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Brooks MacdonaldASX Announcement
23 August 2016
______________________________________________________________________
Appendix 4E and Annual Report for Year Ended 30 June 2016
FY16 statutory NPBT of $4.6m, up 79% on the prior year
FY16 EBITDA of $6.4m, up 56% on the prior year
FY16 NPAT of $4.3m, down 28% on prior year
Fully franked final FY16 dividend of 1.2 cents per share
Centrepoint Alliance Limited (ASX:CAF) (‘Centrepoint’) has made significant progress during the
year to become Australia’s most trusted and respected financial services business and at the
same time record a net profit before tax of $4.6m, up 79% on prior year, and EBITDA of $6.4m,
up 56% on prior year.
Centrepoint also announced a final dividend of 1.2 cps fully franked to be paid on 19 October
2016. Total dividends for FY16 of 2.2 cps consistent with the prior year.
The Wealth business is benefitting from its transformation over the last three years into a client
centric contemporary wealth business, focussing on the needs of our client financial advice firms,
with profit before tax up 75% to $5.4m compared to the prior year. The business significantly
increased the number of quality financial advice firms and grew funds under management and
administration.
The Lending business contributed a 22% increase in profit before tax to $2.5m driven by improved
efficiencies in a challenging market.
The Group’s net profit after tax of $4.3m included a $1.3m ($4.3m FY15) benefit from the
recognition of deferred tax.
Operating cashflow has improved by $6.9m to $4.3m and cash and cash equivalents were $10.2m
at 30 June 2016. This leaves the Group in a strong financial position from which to deliver on its
strategy of organic and inorganic growth.
The Chairman, Alan Fisher, noted, “The team have done a fabulous job executing on the strategy
over the last three years and this is beginning to be recognised in our results and by the market.
The focus on quality client outcomes has differentiated Centrepoint from traditional, and typically
institutional, competitors and is increasingly attracting like-minded client centric non-aligned
advisers and brokers. We look forward to continuing to drive improvements across all areas of
our business and improve the experience for our clients.”
The Mortgage business has improved its position with a 13% increase in brokers and the
successful outsourcing of its back office functions. The fundamentals of the premium funding
business are strong with increased brokers and loans written, with $377 million written in FY16.
Managing Director, John de Zwart, said “The strategy to create a truly differentiated financial
advice business in a rapidly evolving sector is leading to solid growth in an exciting market. The
Lending team, who have achieved positive results over the past few years in a sector challenged
by premium rate reductions, did a superb job to lift profit and maintain volumes.
1
“Only organisations that focus on their clients will succeed as the pace of change and the options
available for client’s increases. Our business is well positioned as the non-aligned leader in our
market. Our goal to be the most trusted and respected financial services organisation in Australia
is delivering long term sustainable growth.
“We have developed an innovative range of solutions to help non-institutional advisers and
brokers thrive. This has been driven by several years of investment in our team, technology and
client solutions in both the Wealth and Lending businesses. We recently re-launched the
Centrepoint Alliance brand and are now looking to capitalise on our presence and reputation
within the financial services industry in the year ahead.”
Investor Briefing
John de Zwart, Managing Director, and John Cowan, Chief Financial Officer, will hold an investor
briefing at 10:30am (AEST) on Wednesday, 24 August 2016.
If you wish to participate in the briefing please register at the ASX Announcements section of the
Centrepoint website - www.centrepointalliance.com.au/investor-centre/asx-announcements/.
Centrepoint’s Appendix 4E and Annual Report are appended.
For further information please contact:
John de Zwart
Managing Director
Centrepoint Alliance Limited
Ph: +612 8987 3002
2
CENTREPOINT ALLIANCE LIMITED
AND ITS CONTROLLED ENTITIES
ABN 72 052 507 507
Appendix 4E
Year ended 30 June 2016
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Revenues from ordinary activities
Down
0%
$41,881,000
$42,294,000
Profit before tax and non-controlling interests
Up
79%
$4,561,000
$2,553,000
Profit after tax attributable to members
Down
28%
$4,262,000
$5,880,000
30 June 2016
30 June 2015
Dividends (distributions)
Final dividend
Previous corresponding period
Amount per security
Franked amount
per security
1.2 cents
1.2 cents
1.2 cents
1.2 cents
Record date for determining entitlements to dividend
26 September 2016
Payment date of dividend
19 October 2016
Dividend Reinvestment Plan
Plan active
Discount
Pricing period
Last DRP election date
Net tangible assets per share
No
N/A
N/A
N/A
30 June 2016
30 June 2015
16.94 cents
14.85 cents
Centrepoint Alliance Limited reported a net profit before tax of $4.6m, up 79% on the prior year. The Wealth net profit
before tax increased by 75% to $5.4m. During the year Wealth has been successful in recruiting a significant number
of new firm’s and expanding the number of advisers using Centrepoint solutions. The Lending net profit before tax
increased by 22% to $2.5m and was impacted by a continuing softer general insurance market. The mortgage
business has improved its position with an increase in brokers and outsource of back office functions. This year the
Group recognised $1.3m ($4.3m FY15) in deferred tax assets.
PAGE 1
CENTREPOINT ALLIANCE LIMITED
AND ITS CONTROLLED ENTITIES
ABN 72 052 507 507
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2016
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Annual Financial Report
30 June 2016
Contents
Chairman’s Report
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Directors’ Declaration
ASX Additional Information
Independent Auditor’s Report
1
3
13
25
26
27
28
29
30
80
81
83
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Chairman’s Report
30 June 2016
Centrepoint Alliance Limited (‘Centrepoint’ or the ‘Company’) has made significant progress during
the financial year ended 30 June 2016 (‘FY16’) in executing its strategy to become the most
respected, independent financial services provider in Australia.
We are pleased to announce in FY16, a net profit before tax of $4.6m, after tax of $4.3m and an
EBITDA1 of $6.4m. There has been strong growth in earnings with profit before tax up 79% and
EBITDA up 56% on the previous year. This growth improvement has not fully flowed through to an
improved net profit after tax mainly due to the impact of the deferred tax adjustment last year and a
final onerous lease adjustment related to the Gold Coast property. There continues to be a
significant investment in new businesses and capabilities in line with our strategy to build an
independent modern client-centric business which is widely respected among the wealth and general
insurance industry.
Wealth benefited from the growth in new advisers joining the business and increasing net flows into
the Ventura Managed Accounts Portfolios (‘vMaps’) solution. Whilst revenue has remained flat there
has been a good transformation in the revenue base to the contemporary business model.
The Lending business continues to be impacted by a softer general insurance market which impacts
the value of premiums funded. The Mortgage business has improved its position with an increase
in brokers and the successful outsourcing of its back office functions.
The Board is pleased to announce a final dividend of 1.2 cents per share, fully franked, to be paid
on 19 October 2016.
