt other than the cash advance facility in our margin lending business, Bell potter capital. net assets at year end were $180 million (2012: $176 million), net tangible assets were $47 million (2012: $44 million) and cash and cash equivalents (excluding margin lending and client cash) were $52 million (2012: $42 million). overheads group overheads excluding commission paid to advisers were $71 million, down 7% or $5 million on 2012. as previously stated the reduction was due mainly to the extensive review undertaken mid-way through 2012. we continuously monitor our cost structure to ensure it is appropriate as market conditions change. outlook it is difficult to make projections in our business. last year i said our leverage to a positive change to investment sentiment was high. that argument remains valid, if not more so, and 2013 was just a small indication of what we can achieve. Early signs suggest that 2014 should be better again. yours sincerely alastair provan managing director Bell Financial group ltd operatinG anD Financial review 05 revenue ($a m) 2009-2013 net proFit/(loss) aFter taX ($a m) 2009-2013 equities eXeCution revenue ($a m) 2009-2013 Funds under adviCe ($a B) 2009-2013 206.7 200.2 155.5 159.1 136.5 250 200 150 100 50 0 108.3 111.0 91.5 90.9 76.8 27.3 21.6 30 25 20 15 10 5 0 -5 7.6 6.8 -3.2 120 100 80 60 40 20 0 30 25 23.7 22.2 28.2 24.4 18.8 20 15 10 5 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 revenue net profit / (loss) after tax equities execution revenue Funds under advice ■ 2013 group revenue was ■ consolidated full year $159.1m, up 17% on 2012. the increase was largely due to an improvement in both Equities Execution revenues and Equity capital markets revenues as market sentiment and investor confidence improved on the prior year. profit after tax was $6.8m, a $10m turnaround on the 2012 result. we are confident the business remains well positioned to benefit from a positive change to investment sentiment. ■ 2013 Equities Execution revenue was $90.9m, up 18% on the prior year. the improvement was largely driven by the retail division as investors tentatively re-entered the market. wholesale also improved on 2012 albeit to a lesser extent. ■ Funds under advice (Fua) includes sponsored holdings, cash, margin loans, portfolio administration services (pas) and superannuation. ■ Fua increased 16% over 2013 to $28.2b. the increase was largely attributable to movement in market indices. equity Capital markets revenue ($a m) 2009-2013 marGin lendinG & Cash revenue ($a m) 2009-2013 Bell direCt (online) Gross revenue ($a m) 2009-2013 6.9 5.9 5.6 5.5 4.4 50.5 38.1 60 50 40 30 20 10 0 26.9 24.1 18.2 8 7 6 5 4 3 2 1 0 9.2 7.0 7.0 10 9 8 7 6 5 4 3 2 1 0 5.6 3.7 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 equities Capital markets revenue ■ Ecm revenue was up 32% on the prior year to $24.1m, as a result of a higher number of completed transactions, particularly in the second half. Bell potter Capital margin lending and Cash revenue ■ Bell potter capital, our margin lending and cash business, performed solidly throughout 2013. loan balances increased 17% to $172m, average margins were maintained, and there were no bad debts of note. Bell direct (online) ■ Full year Bell direct consolidated revenues and expenses were included in the group’s results for the first time. while the overall Bell direct result was around breakeven, key metrics including revenues, client acquisition and sponsored holdings all continue to grow strongly. ■ 2013 revenue numbers include a full 12-month contribution from Bell direct which was consolidated from 28 may 2012 onward (additional 5-months contribution due to consolidation – approximately $3m). 06 dirEctors’ rEport For thE yEar EndEd 31 dEcEmbEr 2013 mr CraiG Coleman Bcomm, university of western australia mr coleman was appointed as a director in July 2007 and has been a non-executive director since october 2007. he is a member of the group risk and audit committee and the remuneration committee. mr coleman is a senior advisor and non-executive director of private investment company, wyllie group pty ltd. previously, he was managing director and a non-executive director of home Building society limited. prior to joining home Building society, mr coleman held a number of senior executive positions and directorships with anZ, including managing director – Banking products, managing director – wealth management and non-executive director of E*trade australia limited. mr Graham CuBBin BEcon (hons), monash university Fellow of the australian institute of company directors mr cubbin was appointed as a non- executive director in september 2007 and is an independent director. he is chairman of the group risk and audit committee and the remuneration committee. mr cubbin was a senior Executive with consolidated press holdings limited (cph) from 1990 until september 2005, including chief Financial officer for 13 years. prior to joining cph, he held senior finance positions with a number of major companies including capita Financial group and Ford motor company. mr cubbin has over 20 years’ experience as a director and audit committee member of public companies in australia and the us. other listed companies – past three years chairman, rubik Financial limited (december 2006 – present) non-executive director, amcom telecommunications limited (october 2008 – present) chairman, lonestar resources limited (July 2008 – present) non-executive director, pulse health limited (January 2010 – present) other listed companies – past three years non-executive director, challenger limited (January 2004 – present) non-executive director, stw communications group limited (may 2008 – present) non-executive director, white Energy company limited (February 2010 – present) non-executive director, mcpherson’s limited (september 2010 – present) the directors of Bell Financial Group limited (“Bell Financial” or “Company”) present their report on the consolidated entity (“Group”) consisting of Bell Financial and its controlled entities and associates at the end of or during the year ended 31 december 2013. direCtors the directors of Bell Financial group limited during the whole of the year and up to the date of this report were: ■ mr c Bell ■ mr a provan ■ mr c coleman ■ mr g cubbin ■ mr B wilson ■ ms B shanahan. particulars of the directors’ qualifications, experience, special responsibilities and any directorships of other listed companies are set out below. mr Colin Bell BEcon (hons), monash university mr Bell is the Executive chairman of Bell Financial and has responsibility for the business development of the company and all associated businesses within the group. mr Bell founded Bell commodities in 1970 after working with the international Bank for reconstruction and development in washington dc, usa. mr alastair provan mr provan is the managing director of Bell Financial and is responsible for the day-to-day management of all businesses within the group. mr provan joined Bell commodities in 1983 and held a number of dealing and management roles prior to becoming managing director in 1989. mr provan is a member of the remuneration committee. Directors’ report For the year enDeD 31 DecemBer 2013 07 mr Brian wilson mcomm (hons), auckland mr wilson was appointed as a non-executive director in october 2009. mr wilson is also chairman of the Foreign investment review Board, deputy chancellor of university of technology, sydney, and a member of the payments system Board of the reserve Bank of australia. he was a member of the commonwealth government review of australia’s superannuation system and is currently a member of the ato superannuation reform steering committee. mr wilson retired in 2009 as a managing director of the global investment bank lazard, after co-founding the firm in australia in 2004 and was previously a vice-chairman of citigroup australia and its predecessor companies. ms Brenda shanahan B.comm, melbourne university Fellow of the australian institute of company directors ms shanahan was appointed as a non- executive director in June 2012 and is an independent director. she is a member of the group risk and audit committee and the remuneration committee. ms shanahan has served in senior executive and Board roles in australia and overseas, primarily in the finance and stock broking industries, during a career spanning more than 30 years. ms shanahan was previously an Executive director of Jm Financial group limited, may mellor, Equitlink limited and william m mercer. ms shanahan also chairs the st vincent’s medical research institute and the aikenhead centre for medical discovery and is a director of the Kimberley Foundation australia. other listed companies – past three years non-executive director, clinuvel pharmaceuticals limited (February 2007– present) non-executive director, challenger limited (april 2011 – present) prinCipal aCtivities Bell Financial is an australian-based provider of stockbroking, investment and financial advisory services to private, institutional and corporate clients. operating across a network of 13 offices in australia plus offices in london and hong Kong, Bell Financial has approximately 600 employees, including more than 300 experienced advisers, serving over 160,000 active clients with funds under advice exceeding $28 billion. Bell Financial has a 51.23% holding in third party platform pty ltd (Bell direct), an online stockbroking business. operations the group’s consolidated operating result after income tax attributable to members was a profit of $6.8 million (2012: $3.2 million loss). a review of the operations of the group is set out in the operating and Financial review section on pages 4 to 5. option to aCquire shares in Bell direCt the company has a call option to purchase all the shares in Bell direct it does not own, taking its holding to 100%. the exercise price of the call option is to be satisfied by Bell Financial issuing new shares and values all of Bell direct’s existing share capital at $70 million. the company has until 31 January 2015 to exercise the call option. the company has granted a put option in favour of certain Bell direct management shareholders (who together held approximately 4.5% of the shares in Bell direct) permitting them to sell their Bell direct shares to the company. the put option values Bell direct at $35 million and is exercisable at any time before 31 January 2015. in late January 2013, two Bell direct shareholders exercised their put options, which resulted in Bell Financial’s ownership interest in Bell direct increasing from 49.83% to 51.23%. issue of shares under the call option is subject to shareholder approval, which the company will seek at the appropriate time in accordance with the corporations act and asx listing rule requirements and prior to the exercise of the option. Bell Financial is under no obligation to exercise the call option and any decision whether or not to exercise it will be made by the company’s independent non-executive directors at the relevant time. as noted in the company’s previous annual reports, the proposed issue of Bell Financial shares to the grantors of the call option will be subject to obtaining relevant asic relief or shareholder approval. 08 Directors’ report For the year enDeD 31 DecemBer 2013 matters suBsequent to the end oF the FinanCial year there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to significantly affect: ■ the group’s operations in future financial years, or ■ the results of those operations in future financial years, or ■ the group’s state of affairs in future Bell Financial’s alliance with citi replaces the long-standing relationship the company has had with uBs. the strategic alliance agreement had an initial term of three years from 12 december 2007 and was extended for a further three year term to 12 december 2013, then again to 28 February 2014. as at the date of this report, uBs owns 16.27% of the ordinary shares in the company. on termination of the strategic alliance agreement, all of the company’s obligations to uBs regarding shareholder restrictions, non- dilution rights and distribution exclusivity fall away. Final dividend on 25 February 2014, the directors resolved to pay a fully franked final dividend of 1.5 cents per share. financial years, other than: Citi and Bell potter siGn mou on 20 February 2014, Bell Financial announced that it had signed a memorandum of understanding (mou) with citi. the arrangement will see Bell potter’s retail and sophisticated investor clients provided with access to citi’s highly ranked global research platform and securities products. the products will include equity offerings, equity-linked (hybrid instruments) and certain fixed interest products. Bell potter’s retail clients will be able to access a research offering which combines citi’s resources of highly rated research teams in EmEa, asia and the americas with Bell potter’s own predominantly small and medium capitalized company research. the distribution and research agreement is being finalised and is intended to take effect in the coming weeks. Directors’ report For the year enDeD 31 DecemBer 2013 09 direCtors’ meetinGs the number of meetings of the company’s Board of directors held during the year ended 31 december 2013, and the number of meetings attended by each director, are set out below. Each director was a director for the full year. direCtor Board meetinGs Group risk and audit Committee meetinGs remuneration Committee meetinGs colin Bell alastair provan graham cubbin craig coleman Brian wilson Brenda shanahan a 5 4 5 5 5 4 B 5 5 5 5 5 5 a - - 6 6 - 6 B - - 6 6 - 6 a - 2 2 2 - 2 B - 2 2 2 - 2 a – number of meetings attended B – number of meetings held during the year direCtors’ interests the relevant interests of each director in the shares and options over such instruments issued by the company as of the date of this report is as follows: Bell FinanCial Group ltd direCt indireCt total numBer oF options ordinary shares name colin Bell alastair provan graham cubbin craig coleman Brian wilson Brenda shanahan 2,560,683 31,264,919 33,825,602 2,415,891 31,264,919 33,680,810 130,000 50,000 180,000 39,264 1,733,019 1,772,283 - - 1,000,000 1,000,000 250,000 250,000 - - - - - - there were no changes to directors’ interests in the company’s shares between 31 december 2013 and the date of this report. dividends dividends paid or declared by the company to members during the financial year were as follows: Cents per share total amount $’000 Franked/ unFranked date oF payment deClared and paid durinG the year Final 2012 ordinary interim 2013 ordinary - 1.0 - 2,596 - - Franked 25 september 2013 all dividends declared were fully franked at the tax rate of 30%. there were no dividends declared in 2012. the directors have declared a final 2013 dividend (see previous page). 10 Directors’ report For the year enDeD 31 DecemBer 2013 Company seCretary 1.2 Chairman cindy-Jane lee BEc/llB was appointed as company secretary on 10 January 2014 and is also the company’s general counsel. ms lee has over 13 years’ experience in corporate and financial services law and has previously worked in london and singapore. ms lee replaced dean davenport BBus, chief Financial officer, who was the company secretary from 18 July 2013 to 10 January 2014. mr davenport is a chartered accountant with over 20 years financial services industry experience. paul vine was company secretary from 2007 to 19 July 2013. Corporate GovernanCe Bell Financial recognises the importance of good corporate governance practices. this section outlines key aspects of its corporate governance policies and frameworks. Bell Financial developed its corporate governance framework by reference to the asx corporate governance council’s corporate governance principles and recommendations with 2010 amendments (“asx recommendations”). the asx recommendations are guidelines of practices designed to optimise corporate performance and accountability. having regard to the structure, size and nature of operations of Bell Financial, the Board considers that certain asx recommendations are not appropriate to its particular circumstances at present. departures from the asx recommendations are identified below. 1.0 Board oF direCtors 1.1 Composition of the Board the members of the Board and their experience and qualifications were set out on pages 6 to 7. the chairman of the Board is not an independent director. this represents a departure from the asx recommendations. colin Bell serves as the Executive chairman. the Board considers that this is in the best interests of Bell Financial given his experience, expertise and understanding of the business. alastair provan, the managing director, has the primary responsibility for the discharge of the chief executive function including the day-to-day management of Bell Financial. in this way, the Executive chairman is not distracted in performing the role of chairman effectively. 1.3 directors’ independence an independent director is a non- executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement. the Board charter contains the principles used by the Board in assessing independence. during 2013, there were four non- executive directors on the Board - graham cubbin, craig coleman, Brian wilson, and Brenda shanahan. mr cubbin and ms shanahan are independent non-executive directors. the Board did not consider that mr coleman was an “independent” director in 2013 as he provided consultancy services to Bell Financial during the year. the Board did not consider that mr wilson was an “independent” director in 2013 as he provided consultancy services to Bell Financial in 2012. their status as independent directors may change over time and this will be disclosed to the market in a timely manner. as at the date of this report the Board does not have a majority of independent directors, however it has a majority of non- executive directors. the Board considers that it has the appropriate balance of experience, expertise and independence to enable it to discharge its functions effectively. 1.4 independent professional advice directors are, after consultation with the chairman, able to seek independent professional advice at the company’s expense. where appropriate, the advice may be made available to the Board. 1.5 director education the group has a formal process to educate new directors about the nature of the business, current issues, the corporate strategy, and the expectations of the group concerning performance of directors. directors also have the opportunity to meet with management to gain a better understanding of business operations. directors are given access to continuing education opportunities to update and enhance their skills and knowledge. 2.0 Board responsiBilities the Board is responsible for the overall corporate governance of Bell Financial, which includes effective oversight of management. the Board has adopted a Board charter, a copy of which is available on Bell Financial’s website, www.bellfg.com.au/corporategovernance. aspx. the Board charter contains a description of the specific responsibilities reserved to the Board. the Board charter also describes the nature of matters delegated to the senior executives, and includes a description of the respective roles of the Executive chairman and the managing director. this description is designed to clearly identify the division of responsibility at the senior executive level of Bell Financial. the managing director has authority to sub-delegate to the senior executive team. whilst the appointment of an Executive chairman represents a departure from the asx recommendations, the Board is satisfied that the division of responsibility is clearly articulated and ensures appropriate accountability. Directors’ report For the year enDeD 31 DecemBer 2013 11 the Board is responsible for monitoring the senior executive team’s performance. as part of the delegation of authority to manage the day-to-day affairs of the company, the managing director carries out a performance evaluation for senior executives regularly, against appropriate performance objectives and indicators. a performance evaluation for senior executives was carried out by the managing director in 2013 in accordance with that process. 