The last financial year has seen the business in a position to shift its focus to growth. The
Centrepoint Alliance brand has been updated and the website has been redeveloped. We will
continue to invest in the Centrepoint Alliance brand to fuel further growth. Our innovative separately
managed account service vMAPs has been enhanced with the addition of two models managed by
Dimensional Fund Advisors and Russell Investments. vMAPs uses latest technology and
internationally leading service providers to deliver professional managed investments at a lower cost
to traditional investment solutions. The salaried advice channel has had success in developing the
life insurance business and we continue to focus on profitably growing this business line.
The premium funding banking facilities have been restructured with improved terms. Last year we
established a premium funding business in New Zealand. This strategy did not gain enough traction
and as a result of renegotiating the banking arrangement we made the decision to close the
business. The fundamentals of the premium funding business are strong with increased broker
numbers and loans written.
There has also been significant investment in people, technology and client solutions in both
Centrepoint Wealth and Centrepoint Lending. This is an integral part of the Group’s strategy to
achieve sustainable, long term growth by delivering innovative solutions to meet customers’ needs
while assisting financial advisers and brokers to operate efficient and profitable businesses.
The Group is well placed to take advantage of the anticipated growth in both non-bank lending and
wealth markets. We are well placed in our markets and are moving swiftly towards an easier client
experience using technology to automate and simplify processes. This has enabled both our wealth
advisers and insurance brokers to concentrate on building quality, independent advice businesses,
growing their market share and ultimately delivering solid returns to shareholders. We remain
disciplined in reviewing acquisition opportunities in both markets to ensure strategic fit for the
generation of shareholder value.
Thank you to our employees, advisers, clients and business partners, and you, our shareholders,
for your continued support as we strive to become the leading and most highly respected non-
institutional financial services business in Australia.
1 EBITDA – Interest paid and received on premium funding loans is excluded
PAGE 1
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Chairman’s Report
30 June 2016
On behalf of my fellow directors I am pleased to present the Centrepoint annual report for the year
ended FY16 and to report a successful year in implementing our strategy to become Australia’s most
respected independent financial services business.
Yours sincerely
Alan Fisher
Chairman
PAGE 2
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Your directors present their report for the year ended 30 June 2016.
Directors
The names and details of the Company’s directors in office during the financial year and until the
date of this report are as follows. Directors were in office for this entire period unless otherwise
stated.
Alan Fisher (Appointed 12 November 2015)
BCom, FCA, MAICD
Chairman and Non-executive Director
Alan has extensive and proven experience in enhancing shareholder value. Alan is currently the
chairperson of Australian Renewable Fuels Limited (under a DOCA), a non-executive director of IDT
Australia Limited and managing director of both DMC Corporate Pty Ltd and Fisher Corporate
Advisory Pty Ltd. Alan has previously held the position of CEO of Pental Limited where he was
instrumental in its successful restructuring and was a former Corporate Finance Partner of Coopers
& Lybrand.
John de Zwart
BEcon, CA
Managing Director and Chief Executive Officer
John has 20 years of experience in senior executive roles within the Australian, UK and NZ financial
services industry. John’s passion and success has come from a focus on the customer and staff
experience to transform and build fast growing and industry leading businesses in a range of
sectors. John was the Chief Financial Officer for TAL, Tower Limited and AMP Corporate
Superannuation. He has also worked with Westpac, Credit Suisse and Price Waterhouse.
John believes strongly in aligning corporate and social outcomes and has been actively involved in
a range of charities, most recently as Director of CanTeen.
John O’Shaughnessy
MBA, MAICD, Graduate Certificate in Management
Non-executive Director, Chairman of the Group Audit, Risk & Compliance Committee, Chairman of
the Nomination, Remuneration & Governance Committee
John has many years’ experience in financial services in Asia/Pacific and in the UK/Europe having
held CEO, senior executive and Board roles covering funds management, insurance, banking and
securities. John has been a Director of A. T. Kearney, University of Adelaide’s International Centre
for Financial Services, Forticode, Elevate Australasia and Australian Services Roundtable. John
was also Deputy CEO of the Financial Services Council of Australia.
Martin Pretty
BA, CFA, Graduate Diploma of Applied Finance
Non-executive Director, Chairman of the Group Investment Committee
Martin is currently an Investment Manager with the Thorney Investment Group, a substantial
shareholder, and brings to the Board over 16 years’ experience in the finance sector. The majority
of this experience was gained within ASX-listed financial services businesses, including Hub24, Bell
Financial Group and IWL Limited. Martin has also previously worked as a finance journalist with The
Australian Financial Review.
PAGE 3
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Hugh Robertson (Appointed 2 May 2016)
Non-executive Director
Hugh has over 30 years’ experience in the financial services sector having been involved in a number
of successful stockbroking and equity capital markets businesses. Hugh has previously been a
director of HUB24 and OAMPS and is currently a non-executive director of AMA Group Limited and
TasFood Limited.
Richard (Rick) Nelson (Resigned 12 November 2015)
FAICD
Chairman & Non-executive Director
Matthew Kidman (Resigned 12 November 2015)
BEc, LLb, Graduate Diploma of Applied Finance
Non-executive Director, Chairman of the Nomination, Remuneration & Governance Committee
Stephen Maitland (Resigned 31 August 2015)
OAM, RFD, BEc, M.Bus, LLM, FCPA, FAICD, FCIS, FAIM, SF Fin
Non-executive Director, Chairman of the Group Audit, Risk & Compliance Committee
Directors’ Interests in Shares
As at the date of this report, the interests of the directors in the shares of the Company were:
*Beneficiary of Centrepoint Alliance Services Pty Ltd (‘CAESP’) holding 4,300,000 shares on behalf of John de Zwart under
the terms of the Group’s long term incentive plan.
**Subsequent to year end, the Board approved the issue of 650,000 of 1,500,000 performance rights.
No interests were held in other securities of the Company or related bodies corporate.
Company Secretary
Debra Anderson
B. Law (LLB) Hons, Post Graduate Diploma in Legal Practice, Diploma of Financial Planning
Debra is a lawyer who began her career in private practice in Australia and worked in New Zealand
and Hong Kong, before joining the Company in 2003. She has gained extensive experience in
financial services over the past 12 years and was appointed Company Secretary in November 2013.
PAGE 4
Number of ordinary sharesNumber of ordinary sharesDirectorFully PaidPartly PaidA. D. Fisher----J. A. O'Shaughnessy100,000---H. W. Robertson----J. M. de Zwart*6,880,743*--1,500,000**M. P. Pretty----Number of Options over ordinary sharesNumber of performance rights
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Committee membership
As at the date of this report, the Company had a Nomination, Remuneration and Governance
committee (‘NRGC’), Group Audit, Risk and Compliance committee (‘GARCC’) and Group
Investment committee (‘GIC’).
Directors acting on the committees of the board during the year were:
Meetings of Directors
The following table sets out the number of directors’ meetings (including meetings of committees of
directors) held during the financial year and the number of meetings attended by each director (while
they were a director or committee member).
Corporate Information
History
Centrepoint Alliance Limited (formerly Alliance Finance Corporation Limited) was founded in 1991
as an insurance premium funding company. It was incorporated in Australia as a company limited
by shares and listed on the Australian Stock Exchange in June 2002.
On 30 September 2005, Centrepoint Alliance Limited merged with the Centrepoint Finance Pty Ltd.
During the 2009 financial year, the Group ceased its commercial finance activities, which involved
the sale on 31 December 2008 of its finance broking businesses and the cessation of its equipment
finance operations.
On 13 December 2010 the Company acquired 100% of Centrepoint Wealth Pty Ltd (formerly
Professional Investment Holdings Limited) and its controlled entities through a scheme of
arrangement.
PAGE 5
NRGCGARCCGICJ. A. O'Shaughnessy (Chairman*)J. A. O'Shaughnessy (Chairman*)M. P. Pretty (Chairman)A. D. Fisher*H. W. Robertson****J. M. de ZwartM. Kidman**M. P. PrettyR. J. Nelson**S. J. Maitland***M. Kidman**MembersHeldAttendedHeldAttendedHeldAttendedHeldAttendedA. D. Fisher*10955J. A. O'Shaughnessy19177755H. W Robertson****4410J. M. de Zwart191721M. P. Pretty19175522R. J. Nelson**9822S. J. Maitland***6310M. Kidman**972210* Appointed 12 November 2015** Resigned 12 November 2015*** Resigned 31 August 2015**** Appointed 2 May 2016Board of directorsNRGCGARCCGIC
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Principal activities
The principal activities of the Company and its related entities during the course of the financial year
were:
Wealth, which provides a range of financial advice and licensee support services (including
licensing, systems, compliance, training and technical advice) and investment solutions to
financial advisers, accountants and their clients across Australia; and,
Lending, which provides insurance premium funding and mortgage aggregation services to
mortgage brokers
Corporate structure
Centrepoint Alliance Limited is a company limited by shares that is incorporated and domiciled in
Australia and listed on the Australian Securities Exchange. Information on the Group structure is
provided in Note 24 to the Consolidated Financial Statements.
Operating & Financial Review
Group Business Operations
Centrepoint Alliance Limited and its controlled entities (the ‘Group’) operate predominantly in the
financial services industry within Australia and has two core business segments as outlined above
in Principal activities.
Financial Performance
Profit before tax from continuing operations for the year to 30 June 2016 was $4.561m (2015:
$2.553m). The 79% increase in profit before tax is a reflection of the adoption of the Centrepoint
business models and the increasing pace of transformation and growth of the Wealth business and
the Lending business performing well in challenging markets.
a) Wealth
Description: Provider of a range of financial advice and licensee support services (including
licencing, systems, compliance, training and technical advice) and investment solutions
(platforms and managed portfolios and funds) to financial advisers, accountants and their
clients across Australia.
Business Model: Wealth provides services to authorised representatives under its Australian
Financial Services Licences (‘AFSL’) through Professional Investment Services Pty Ltd
(‘PIS’) and Alliance Wealth Pty Ltd (‘AW’). Services are also provided to authorised
representatives of other AFSL holders through Associated Advisory Practices Pty
Ltd. Wealth sources best of breed investment platforms, portfolio solutions and managed
funds through Investment Diversity Pty Ltd and Ventura Investment Management Ltd. The
business is a modern advice business built around client best interest and fee for service. In
addition revenue is generated from product providers through product margins on packaged
investment platforms, managed funds and other fees for services.
Key Drivers: The number of advice firms, fee income, funds under administration, funds
under management and distribution agreements, and margin and operating costs.
Overview: Wealth operates in a market alongside large institutions. Wealth is one of the
largest non-institutional full advice businesses in Australia. The wealth market is attractive
PAGE 6
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
with over $2 trillion2 in superannuation assets expected to continue to grow by approximately
7% p.a. over the next twenty years and the need for quality advice continuing to grow. The
market has experienced significant regulatory change with Future of Financial Advice
legislation and Life Insurance Framework leading to long term positive impacts on the
industry.
The Group continues to execute its strategy to improve the quality of advice and wealth
solutions provided to Australians. This continues to involve a significant evolution to develop
a customer centric wealth business.
During the year Wealth has been successful in recruiting a significant number of new firms
and expanding the number of advisers using Centrepoint solutions. The quality of the team,
client focus and best of breed solutions were key to this recent success.
Financial Performance: Profit before tax was $5.385m compared to $3.079m for 2015. The
75% increase in profit before tax reflects the transformation in business model with strong
revenue growth in Funds flowing to the bottom line. The Wealth business revenues are down
1% to $29.798m, however strong second half growth in adviser numbers is not reflected and
profit performance has been significantly improved.
b) Lending
Description: Provides a cash flow solution primarily to small and medium sized enterprises
(‘SME’) and corporate clients to enable lending of their general insurance premiums and also
provides aggregation and licencing services to mortgage brokers.
Business Model: Insurance premium funding is distributed to customers through a national
network of third party general insurance brokers. The business funds a large volume of
relatively small short term high quality loans. Centrepoint Alliance Lending Pty Ltd (‘CALP’)
is an aggregator of mortgage and asset finance solutions. It is a boutique player in a large
market designed to primarily service the needs of financial planning clients.
Key Drivers: The number of supporting brokers, dollar volume and number of loans written,
general insurance premium price cycle, property purchases, lending terms and lending
margins, credit management and operating expenses.
Overview: The insurance premium funding market is estimated to have suffered a decline by
6%3 in 2015 following a 10% decline in the previous year, due to commercial insurance
premium reductions.
Financial Performance: Profit before tax increased 22% to $2.536m (2015: $2.086m). Total
Revenue from the Lending business increased 8% to $12.338m on steady premiums funded
and improved funding costs.
Net margins have remained steady and shown improvement in the second half year due to
reduced borrowing costs associated with lower bank facility interest charges and commitment
limits.
2 APRA March 2016 Quarterly Superannuation Performance
3 Taylor Fry Radar 2016 Insights for Insurance Leaders
PAGE 7
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
The number of active general insurance broker relationships has grown as has the number
of loans written, driven by expansion of the east coast presence. Existing brokers include
the joint venture with IBNA and Steadfast Group as a panel funder, Australia’s largest broker
network. Substantial investment took place across Lending during the period in technology
enhancements to ensure that we can continue to grow and retain a leading position. This will
ensure consistent, quality and reliable service over the longer term to all of our business
partner relationships. Credit quality remains strong.
The mortgage broking business has outsourced its back office during the year and is now
taking greater advantage of the Group’s relationships with financial advisers and brokers.
c) Corporate
Description: The costs of the Centrepoint board of directors, company secretarial functions
and the administration of the listed public entity are reflected in Corporate.
Overview: Consistent with the prior simplification of the corporate structure some expenses
have been reclassified to improve accountability and efficiency.
Cash Flows
The Group held $10.192m in cash and cash equivalents as at 30 June 2016 (2015: $12.539m).
Cash provided by operations was $7.132m (2015: $6.479m) from which $2.809m was paid out in
adviser claims (2015: $9.081m), $4.598m was provided as borrowings to the insurance premium
funding business (2015: $1.455m) resulting in an overall cash movement of $2.347m in the year
(2015: $3.834m).