3.0 Board Committees the Board charter contemplates that the Board may delegate certain functions to Board committees to assist the Board in the discharge of its oversight role. these committees are required to consider particular issues in detail and then report back to and advise the Board. the Board has established two standing committees, the functions of which are discussed below. a copy of the Board committee charters are also available on Bell Financial’s website, www.bellfg.com.au/ corporategovernance.aspx. 3.1 Group risk and audit Committee the group risk and audit committee (grac) assists the Board to carry out its oversight role in relation to risk management, accounting, auditing and financial reporting. the core responsibilities of the grac include reviewing and, where required, providing recommendations to the Board on: ■ the effectiveness of Bell Financial’s risk management and internal control systems, ■ external financial reporting and financial statements, ■ the discharge of the internal audit function, and ■ matters relating to the appointment, independence and performance of the external auditor, and the rotation of the external auditor. the grac charter stipulates that the chair of the committee must be an independent non-executive director, who is not the chairman of the Board. the grac charter also stipulates that the committee must be comprised of only non-executive directors, a majority of independent directors and have at least three members. during 2013, the members of the grac were mr cubbin (chairman), mr coleman, and ms shanahan. Each director was a grac member for the full year. a copy of the grac charter is available on Bell Financial’s website, www.bellfg.com.au/ corporategovernance.aspx. 3.2 remuneration committee the remuneration committee assists and advises the Board on remuneration matters. the role of the remuneration committee is to develop, review and make recommendations to the Board on the remuneration framework for the non-executive directors, executive directors, other key management personnel and senior executives. this includes recommendations in relation to incentive schemes and equity based plans where appropriate. an overview of Bell Financial’s remuneration policy and framework is contained in section 2 of the remuneration report. the members of the remuneration committee during 2013 were mr cubbin (chairman), mr coleman, mr provan, and ms shanahan. Each director was a committee member for the full year. the composition of the remuneration committee represents a departure from the asx recommendations that propose that a majority of members should be independent directors. however, the Board is satisfied that, given the majority of non-executive directors, the remuneration committee has the appropriate balance of experience, expertise and independence to enable it to discharge its functions effectively. a copy of the remuneration committee charter is available on Bell Financial’s website, www.bellfg.com.au/ corporategovernance.aspx. 4.0 Board nominations and renewal the company does not have a nominations committee and this is a departure from the asx recommendations. the Board does not consider that delegating the Board selection and appointment practices of Bell Financial to a separate committee would enhance efficiency. instead, the Board has reserved to itself relevant responsibilities, including appointing and removing the managing director, developing and approving succession plans for the Board and key senior executives, and overseeing that membership of the Board has the mix of experience, skills and diversity appropriate for Bell Financial’s needs, as identified in the Board charter. a performance evaluation in accordance with the Board charter was carried out in 2013 in relation to the directors and the two Board committees. there must be an election of directors at each annual general meeting. the constitution of the company provides, amongst other things, for a process of retirement of directors by rotation (which will occur for each director approximately every three years except for the managing director, alastair provan). directors who retire from office are eligible to stand for re-election. 5.0 Company poliCies 5.1 ongoing disclosure with a view to ensuring that investors are informed of all major developments affecting Bell Financial and its businesses, the Board has adopted policies designed to ensure that Bell Financial meets the continuous disclosure obligations imposed by the asx listing rules and the corporations act. information is communicated to shareholders through asx announcements, annual reports and half-yearly updates which are accessible on Bell Financial’s website, www.bellfg.com.au. a copy of the disclosure and communications policy and guidelines is available on Bell Financial’s website, www.bellfg.com.au/corporategovernance. aspx. 12 Directors’ report For the year enDeD 31 DecemBer 2013 5.2 securities trading guidelines Bell Financial has adopted a trading policy that applies to directors, executives and employees of Bell Financial. the trading policy explains the type of conduct in relation to dealings in the company’s securities that is prohibited under the corporations act, and establishes procedures in relation to directors, executives and employees dealing in securities of the company. under the trading policy, directors and designated employees may not deal in securities of the company during the following “black-out periods” (subject to limited exceptions): ■ from the end of the company’s financial year (31 december) until release of its full year results in February; and ■ from the end of the company’s half- year (30 June) until release of its half-year results in august. other “black-out periods” may be declared from time to time. the policy contains an approval process to be followed by directors and other designated employees if they propose to deal in the company’s securities. a copy of the trading policy is available on Bell Financial’s website, www.bellfg.com.au/ corporategovernance.aspx. 5.3 Code of conduct Bell Financial has developed a code of conduct (code), which applies to all directors, officers, employees, contractors, consultants and associates. Bell Financial is committed to honesty and integrity in all its dealings, as well as ensuring the highest quality of service is provided to customers and clients at all times. the code sets out the ethical standards, values and policies of the company. it provides a framework to guide compliance with legal and other obligations to stakeholders, commitment to which the Board believes will maintain the confidence of the company’s stakeholders. the code states that all potential or actual conflicts of interest must be avoided or disclosed. directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the company. where the Board believes that a significant conflict exists for a director on a Board matter, the director concerned will not receive the relevant Board papers and must not be present at the meeting while the item is considered. details of the director related party transactions with the company and the group are set out in note 33 of the financial statements. 5.4 diversity considerable diversity exists throughout the Bell Financial group, in terms of age, culture and gender. the company values diversity in the workplace and is committed to employing people on the basis of the “best fit” for the job, based on relative ability, performance and potential. the company departs from the asx recommendations in that it does not disclose measurable objectives around gender diversity, nor does it disclose the proportion of women employees at organisation, senior executive and Board level. Bell Financial has a diversity policy, which is available on the company’s website, www.bellfg.com.au/ corporategovernance.aspx. 5.5 risk assessment and management the Board understands that the management of risk is a continuous process and an integral part of sound business management and corporate governance. the group risk and audit committee (grac) plays a key role in assisting the Board with its responsibilities relating to accounting, internal control systems, reporting practices, risk management and monitoring the independence of the company’s external auditors. the company has implemented a risk management policy and Framework based on australian/new Zealand standard as/nZ iso 3100:2009 Risk Management Standard. a description of the risk management policy Framework is available on Bell Financial’s website, www. bellfg.com.au/corporategovernance.aspx. the grac reviewed and approved the company’s risk management policy and its risk management plan in 2013. the grac reported to the company’s Board on these matters and the Board is satisfied that the company’s risk management and internal control system is appropriate. the group’s principal financial instruments comprise listed securities, derivatives, term deposits and cash. the main risks arising from the group’s financial instruments are market risk, credit risk and liquidity risk. these are examined in more detail in note 3 of the financial statements. 5.6 Financial reporting the managing director and chief Financial officer have declared in writing to the Board that the declaration provided to the Board in accordance with section 295a of the corporations act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. 5.7 external auditors the company policy is to appoint external auditors who demonstrate quality and independence. the performance of the auditor is reviewed annually. Kpmg is Bell Financial’s external auditor. an analysis of fees paid to the external auditor is provided in note 37 of the financial statements. the external auditor will attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. Directors’ report For the year enDeD 31 DecemBer 2013 13 the company may decide to engage the auditor on assignments additional to their statutory audit duties where the auditor’s expertise in relation to the group is important. the Board has considered the position and, in accordance with the advice from the group audit and risk committee (grac), is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors outlined by the corporations act. the directors are satisfied that the auditor’s independence is not compromised in relation to non-audit services for the following reasons: ■ all non-audit services have been reviewed by the grac to ensure they do not impact the impartiality and objectivity of the auditor, ■ none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of ethics for professional accountants. 5.8 internal audit the internal auditors assist the grac in ensuring compliance with internal controls and risk management programs by regularly reviewing the effectiveness of the company’s internal controls and systems. the grac is responsible for approving the program of internal audit visits to be conducted each financial year and for the scope of the work to be performed. the grac is responsible for recommending to the Board the appointment and dismissal of the internal audit and risk manager. 6.0 asX Corporate GovernanCe reCommendations the asx listing rules require listed entities to include in their annual report a statement disclosing the extent to which they have followed the recommendations set out by the asx corporate governance council during the reporting period, identifying the recommendations that have not been followed and giving reasons for not following them. asX Corporate GovernanCe reCommendation reFerenCe Comply prinCiple 1: lay solid Foundations For manaGement and oversiGht 1.1 1.2 1.3 Establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. disclose the process for evaluating the performance of senior executives. provide the information indicated in the guide to reporting on principle 1. prinCiple 2: struCture the Board to add value 2.1 2.2 2.3 2.4 2.5 2.6 a majority of the Board should be independent directors. the chair should be an independent director. the roles of chair and chief Executive officer should not be exercised by the same individual. the Board should establish a nomination committee. disclose the process for evaluating the performance of the Board, committees and individual directors. provide the information indicated in the guide to reporting on principle 2. prinCiple 3: promote ethiCal and responsiBle deCision makinG Establish a code of conduct and disclose the code or a summary of the code as to: ■ the practices necessary to maintain confidence in the company’s integrity ■ the practices necessary to take into account the company’s legal obligations and the reasonable expectations of stakeholders ■ the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. Establish a policy concerning diversity and disclose the policy or a summary of that policy. the policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and progress for achieving them. disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them. disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board. 3.1 3.2 3.3 3.4 3.5 2 2 2 1.3 1.2 1.2 4 4 1 5.3 5.4 3 3 3 non-comply non-comply 3 non-comply 3 3 3 3 non-comply non-comply provide the information indicated in the guide to reporting on principle 3. 5.4 3 14 Directors’ report For the year enDeD 31 DecemBer 2013 asX Corporate GovernanCe reCommendation reFerenCe Comply prinCiple 4: saFeGuard inteGrity in FinanCial reportinG 4.1 4.2 4.3 4.4 the Board should establish an audit committee. the audit committee should be structured so that it: ■ consists of only non-executive directors ■ consists of a majority of independent directors ■ is chaired by an independent chair, who is not chair of the Board ■ has at least three members. the audit committee should have a formal charter. provide the information indicated in the guide to reporting on principle 4. prinCiple 5: make timely and BalanCed disClosure 5.1 5.2 Establish written policies designed to ensure compliance with asx listing rules disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies. provide the information indicated in the guide to reporting on principle 5. prinCiple 6: respeCt the riGhts oF shareholders 6.1 6.2 design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose the policy or a summary of that policy. provide the information indicated in the guide to reporting on principle 6. prinCiple 7: reCoGnise and manaGe risk 7.1 7.2 7.3 Establish policies for the oversight and management of material business risks and disclose a summary of those policies. the Board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. the Board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks. the Board should disclose whether it has received assurance from the chief Executive officer (or equivalent) and the chief Financial officer (or equivalent) that the declaration provided in accordance with section 295a of the corporations act is founded on a sound system of risk management and internal control and that the system is operating efficiently in all material respects in relation to financial reporting risks. 3.1 3.1 3.1 3.1 5.1 5.1 5.1 5.1 5.5 5.5 5.6 7.4 provide the information indicated in the guide to reporting on principle 7. 5.5, 5.6 prinCiple 8: remunerate Fairly and responsiBility 8.1 8.2 8.3 8.4 the Board should establish a remuneration committee. the remuneration committee should be structured so that it: ■ consists of a majority of independent directors ■ is chaired by an independent director ■ has at least 3 members. clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives. provide the information indicated in the guide to reporting on principle 8. 3.2 3.2 3.2 3.2 3.2, remuneration report 3.2, remuneration report 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 non-comply 3 3 3 3 Directors’ report For the year enDeD 31 DecemBer 2013 15 remuneration report (audited) 1. key management personnel (kmp) Kmp include each of the directors, both non-executive and executive, and those executives who have authority and responsibility for planning, directing and controlling the activities of Bell Financial group. in this report, “Executive Kmp” refers to Kmp other than non-executive directors. the Kmp for 2013 are set out in the Kmp remuneration table in section 8.5 below. 2. overview of remuneration policy and framework Bell Financial group remunerates Executive Kmp and other executives, management and advisers by one or more of fixed salary, commission entitlements and other short-term and long-term incentives. non-executive directors receive a fixed fee and statutory superannuation only for their role on the Board. in considering the group’s performance and benefits for shareholder wealth, the remuneration committee and the Board have regard to the following financial indicators in respect of the current financial year and previous financial years. net profit / (loss) after tax share price at year end dividends declared 2009 $’000 2010 $’000 $27,288 $21,569 $1.17 $0.97 $19,377 $16,162 2011 $’000 $7,639 $0.605 $7,649 2012 $’000 ($3,189) $0.46 - 2013 $’000 $6,811 $0.70 $2,596 the company has established two equity-based plans to assist in the attraction, retention and motivation of Executive Kmp, management and employees of the company. the long term incentive plan and the Employee share acquisition (tax exempt) plan. Each plan contains customary and standard terms for dealing with the administration of an employee share plan, and the termination and suspension of the plan. participants in the plans must not enter into a transaction or arrangement or otherwise deal in financial products which operate to limit the economic risk of the unvested Bell Financial group securities issued under the plans. 3. Fixed compensation Fixed compensation consists of base compensation as well as employer contributions to superannuation funds. compensation levels are reviewed annually through a process that considers individual performance and that of the overall group. 4. Commission commission entitlements are determined by the Board from time to time and aim to align the remuneration of Executive Kmp and advisers with the company’s performance. in general, certain executives and advisers are paid a commission based on revenue generated by the individual during the year. this creates a strong incentive for key executives and advisers to maximise the company’s revenues and performance. 5. performance linked compensation performance linked compensation includes both short-term and long-term incentives and is designed to reward executive directors and Executive Kmp for meeting or exceeding their financial and individual objectives. the short-term incentive is an ‘at risk’ bonus provided in the form of cash, while the long-term incentive is provided as options or performance rights over ordinary shares of the company. 