Financial Position
The Group has net assets at 30 June 2016 of $39.550m (2015: $36.658m) and net tangible assets
of $26.324m (2015: $22.019m) representing net tangible assets per share of 16.94 cents (2015:
14.85 cents).
The financial position remains stable with total assets of $168.505m (2015: $168.634m) with no
significant changes of note. The significant items are the Premium Funding Receivables and interest
bearing liabilities associated with the receivables.
PAGE 8
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Risks & Risk Management
The business regularly reviews operational and strategic risks faced by the Group that could affect
its financial prospects. These include:
Legacy advice claims – The Consolidated Statement of Financial Position includes a
provision for reported as well as incurred but not reported (‘IBNR’) client advice claims in
relation to advice provided prior to 1 July 2010. The provision is based on an external
actuarial model that projects future claims based on historical data. Actual claims may exceed
the provision and it is impracticable to quantify the amount of any such additional liability.
The actuarial model does not project claims from potential class actions. Class action lawyers
have been active within the financial advice industry in relation to failed investment products
and there is an unquantifiable risk that such action may be taken against a Group subsidiary
in the future.
Loss of financial advisers – Wealth depends on revenue generated from financial advisers.
Financial advisers are able to leave the Group if they are dissatisfied with the services
provided. Considerable effort and progress is being made to develop the leading advice
business in Australia and a new advice fee model was recently implemented which will aid
retention of key existing financial advisers and attract external advisers to the Group.
Regulatory change – Whilst the Future of Financial Advice (‘FOFA’) legislation has been
finalised, the Financial System Inquiry (‘FSI’) and new Life Insurance Framework (‘LIF’)
regulations will continue to evolve the direction for the future of Australia’s financial
system. Depending on the outcome of these changes it could impact the Group including
operational change costs, slowing down adviser recruitment, and increasing the ongoing
costs and risks associated with regulatory compliance.
Loss of key personnel – A comprehensive staff review and feedback process is actively
employed. Regular reviews of remuneration to ensure market competitiveness are
undertaken, and the Board has approved a structured short-term incentive program and long-
term incentive program for staff.
Competitor behaviour – The financial services industry and the insurance premium funding
industry have several participants which have relatively large market shares (relative to the
Group) and are subsidiaries or operating divisions of large financial services businesses. The
size of these competitors and their greater access to lending provide them with a strong
position on which to compete with the Group. There is also the emergence of smaller
businesses looking to disrupt the traditional business models. There is a risk that earnings
of the Group could be adversely impacted by the activities of competitors. The Group is
focused on building and maintaining the leading service propositions in the industry and its
position as a non-aligned service provider helps to mitigate this risk.
Strategies & Prospects
The Group is focused on becoming the most respected financial services business in Australia.
Industry consolidation is providing opportunities for organic growth stemming from the Group’s
position as one of the largest non-aligned premium funders with a strong track record of service and
delivery. It may also create opportunities for inorganic growth as small sub-scale businesses look to
exit the industry or diversification and synergies develop with non-bank lenders. Lending will
continue its strategy of growing the insurance funding business on the east coast. The mortgage
broking business has outsourced its back office to improve efficiency and has recently experienced
good growth in new brokers largely based on the Group’s relationships with financial advisers and
insurance brokers.
PAGE 9
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
The Wealth business is implementing its strategy to become a leading customer centric wealth
business focused on customer outcomes and building sustainable financial advice practices. It is
transitioning to a contemporary business model which leaves it well positioned in an industry that
remains very attractive for the long-term growth driven by growing national savings and investment
pool increases and the greater need for advice as the complexity of the regulatory environment, tax
system and market increases. The Group will continue to invest in its capabilities to grow revenue
and profitability over the medium term.
Dividends
On 23 August 2016, the directors of Centrepoint Alliance Limited declared a final dividend on
ordinary shares in respect of the 2016 financial year. The dividend is to be paid out of the dividend
reserve. The total amount of the dividend is $1,865,209 which represents 1.2 cents per share and
is fully franked at the corporate income tax rate of 30%. The record date is 26 September 2016 and
payment date is 19 October 2016.
Shares and Performance rights
Unissued shares
As at the date of this report, there were 400,000 fully vested options exercisable at $0.40 each on
or before 31 December 2016. The Option holder does not have any right, by virtue of the options, to
participate in any share issue of the Company or any related body corporate.
In August 2013 the Company granted 4,100,000 performance rights, which is a right that can be
converted to an ordinary fully paid share in the Company for no monetary consideration subject to
specific performance criteria being achieved. 1,500,000 of these rights were granted to Managing
Director and Chief Executive Officer, John de Zwart, (approved by shareholders during the 2013
Annual General Meeting) and the remaining 2,600,000 were offered to five senior executives in
December 2013. 533,334 of the 2,600,000 rights have now been forfeited due to the departure of
two executives. Based on a review of the profit targets the Board has approved the vesting of
1,498,889 performance rights of which the Managing Director and Chief Executive Officer, John de
Zwart will be allocated 650,000 of these rights.
At the date of this report there are no other unissued ordinary shares subject to options.
Shares issued as a result of the exercise of options
No shares have been issued as a result of the exercise of options during the financial year and up
to the reporting date.
Risk Management
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely
basis and that the Group's objectives and activities are aligned with those risks and opportunities.
Risk management is monitored and assessed by the Group Audit, Risk and Compliance Committee
of the Board, which comprises three non-executive directors. The Managing Director and Chief
Executive Officer and Chief Financial Officer are standing attendees. The Chairman of the Board
may not chair this Committee. As detailed in the Corporate Governance Statement the Committee
is governed by a charter and is responsible on behalf of the Board for overseeing:
The effectiveness of the Group’s system of risk management and internal controls; and
The Group’s systems and procedures for compliance with applicable legal and regulatory
requirements.
The Board has a number of mechanisms in place to ensure that management's objectives and
activities are aligned with the risks identified by the Board. These include the following:
PAGE 10
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Board approval of a strategic plan, which encompasses the Group's vision and strategy
statements, designed to meet stakeholders' needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of
progress against these budgets, including the establishment and monitoring of Key
Performance Indicators (KPI’s) of both a financial and non-financial nature.
Board approved Risk Management Policy and Risk Framework to assist in the identification,
analysis, evaluation and treatment of Group risks.
Significant Changes in the State of Affairs
There are no matters or events constituting a significant change in the state of affairs of the
Company.
Significant Events Subsequent to Balance Date
On 1 July 2016 a new receivables finance facility provided by National Australia Bank was approved
and implemented. The new facility is able to meet our growth ambitions, with lower rates, fees and
capital requirements.
There are no other matters or events which have arisen since the end of the financial period which
have significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent financial years.
Likely Developments
Likely developments in the operations of the Company and the expected results of those operations
in future financial years have been addressed in the Operating and Financial Review, where it was
noted that the strategic plan includes the review and assessment of acquisition opportunities, and in
the subsequent events disclosure. The directors are not aware of any other significant material likely
developments requiring disclosure.
Environmental Regulation
The Consolidated Entity’s operations are not regulated by any significant environmental regulation
under a law of the Commonwealth or of a State or Territory.
Corporate Governance Policies and Practices
For further information on corporate governance policies and charters adopted by Centrepoint
Alliance Limited, please refer to our website: http://www.centrepointalliance.com.au/investor-
centre/corporate-governance/
Indemnification and Insurance of Directors and Officers
During the financial year, the Company paid a premium for a policy insuring all directors of the
Company, the company secretaries and all executive officers against any liability incurred by such
director, secretary or executive officer to the extent permitted by the Corporations Act 2001.
The policy does not allocate an identifiable part of the premium to specific directors or officers.
Accordingly, the premium paid has not been apportioned to directors’ remuneration.
The Company has not otherwise during or since the end of the financial year, indemnified or agreed
to indemnify any officer of the Company against a liability incurred as such officers.
PAGE 11
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Deloitte Touche
Tohmatsu, as part of the terms of its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has been made to indemnify Deloitte
Touche Tohmatsu during or since the end of the financial year.
Rounding
The Company is a company of the kind referred to in ASIC Corporations (Rounding in
Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with
that Corporations Instrument amounts in the directors’ report and the financial statements are
rounded off to the nearest hundred thousand dollars, unless otherwise indicated.
PAGE 12
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Remuneration Report
This Remuneration Report for the year ended 30 June 2016 outlines the remuneration arrangements
of the directors and executives of the Group in accordance with the requirements of the Corporations
Act 2001 (the ‘Act’) and its regulations. This information has been audited as required by section
308(3C) of the Act.
The Remuneration Report is presented under the following sections:
Key Management Personnel
Remuneration philosophy
Group performance
Nomination, Remuneration & Governance committee (‘NRGC’)
Employment contracts
Remuneration of Key Management Personnel
Short-term incentives
Long-term incentives
For the purposes of this Report, Key Management Personnel (‘KMP’) of the Group are defined as
those persons having authority and responsibility for planning, directing and controlling the major
activities of the Group, directly or indirectly, including any director (whether executive or otherwise)
of the Company.
Key Management Personnel
The key management personnel of the Company during the financial year were as follows:
There were no changes of KMP after the reporting date and before the signing of this Report.
Remuneration philosophy
The performance of the Company depends on the quality of its directors, executives and employees.
To prosper, the Company must attract, motivate and retain skilled and high performing individuals.
Accordingly, the Company’s remuneration framework is structured around the central principle and
goal of providing competitive rewards to attract the highest calibre people.
The level of fixed remuneration is set to provide a base level of remuneration that is appropriate to
the position and competitive in the market. It is not directly related to the performance of the
Company. Fixed remuneration is reviewed annually and the process consists of a review of
company-wide, business unit and individual performance, relevant comparative remuneration in the
market and internal and, where appropriate, external advice on policies and practices.
Short-term incentives in the form of potential cash bonuses are made available to KMP. Any award
is based on the achievement of pre-determined objectives.
PAGE 13
A. D. FisherChairman & Director (non-executive) - appointed 12 November 2015J. A. O'ShaughnessyDirector (non-executive) J. M. de ZwartManaging Director & Chief Executive OfficerH. W. RobertsonDirector (non-executive) - appointed 2 May 2016M. P. PrettyDirector (non-executive) J. S. CowanChief Financial OfficerR. M. DoddChief Executive Officer – Centrepoint Alliance Premium Funding Pty LtdR. J. Nelson Chairman & Director (non-executive) - resigned 12 November 2015M. KidmanDirector (non-executive) - resigned 12 November 2015S. J. MaitlandDirector (non-executive) - resigned 31 August 2015
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Long-term incentives are made available to certain KMP in the form of performance rights, shares
or options. The directors consider these to be the best means of aligning incentives of KMP with the
interests of shareholders.
The remuneration of non-executive directors of the Company consists only of directors’ fees and
committee fees.
Group performance
Shareholder returns for the last five years have been as follows:
Nomination, Remuneration & Governance Committee (‘NRGC’)
The role of the NRGC includes the setting of policy and strategy for the appointment, compensation
and performance review of directors and executives, approving senior executive service agreements
and severance arrangements, overseeing the use of equity-based compensation and ensuring
appropriate communication and disclosure practices are in place.
Non-executive directors are not employed under specific employment contracts but are subject to
provisions of the Corporations Act in terms of appointment and termination. The Company applies
the ASX listing rules that specify that aggregate remuneration shall be determined from time to time
by shareholders in a general meeting. The maximum aggregate remuneration for the financial year
ended 30 June 2016, which was approved by a resolution of shareholders at the Annual General
Meeting on 29 November 2012, is $425,000.
The remuneration of the non-executive directors does not currently incorporate a component based
on performance. Within the limits approved by Company shareholders, individual remuneration
levels are set by reference to market levels. Simon Hare was engaged to review Executive
Remuneration, and Norton Gledhill was engaged to prepare an updated employment contract for
the Managing Director. They were engaged by and reported to the NRGC.
Executive directors and executives are employed under contracts or agreed employment
arrangements that specify remuneration amounts and conditions.
The Board has introduced for executives and senior employees an incentive system based on
issuing performance rights, shares or options in the Company.
The Company’s Securities Trading Policy prohibits directors from entering into margin lending
arrangements and also forbids directors and senior executives from entering into hedging
transactions involving the Company’s securities.
Details of current incentive arrangements for key management personnel, where they exist, are
shown under the disclosure of their contracts below:
PAGE 14
20162015201420132012$'000$'000$'000$'000$'000GROUPNet profit/(loss) after tax4,262 5,880 3,223 (7,288)(17,299)EPS (basic) - (cents per share)2.944.143.20(8.04)(17.90)EPS (diluted) - (cents per share)2.753.963.13(8.04)(17.90)Share price ($)0.41 0.50 0.370.270.18
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Employment contracts
Details of the terms of employment of the Managing Director & Chief Executive Officer and the
named executives are set out below:
John de Zwart – Managing Director & Chief Executive Officer
Contract commencement date: 15 April 2013
Term: No term specified
Incentives:
Short term incentive –
A short term incentive of $150,000 was paid after the end of the 2015 financial year and on
achievement of key performance targets set by the Board. The key performance targets are
measures of underlying profit, improvement of customer retention and engagement, strengthening
the organisational capability and business sustainability through talent acquisition, retention and
development, improvement in compliance levels and risk management.
Short term incentive performance criteria will be approved by the Board on 30 September 2016 for
the 2017 financial year. The key performance targets are measures of profit, achievement of certain
strategic projects and growth in the business combined with strong compliance levels and risk
management.
Long term incentive –
CAESP16
The Board has approved the issue of 650,000 of the potential 1,500,000 fully paid ordinary
Centrepoint Alliance Limited (‘CAF’) shares at nil cost, to be issued post finalisation of the Accounts.