16 Directors’ report For the year enDeD 31 DecemBer 2013 8.2 executives all key executives are permanent employees of Bell Financial group. Each executive has an employment contract with no fixed end date. any executive may resign from their position by giving four weeks’ written notice. the company may terminate an employment contract by providing written notice and making payment in lieu of notice in accordance with the company’s termination policies. the company may terminate an employment contract at any time for serious misconduct. Eligible persons participating may be granted options or performance rights on the terms and conditions in the ltip rules and as determined by the Board from time to time. an option or performance right is a right, subject to the satisfaction of the applicable vesting conditions and exercise conditions, to subscribe for a share in the company. if persons become entitled to participate in the ltip and their participation requires approval under chapter 10 of the asx listing rules, they will not participate in the ltip until that shareholder approval is received. 8. service agreements 8.1 executive Chairman and managing director Bell Financial group entered into service agreements with its Executive chairman, colin Bell, and its managing director, alastair provan, effective from listing in december 2007. these agreements set out the terms of each appointment, including responsibilities, duties, rights and remuneration. a summary of the remuneration packages including benefits under the short-term and long-term incentive plans for both mr Bell and mr provan is set out in the Kmp remuneration table in section 8.5. Bell Financial group may terminate either service agreement on 12 months’ notice, or immediately for cause. if either agreement is terminated on 12 months’ notice, Bell Financial group has agreed to vest early any unvested options under the ltip and to allow their early exercise. mr Bell and mr provan may terminate their respective service agreements on six months’ notice. mr Bell and mr provan have entered into non-competition covenants with Bell Financial group which operate for six months from termination of their respective service agreements. remuneration report (audited) cont. 6. short-term incentive bonus the company may pay Executive Kmp and other executives a short-term incentive (sti) annually. the company’s remuneration committee is responsible for determining who is eligible to participate in sti arrangements, as well as the structure of those arrangements. there are two types of sti arrangements, being: ■ the sti payable to executives who are not remunerated by reference to commission, which is a discretionary annual cash bonus determined based on the company’s financial performance during the year, key performance indicators, industry competitive measures and individual performance over the period; ■ the sti payable to the Executive chairman and the managing director, which is a discretionary annual cash bonus, up to three times annual salary, determined based on the company’s financial performance during the year, key performance indicators as well as individual performance over the period. these sti arrangements aim to ensure that executive remuneration is aligned with the company’s financial performance and growth. 7. long-term incentive plan (ltip) the ltip is part of the company’s remuneration strategy and is designed to align the interests of the company’s Executive Kmp, other executives and advisers with the interests of shareholders to assist the company in the attraction, motivation and retention of Executive Kmp, other executives and advisers. in particular, the ltip is designed to provide relevant Executive Kmp, other executives and advisers with an incentive for future performance, with conditions for the vesting and exercise of the options or performance rights under the ltip, therefore encouraging them to remain with the company and contribute to its future performance. Directors’ report For the year enDeD 31 DecemBer 2013 17 8.3 non-executive directors on appointment to the Board, all the non-executive directors (mr coleman, mr cubbin, mr wilson, and ms shanahan) were provided with a letter of appointment setting out the terms, including responsibilities, duties, rights and remuneration, relevant to the office of director. a summary of the annual remuneration package for those directors is in the following section of this report. name craig coleman Brian wilson graham cubbin Brenda shanahan a) Craig Coleman direCtors’ Fees superannuation $ 91,638 91,638 91,638 91,638 $ 8,362 8,362 8,362 8,362 total $ 100,000 100,000 100,000 100,000 during 2013, mr coleman provided consultancy services to Bell Financial and was paid $50,000 (2012: $165,000) in relation to those services. mr coleman is the chairman of Bell direct. B) Brian wilson during 2013, mr wilson did not provide consultancy services to Bell Financial. (in 2012, mr wilson provided consultancy services to Bell Financial and was paid $100,000 in relation to those services.) 18 Directors’ report For the year enDeD 31 DecemBer 2013 remuneration report (audited) cont. 8.4 kmp remuneration details of the remuneration of each Kmp are tabled below. direCtors eXeCutive direCtors colin Bell, Executive chairman1 alastair provan, managing director1 non-eXeCutive direCtors graham cubbin craig coleman Brian wilson malcolm spry3 Brenda shanahan3 total compensation: directors (consolidated) eXeCutives lewis Bell, head of compliance andrew Bell, Executive director of Bell potter securities dean davenport, chief Financial officer rowan Fell, director – investment services paul vine, general counsel and company secretary4 total compensation: executives (consolidated) short-term salary & Fees sti Cash Bonus non-monetary BeneFits $ $ $ 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 599,190 582,345 527,153 528,153 91,638 91,743 141,638 256,743 91,638 183,935 - 55,810 91,638 52,576 1,542,895 1,751,305 359,502 352,002 566,999 328,047 282,878 291,765 312,873 313,877 141,644 233,877 - - - - - - - - - - - - - - - - - - - - 100,000 50,000 110,000 55,000 - - 1,663,896 1,519,568 210,000 105,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - total $ 599,190 582,345 527,153 528,153 91,638 91,743 141,638 256,743 91,638 183,935 - 55,810 91,638 52,576 1,542,895 1,751,305 359,502 352,002 566,999 328,047 382,878 341,765 422,873 368,877 141,644 233,877 1,873,896 1,624,568 1. colin Bell and alastair provan volunteered to forego any discretionary annual cash bonus in 2012 and 2013. 2. voluntary super contributions above the minimum legislative requirements are classified as post-employment benefits. 3. malcolm spry resigned on 5 June 2012. Brenda shanahan was appointed on 5 June 2012. 4. paul vine resigned with effect from 19 July 2013. superannuation other lonG termination total amortisation post- employment BeneFits2 $ term $ share-Based payments proportion oF remuneration value oF options as perFormanCe proportion oF BeneFits2 value oF lti options total related remuneration $ $ $ 20,810 37,655 17,122 16,123 8,362 8,257 8,362 8,257 8,362 16,065 - 5,023 8,362 4,732 71,380 96,112 30,000 37,500 41,863 50,169 17,122 8,235 17,122 16,123 9,456 16,123 115,653 128,150 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 620,000 620,000 544,275 544,276 100,000 100,000 150,000 265,000 100,000 200,000 - 60,833 100,000 57,308 389,502 389,502 608,862 378,216 419,567 350,000 449,779 385,000 151,100 250,000 1,614,275 1,847,417 - - - - - - - - - - - - - - - - - - - - - - - - - 19,567 9,784 29,351 2,018,810 1,752,718 % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 24% 14% 24% 14% 0% 0% 10% 6% % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 0% 2% 0% 0% 0% 1% 0% short-term salary & sti Cash non-monetary Bonus BeneFits total $ $ $ remuneration report (audited) cont. 8.4 kmp remuneration details of the remuneration of each Kmp are tabled below. direCtors eXeCutive direCtors colin Bell, Executive chairman1 alastair provan, managing director1 non-eXeCutive direCtors graham cubbin craig coleman Brian wilson malcolm spry3 Brenda shanahan3 total compensation: directors (consolidated) eXeCutives lewis Bell, head of compliance andrew Bell, Executive director of Bell potter securities dean davenport, chief Financial officer rowan Fell, director – investment services paul vine, general counsel and company secretary4 total compensation: executives (consolidated) Fees $ 599,190 582,345 527,153 528,153 91,638 91,743 141,638 256,743 91,638 183,935 - 55,810 91,638 52,576 359,502 352,002 566,999 328,047 282,878 291,765 312,873 313,877 141,644 233,877 1,542,895 1,751,305 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 100,000 50,000 110,000 55,000 1,663,896 1,519,568 210,000 105,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 599,190 582,345 527,153 528,153 91,638 91,743 141,638 256,743 91,638 183,935 - 55,810 91,638 52,576 1,542,895 1,751,305 359,502 352,002 566,999 328,047 382,878 341,765 422,873 368,877 141,644 233,877 1,873,896 1,624,568 1. colin Bell and alastair provan volunteered to forego any discretionary annual cash bonus in 2012 and 2013. 2. voluntary super contributions above the minimum legislative requirements are classified as post-employment benefits. 3. malcolm spry resigned on 5 June 2012. Brenda shanahan was appointed on 5 June 2012. 4. paul vine resigned with effect from 19 July 2013. Directors’ report For the year enDeD 31 DecemBer 2013 19 post- employment share-Based payments superannuation BeneFits2 other lonG term termination BeneFits2 total amortisation value oF lti options $ $ $ 20,810 37,655 17,122 16,123 8,362 8,257 8,362 8,257 8,362 16,065 - 5,023 8,362 4,732 71,380 96,112 30,000 37,500 41,863 50,169 17,122 8,235 17,122 16,123 9,456 16,123 115,653 128,150 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - proportion oF remuneration perFormanCe related value oF options as proportion oF remuneration % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 24% 14% 24% 14% 0% 0% 10% 6% % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 0% 2% 0% 0% 0% 1% 0% $ - - - - - - - - - - - - - - - - - - - - 19,567 - 9,784 - - - total $ 620,000 620,000 544,275 544,276 100,000 100,000 150,000 265,000 100,000 200,000 - 60,833 100,000 57,308 1,614,275 1,847,417 389,502 389,502 608,862 378,216 419,567 350,000 449,779 385,000 151,100 250,000 29,351 2,018,810 - 1,752,718 20 Directors’ report For the year enDeD 31 DecemBer 2013 remuneration report (audited) cont. 8.5 kmp remuneration (Group) notes on Kmp remuneration table a) in relation to the Executive Kmp, the short-term incentive bonus is for performance during the financial year ended 31 december 2013 using the criteria set out in section 6 of the remuneration report. B) options were issued to dean davenport and rowan Fell in may 2013. the fair value of the options is calculated at the date of grant using an option-pricing model and allocated to each reporting period evenly over the period from grant date to vesting date. the value disclosed is the portion of the fair value of the options recognised in this reporting period. in valuing the options, market conditions have been taken into account. the following factors and assumptions were used in determining the fair value of options on grant date: Grant date option eXerCise date Fair value per option eXerCise priCe priCe oF shares on Grant date eXpeCted volatility risk Free interest rate dividend yield 28 may 13 28 may 20161 $0.08386 $0.802 $0.55 45.76% 2.62% 2.0% 1. options can be exercised for a period of up to 12 months from exercise date. 2. represents exercise price at grant. Equity instruments all options refer to options over ordinary shares of Bell Financial, which are exercisable on a one-for-one basis under the lti plan. 9. options granted as compensation details on options over ordinary shares in the company that were granted as compensation to each Kmp in 2013 and details on options that were vested during the reporting period are outlined below. numBer oF options Granted durinG 2013 Fair value per option at Grant date ($) Grant date eXerCise priCe per option ($) eXpiry date numBer oF options vested durinG 2013 eXeCutive direCtors colin Bell alastair provan non-eXeCutive direCtors graham cubbin Brenda shanahan Brian wilson craig coleman eXeCutives andrew Bell lewis Bell dean davenport rowan Fell - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 400,000 200,000 28 may 2013 28 may 2013 $0.08386 $0.08386 $0.80 $0.80 28 may 2017 28 may 2017 - - - - - - - - - - the options were granted at no cost to the recipient. the options vest on 28 may 2016 and are exercisable for a period of 12 months after that date, provided that the Kmp remains employed as an executive or a director of the company as at that date. Directors’ report For the year enDeD 31 DecemBer 2013 21 9.1 modification of terms of equity-settled share-based payment transactions no terms of equity settled share based payment transactions (including options granted to executives) have been altered or modified by the issuing entity during the reporting period. 9.2 exercise of options granted as compensation Following the vesting date on the accelerated vesting of an option, the vested option may be exercised by the executive subject to any exercise conditions and the payment of the exercise price (if any). no options granted as compensation were exercised during the period. 9.3 analysis of options granted as compensation details of vesting profile of the options granted as remuneration to each Kmp are detailed below. eXeCutive direCtors colin Bell alastair provan non-eXeCutive direCtors graham cubbin Brenda shanahan Brian wilson craig coleman eXeCutives lewis Bell andrew Bell dean davenport rowan Fell options Granted numBer date % vested in year FinanCial years in whiCh Grant vests - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 400,000 200,000 28 may 13 28 may 13 0% 0% 28 may 2016 28 may 2016 9.4 analysis of movements in options there was no movement in options during the year. 9.5 unissued shares under options at the date of this report unissued ordinary shares of the company granted to directors and employees under option are: eXpiry date 28 may 2017 all options expire on the earlier of termination date or expiry date. eXerCise priCe numBer oF options $0.80 23,000,000 22 Directors’ report For the year enDeD 31 DecemBer 2013 likely developments Further details of likely developments in the operations of the group and its prospects in future financial years are contained in the chairman’s report and the operating and Financial review set out on pages 2 to 5. in the opinion of the directors, disclosure of any further information would be likely to result in unreasonable prejudice to the group. lead auditor’s independence declaration the lead auditor’s independence declaration is set out on page 23 and forms part of the directors’ report for the financial year ended 31 december 2013. rounding of amounts the company is of a kind referred to in asic class order 98/100 dated 10 January 1998 and in accordance with that class order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. signed in accordance with a resolution of the directors. Colin Bell Executive chairman 25 February 2014 indemniFiCation and insuranCe oF direCtors indemnification the company has agreed to indemnify the directors against all liabilities to another person (other than the company or a related entity) that may arise from their position as directors of the company or its controlled entities, except where the liability arises out of conduct including a lack of good faith. Except for the above, neither the company nor its controlled entities has indemnified any person who is or has been an officer or auditor of the company or its controlled entities. insurance premiums since the end of the previous financial year the company has paid a premium for an insurance policy for the benefit of the directors, officers, secretaries and senior executives of the company. in accordance with commercial practice, the policy prohibits disclosure of the nature of insurance or amount of the premium. environmental regulation the operations of the group are not subject to any particular and significant environmental regulation under a law of the commonwealth of a state or territory. to the best of the company’s knowledge no member of the group has incurred any material environmental liability during the year. non-audit services the company may decide to engage the auditor on assignments additional to their statutory audit duties where the auditor’s expertise with the group is important. the provision of these services and the auditor’s independence are discussed at section 5.7. details of the amounts paid to the auditor of the company, Kpmg, and its related practices for audit and non-audit services provided during the year are set in note 38 of the financial statements. lEad auditor’s indEpEndEncE dEclaration 23 lead auditor’s independence declaration under section 307c of the Corporations Act 2001 to: the directors of Bell Financial group limited i declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 31 december 2013, there have been: i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii) no contraventions of any applicable code of professional conduct in relation to the audit. Kpmg dean m waters partner melbourne 25 February 2014 KpmG, an australian partnership and a member firm of the KpmG network of independent member firms affiliated with KpmG international cooperative (“KpmG international”), a swiss entity. liability limited by a scheme approved under professional standards legislation. 24 statEmEnt oF proFit or loss For thE yEar EndEd 31 dEcEmbEr 2013 rendering of services Finance income investing income / (expense) other income total revenue Employee expenses depreciation and amortisation expenses occupancy expenses systems and communication expenses professional expenses Finance expenses other expenses total expenses results from operating activities share of profit / (loss) of equity accounted investments, net of income tax profit / (loss) before income tax note 6. 9. 7. 8. 10. 15,16. 9. Consolidated $ ‘000 2013 142,590 14,826 719 942 restated* 2012 119,058 16,137 513 773 159,077 136,481 (102,249) (1,199) (13,330) (15,279) (2,860) (5,328) (8,378) (148,623) (88,268) (1,534) (14,996) (15,320) (2,540) (7,398) (10,202) (140,258) 10,454 (3,777) - 10,454 (248) (4,025) income tax (expense) / benefit 11. (3,643) 836 profit / (loss) for the year attriButaBle to: Equity holders of the company non-controlling interests profit / (loss) for the year earninGs per share: Basic earnings per share (aud) diluted earnings per share (aud) * see note 17. the notes on pages 29 to 63 are an integral part of these consolidated financial statements. 6,811 (3,189) 6,821 (10) 6,811 (2,758) (431) (3,189) 28. 28. Cents Cents 2.7 2.7 (1.2) (1.2) statEmEnt oF comprEhEnsivE incomE For thE yEar EndEd 31 dEcEmbEr 2013 25 profit / (loss) for the year other comprehensive income items that may are or may Be ClassiFied to proFit and loss change in fair value of cash flow hedge other comprehensive income for the year, net of tax total comprehensive income for the year attriButaBle to: Equity holders of the company non-controlling interests total comprehensive income for the year other movements in equity arising from transactions with owners as owners are set out in note 26. * see note 17. the notes on pages 29 to 63 are an integral part of these consolidated financial statements. Consolidated $ ‘000 2013 6,811 restated* 2012 (3,189) 13 13 170 170 6,824 (3,019) 6,834 (10) 6,824 (2,588) (431) (3,019) 26 statEmEnt oF Financial position as at 31 dEcEmbEr 2013 Consolidated $ ‘000 note 2013 restated* 2012 assets cash and cash equivalents trade and other receivables loans and advances Financial assets prepayments total current assets deferred tax assets property, plant and equipment goodwill intangible assets total non-current assets total assets liaBilities trade and other payables deposits and borrowings current tax liabilities derivatives Employee benefits provisions total current liabilities Employee benefits total non-current liabilities total liabilities net assets equity contributed equity other equity reserves non-controlling interests retained earnings total equity attributable to equity holders of the Company * see note 17. the notes on pages 29 to 63 are an integral part of these consolidated financial statements. 