CAESP17
2,800,000 fully paid ordinary CAF shares at 52.2 cents per share, that are legally held by the
Centrepoint Alliance Services Pty Ltd ATF Centrepoint Alliance Employee Share Scheme
(‘CAESPT’) until satisfaction of the vesting conditions determined on 15 December 2017 (‘2017
tranche’) and 15 December 2018 (‘2018 tranche’) based on the following:
2017 tranche
If the cumulative fully diluted underlying earnings per share (‘EPS’) adjusted for any dilutionary
impact of dividend reinvestment plan (‘DRP’) for the financial years ended 30 June 2015, 2016 and
2017 divided by 3 is:
Less than 133% of 2014 EPS, nil vest;
Between 133% and 145% of 2014 EPS, shares will vest on a pro-rata basis;
145% and above of 2014 EPS, 100% of shares will vest.
2018 tranche
If the cumulative fully diluted underlying EPS adjusted for any dilutionary impact of DRP for the
financial years ended 30 June 2015, 2016, 2017 and 2018 divided by 4 is:
Less than 143% of 2014 EPS, nil vest;
Between 143% and 160% of 2014 EPS, shares will vest on a pro-rata basis;
160% and above of 2014 EPS, 100% of shares will vest.
CAESP18
Issue of up to 1,500,000 fully paid ordinary CAF shares at 34 cents per share, that are legally held
by the CAESPT until satisfaction of the vesting conditions determined on 13 December 2018 based
on the following:
If the underlying Basic EPS for 30 June 2018 financial year is:
PAGE 15
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Less than 140% of the 30 June 2015 underlying basic EPS, none will vest;
140% of the 30 June 2015 underlying basic EPS, 40% of the shares will vest;
Between 141% and 171% of the 30 June 2015 underlying basic EPS, shares will vest on a
pro-rata basis; or
172% and above of the 30 June 2015 underlying basic EPS, 100% of the shares will vest.
Required notice (Executive): 3 months.
Required notice (Company): 6 months.
Termination Entitlement: Statutory entitlements and so much of the total fixed remuneration as is
due and owing on the date of termination.
John Cowan - Chief Financial Officer
Contract commencement date: 12 January 2015
Term: No term specified
Incentives:
Short term incentive –
Eligible from the date of appointment to participate in the Company’s short term incentive plan as
amended or varied from time to time by the Company in its absolute discretion and without any
limitation on its capacity to do so.
A retention incentive was approved by the Board in March 2016 with the first payment of $75,000 to
be made in September 2016 and the second payment of $75,000 to be made in September 2017.
The incentive is subject to employment criteria.
Long term incentive –
CAESP18
Issue of up to 1,200,000 fully paid ordinary CAF shares at 34 cents per share, that are legally held
by the CAESPT until satisfaction of the vesting conditions determined on 13 December 2018 based
on the following:
If the underlying Basic EPS for 30 June 2018 financial year is:
Less than 140% of the 30 June 2015 underlying basic EPS, none will vest;
140% of the 30 June 2015 underlying basic EPS, 40% of the shares will vest;
Between 141% and 171% of the 30 June 2015 underlying basic EPS, shares will vest on a
pro-rata basis; or
172% and above of the 30 June 2015 underlying basic EPS, 100% of the shares will vest.
Required notice (Executive): 6 months.
Required notice (Company): 3 months.
Termination Entitlements: Statutory entitlements.
PAGE 16
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Bob Dodd - Chief Executive Officer (Insurance Premium Funding)
Contract commencement date: 1 December 2006
Term: 5 years with 5 year option (evergreen)
Incentives:
Short term incentive –
For the 2015 – 2019 financial years, a payment of $120,000 each year upon successful achievement
of the Centrepoint Alliance Premium Funding budget for that year.
Long term incentive –
CAESP16
The Board has approved the issue of 200,000 of the potential 600,000 fully paid ordinary CAF shares
at nil cost, to be issued post finalisation of the Accounts.
CAESP17
Issue of up to 500,000 fully paid ordinary CAF shares at 52.2 cents per share, that are legally held
by the CAESPT until satisfaction of the vesting conditions determined on 15 December 2017 (‘2017
tranche’) based on the following:
2017 tranche
If the cumulative fully diluted underlying earnings per share (‘EPS’) adjusted for any dilutionary
impact of DRP for the financial years ended 30 June 2015, 2016 and 2017 divided by 3 is:
Less than 133% of 2014 EPS, nil vest;
Between 133% and 145% of 2014 EPS, shares will vest on a pro-rata basis;
145% and above of 2014 EPS, 100% of shares will vest.
Commencing 1 July 2015, 10% of the total value added profit over the performance period (1 July
2015 to 30 June 2019). Value added profit in Centrepoint Alliance Premium Funding Pty Ltd’s
statutory profit before tax (‘CAPF PBT’) less the total minimum return on equity for that year. Growth
in CAPF PBT must be at least 10% each year and an average of at least 15% over the performance
period.
Required notice (Executive): 6 months.
Required notice (Company): 6 months.
Termination entitlements: Statutory entitlements and up to 6 months’ notice or equivalent base
salary in lieu of notice.