12. 13. 19. 14. 18. 15. 16. 16. 20. 21. 22. 30. 24. 23. 24. 26. 26. 26. 26. 146,298 72,720 171,696 976 673 107,720 72,685 147,120 2,249 553 392,363 330,327 9,761 1,725 130,413 2,366 144,265 536,628 144,227 192,548 1,919 45 14,652 450 9,517 2,356 130,413 2,104 144,390 474,717 109,647 175,768 495 58 9,624 450 353,841 296,042 2,684 2,684 356,525 180,103 2,478 2,478 298,520 176,197 164,284 164,284 1,806 (612) 4,314 10,311 180,103 2,764 (885) 3,947 6,087 176,197 statEmEnts oF changEs in Equity 27 share Capital $ ‘000 164,284 treasury shares reserve $ ’000 (863) share Based payments reserve $ ’000 non- ControllinG interests $ ‘000 Cash Flow hedGe reserve $ ‘000 retained earninGs $ ‘000 other equity $ ‘000 - - - - - - (811) - 240 - - restated* Balance at 1 January 2012 total Comprehensive inCome profit / (loss) for the year other Comprehensive inCome change in fair value of cash flow hedges total other comprehensive income total comprehensive income for the year - - - - transaCtions with owners, direCtly in equity increase / (decrease) in non-controlling interests transfer of retained earnings purchase of treasury shares share based payments Employee share awards exercised increase / (decrease) in other equity dividends - - - - - - - Balance at 31 december 2012 164,284 (1,434) Balance at 1 January 2013 164,284 (1,434) total Comprehensive inCome profit / (loss) for the year other Comprehensive inCome change in fair value of cash flow hedges total other comprehensive income total comprehensive income for the year - - - - transaCtions with owners, direCtly in equity increase / (decrease) in non-controlling interests transfer of retained earnings share based payments purchase of treasury shares Employee share awards exercised increase / (decrease) in other equity dividends - - - - - - - - - - - - - - (465) 213 - - 8 - - - - - - - 840 (240) - - 608 608 - - - - - - 724 - (213) - - total equity $ ‘000 174,641 (3,189) 170 170 (3,019) 4,378 - (811) 840 - - - - - - - - - - - - - - - - 4,378 (431) - - - - - (228) 11,440 - (3,189) 170 170 170 - - (3,189) - 431 - - - - - - - - - - - 2,764 2,764 (2,596) - (2,596) 3,947 (58) 6,086 2,764 176,197 3,947 (58) 6,086 2,764 176,197 - - - - 377 (10) - - - - - - 13 13 13 - - - - - - - 6,811 - - 6,811 - 10 - - - - - - - - - - - - - (958) 6,811 13 13 6,824 377 - 724 (465) - (958) (2,596) 10,311 - (2,596) 1,806 180,103 Balance at 31 december 2013 164,284 (1,686) 1,119 4,314 (45) * see note 17. the notes on pages 29 to 63 are an integral part of these consolidated financial statements. 28 statEmEnt oF cash Flows For thE yEar EndEd 31 dEcEmbEr 2013 Consolidated $ ‘000 note 2013 restated* 2012 Cash Flows From / (used in) operatinG aCtivities cash receipts from customers and clients cash paid to suppliers and employees cash generated from operations 1. dividends received interest received interest paid income taxes paid net cash from operating activities 25. Cash Flows From / (used in) investinG aCtivities net proceeds from sale of investments acquisition of property, plant and equipment acquisition of other investments interest in equity accounted investees and non-controlling interests net cash from / (used in) investing activities Cash Flows From / (used in) FinanCinG aCtivities dividends paid on market share purchases bell potter capital (margin lending) deposits loans repayment of borrowings net cash from / (used in) financing activities net increase / (decrease) in cash and cash equivalents cash and cash equivalents at 1 January 191,539 (150,254) 41,285 30 14,702 (5,328) (2,463) 48,226 3,242 (189) (1,252) (592) 1,209 (2,596) (465) 16,780 (24,576) - 166,541 (157,837) 8,704 21 15,787 (7,398) (678) 16,436 840 (460) (504) 138 (14) (2,596) (811) (6,635) (8,623) - (10,857) (18,665) 38,578 107,720 (2,215) 109,935 Cash and cash equivalents at 31 december 12, 25. 146,298 107,720 * see note 17. the notes on pages 29 to 63 are an integral part of these consolidated financial statements. 1. ‘cash generated from operations’ relates to group cash reserves and client balances. refer to note 12 for further information on cash and cash equivalents. notEs to thE Financial statEmEnts For thE yEar EndEd 31 dEcEmbEr 2013 29 bell Financial group ltd (“bell Financial” or the “company”) is domiciled in australia. the address of the company’s registered office is level 29, 101 collins street, melbourne, vic. the consolidated financial statements of the company comprise the company, its subsidiaries and associates (the “group” or “consolidated Entity”) and the group’s interest in associates. 1. siGniFiCant aCCountinG poliCies set out below is a summary of significant accounting policies adopted by the company, its subsidiaries and associates in the preparation of the consolidated financial statements. a) Basis of preparation statement of compliance the financial report is a general purpose financial report prepared in accordance with australian accounting standards (aasBs) (including australian accounting interpretations) adopted by the australian accounting standards Board (aasB) and the corporations act. the consolidated financial report of the group and the financial report of the company comply with international Financial reporting standards (iFrs) and interpretations adopted by the international accounting standards Board (iasB). the financial statements were approved by the Board of directors on 25 February 2014. the accounting policies set out below, except as noted, have been applied consistently to all periods presented in these consolidated financial statements, and have been consistently applied by all entities within the consolidated entity. Basis of measurement these consolidated financial statements have been prepared under the historical cost convention, except for financial assets and liabilities (including derivative instruments) at fair value through the profit and loss. Functional and presentation currency investments in associates associates are those entities in which the company has significant influence, but not control, over the financial and operating policies. associates are accounted for using the equity method. the consolidated financial statements include the group’s share of the income and expenses of equity accounted investees, from the date significant influence commences until the date that significant influence ceases. when the group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to nil. unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group’s interest in the investee. unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. special purpose entities the group has established a special purpose entity (spE) to manage margin loans. the group does not have direct or indirect shareholdings in this entity. an spE is consolidated if, based on an evaluation of the substance of its relationship with the group and the spE’s risks and rewards, the group concludes that it controls the spE. spE’s consolidated by the group were established under terms that impose strict limitations on the decision making powers of the spE’s management and that result in the group receiving the majority of the benefits related to the spE’s operations and net assets, being exposed to risks incident to the spE’s activities and retaining the majority of the residual or ownership risks related to the spE or its assets. these consolidated financial statements are presented in australian dollars, which is the company’s functional currency and the functional currency of the majority of the group. the company is of a kind referred to in asic class order 98/100 dated 10 July 1998 and in accordance with that class order, all financial information presented in australian dollars has been rounded to the nearest thousand dollars unless otherwise stated. removal of parent entity financial statements the group has applied amendments to the corporations act that remove the requirement for the group to lodge parent entity financial statements. parent entity financial statements have been replaced by the specific parent entity disclosures in note 32. b) principles of consolidation Business combinations the group has adopted revised aasB 3 Business combinations (2008) and amended aasB 127 consolidated and separate Financial statements (2008) for business combinations occurring in the financial year starting 1 January 2009. all business combinations occurring before this date are accounted for by applying the acquisition method. subsidiaries subsidiaries are all entities controlled by the group. the group controls an entity when it 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 over the entity. the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commenced until the date that control ceases. all controlled entities have a 31 december balance date. intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 30 notes to the Financial statements For the year enDeD 31 DecemBer 2013 1. siGniFiCant e) income tax tax consolidation aCCountinG poliCies cont. c) revenue recognition revenue is recognised to the extent that it is probable that the economic benefit will flow to the group and the revenue can be reliably measured. the following specific criteria must also be met before revenue can be recognised. rendering of services revenue arising from brokerage, commissions, fee income and corporate finance transactions are recognised by the group on an accruals basis as and when services have been provided, net of the amount of goods and services tax (gst). provision is made for uncollectible debts arising from such services. securities held at balance date are valued by directors at market value at each balance date, with any unrealised gains and losses being taken to the income statement. interest income interest income is recognised as it accrues using the effective interest rate method. dividend income dividends are brought to account as revenue when the right to receive the payment is established. d) statement of Cash Flows the statement of cash Flows is prepared on the basis of net cash flows in relation to settlement of trades. this is consistent with the group’s revenue recognition policy whereby the entity acts as an agent and receives and pays funds on behalf of its clients, however only recognises as revenue, the group’s entitlement to brokerage commission. For the purpose of the statement of cash Flows, cash and cash equivalents comprise cash at bank and on hand, investments in money market instruments maturing within less than 14 days (net of bank overdrafts) and short-term deposits with an original maturity of 3 months or less. it is important to note that the statement of Financial position discloses trade debtors and payables that represent net client accounts being the accumulation of gross trading. income tax expense or revenue for the period comprises current and deferred tax. income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years. deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. Effective 1 January 2003, the company elected to apply the tax consolidation legislation. all current tax amounts relating to the group have been assumed by the head entity of the tax-consolidated group, Bell Financial group. deferred tax amounts in relation to temporary differences are allocated as if each entity continued to be a taxable entity in its own right. f) Goods and services tax revenues, expenses and assets are recognised net of the amount of goods and services tax (gst), except where the amount of gst incurred is not recoverable from the australian tax office (ato). in these circumstances the gst is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. receivables and payables are stated with the amount of gst excluded. the net amount of gst recoverable from, or payable to, the ato is included as a current asset or liability in the statement of Financial position. cash flows are included in the statement of cash Flows on a gross basis. the gst components of cash flows arising from investing and financing activities that are recoverable from, or payable to, the ato are classified as operating cash flows. g) Cash and cash equivalents cash and cash equivalents comprise cash balances, investments in money market instruments maturing within less than 14 days and short-term deposits with original maturity of less than three months. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents for the purpose of the statement of cash Flows. cash held in trust for clients is included as cash and cash equivalents and is included within trade and other payables. a deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. h) derivatives derivative financial instruments are contracts whose value is derived from one or more underlying price indices or other variable. they include swaps, forward rate agreements, options or a combination of all three. notes to the Financial statements For the year enDeD 31 DecemBer 2013 31 certain derivative instruments are held for trading for the purpose of making short-term gains. these derivatives do not qualify for hedge accounting. the right to receive options arising from the provision of services to corporate fee clients are valued using the Black scholes model. on disposal of options any realised gains/ losses are taken to the income statement. derivatives are recognised initially at fair value and attributable transaction costs are recognised in profit or loss when incurred. derivative financial instruments are also used for hedging purposes to mitigate the group’s exposure to interest rate risk. derivative financial instruments are recognised initially at fair value. where the derivative is designated effective as a hedging instrument, the timing of the recognition of any resultant gain or loss is dependant on the hedging designation. the group designated interest rate swaps as cash flow hedges during the period. details of the hedging instruments are outlined below: Cash flow hedges changes in the fair value of cash flow hedges are recognised directly in equity to the extent that the hedges are effective. to the extent hedges are ineffective, changes in the fair value are recognised in the profit and loss. hedge effectiveness is tested at each reporting date and is calculated using the dollar offset method. Effectiveness will be assessed on a cumulative basis by calculating the change in fair value of the interest rate swap as a percentage of the change in fair value of the designated hedge item. if the ratio change in the fair value is within the 80 – 125% range, a hedge is deemed to be effective. if the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, the hedge accounting is discontinued prospectively. the cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. i) impairment of assets l) leased assets at each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. if such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. an impairment loss, with the exception of goodwill, is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised in equity. impairment losses on goodwill are not reversed. j) trade and other receivables trade debtors to be settled within 3 trading days are carried at amounts due. term debtors are carried at the amount due. the collectability of debts is assessed at balance date and specific provision is made for any doubtful accounts. leases in terms of which the group assumes substantially all the risks and rewards of ownership are classified as finance leases. upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of minimum lease payments. subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. other leases are operating leases and are not recognised on the group’s statement of Financial position. m) Borrowing costs Borrowing costs are recognised as expenses in the period in which they are incurred. n) provisions a provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. o) deposits and borrowings all deposits and borrowings are recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowings. k) trade and other payables liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the parent entity or group. trade accounts payable are normally settled within 60 days. p) Goodwill and intangible assets Goodwill goodwill on acquisition is initially measured at cost being the excess of the costs of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. 32 notes to the Financial statements For the year enDeD 31 DecemBer 2013 1. siGniFiCant aCCountinG poliCies cont. Financial assets at fair value through profit or loss p) Goodwill and intangible assets cont. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying amount is impaired. an impairment loss in respect to goodwill is not reversed. other intangible assets other intangible assets that are acquired by the group, which have finite lives, are measured at cost less accumulated amortisation and accumulated impairment losses. amortisation is recognised in the profit and loss on a straight-line basis over the estimated useful lives of intangible assets. the estimated useful lives are as follows: a financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of aasB 139 Recognition and Measurement of Financial Instruments. realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise. items of property, plant and equipment are depreciated/amortised using the straight-line method over their estimated useful lives. the depreciation rates for each class of asset are as follows: leasehold improvements 2013 2012 20 – 25% 20 – 25% office equipment 20 – 50% 20 – 50% Furniture and fittings 20 – 50% 20 – 50% loans and advances all loans and advances are recognised at amortised cost. impairment assessments are performed at least at each reporting date and impairment is reviewed on each individual loan. impairment provisions are raised if the recoverable amount is less than the carrying value of the loan. loans are secured by holding equities as collateral. s) employee entitlements wages, salaries and annual leave the provisions for entitlements to wages, salaries and annual leave expected to be settled within 12 months of reporting date represent the amounts which the group has a present obligation to pay resulting from employees’ services provided up to reporting date. customer list 10 years 10 years 2013 2012 share capital ordinary shares q) Financial instruments all investments are initially recognised at fair value of the consideration given, plus directly attributable transaction costs. subsequent to initial recognition, investments, which are classified as financial assets are measured as described below. Fair value estimation For investments actively traded in organised financial markets, fair value is determined by reference to stock Exchange quoted market bid prices at the close of business on the balance sheet date. For investments where there is no quoted market price and a reliable estimate of fair value is not available the security is recorded at the lower of cost and recoverable amount, being a directors’ valuation, by reference to the current market value of another instrument that is substantially the same. realised and unrealised gains and losses are included in the income statement. dividends are brought to account when declared. ordinary shares are classified as equity. incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. dividends dividends are recognised as a liability in the period in which they are declared, being appropriately authorised and no longer at the discretion of the company. treasury shares when share capital recognised as equity is repurchased, the amount of the consideration paid is recognised as a deduction from equity. repurchased shares are classified as treasury shares and are presented in the reserve