PAGE 17
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
PAGE 18
Salary & FeesCash BonusSuperannuationCash IncentivesLong service leavePerformance rightsShares$$$$$$$$%%J.A. O'Shaughnessy4201636550,550 - 15,752 66,302 - - 2015345,512 - 524 - - - - - 6,036 - - R. J. Nelson1201613522,156 - 24,049 46,205 - - 2015365114,679 - 10,895 - - - - - 125,574 - - J. M. de Zwart2016365381,610 139,308 33,021 78,000 189,262 821,201 16.96% 32.55% 2015365372,230 125,000 24,342 - - 60,000 66,640 - 648,212 19.28% 19.54% A. D. Fisher2201623072,298 - 6,868 79,166 - - H. W. Robertson220165910,092 - 959 11,051 - - S. J. Maitland120166210,092 - 959 11,051 - - 201536560,550 - 5,752 - - - - - 66,302 - - M. Kidman1201613522,279 - 2,117 24,396 - - 201536560,550 - 5,752 - - - - - 66,302 - - M. P. Pretty201636560,000 5,700 65,700 - - 201536560,000 - 5,700 - - - - - 65,700 - - J. S. Cowan2016365323,146 59,361 24,947 - 44,787 452,241 13.13% 9.90% 2015142147,229 - 9,392 - - - - - 156,621 - - G.P.Toohey32015223146,875 36,530 16,790 - - - - 52,372 252,567 14.46% - N. J. Griffin3201521535,321 3,356 38,677 - - R. M. Dodd2016365375,000 45,000 35,000 - 6,299 22,667 26,703 - 510,669 8.81% 9.67% 2015365375,000 188,562 35,000 200,000 23,867 22,667 13,329 - 858,425 45.26% 4.19% Total20161,327,223 243,669 149,372 - 6,299 100,667 260,752 - 2,087,982 Total20151,377,946 350,092 117,503 200,000 23,867 82,667 79,969 52,372 2,284,416 1Resigned during the year 2Appointed during the year 3Resigned during the previous financial year 4Appointed during the prior yearShare RelatedLong-term benefitsShare-based paymentsTermination paymentsPost EmploymentTotalShort-term benefits No. of days remunerationPerformance relatedYear
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Subsequent to year end, the Board approved the following:
*Issue of 650,000 of the potential 1,500,000 performance rights
** Issue of 199,980 of the potential 600,000 performance rights
PAGE 19
Performance rights, shares and options awarded, vested, lapsed and forfeitedNameYearRights, options or shares granted in yearNo.Grant dateFair value at grant date$Vesting DateExercise price$Expiry dateVested in yearNo.Lapsed in yearNo.Forfeited in yearNo.Performance rightsJ. M. de Zwart*20141,500,000 29 Nov 20130.36 1 Sep 2016- 1 Sep 2016- - - R. M. Dodd**2014600,000 18 Dec 20130.34 1 Sep 2016- 1 Sep 2016- - - Shares under CAESPJ. M. de Zwart20161,500,000 14 Dec 20150.21 13 Dec 2018- 21 Dec 2015- - - 20151,400,000 16 Dec 20140.16 15 Dec 2017- 22 Dec 2014- - - 20151,400,000 16 Dec 20140.17 15 Dec 2018- 22 Dec 2014- - - J. S. Cowan20161,200,000 14 Dec 20150.21 13 Dec 2018- 21 Dec 2015- - - R. M. Dodd2015500,000 16 Dec 20140.16 15 Dec 2017- 22 Dec 2014- - - Reconciliation of the number and fair value of options, shares and performance rights held by KMPBalance at the start of the periodBalance at the end of the periodVested and exercisableUnvestedNameYearNo.No.Value ($)No.Value ($)No.Value ($)No.Value ($)No.No.No.Performance rightsJ. M. de Zwart*20141,500,000 - - - - - - - - 1,500,000 - 1,500,000 R. M. Dodd**2014600,000 - - - - - - - - 600,000 - 600,000 Shares under CAESPJ. M. de Zwart2016- 1,500,000 310,050 1,500,000 - 1,500,000 20152,800,000 - - - - - - 2,800,000 - 2,800,000 J. S. Cowan2016- 1,200,000 248,040 - - - - - - 1,200,000 - 1,200,000 R. M. Dodd2015500,000 - - - - - - 500,000 - 500,000 Granted as compensation during the periodExercised during the periodLapsed during the periodForfeited during the period
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
PAGE 20
Shares held in Centrepoint Alliance Limited (Number)Balance Granted asNet changeBalance1 July 2015remunerationother #30 June 2016OrdOrdOrdOrdOrdA. Fisher2- - - - - J. M. de Zwart2,019,492 561,251 2,580,743 M. P. Pretty- - - - - J. A. O'Shaughnessy- - - 100,000 100,000 J. S. Cowan- - - - - H. W. Robertson2- - - - - R. M. Dodd7,372 - - 15 7,387 Former KMP'sR. J. Nelson14,223,378 - - 281,475 4,504,853 S. J. Maitland167,982 - - (67,982)- M. Kidman11,254,821 - - 83,629 1,338,450 1Resigned during the year2Appointed during the year* Includes shares held directly, indirectly and beneficially by KMP# All equity transactions with KMP other than those arising from the exercise of remuneration options have been entered into under terms and conditionsno more favourable than those the Company would have adopted if dealing at arm's length.Shareholdings of Key Management Personnel ('KMP')*On exercise of options
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Short term incentives
Objective
The objective of short term incentives (‘STI’) is to link the achievement of the Group's operational
targets with the remuneration received by the executives charged with meeting those targets. The
total potential STI available is set at a level so as to provide sufficient incentive to the executive to
achieve the operational targets and the cost to the Group is reasonable. The purpose of STI is to
focus the Group’s efforts on those performance measures and outcomes that are priorities for the
Group for the relevant financial year, and to motivate the executive to strive to achieve stretch
performance objectives.
Structure
In July 2013 the directors approved a Group-wide structured STI scheme applicable to all
employees, excluding the Group CEO and the CEO – Centrepoint Alliance Premium Funding Pty
Ltd. Under the STI scheme, employees may be able to achieve a cash bonus based on a percentage
of their annual base salary. Bonuses will be weighted by a three tiered approach with weightings
assigned to each level, being CAF Group results, Business Unit results and Individual Performance
(KPI’s). For eligible Group KMP the respective weightings are 40%, 40% and 20%. The maximum
bonus payable is 50% of the KMP annual salary. On an annual basis, after consideration of
performance against KPI’s, the NRGC, in line with their responsibilities, determine the total amount,
if any, of any short term incentive amounts to be paid to each employee. This process usually occurs
within three months of the reporting date. Whilst the STI system is a simple, consistent method of
remunerating and rewarding employees, the directors are reviewing alternatives to better align
interests with those of the shareholders.
Long term incentives
Objective
The objective of long term incentives (‘LTI’) is to reward executives in a manner that aligns
remuneration with the creation of shareholder wealth. As such, LTI grants are only made to
executives who are able to significantly influence the generation of shareholder wealth and thus
have an impact on the Group's performance against the relevant long term performance hurdle.
Structure
LTI awards to executives are made under the executive LTI plan and are delivered in the form of
shares. Shares vest in tranches over a specified time period and may also have other performance
hurdle requirements, typically related to shareholder return, as determined by the NRGC.
Performance rights are rights that can be converted to fully paid ordinary shares in the Company for
no monetary consideration subject to specific performance criteria being achieved. The performance
rights will only vest if certain profit targets are met.
Awards
CAESP16
In August 2013 the Board approved the grant of up to 1,500,000 performance rights to the Managing
Director (approved by shareholders at the 2013 AGM) and up to 2,600,000 performance rights to
nominated senior executives of the Group, which are subject to achievement of the profit hurdles
outlined below:
If the cumulative underlying profit of financial years 2014, 2015 and 2016 divided by 3 is:
Less than 133% of 2013 underlying profit, none will be issued;
133% to 138% of 2013 underlying profit one-third of the total will be issued;
PAGE 21
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
139% to 145% of 2013 underlying profit two-thirds of the total will be issued;
146% or greater of 2013 underlying profit 100% will be issued.
On the departure of two senior executives, 533,334 of the 2,600,000 performance rights issued have
been forfeited.
Underlying profit is a measure of consolidated net profit after tax for the Group from its core trading
activities. It excludes gains or losses from unusual or rarely-occurring events and from any
misalignment between economic value and accounting treatment. The final underlying profit or loss
for a period will be determined by the Board.
These arrangements form part of the Company’s long term incentive scheme for senior executives,
the purpose of which is to align their interests with those of the shareholders and to provide a key
retention incentive. Upon issue, the shares will rank equally with all other fully paid ordinary shares
in the Company then on issue.
CAESP17
On 30 October 2014, the Board approved 5,300,000 shares to the Managing Director and Chief
Executive Officer and other senior executives of the Group under the CAESP. The vesting
conditions are subject to the following:
2017 tranche
If the cumulative fully diluted underlying EPS adjusted for any dilutionary impact of DRP for the
financial years ended 30 June 2015, 2016 and 2017 divided by 3 is:
Less than 133% of 2014 EPS, nil vest;
Between 133% and 145% of 2014 EPS, shares will vest on a pro-rata basis;
145% and above of 2014 EPS, 100% of shares will vest.