until sold or reissued. r) property, plant and equipment property, plant and equipment is included at cost less accumulated depreciation and any impairment in value. all property, plant and equipment is depreciated over its estimated useful life, commencing from the time assets are held ready for use. long-service leave the provision for salaried employee entitlements to long-service leave represents the present value of the estimated future cash outflows to be made resulting from employees service provided up to reporting date. liabilities for employee entitlements, which are not expected to be settled within twelve months, are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities. in determining the liability for employee entitlements, consideration has been given to future increases in wage and salary rates, and experience with staff departures. related on-costs have also been included in the liability. Bonuses the company recognises a liability and an expense for bonuses. the company recognises a provision where contractually obliged or where there is a past performance that has created a constructive obligation. notes to the Financial statements For the year enDeD 31 DecemBer 2013 33 defined contribution plans u) Foreign currency transactions a defined contribution plan is a post- employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. obligations for contributions to defined contribution plans are recognised as an employee expense in profit or loss when they are due. share-based payments the company has adopted a number of share-based Equity incentive plans in which employees and directors participate. the grant date fair value of shares expected to be issued under the various Equity incentive plans, including options, granted to employees and directors is recognised as an employee expense, with a corresponding increase in equity over the period in which the employees become unconditionally entitled to the shares. the fair value of options at grant date is independently determined using the Black scholes option pricing model that takes into account the exercise price, the vesting period, the vesting and performance criteria, the impact of dilution, the share price at grant date and the expected price volatility of the underlying share and the risk free interest rate for the vesting period. t) earnings per share the group presents basic and diluted Earnings per share (Eps) data for its ordinary shares. Basic earnings per share Basic Eps is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. diluted earnings per share diluted Eps is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares and share options granted to employees and directors. transactions in foreign currencies are translated to the functional currency of the group at exchange rates at the date of the transaction. monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on available for sale equity instruments that are recognised directly in equity. v) segment reporting the group determines and presents operating segments based on the information that is internally provided to the chief decision maker in accordance with aasB 8 Operating Segments. an operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components. an operating segment’s results are reviewed regularly by management to make decisions about resources to be allocated to the segment and assess its performance. segment results that are reported to management include items directly attributable to a segment as well as to those that can be allocated on a reasonable basis. w) new standards and interpretations not yet adopted a number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these consolidated financial statements. those which may be relevant to the group are set out below. the group does not plan to adopt these standards early. aasB 9 Financial Instruments (2010), aasB 9 Financial Instruments (2009) aasB 9 (2009) introduces new requirements for the classification and measurement of financial assets. under aasB 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. aasB 9 (2010) introduces additions relating to financial liabilities. the iasB currently has an active project that may result in limited amendments to the classification and measurement requirements of aasB 9 and add new requirements to address the impairment of financial assets and hedge accounting. aasB 9 (2010 and 2009) are effective for annual periods beginning on or after 1 January 2015 with early adoption permitted. the adoption of aasB 9 (2010) is expected to have an impact on the group’s financial assets, but no impact on the group’s financial liabilities. x) Changes in accounting policies Except for the changes below, the group has consistently applied the accounting policies set out in note 1 to all periods presented in these consolidated financial statements. the group has adopted the following new standards and amendments to standards, including any consequential amendments in other standards, with a date of initial application of 1 January 2013. i) aasB 10 Consolidated Financial statements (2011) as a result of aasB 10 (2011), the group has changed its accounting policy for determining whether it has control over and consequently whether it consolidates its investees. aasB 10 (2011) introduces a new control model that focuses on whether the group has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns. 34 notes to the Financial statements For the year enDeD 31 DecemBer 2013 1. siGniFiCant aCCountinG poliCies cont. x) Changes in accounting policies cont. i) aasB 10 Consolidated Financial statements (2011) cont. in accordance with transitional provisions of aasB 10 (2011), the group reassessed the control conclusion for its investees at 1 January 2013. as a consequence, the group has changed its control conclusion in respect of its investment in third party platform pty ltd, which was previously accounted for as an associate using the equity method. the group has determined that it had control over the investee on 28 may 2012. this is because the group has held significantly more voting rights of the investee than any other vote holders. accordingly, the group applied acquisition accounting to the investment at 28 may 2012 and restated the relevant amounts as if the investee had been consolidated from that date. the quantitative impact of the change is set out in note 17. ii) aasB 13 Fair value measurement aasB 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements when such measurements are required or permitted by other iFrss. it unifies the definition of fair value as 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. it replaces and expands the disclosure requirements about fair value measurements in other aasBs, including aasB 7. as a result, the group has included additional disclosures in this regard (refer to note 30). in accordance with the transitional provisions of aasB 13, the group has applied the new fair value measurement guidance prospectively and has not provided any comparative information for new disclosures. notwithstanding the above, the change had no significant impact on the measurements of the group’s assets and liabilities. 2. siGniFiCant aCCountinG JudGements, estimates and assumptions in applying the group’s accounting policies management continually evaluates judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the group. all judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management and are reviewed on an ongoing basis. actual results may differ from the judgements, estimates and assumptions. significant judgements, estimates and assumptions made by management in the preparation of these financial statements are outlined below: recovery of deferred tax assets deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences (refer to note 19). impairment of loans and advances the company assesses impairment of all loans at each reporting date by evaluating any issues particular to an asset that may lead to impairment. in the directors’ opinion, no such impairment exists beyond that provided at 31 december 2013 (refer to note 19). long-service leave provisions the liability for long-service leave is recognised and measured as the present value of the estimated future cash flows to be made in respect of all employees at balance date. in determining the present value of a liability, attrition rates and pay increases through promotion and inflation have been taken into account. a discount rate equal to the government bond rate has been used in determining the present value of the obligation (refer to note 24). legal provision as at 31 december 2013, a provision has been accrued to reflect potential claims. in the directors’ opinion, the provision is appropriate to cover losses that are quantifiable or measurable at 31 december 2013 (refer to note 23). intangible assets the customer lists acquired have been valued using the net present value of the unlevered free cash flow from each business’ client list and software development costs acquired are initially measured at cost and are amortised over the useful life. these valuations are outlined below: Bell Foreign exchange and Futures business the amortisation period for the acquired intangible assets of the Foreign Exchange and Futures business is deemed to be 10 years. this was determined by analysing the average length of the relationship clients have with the business. Bell direct development Costs the amortisation period for the acquired intangible assets of the Bell direct development costs is deemed to be 10 years. this was determined by analysing the average length of the useful life. impairment of goodwill goodwill is tested for impairment annually at 31 december 2013, or more frequently if events or changes in circumstances indicated that it might be impaired. For the purpose of impairment testing, goodwill is allocated to retail and wholesale which represents the lowest level at which it is monitored for internal management purposes. the recoverable amount of the business to which each goodwill component is allocated to a cash-generating unit is estimated based on its value in use and is determined by discounting the future cash flows generated from continuing use. at 31 december 2013, goodwill allocated to the cash-generating units was $57.5 million for retail and $72.9 million for the wholesale segment. notes to the Financial statements For the year enDeD 31 DecemBer 2013 35 key assumptions used in discounted cash flow projections the assumptions used for determining the recoverable amount are based on past experience and expectations for the future. projected cash flows for each group of cash-generating units are discounted using an appropriate discount rate and a terminal value multiple is applied. the following assumptions have been used in determining the recoverable amount of the all segments: discount rates terminal value multiple Brokerage revenue corporate fee income a range of discount rates was used with 11.0% being the mid-point of the range. the discount rate is a post- tax measure based on the risk-free rate, adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific business. a range of terminal value multiples was used with 7 times representing the mid-point of the range. the multiples were applied to extrapolate the discounted future maintainable after- tax cash flows beyond the five year forecast period. an overall improvement in average brokerage revenue from current levels in both the wholesale and retail businesses. an overall improvement in corporate fee income as market conditions improve. sensitivity analysis the recoverable amounts for the retail and wholesale segments exceeds the carrying values. the recoverable amounts are sensitive to several key assumptions and a change in these assumptions could cause the carrying amounts to exceed the recoverable amounts. using the mid-point range above, if brokerage and corporate fee revenue and communications and system expenses (which are volume based) decreases by approximately 6.5% for retail and 17.5% for wholesale from the estimated amounts, the estimated recoverable amounts would be equal to the carrying amounts. if the discount rate increased to 15.5% for retail and 20% for wholesale, the estimated recoverable amounts would be equal to the carrying amounts. Further, if the terminal value multiple decreased to approximately 5.2 times for retail and 3.7 times for wholesale, the estimated recoverable amounts would be equal to the carrying amounts. 3. FinanCial risk manaGement overview the group’s principal financial instruments comprise listed securities, derivatives, term deposits and cash. the group has exposure to the following risks from its use of financial instruments: ■ market risk ■ credit risk ■ liquidity risk risk management framework the Board of directors has overall responsibility for the establishment and oversight of the risk management framework. the Board has established the group risk and audit committee, which is responsible for developing and monitoring risk management policies. the committee reports regularly to the Board of directors on its activities. risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group’s activities. the group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. the group risk and audit committee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group. internal audit assists the group risk and audit committee in its oversight role. internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the group risk and audit committee. market risk market risk is the risk that changes in market prices, such as interest rates, equity prices and foreign exchange rates will affect the group’s income or the value of its holdings of financial instruments. the objective of market risk management is to manage and control exposures within acceptable parameters, while optimising returns. equity price risk all instruments are subject to the risk that future changes in market conditions may make an instrument less valuable. as trading instruments are valued with reference to the market or Black scholes model, changes in equity prices directly affect reported income in each period. the group continually monitors equity price movements to ensure the impact on the group’s activities is managed. interest rate risk interest rate risk arises from the potential for change in interest rates to have an adverse effect on the group’s net earnings. the group continually monitors movements in interest rates and manages exposure accordingly. the Board has also approved the use of derivatives, in the form of interest rate swaps, to mitigate its exposure to interest rate risk. changes in the fair value and effectiveness of interest rate swaps (which are designated cash flow hedging instruments) are monitored on a six- monthly basis. Currency risk the group is exposed to currency risk on monetary assets and liabilities held in a currency other than the respective functional currency of the group. the group ensures the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. 36 notes to the Financial statements For the year enDeD 31 DecemBer 2013 margin lending intangible assets the fair value of intangible assets acquired in a business combination is based on the discounted cash flows expected to be derived from the assets. investments in equity the fair values of financial assets at fair value through profit and loss are determined with reference to the quoted bid price or if unquoted determined using a valuation model at reporting date. derivatives the fair value of interest rate swaps is based on a mark-to-market model with reference to prevailing fixed and floating interest rates. these quotes are tested for reasonableness by discounting estimated future cash flows based on term to maturity of each contract and using market interest rates for a similar instrument at the measurement date. the fair value of options is determined using the Black scholes option-pricing model. share-based payments the fair value of employee stock options is determined using a Black scholes model. measurement inputs include share price, exercise price, volatility, weighted average expected life of the instrument, expected dividends and risk free interest rate. service and non- market conditions are not taken into account in determining fair value. management monitors exposure to credit risk on an ongoing basis. the group requires collateral in respect of margin loans made in the course of business. this collateral is generally in the form of the underlying security the margin loan is used to invest in. loan-to-value ratios (lvrs) are assigned to determine the amounts of lending allowed against each security. loans balances are reviewed daily and are subject to margin calls once the geared value falls 10% lower than the loan balance. warnings are sent between 5% and 10%. Capital management the Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. capital consists of ordinary shares and retained earnings of the group. the group is required to comply with certain capital and liquidity requirements imposed by regulators as a licensed broking firm. all capital requirements are monitored by the Board and the group was in compliance with all requirements throughout the year. security arrangements the anZ Bank has a registered mortgage debenture over the assets and undertakings of the company. 4. determination oF Fair values a number of the group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined and disclosed based on the following methods. where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. 3. FinanCial risk manaGement cont. liquidity risk liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. the group’s approach to managing this risk is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation. ultimate responsibility for liquidity risk management rests with the Board of directors, which has built an appropriate liquidity risk management framework for the management of the group’s short, medium and long-term funding requirements. the group manages liquidity by maintaining reserves, banking facilities and reserve borrowing facilities and by continuously monitoring forecast and actual cash flows and matching up maturity profiles of financial assets and liabilities. with respect to the maturity of financial liabilities, the group also: ■ holds financial assets for which there is a liquid market and that they are readily saleable to meet liquidity needs; and ■ has committed borrowing facilities or other lines of credit that it can access to meet liquidity needs. Credit risk credit risk is the financial loss to the group if a debtor or counterparty to a financial instrument fails to meet its contractual obligations. trade and other receivables the credit risk for these accounts is that financial assets recognised on the balance sheet exceed their carrying amount, net of any provisions for doubtful debts. in relation to client debtors, the group’s credit risk concentration is minimised as transactions are settled on a delivery versus payment basis with a settlement regime of trade day plus three days. notes to the Financial statements For the year enDeD 31 DecemBer 2013 37 5. seGment reportinG Business segments in order to more closely align with how operating results are reviewed and assessed, the group’s operating segments were changed from 30 June 2013. comparative segment information has been restated accordingly. the segments reported below are consistent with internal reporting provided to the chief decision makers: ■ retail – equities, futures, foreign exchange, corporate fee income, portfolio administration services, margin lending and deposits. ■ wholesale – equities and corporate fee income. 31 deCemBer 2013 revenue from operations profit / (loss) after tax segment assets total assets segment liabilities total liabilities other seGment details interest revenue interest expense depreciation / amortisation share of net losses of associates restated 31 deCemBer 2012 revenue from operations profit / (loss) after tax segment assets total assets segment liabilities total liabilities other seGment details interest revenue interest expense depreciation / amortisation share of net losses of associates Geographical segments retail 2013 $ ‘000 124,709 4,734 456,494 456,494 351,973 351,973 14,826 (5,328) (1,145) - retail 2012 $ ‘000 110,871 (2,276) 394,187 394,187 295,660 295,660 16,137 (7,398) (1,340) - wholesale 2013 $ ‘000 other 2013 $ ‘000 Consolidated 2013 $ ‘000 34,368 2,077 80,134 80,134 4,552 4,552 - - (54) - - - - - - - - - - - 159,077 6,811 536,628 536,628 356,525 356,525 14,826 (5,328) (1,199) - wholesale 2012 $ ‘000 other 2012 $ ‘000 Consolidated 2012 $ ‘000 25,610 (913) 80,530 80,530 2,860 2,860 - - (194) - - - - - - - - - - (248) 136,481 (3,189) 474,717 474,717 298,520 298,520 16,137 (7,398) (1,534) (248) the group operates predominantly within australia and has offices in hong Kong and london. 38 notes to the Financial statements For the year enDeD 31 DecemBer 2013 6. renderinG oF serviCes Brokerage Fee income trailing commissions portfolio administration fees other 7. investinG inCome dividends received profit / (loss) on financial assets held at fair value through profit and loss 8. other inCome Bad debts recovered sundry income 9. FinanCe inCome and eXpenses interest income on bank deposits interest income on loans and advances total finance income Bank interest expense interest expense on deposits total finance expense net finance income / (expense) Consolidated 2013 $ ‘000 101,324 25,213 7,822 7,914 317 restated 2012 $ ‘000 86,580 18,441 6,544 7,188 304 142,590 119,058 Consolidated 2013 $ ‘000 30 689 719 restated 2012 $ ‘000 21 492 513 Consolidated 2013 $ ‘000 - 942 942 restated 2012 $ ‘000 4 769 773 Consolidated 2013 $ ‘000 2,458 12,368 14,826 (1,088) (4,240) (5,328) 9,498 restated 2012 $ ‘000 2,699 13,438 16,137 (1,530) (5,868) (7,398) 8,739 notes to the Financial statements For the year enDeD 31 DecemBer 2013 39 10. employee eXpenses wages and salaries superannuation payroll tax other employee expenses Equity-settled share-based payments 11. inCome taX eXpense Current taX eXpense current period taxable loss not taken up adjustment for prior periods deFerred taX eXpense origination and reversal of temporary differences total income tax expense / (benefit) numerical reconciliation between tax-expense and pre-tax profit accounting profit / (loss) before income tax income tax using the company’s domestic tax rate of 30% (2012: 30%) non-deductible expenses adjustments in respect of current income tax of previous year tax loss not taken up Consolidated 2013 $ ‘000 (89,916) (5,647) (4,466) (1,496) (724) restated 2012 $ ‘000 (76,413) (5,945) (3,905) (1,166) (839) (102,249) (88,268) Consolidated 2013 $ ‘000 3,790 125 (41) 3,874 (231) 3,643 restated 2012 $ ‘000 104 242 (264) 82 (918) (836) Consolidated 2013 $ ‘000 10,454 3,136 423 (41) 125 3,643 restated 2012 $ ‘000 (4,025) (1,207) 393 (264) 242 (836) tax consolidation Bell Financial group ltd and its wholly owned australian controlled entities are a tax-consolidated group. 40 notes to the Financial statements For the year enDeD 31 DecemBer 2013 12. Cash and Cash equivalents cash on hand cash at bank short-term deposits marGin lendinG Cash cash at bank and short term deposits Client Cash cash at bank (trust account) segregated cash at bank (client) Consolidated 2013 $ ‘000 13 40,426 11,106 51,545 22,866 22,866 60,236 11,651 71,887 restated 2012 $ ‘000 13 30,136 11,387 41,536 30,593 30,593 25,225 10,366 35,591 Cash and cash equivalents in the statement of Cash Flows 146,298 107,720 Cash on hand, Cash at bank and short-term deposits represent Group cash reserves. cash on hand and at bank earns interest at floating rates based on daily bank deposit rates. short-term deposits are made for periods of between 7 days and 90 days. segregated cash and trust bank balances earn interest at floating rates based on daily bank rates. segregated cash and trust bank balances are restricted cash balances of the group. a corresponding liability is recognised within trade and other payables (note 20). the group’s exposure to interest rate risk for financial assets and liabilities is disclosed in note 30. 13. trade and other reCeivaBles Current trade debtors less: provision for impairment segregated deposits with clearing brokers less : provision for impairment1 sundry debtors the movement for the allowance in impairment in respect of loans and receivables during the year was as follows: Balance at 1 January Bad debts charged to income statement Bad debts recovered Balance at 31 december Consolidated 2013 $ ‘000 61,973 (164) 61,809 9,250 (1,061) 8,189 2,722 72,720 1,095 130 - 1,225 restated 2012 $ ‘000 56,085 - 56,085 13,837 (1,095) 12,742 3,858 72,685 4 1,095 (4) 1,095 1. provisioning against receivables owed from mF global australia limited which was placed into administration late 2011. notes to the Financial statements For the year enDeD 31 DecemBer 2013 41 14. FinanCial assets FinanCial assets Current (held at Fair value throuGh proFit and loss) shares in listed corporations unlisted options held for trading 15. property, plant and equipment Consolidated year ended 31 deCemBer 2013 Balance at 1 January 2013 (net accumulated depreciation) additions disposals depreciation charge for the year Balance at 31 december 2013 BalanCe at 1 January 2013 cost accumulated depreciation net carrying amount BalanCe at 31 deCemBer 2013 cost accumulated depreciation net carrying amount restated Consolidated year ended 31 deCemBer 2012 Balance at 1 January 2011 (net accumulated depreciation) additions disposals depreciation charge for the year Balance at 31 december 2012 BalanCe at 1 January 2012 cost accumulated depreciation net carrying amount BalanCe at 31 deCemBer 2012 cost accumulated depreciation net carrying amount Consolidated 2013 $ ‘000 472 504 976 restated 2012 $ ‘000 2,107 142 2,249 FiXtures and FittinGs $ ‘000 oFFiCe equipment $ ‘000 leasehold improvements $ ‘000 506 16 - (103) 419 2,110 (1,604) 506 2,126 (1,707) 419 1,056 126 (29) (479) 674 5,388 (4,332) 1,056 5,485 (4,811) 674 794 46 - (208) 632 6,123 (5,329) 794 6,169 (5,537) 632 FiXtures and FittinGs $ ‘000 oFFiCe equipment $ ‘000 leasehold improvements $ ‘000 632 13 - (139) 506 2,097 (1,465) 632 2,110 (1,604) 506 1,449 311 - (704) 1,056 5,077 (3,628) 1,449 5,388 (4,332) 1,056 1,030 133 - (369) 794 5,990 (4,960) 1,030 6,123 (5,329) 794 total $ ‘000 2,356 188 (29) (790) 1,725 13,621 (11,265) 2,356 13,780 (12,055) 1,725 total $ ‘000 3,111 457 - (1,212) 2,356 13,164 (10,053) 3,111 13,621 (11,265) 2,356 42 notes to the Financial statements For the year enDeD 31 DecemBer 2013 16. Goodwill and intanGiBle assets year ended 31 deCemBer 2013 Balance at 1 January 2013 additions amortisation impairment Balance at 31 december 2013 BalanCe at 1 January 2013 cost (gross carrying amount) additions accumulated amortisation accumulated impairment net carrying amount BalanCe at 31 deCemBer 2013 cost (gross carrying amount) additions accumulated amortisation accumulated impairment net carrying amount restated 31 deCemBer 2012 year ended 31 deCemBer 2012 Balance at 1 January 2012 additions amortisation impairment Balance at 31 december 2012 BalanCe at 1 January 2012 cost (gross carrying amount) accumulated amortisation accumulated impairment net carrying amount BalanCe at 31 deCemBer 2012 cost (gross carrying amount) additions accumulated amortisation accumulated impairment net carrying amount Consolidated identiFiaBle intanGiBles $ ‘000 2,104 671 (409) - 2,366 2,945 684 (1,525) - 2,104 3,629 671 (1,934) - 2,366 Goodwill $ ‘000 130,413 - - - 130,413 130,413 - - - 130,413 130,413 - - - 130,413 Consolidated identiFiaBle intanGiBles $ ‘000 Goodwill $ ‘000 118,819 11,594 - - 130,413 118,819 - - 118,189 118,819 11,594 - - 130,413 1,741 684 (321) - 2,104 2,945 (1,204) - 1,741 2,945 684 (1,525) - 2,104 total $ ‘000 132,517 671 (409) - 132,779 133,358 684 (1,525) - 132,517 134,042 671 (1,934) - 132,779 total $ ‘000 120,560 12,278 (321) - 132,517 121,764 (1,204) - 120,560 121,764 12,278 (1,525) - 132,517 notes to the Financial statements For the year enDeD 31 DecemBer 2013 43 17. non-ControllinG interest (nCi) the following table summarises the information relating to each of the group’s subsidiaries that has material nci, before any intra- group eliminations. in 2013, the non-controlling interest in third party platform pty ltd was 48.77% (2012: 50.17%). third party platForm pty ltd non-current assets current assets non-current liabilities current liabilities net assets carrying amount of nci revenue profit / (loss) after tax total comprehensive income profit allocated to nci cash flows from operating activities cash flows from investing activities cash flows from financing activities net increase / (decrease) in cash and cash equivalents summary of quantitative impacts 2013 $’000 7,606 29,574 (212) (28,122) 8,846 4,314 9,176 (21) (21) (10) (351) (32) 1,000 617 2012 $’000 7,089 29,111 (148) (28,185) 7,867 3,947 3,406 (864) (864) (431) (2,746) (130) 2,333 (543) the following table summarises the adjustments made to the group’s statement of Financial position at 31 december 2012 and the statement of profit and loss for the year ended 31 december 2012 as a result of the consolidation of third party platform pty ltd. there is no material change to the statement of changes in Equity or the statement of cash Flows. statement of Financial position intangible assets and goodwill Equity accounted investees trade and other receivables property, plant and equipment deferred tax asset cash and cash equivalents overall impact on total assets trade and other payables overall impact on total liabilities non-controlling interest other equity overall impact on total equity as previously reported $ ‘000 adJustments $ ‘000 as restated $ ‘000 120,264 12,750 196,655 2,243 3,199 104,560 - 270,186 - - - - 12,253 (12,750) 25,952 113 6,318 3,160 35,046 28,334 28,334 3,947 2,764 6,711 132,517 - 222,607 2,356 9,517 107,720 - 298,520 - - - - 44 notes to the Financial statements For the year enDeD 31 DecemBer 2013 17. non-ControllinG interest (nCi) cont. statement of profit & loss share in profit of equity accounted investees, net of tax revenue Expenses tax expenses overall impact on profit & loss 18. deFerred taX assets and liaBilities deferred tax assets are attributable to the following: as previously reported $ ‘000 adJustments $ ‘000 as restated $ ‘000 (681) 132,329 (135,155) 750 - 433 4,152 (5,103) 87 (431) (248) 136,481 (140,258) 836 - statement oF FinanCial position inCome statement Consolidated the BalanCe Comprises temporary diFFerenCes attriButaBle to: depreciation Employee benefits tax losses other items gross deferred income tax assets deferred income tax charge 2013 $ ‘000 213 1,678 6,184 1,686 9,761 restated 2012 $ ‘000 279 1,487 6,184 1,567 9,517 unrecognised deferred tax assets relating to tax losses at 31 december 2013: $377,000 (2012: $242,000) 19. loans and advanCes current margin lending there were no impaired, past due or renegotiated loans at 31 december 2013 (2012:nil). refer to note 30 for further detail on the margin lending loans. 2013 $ ‘000 (65) 192 - 117 244 restated 2012 $ ‘000 (75) 161 - 815 901 Consolidated 2013 $ ‘000 $ ‘000 171,696 171,696 restated 2012 $ ‘000 $ ‘000 147,120 147,120 notes to the Financial statements For the year enDeD 31 DecemBer 2013 45 20. trade and other payaBles Current settlement obligations sundry creditors and accruals segregated client liabilities Consolidated 2013 $ ‘000 66,558 10,976 66,693 restated 2012 $ ‘000 62,623 9,618 37,406 144,227 109,647 settlement obligations are non-interest bearing and are normally settled on 3-day terms. sundry creditors are normally settled on 60-day terms. 21. deposits and BorrowinGs this note provides information about the contractual terms of the group’s interest-bearing deposits and borrowings. For more information about the group’s exposure to interest rate and foreign currency risk, see note 30. Current liaBilities deposits (cash account)1 cash advance facility2 Consolidated 2013 $ ‘000 162,824 29,724 192,548 restated 2012 $ ‘000 175,768 - 175,768 1. Borrowings relate to margin lending / cash account business (Bell potter capital) which are largely at call. 2. represents drawn funds from available Bell potter capital cash advance facility of $100m (2012:$100m). interest rate risk exposures details of the group’s exposure to interest rate changes on borrowings are set out in note 30. terms and debt repayment schedule terms and conditions of outstanding deposits and borrowings were as follows: averaGe eFFeCtive interest rate Consolidated cash advance facility* deposits (cash account)* 2013 3.03% 1.8% 2012 1.08% 2.5% 2013 restated 2012 year oF maturity 2014 2014 FaCe value $ ‘000 29,724 162,824 192,548 CarryinG amount $ ‘000 29,724 162,824 192,548 FaCe value $ ‘000 - 175,768 175,768 CarryinG amount $ ‘000 - 175,768 175,768 * Borrowings relate to margin lending / cash account business (Bell potter capital) which are largely at call. 22. Current taX liaBilities the current tax liability of the group is $1,918,987 (2012: $495,155). this amount represents the amount of income taxes payable in respect of current and prior financial periods. 46 notes to the Financial statements For the year enDeD 31 DecemBer 2013 23. provisions Current legal provision Balance at 1 January arisinG durinG the year: legal/other utilised: legal/other Balance at 31 december legal provision Consolidated 2013 $ ‘000 450 450 2013 $ ‘000 450 - - 450 restated 2012 $ ‘000 450 450 restated 2012 $ ‘000 750 - (300) 450 this amount represents a provision for certain legal claims brought against the group. in the directors’ opinion, the provision is appropriate to cover losses that are quantifiable or measurable at 31 december 2013. 24. employee BeneFits Current salaries and wages accrued liability for annual leave total employee benefits – current non-Current liability for long-service leave total employee benefits – non-current Consolidated 2013 $ ‘000 11,503 3,148 14,652 2,684 2,684 restated 2012 $ ‘000 6,778 2,846 9,624 2,478 2,478 the present value of employee entitlements not expected to be settled within twelve months of balance date have been calculated using the following inputs or assumptions at the reporting date: assumed rate of increase on wages / salaries discount rate settlement term (years) number of employees at year end Consolidated 2013 5.5% 2.6% 7 634 restated 2012 5.5% 3.1% 7 643 notes to the Financial statements For the year enDeD 31 DecemBer 2013 47 25. reConCiliation oF Cash Flows From operatinG aCtivities Cash Flows From operatinG aCtivities profit / (loss) after tax: adjustments for: depreciation & amortisation doubtful debt provision net (gain) / loss on investments disposals of property, plant & equipment share of losses of equity accounted investees Equity settled share-based payments (increase) / decrease current client receivables (increase) / decrease current other receivables (increase) / decrease other current assets (increase) / decrease intangibles (increase) / decrease deferred tax assets increase / (decrease) current client payables increase / (decrease) current other payables increase / (decrease) current tax liabilities increase / (decrease) current provisions increase / (decrease) non-current payables increase / (decrease) non-current provisions net cash from operating activities reconciliation of cash For the purpose of the cash flow statement, cash and cash equivalents comprise: cash on hand cash at bank short-term deposits marGin lendinG Cash cash at bank and short term deposits Client Cash cash at bank (trust account) segregated cash at bank (client) Consolidated 2013 $ ‘000 restated 2012 $ ‘000 6,811 (3,189) 1,199 130 (689) 29 - 724 8,204 (1,314) 1,135 (122) (671) (244) 33,223 1,357 1,424 5,028 - 206 1,534 1,095 (492) - 249 839 36 (21,404) (57) (10) (684) (901) 34,550 2,746 (525) 2,654 (3) 34 48,226 16,436 2013 $ ‘000 13 40,426 11,106 51,545 22,866 22,866 60,236 11,651 71,887 restated 2012 $ ‘000 13 30,136 11,387 41,536 30,593 30,593 25,225 10,366 35,591 146,298 107,720 48 notes to the Financial statements For the year enDeD 31 DecemBer 2013 26. Capital and reserves share capital ordinary shares on issue at 1 January share issue on issue at 31 december movements in ordinary share capital date 1 January 2012 details opening balance 31 december 2012 Balance 1 January 2013 opening balance 31 december 2013 Balance ordinary shares Consolidated 2013 $ ‘000 164,284 - 2012 $ ‘000 164,284 - 164,284 164,284 numBer oF shares 259,623,049 259,623,049 259,623,049 259,623,049 the authorised capital of the group is $164,283,700 representing 259,623,049 fully paid ordinary shares. the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. all ordinary shares rank equally with regard to the company’s residual assets. treasury shares as at 31 december 2013, there were 2,950,000 treasury shares outstanding (2012: 2,500,000). retained earnings as at 31 december 2013, there were retained profits of $10.3m (2012: $6.1m). non-Controlling interests the non-controlling interests relate to ownership of third party platform pty ltd at 48.77% (2012: 50.17%). Balance at 31 december 2013: $4.3m (2012: $3.9m). Cash flow hedging reserve the cash flow hedging reserve comprises the effective portion of the cumulative net change in the fair value of the interest rate swap related to hedged transactions. Balance at 31 december 2013: $45,000 (2012: $58,000). share based payments reserve the share based payments reserve arises on the grant of options, performance rights and deferred share rights to select employees under the company’s equity-based remuneration plans. Balance at 31 december 2013: $1.1m (2012: $0.6m). treasury shares reserve the treasury shares reserve represents the cost of shares held by the Employee share trust that the group is required to include in the consolidated financial statements. Balance at 31 december 2013: $1.7m (2012: $1.4m). notes to the Financial statements For the year enDeD 31 DecemBer 2013 49 27. dividends dividends recognised in the current year by the group are: 2013 interim 2013 ordinary dividend Final 2013 ordinary dividend 2012 interim 2012 ordinary dividend Final 2012 ordinary dividend Cents per share total amount $ ‘000 Franked / unFranked date oF payment 1.0 - - - 2,596 Franked 25 september 2013 - - - - - - - - - Company 2013 $ ‘000 2012 $ ‘000 dividend FrankinG aCCount 30 percent franking credits available to shareholders of Bell Financial group ltd for subsequent financial years 18,543 17,210 the above available amounts are based on the balance of the dividend franking account at year-end adjusted for: 1. Franking credits that will arise from the payment of current tax liabilities. 2. Franking debits that will arise from payment of dividends recognised as a liability at year-end. 3. Franking credits that will arise from the receipt of dividends recognised as receivable at year-end. the ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. the impact on the dividend franking account of dividends declared but not recognised as a liability is to reduce it by nil (2012: nil). 28. earninGs per share Earnings per share at 31 december 2013 based on profit after tax and a weighted average number of shares outlined below was 2.7 cents (2012: (1.2) cents). diluted earnings per share at 31 december 2013 was 2.7 cents (2012: (1.2) cents). reconciliation of earnings used in calculating eps BasiC earninGs per share profit / (loss) after tax profit attributable to ordinary equity holders used for basic eps adJustments For CalCulation oF diluted earninGs per share profit attributable to ordinary equity holders used to calculate basic Eps Effect of stock options issued profit attributable to ordinary equity holders used for diluted eps weighted average number of ordinary shares used as the denominator weighted average number of ordinary shares used to calculate basic Eps (net of treasury shares) weighted average number of ordinary shares at year-end Consolidated 2013 $ ‘000 6,811 6,811 6,811 - 6,811 restated 2012 $ ‘000 (3,189) (3,189) (3,189) - (3,189) Consolidated 2013 numBer 256,835,310 256,835,310 2012 numBer 258,464,804 258,464,804 weighted average number of ordinary shares used to calculate diluted eps 256,835,310 258,464,804 50 notes to the Financial statements For the year enDeD 31 DecemBer 2013 29. share-Based payments long-term incentive plan (ltip) the Board is responsible for administering the ltip rules and the terms and conditions of specific grants of options or performance rights to participants in the ltip. the ltip rules include the following provisions: ■ the Board may determine which persons will be eligible to participate in the ltip from time to time. Eligible persons may be invited to apply to participate in the ltip. the Board may in its discretion accept such applications. ■ a person participating in the ltip (“Executive”) may be granted options or performance rights on conditions determined by the Board. ■ the options or performance rights will vest on, and become exercisable on or after, a date predetermined by the Board (“the vesting date”), provided that the Executive remains employed as an executive of the company as at that date. these terms may be accelerated at the discretion of the Board under specified circumstances. ■ an unvested option or performance right will generally lapse at the expiry of the exercise period applicable to that option or performance right. ■ Following the vesting date, the vested option or performance right may be exercised by the Executive subject to any exercise conditions and the payment of the exercise price (if any), and the Executive will then be allocated or issued shares on a one for one basis. ■ the company has established an Employee share trust for the purpose of acquiring and holding shares in the company for the benefit of participants. Fair value of options granted there were 23,750,000 share options granted during the year to 31 december 2013 (2012 : nil). the assessed fair value at grant date of options issued in 2013 is $1,991,718. the fair value was determined using the Black scholes option-pricing model. an outline of details and assumptions used in the valuation of share options granted is provided below: Fair value oF share options and assumptions Fair value at grant date share price at grant date Exercise price at grant date option life (expected weighted average life) Expected volatility (weighted average volatility) risk-free interest rate (based on government bonds) 1. options can be exercised for a period of up to 12 months from exercise date. the number and weighted average exercise prices of share options is as follows: 2013 $0.08386 $0.55 $0.80 28 may 20171 45.76% 2.62% outstanding 1 January granted during the year Forfeited during period outstanding 31 december exercised 31 december weiGhted averaGe eXerCise priCe 2013 - $0.80 - numBer oF options 2013 - 23,750,000 (750,000) $0.80 23,000,000 - - weiGhted averaGe eXerCise priCe 2012 numBer oF options 2012 - - - - - - - - - notes to the Financial statements For the year enDeD 31 DecemBer 2013 51 performance rights under the ltip rules, performance rights are deferred equity taken as 100% shares, with the conditions, including vesting and the period of deferral, governed by the terms of the grant. unvested performance rights are forfeited in certain situations set out in the ltip rules. ordinary shares allocated under the ltip on exercise of performance rights may be held in trust beyond the deferral period. the issue price for the 2011/2012 performance rights is based on the closing price of the shares traded on the asx on the grant date. the issue price for the 2013 performance rights is based on the closing price of the shares traded on the asx on the vesting date. reconciliation of outstanding performance rights: outstanding 1 January granted during the year Forfeited during the year Exercised during the year outstanding balance 31 december expenses arising from share-based payment transactions performance rights total expense recognised as employee costs 30. FinanCial instruments 2013 $ ‘000 2,600 270 - (431) 2,439 2012 $ ‘000 2,000 1,000 - (400) 2,600 Consolidated 2013 $ ‘000 724 724 2012 $ ‘000 839 839 Exposure to credit, interest rate, currency and liquidity risks arise in the normal course of the group’s business. Credit risk management has a process in place to monitor the exposure to credit risk on an ongoing basis. the group requires collateral in respect of margin loans made in the course of business within Bell potter capital. this collateral is generally in the form of the underlying security the margin loan is used to invest in. a loan-to-value ratio (lvr) is determined for each security with regard to market weight, index membership, liquidity, volatility, dividend yield, industry sector and advice from Bell Financial group’s research department. a risk analyst performs a review of the lvr and the recommendation is submitted to management. management does not expect any counterparty to fail to meet its obligations. advisers and clients are provided with early warning of accounts in deficit from 5% up to 10% and clients receive a margin call if their account is in deficit by more than 10%. margin calls are made based on the end-of-day position but can be made intraday at management’s discretion. the maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of Financial position as outlined below: trade debtors segregated deposits with clearing brokers loans and advances sundry debtors Consolidated restated 2013 $ ‘000 61,809 8,189 171,696 2,722 2012 $ ‘000 56,085 12,742 147,120 3,858 note 13. 13. 19. 13. 52 notes to the Financial statements For the year enDeD 31 DecemBer 2013 30. FinanCial instruments cont. the ageing of trade receivables at reporting date is outlined below: Consolidated aGeinG oF reCeivaBles not past due past due 0 – 30 days past due 31-365 days more than one year Gross impairment Gross impairment 2013 $ ‘000 58,667 2,812 20 310 2013 $ ‘000 - - - (164) restated 2012 $ ‘000 restated 2012 $ ‘000 53,861 2,107 - 117 - - - - collectability of trade receivables is reviewed on an ongoing basis. debts that are known to be uncollectible are written off. a provision for impairment of trade receivables is established when there is evidence that the company will not be able to collect all amounts due according to the original terms. significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or delinquency in payments (for amounts greater than 30 days overdue) are considered indicators that the trade receivable is impaired. liquidity risk the following are the contractual maturities of financial liabilities, including estimated interest excluding the impact of netting agreements. Consolidated 2013 CarryinG amount $ ‘000 ContraCted CashFlow $ ‘000 6-months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 years $ ‘000 5+ years $ ‘000 non-derivative liaBilities trade & other payables cash deposits cash advance facilities derivative liaBilities hedging derivative 144,227 (144,227) (144,227) 162,824 29,724 (162,824) (29,724) (162,824) (29,724) 45 (45) (45) - - - - - - - - - - - - - - - - restated Consolidated 2012 CarryinG amount $ ‘000 ContraCted CashFlow $ ‘000 6-months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 years $ ‘000 5+ years $ ‘000 non-derivative liaBilities trade & other payables cash deposits cash advance facilities derivative liaBilities hedging derivative 109,647 (109,647) (109,647) 175,768 (175,768) (175,768) - 58 - - (58) (58) - - - - - - - - - - - - - - - - the group manages liquidity by maintaining reserves, banking facilities and reserve borrowing facilities and by continuously monitoring forecast and actual cash flows and matching up maturity profiles of financial assets and liabilities. rolling cash projections are used to monitor cash flow requirements and optimise cash returns on investments. a bank facility is also available to be drawn upon in order to meet both short and long-term liquidity requirements. notes to the Financial statements For the year enDeD 31 DecemBer 2013 53 market risk market risk is the risk that changes in market prices, such as interest rates, equity prices and foreign exchange rates will affect the group’s income or the value of its holdings of financial instruments. the objective of market risk management is to manage and control exposures within acceptable parameters, while optimising returns. interest rate risk the group’s investments in fixed-rate debt securities and its fixed-rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. the group’s investments in variable-rate debt securities and its variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. interest rate swaps are used to hedge exposure to fluctuations in interest rates. changes in the fair value of these derivative hedging instruments are recognised directly in equity to the extent that the hedge is effective. to the extent the hedge is ineffective, changes in the fair value are recognised in profit and loss. in managing interest rate risk the group aims to reduce the impact of short-term fluctuations on the group’s earnings. over the longer-term, however, permanent changes in interest rates will have an impact on profit. investments in equity securities and short-term receivables and payables are not exposed to interest rate risk. equity price risk all instruments are subject to the risk that future changes in market conditions may make an instrument less valuable. as trading instruments are valued with reference to the market or Black scholes model, changes in equity prices directly affect reported income each period. the group monitors equity price movements to ensure there is no material impact on the group’s activities. the group is exposed to equity price risks through its listed and unlisted investments. these investments are classified as financial assets or liabilities at fair value through the profit and loss. Foreign currency risk the group is exposed to insignificant currency risk on monetary assets and liabilities held in a currency other than the respective functional currency of the group. the group ensures the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. sensitivity analysis interest rate risk at 31 december 2013, it is estimated that a general decrease of one-percentage point in interest rates would decrease the group’s profit before income tax by approximately $1.23 million (2012: $0.8 million increase to loss). interest rate swaps have been included in this calculation. a general increase of one-percentage point in interest rates would have an equal but opposite effect. equity price risk at 31 december 2013, it is estimated that a 10% decrease in equity prices would decrease the group’s profit before income tax by approximately $0.1 million (2012: $0.2 million increase to loss). a 10% increase in equity prices would have an equal but opposite effect. 54 notes to the Financial statements For the year enDeD 31 DecemBer 2013 30. FinanCial instruments cont. effective interest rates in respect of income-earning financial assets and interest-bearing financial liabilities, the following tables indicate their average effective interest rates at the reporting date and the periods in which they mature. averaGe eFFeCtive interest rate $ ‘000 Consolidated note FiXed rate instruments 2013 restated 2012 total $ ‘000 6 months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 years $ ‘000 more than 5 years $ ‘000 6 months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 years $ ‘000 more than 5 years $ ‘000 cash and cash equivalents loans and advances deposits and borrowings cash advance facility 12. 19. 21. 21. 3.39% 26,370 26,370 5.77% 45,470 45,349 - 121 3.71% (14,588) (14,238) (350) 3.03% (29,274) (29,274) - 27,978 28,207 (229) variaBle rate instruments cash and cash equivalents loans and advances deposits and borrowings 12. 19. 21. 2.5% 119,928 119,928 6.58% 126,226 126,226 1.64% (148,236) (148,236) 97,918 97,918 - - - - Fair value measurements a) accounting classifications and fair values - - - - - - - - - - - - - - - - - - - - - - - - - - - the following table shows the carrying amounts of financial assets and financial liabilities, including their levels in the fair value hierarchy. it does not include fair value information of financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. 31 deCemBer 2013 FinanCial assets measured at Fair value Equity securities FinanCial assets not measured at Fair value trade and other receivables cash and cash equivalents loans and advances FinanCial liaBilities measured at Fair value interest rate swaps used for hedging FinanCial liaBilities not measured at Fair value trade and other payables deposits and borrowings CarryinG amount desiGnated at Fair value $’000 Fair value hedGinG instruments $’000 loans and reCeivaBles $’000 other FinanCial liaBilities $’000 976 976 - - - - - - - - - - - - - - - - 45 45 - - - - - - 72,720 146,298 171,696 390,714 - - - - - - - - - - - - - - 144,226 192,548 336,774 - total $’000 976 976 72,270 146,298 171,696 390,714 45 45 144,226 192,548 336,774 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 84,256 84,256 2.4% (170,259) (170,259) (5,184) (5,184) Fair value level 1 $’000 level 2 $’000 level 3 $’000 averaGe eFFeCtive interest rate $ ‘000 4.45% 6.31% 4.47% 1.08% 3.0% 7.18% 472 472 - - - - - - - - - - total $ ‘000 41,530 48,235 (5,509) - 66,190 98,885 504 504 45 45 - - - - - - - - 41,530 48,235 (5,509) - 66,190 98,885 - - - - - - - - - - - - - - - - - - - - - total $’000 976 976 45 45 - - - - - - - - notes to the Financial statements For the year enDeD 31 DecemBer 2013 55 41,530 48,235 (5,509) - total $ ‘000 41,530 48,235 (5,509) - averaGe eFFeCtive interest rate $ ‘000 4.45% 6.31% 4.47% 1.08% 3.0% 7.18% 30. FinanCial instruments cont. effective interest rates averaGe eFFeCtive interest rate $ ‘000 Consolidated note FiXed rate instruments in respect of income-earning financial assets and interest-bearing financial liabilities, the following tables indicate their average effective interest rates at the reporting date and the periods in which they mature. 2013 - - - - - - total $ ‘000 6 months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 more than years $ ‘000 5 years $ ‘000 cash and cash equivalents loans and advances deposits and borrowings cash advance facility cash and cash equivalents loans and advances deposits and borrowings 12. 19. 21. 21. 12. 19. 21. variaBle rate instruments 3.39% 26,370 26,370 5.77% 45,470 45,349 3.71% (14,588) (14,238) 121 (350) 3.03% (29,274) (29,274) 27,978 28,207 (229) 2.5% 119,928 119,928 6.58% 126,226 126,226 1.64% (148,236) (148,236) 97,918 97,918 Fair value measurements a) accounting classifications and fair values - - - - - - - - - - - - - - - - - - the following table shows the carrying amounts of financial assets and financial liabilities, including their levels in the fair value hierarchy. it does not include fair value information of financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. FinanCial assets measured at Fair value 31 deCemBer 2013 Equity securities FinanCial assets not measured at Fair value trade and other receivables cash and cash equivalents loans and advances FinanCial liaBilities measured at Fair value interest rate swaps used for hedging FinanCial liaBilities not measured at Fair value trade and other payables deposits and borrowings 976 976 - - - - - - - - - - - - - - - - - - - - 45 45 72,720 146,298 171,696 390,714 - - - - - - - - - - - - - - - - - 144,226 192,548 336,774 - - - - - - - - - total $’000 976 976 72,270 146,298 171,696 390,714 45 45 144,226 192,548 336,774 - 2.4% (170,259) (170,259) (5,184) (5,184) CarryinG amount Fair value hedGinG desiGnated at loans and Fair value instruments reCeivaBles $’000 $’000 $’000 other FinanCial liaBilities $’000 Fair value level 1 $’000 level 2 $’000 level 3 $’000 472 472 - - - - - - - - - - 504 504 - - - - 45 45 - - - - - - - - - - - - - - - - 84,256 84,256 66,190 98,885 66,190 98,885 restated 2012 6 months or less $ ‘000 6-12 months $ ‘000 1-2 years $ ‘000 2-5 years $ ‘000 more than 5 years $ ‘000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - total $’000 976 976 - - - - 45 45 - - - - 56 notes to the Financial statements For the year enDeD 31 DecemBer 2013 30. FinanCial instruments cont. restated 31 deCemBer 2012 FinanCial assets measured at Fair value Equity securities FinanCial assets not measured at Fair value trade and other receivables cash and cash equivalents loans and advances FinanCial liaBilities measured at Fair value interest rate swaps used for hedging FinanCial liaBilities not measured at Fair value trade payables deposits and borrowings desiGnated at Fair value $’000 Fair value hedGinG instruments $’000 loans and reCeivaBles $’000 other FinanCial liaBilities $’000 2,249 2,249 - - - - - - - - - - - - - - - 58 58 - - - - - 72,685 107,720 147,120 327,525 - - - - - - - - - - - - - 109,647 175,768 285,415 b) accounting classifications and fair values the following shows the valuation techniques used in measuring level 1, 2 and level 3 values, as well as the significant unobservable inputs used. level 1 – Equity securities – the valuation is based on quoted prices in active markets for identical assets and liabilities. level 2 – Equity securities (unlisted options) – the valuation technique using observable inputs. the valuation is based on Black scholes model. level 3 – interest rate swaps – the fair values are based on broker quotes. similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments. CarryinG amount Fair value total $’000 2,249 2,249 72,685 107,720 147,120 327,525 58 58 109,647 175,768 285,415 level 1 $’000 level 2 $’000 level 3 $’000 2,107 2,107 - - - - - - - - - 142 142 - - - - - - - 58 58 total $’000 2,249 2,249 - - - - - - - 58 58 - - - - - - - - - - - notes to the Financial statements For the year enDeD 31 DecemBer 2013 57 CarryinG amount Fair value Fair value hedGinG desiGnated at loans and Fair value instruments reCeivaBles $’000 $’000 $’000 other FinanCial liaBilities $’000 level 1 $’000 level 2 $’000 level 3 $’000 2,107 2,107 - - - - - - - - - 142 142 - - - - 58 58 - - - - - - - - - - - - - - 30. FinanCial instruments cont. restated 31 deCemBer 2012 Equity securities FinanCial assets measured at Fair value FinanCial assets not measured at Fair value trade and other receivables cash and cash equivalents loans and advances FinanCial liaBilities measured at Fair value interest rate swaps used for hedging FinanCial liaBilities not measured at Fair value trade payables deposits and borrowings 2,249 2,249 - - - - - - - - - b) accounting classifications and fair values inputs used. - - - - - - - - - 58 58 72,685 107,720 147,120 327,525 - - - - - - - - - - - - - - - 109,647 175,768 285,415 total $’000 2,249 2,249 72,685 107,720 147,120 327,525 58 58 109,647 175,768 285,415 the following shows the valuation techniques used in measuring level 1, 2 and level 3 values, as well as the significant unobservable level 1 – Equity securities – the valuation is based on quoted prices in active markets for identical assets and liabilities. level 2 – Equity securities (unlisted options) – the valuation technique using observable inputs. the valuation is based on Black scholes model. level 3 – interest rate swaps – the fair values are based on broker quotes. similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments. total $’000 2,249 2,249 - - - - 58 58 - - - 58 notes to the Financial statements For the year enDeD 31 DecemBer 2013 31. operatinG lease Commitments leases as lessee Future minimum rental payments under the non-cancellable operating leases at 31 december are as follows: less than one year Between one and five years more than five years Consolidated 2013 $ ‘000 10,436 25,757 18,387 54,580 restated 2012 $ ‘000 10,495 31,042 24,393 65,930 the group has entered into commercial property leases for its office accommodation. these leases have a remaining life of up to ten years. the group has no other capital or lease commitments. 32. parent entity disClosures as at, and throughout the financial year ending 31 december 2013 the parent company of the group was Bell Financial group ltd. results oF the parent entity profit for the year total comprehensive income for the year FinanCial position oF parent entity at year end current assets non-current assets total assets current liabilities total liabilities total equity oF the parent entity ComprisinG oF: contributed equity reserves retained earnings / (losses) total equity Company 2012 $ ‘000 3,798 3,798 357 154,207 154,564 4,922 4,922 164,284 981 (15,622) 149,642 2013 $ ‘000 808 808 261 156,579 156,840 8,728 8,728 164,284 (549) (15,622) 148,112 notes to the Financial statements For the year enDeD 31 DecemBer 2013 59 33. related parties the following were key management personnel of the group at any time during the reporting period: eXeCutive direCtors eXeCutives non-eXeCutive direCtors c Bell a provan l Bell a Bell r Fell d davenport p vine (resigned 19 July 2013) c coleman g cubbin B wilson B shanahan key management personnel compensation the key management personnel compensation comprised: short-term employee benefits other long-term benefits post-employment benefits termination benefits share-based payments Consolidated 2013 $ 2012 $ 3,416,791 3,375,873 - 187,033 - 29,351 - 224,262 - - 3,633,175 3,600,135 loans to key management personnel and their related parties details regarding loans outstanding at the reporting date to key management personnel and their related parties at any time in the reporting period, are as follows: direCtors c Bell a provan c coleman g cubbin B wilson B shanahan eXeCutives l Bell a Bell r Fell d davenport p vine BalanCe 1 January 2013 $ BalanCe 31 deCemBer 2013 $ interest paid and payaBle in the reportinG period $ hiGhest BalanCe in period $ 1,721,850 2,039,163 125,839 2,132,129 - - - - 1,245,787 944,559 64,457 1,366,504 - - - 68,473 223,476 65,147 46,122 134,494 - - - 137,144 211,286 259,616 54,565 136,104 - - - 3,720 13,282 15,259 3,337 4,819 - - - 163,177 408,412 351,481 54,565 138,526 60 notes to the Financial statements For the year enDeD 31 DecemBer 2013 33. related parties cont. direCtors c Bell a provan c coleman g cubbin m spry B wilson B shanahan eXeCutives l Bell a Bell r Fell d davenport p vine BalanCe 1 January 2012 $ BalanCe 31 deCemBer 2012 $ interest paid and payaBle in the reportinG period $ hiGhest BalanCe in period $ 277,349 1,721,850 74,325 1,721,850 - - - - 1,167,715 1,245,787 86,190 1,362,856 - - - - - 500,000 242,534 122,949 138,659 - - - - 68,473 223,476 65,147 46,122 134,494 - - - - 1,275 22,786 5,351 5,611 10,536 - - - - 142,579 500,000 242,534 137,049 142,466 loans totalling $3,782,437 (2012: $3,505,349) were made to key management personnel and their related parties during the year. the recipients of these loans were colin Bell, craig coleman, lewis Bell, andrew Bell, rowan Fell, dean davenport and paul vine. the loans represent margin loans held with Bell potter capital limited. interest is payable at prevailing market rates. related parties also have deposits on normal terms and conditions. details regarding the aggregate of loans made, guaranteed or secured by any entity in the group to key management personnel and their related parties, and the number of individuals in each group, are as follows: total for key management personnel 2013 total for key management personnel 2012 total for other related parties 2013 total for other related parties 2012 openinG BalanCe $ 3,505,349 2,449,206 - - ClosinG BalanCe $ 3,782,437 3,505,349 - - total for key management personnel and their related parties 2013 total for key management personnel and their related parties 2012 3,505,349 2,449,206 3,782,437 3,505,349 interest paid and payaBle in the reportinG period $ numBer in Group at 31 deCemBer 230,713 206,074 - - 230,713 206,074 17 9 - - 17 9 interest is payable at prevailing market rates on all loans to key management persons and their related entities. these rates are available to all clients and may vary marginally depending on individual negotiations. the principal amounts are repayable per terms agreed on an individual basis. interest received on the loans totalled $230,713 (2012: $206,074). no amounts have been written-down or recorded as allowances for impairment, as the balances are considered fully collectible. notes to the Financial statements For the year enDeD 31 DecemBer 2013 61 movements in shares 2013 the movement during the reporting period in the number of ordinary shares in Bell Financial group ltd held, directly, indirectly or beneficially, by each director and key management person, including their related parties, is as follows: direCtors c Bell1 a provan1 c coleman g cubbin B wilson B shanahan eXeCutives lm Bell1 ag Bell1 r Fell d davenport p vine held at 1 January 2013 33,674,602 33,633,345 1,772,283 180,000 1,000,000 250,000 32,773,328 25,113,728 610,000 184,949 50,300 purChases 151,000 147,465 - - - - 162,559 48,750 - - - reCeived on eXerCise oF options held at 31 deCemBer 2013 sales - - - - - - - - - - - - - - - - - - - - - - 33,825,602 33,780,810 1,722,283 180,000 1,000,000 250,000 32,935,887 25,162,478 610,000 184,949 50,300 1. the number of shares held by colin Bell, alastair provan, lewis Bell and andrew Bell includes those held indirectly through Bell group holdings pty limited. movements in shares 2012 direCtors c Bell a provan c coleman g cubbin m spry B wilson B shanahan eXeCutives lm Bell ag Bell r Fell d davenport p vine held at 1 January 2012 purChases reCeived on eXerCise oF options held at 31 deCemBer 2012 sales 33,089,642 32,958,386 1,772,283 180,000 150,000 100,000 - 32,369,919 24,862,478 610,000 184,949 50,300 584,960 674,959 - - - 900,000 250,000 403,409 251,250 - - - - - - - - - - - - - - - - - - (50,000) - - - - - - 33,674,602 33,633,345 1,772,283 180,000 100,000 1,000,000 250,000 32,773,328 25,113,728 610,000 184,949 50,300 62 notes to the Financial statements For the year enDeD 31 DecemBer 2013 33. related parties cont. other key management personnel transactions Bell Financial has an option to purchase the remaining shares of Bell direct from the current shareholders. the current shareholders include directors of Bell Financial. craig coleman, currently a non-executive director, provided consultancy services to Bell Financial and was paid $50,000 for those services (2012: $165,000). Brian wilson, currently a non-executive director, did not provide consultancy services to Bell Financial in 2013 (2012: $100,000). there are no other transactions with key management persons or their related parties other than those that have been disclosed in this report. ultimate parent Bell group holdings pty ltd is the ultimate parent company of Bell Financial group ltd. there are no outstanding amounts owed by the ultimate parent entity at 31 december 2013 (2012: nil). there is no interest receivable at 31 december 2013 (2012: nil). subsidiaries the table below outlines loans made by the company to wholly owned subsidiaries. suBsidiary Bell potter Financial planning limited1 Bell potter investments pty limited1 Bell potter capital limited2 2013 $ 2,136 - 8,149,244 8,151,380 2012 $ 1,550 50,343 8,105,792 8,157,685 1. loan is interest free and unsecured. 2. the loan from the parent entity to Bell potter capital limited represents a subordinated loan that attracts interest at 3.74% per annum (2012: 4.69% per annum). loans made by wholly owned subsidiaries to the company: $14,303,871 (2012: $12,471,952) during the course of the financial year subsidiaries conducted transactions with each other and associates on terms equivalent to those on an arm’s length basis. they are fully eliminated on consolidation. as at 31 december 2013, all outstanding amounts are considered fully collectable. 34. Group entities parent entity Bell FinanCial Group ltd siGniFiCant suBsidiaries Bell potter securities limited Bell potter capital limited third party platform pty ltd Bell potter securities limited (uK) Bell potter securities limited (hK) Country oF ownership interest inCorporation 2013 2012 australia australia australia united Kingdom hong Kong 100% 100% 51.23% 100% 100% 100% 100% 49.83% 100% 100% in the financial statements of the company investments in subsidiaries are accounted for at cost. the company has no jointly controlled entities. notes to the Financial statements For the year enDeD 31 DecemBer 2013 63 third party platform pty ltd Following the introduction of aasB10 consolidated Financial statements, Bell Financial group reassessed when it acquired control over third party platform pty ltd. the effective date of control has been determined as 28th may 2012. it was determined that Bell Financial group does have control over third party platform pty ltd. the remaining voting rights are widely dispersed and there is no indication that all other shareholders exercise their votes collectively. 35. Guarantees From time to time Bell Financial has provided financial guarantees in the ordinary course of business which amount to $12.4m (2012: $14.2m) and are not recorded in the statement of Financial position as at 31 december 2013. 36. ContinGent liaBilities and ContinGent assets the company has agreed to indemnify its wholly owned subsidiary, Bell potter securities limited, in the event that any contingent liabilities of Bell potter securities limited results in a loss. 37. suBsequent events there were no significant events from 31 december 2013 to the date of this report other than: Citi and Bell potter sign mou on 20 February 2014, Bell Financial announced that it had signed a memorandum of understanding (mou) with citi. the arrangement will see Bell potter’s retail and sophisticated investor clients provided with access to citi’s highly ranked global research platform and securities products. the products will include equity offerings, equity-linked (hybrid instruments) and certain fixed interest products. Bell potter’s retail clients will be able to access a research offering which combines citi’s resources of highly rated research teams in EmEa, asia and the americas with Bell potter’s own predominantly small and medium capitalized company research. the distribution and research agreement is being finalised and is intended to take effect in the coming weeks. Bell Financial’s alliance with citi replaces the long-standing relationship the company has had with uBs. the strategic alliance agreement had an initial term of three years from 12 december 2007 and was extended for a further three year term to 12 december 2013, then again to 28 February 2014. as at the date of this report, uBs owns 16.27% of the ordinary shares in the company. on termination of the strategic alliance agreement, all of the company’s obligations to uBs regarding shareholder restrictions, non-dilution rights and distribution exclusivity fall away. Final dividend on 25 February 2014, the directors resolved to pay a fully franked final dividend of 1.5 cents per share. 38. auditors’ remuneration audit serviCes auditors of the company Kpmg australia: audit and review of financial reports total remuneration for audit services audit related serviCes auditors of the company Kpmg australia: other regulatory audit services total remuneration for audit related services non-audit related services Consolidated 2013 $ restated 2012 $ 402,000 402,000 385,200 385,200 93,000 93,000 - 495,000 93,110 93,110 700 479,010 64 dirEctors’ dEclaration 1. in the opinion of the directors of Bell Financial group ltd (‘the company’): a) the consolidated financial statements and notes that are set out on pages 24 to 63 and the remuneration report on pages 15 to 21 in the directors’ report, are in accordance with the corporations act, including: i) giving a true and fair view of the group’s financial position as at 31 december 2013 and of its performance for the financial year ended on that date; and ii) complying with australian accounting standards and the corporations regulations 2001; b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. 2. the directors have been given the declarations required by section 295a of the corporations act from the managing director and chief Financial officer for the financial year ended 31 december 2013. 3. the directors draw attention to note 1(a) of the financial statements which includes a statement of compliance with international Financial reporting standards. signed in accordance with a resolution of the directors: Colin Bell Executive chairman sydney 25 February 2014 indEpEndEnt auditor’s rEport 65 independent auditor’s report to the memBers oF Bell FinanCial Group limited report on the FinanCial report we have audited the accompanying financial report of Bell Financial group (the company), which comprises the consolidated statement of financial position as at 31 december 2013, and consolidated income statement and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 38 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the group comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. directors’ responsibility for the financial report the directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with australian accounting standards and the Corporations Act 2001 and for such internal controls as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. in note 1(a), the directors also state, in accordance with australian accounting standard aasB 101 Presentation of Financial Statements, that the financial statements of the group comply with international Financial reporting standards. auditor’s responsibility our responsibility is to express an opinion on the financial report based on our audit. we conducted our audit in accordance with australian auditing standards. these auditing standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. we performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and australian accounting standards, a true and fair view which is consistent with our understanding of the group’s financial position and of its performance. we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KpmG, an australian partnership and a member firm of the KpmG network of independent member firms affiliated with KpmG international cooperative (“KpmG international”), a swiss entity. liability limited by a scheme approved under professional standards legislation. 66 inDepenDent auDitor’s report independence in conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. auditor’s opinion in our opinion: a) the financial report of the group is in accordance with the Corporations Act 2001, including: i) giving a true and fair view of the group’s financial position as at 31 december 2013 and of its performance for the year ended on that date; and ii) complying with australian accounting standards and the Corporations Regulations 2001. b) the financial report also complies with international Financial reporting standards as disclosed in note 1(a). report on the remuneration report we have audited the remuneration report included in pages 15 to 21 of the directors’ report for the year ended 31 december 2013. the directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300a of the Corporations Act 2001. our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards. auditor’s opinion in our opinion, the remuneration report of Bell Financial group for the year ended 31 december 2013, complies with section 300a of the Corporations Act 2001. Kpmg dean m waters partner melbourne 25 February 2014 sharEholdEr inFormation 67 the shareholder information set out below was applicable as at 31 January 2014. distriBution oF shares ranGe 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over rounding total unmarketaBle parCels minimum $500.00 parcel at $ 0.65 per unit twenty larGest shareholders rank name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Bell group holdings pty limited uBs nominees pty ltd rBc investor services australia nominees pty limited Equitas nominees pty limited Bell potter nominees ltd cypress point investments pty ltd colin Bell pty ltd Fatty holdings pty ltd mr lionel alexander mcfadyen cherryburn pty ltd rBc investor services australia nominees pty limited uBs nominees pty ltd Bond street custodians limited mr alastair provan & mrs Janis provan morson holdings pty ltd merivale investments pty ltd aBn amro clearing sydney nominees pty ltd moat investments pty ltd walter James unger & danielle angela unger ilingal pty ltd numBer oF shareholders numBer oF shares % oF issued Capital 263 733 337 527 89 162,370 2,453,718 2,866,790 17,482,850 236,657,321 1,949 259,623,049 minimum parCel size 770 holders 165 numBer oF shares 117,967,345 42,232,044 17,122,882 10,500,000 6,764,600 4,750,000 1,845,522 1,733,019 1,687,480 1,650,000 1,493,494 1,400,000 1,300,914 1,300,730 1,134,749 1,100,000 1,066,491 1,049,985 1,013,147 1,000,000 0.06 0.95 1.10 6.73 91.15 0.01 100.00 units 64978 % oF issued Capital 45.44 16.27 6.60 4.04 2.61 1.83 0.71 0.67 0.65 0.64 0.58 0.54 0.50 0.50 0.44 0.42 0.41 0.40 0.39 0.39 68 shareholDer inFormation suBstantial shareholdinGs suBstantial shareholder Bell group holdings pty limited (Bgh) colin Bell alastair provan lewis Bell uBs ag, australia Branch rBc investor services australia nominees pty limited numBer oF shares % oF issued Capital 117,967,345 120,528,028 120,383,236 119,638,313 42,232,044 17,122,882 45.44 46.421,4 46.372,4 46.083,4 16.27 6.60 1. registered holder of 2,560,683 shares. 2. registered holder of 2,415,891 shares. 3. registered holder of 1,670,968 shares. 4. Bgh is the registered holder of 117,967,345 shares. colin Bell, alastair provan and lewis Bell are deemed to have Bgh’s relevant interests in these shares because each has voting power in Bgh above 20% (pursuant to section 608(3) of the corporations act). ordinary shares refer to note 26 in the financial statements. votinG riGhts Bell Financial has one class of fully paid ordinary shares. on a show of hands, every member present at the meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. there are no voting rights attached to the options or performance rights. on-market Buy-BaCk there is no current on-market buy-back. voluntary restriCtions there are no shares currently held in voluntary escrow. dirEctory 69 direCtory reGistered and head oFFiCe share reGistry level 29, 101 collins street melbourne, victoria, 3000 telephone 03 9256 8700 Facsimile 03 9256 8787 direCtors Colin Bell (Executive chairman) alastair provan (managing director) Craig Coleman (non-executive director) Computershare investor services pty limited 452 Johnston street abbotsford vic 3067 telephone 03 9415 5000 asX Code BFG shares are listed on the australian securities Exchange Banker Graham Cubbin (non-executive director) australia and new zealand Banking Group Brian wilson (non-executive director) Brenda shanahan (non-executive director) Company seCretary Cindy-Jane lee auditor kpmG weBsite address www.bellfg.com.au Bell FinanCial Group limited level 29, 101 collins street melbourne vic 3000 australia gpo Box 4718 melbourne vic 3001 australia www.bellfg.com.au 

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