2018 tranche
If the cumulative fully diluted underlying EPS adjusted for any dilutionary impact of DRP for the
financial years ended 30 June 2015, 2016, 2017 and 2018 divided by 4 is:
Less than 143% of 2014 EPS, nil vest;
Between 143% and 160% of 2014 EPS, shares will vest on a pro-rata basis;
160% and above of 2014 EPS, 100% of shares will vest.
CAESP18
On 15 July 2015, the Board approved 4,550,000 shares to the Managing Director and Chief
Executive Officer and other senior executives of the Group under the CAESP at 34 cents per share.
These are legally held by the CAESPT until satisfaction of the vesting conditions determined on 13
December 2018 based on the following:
If the underlying basic EPS for 30 June 2018 financial year is:
Less than 140% of the 30 June 2015 underlying basic EPS, none will vest;
140% of the 30 June 2015 underlying basic EPS, 40% of the shares will vest;
Between 141% and 171% of the 30 June 2015 underlying basic EPS, shares will vest on a
pro-rata basis; or
172% and above of the 30 June 2015 underlying basic EPS, 100% of the shares will vest.
PAGE 22
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
a) Option holdings of key management personnel
No options to purchase shares were held by KMP.
b) Other transactions with key management personnel and their related parties
Directors of the Company, or their related entities, conduct transactions with the Company or its
controlled entities within a normal employee, customer or supplier relationship on terms and
conditions no more favourable than those with which it is reasonable to expect the entity would have
adopted if dealing with the director or director related entity at arm’s length in similar circumstances.
There are no transactions by directors in the current or prior financial year.
PAGE 23
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Report
30 June 2016
Auditor Independence and Non-audit Services
The auditor, Deloitte Touche Tohmatsu, has provided a written independence declaration to the
directors in relation to its audit of the financial report for the year ended 30 June 2016. The
independence declaration which forms part of this report is on page 25.
The directors are satisfied that the provision of non-audit services is compatible with the general
standard of independence for auditors imposed by the Act. The nature and scope of non-audit
services provided means that auditor independence was not compromised.
Signed in accordance with a resolution of the directors.
A. D. Fisher
Chairman
23 August 2016
PAGE 24
20162015 $ $ Taxation services provided by Deloitte Touche Tohmatsu87,10810,395Other regulatory services47,55455,000Total134,66265,395
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Riverside Centre
Level 25
123 Eagle Street
Brisbane QLD 4000
Tel: +61 7 3308 7000
Fax: +61 7 3308 7001
www.deloitte.com.au
The Board of Directors
Centrepoint Alliance Limited
Level 9, 10 Bridge Street
Sydney, NSW, 2000
Dear Board Members
Centrepoint Alliance Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Centrepoint Alliance Limited.
As lead audit partner for the audit of the financial statements of Centrepoint Alliance
Limited for the financial year ended 30 June 2016, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David Rodgers
Partner
Chartered Accountants
Brisbane, 23 August 2016
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
PAGE 25
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Profit or Loss and Comprehensive Income
For the year ended 30 June 2016
The Consolidated Statement of Profit or Loss and Comprehensive Income is to be read in conjunction with the attached notes included in
pages 30 to 79.
PAGE 26
20162015Note$'000$'000115,140 117,045 (84,584)(85,822)30,556 31,223 14,808 15,636 Borrowing expenses(4,403)(5,297)510,405 10,339 6920 732 41,881 42,294 7(a)(22,560)(22,318)Marketing and promotion(754)(1,073)Travel and accommodation(864)(1,339)(2,806)(2,136)(843)(1,053)Subscriptions & licences(1,677)(1,489)(1,009)(1,392)19(a)(252)(2,606)IT and communication expenses(1,887)(1,307)Depreciation and amortisation(2,140)(2,040)(602)(507)7(b)(1,926)(2,481)4,561 2,553 9(299)3,327 4,262 5,880 Other comprehensive income to be reclassified to profit or lossin subsequent periods--4,262 5,880 4,262 5,888 -(8)4,262 5,880 4,262 5,888 -(8)4,262 5,880 CentsCents112.94 4.14 Diluted profit per share112.75 3.96 Professional servicesTOTAL COMPREHENSIVE INCOME FOR THE YEARProperty costsInterest income (gross)Other revenueCONTINUING OPERATIONSRevenueAdvice and financial product revenue (gross)Advice and financial product feesAdvice and financial product revenue (net)ExpensesEmployee related expensesInterest income (net)Other general and administrative expensesImpairment of assetsNet profit for the periodProfit before tax from continuing operationsTotal comprehensive profit attributable to:Owners of the parentNon-controlling interestsTotal comprehensive profit for the periodBasic profit per share Earnings per share for profit attributable to the ordinary equity holders of the parent Income tax (expense)/benefitNet profit attributable to:OTHER COMPREHENSIVE INCOMENet profit from continuing operations after taxOwners of the parentNon-controlling interestsClient claimsInsurances
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Financial Position
As at 30 June 2016
The Consolidated Statement of Financial Position is to be read in conjunction with the attached notes included in pages 30 to 79.
PAGE 27
20162015Note$'000$'00022(a)10,192 12,539 1211,696 11,375 13125,848 122,467 144,558 4,377 152,294 150,758 13460 330 141,084 827 151,441 2,080 163,831 4,945 9(d)9,395 9,694 16,211 17,876 168,505 168,634 1734,534 34,427 1884,013 85,317 183 183 198,312 8,911 (1)141 127,041 128,979 18-75 Lease incentives284 467 191,630 2,455 1,914 2,997 128,955 131,976 39,550 36,658 2034,150 32,678 2115,898 18,740 (10,616)(14,878)39,432 36,540 118 118 39,550 36,658 TOTAL ASSETSLIABILITIESInterest bearing receivablesOther assetsTotal current assetsProperty, plant & equipmentIntangible assets & goodwillDeferred tax assetsTotal non-current assetsNon-currentInterest bearing receivablesOther assetsCash and cash equivalentsTrade and other receivablesASSETSCurrentTotal non-current liabilitiesCurrentTrade and other payablesInterest bearing liabilitiesProvisionsCurrent tax liabilityTotal current liabilitiesNon-currentInterest bearing liabilitiesProvisionsLease incentivesEquity attributable to shareholdersNon-controlling interestsTOTAL EQUITYTOTAL LIABILITIESNET ASSETSEQUITYContributed equity ReservesAccumulated losses
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
The Consolidated Statement of Cash Flows is to be read in conjunction with the attached notes included in pages 30 to 79.
PAGE 28
20162015Note$'000$'000Cash Flows from Operating ActivitiesCash receipts from customers143,325 154,639 Cash paid to suppliers and employees(136,193)(148,160)Cash provided by operations7,132 6,479 Claims and litigation settlements19(a)(2,809)(9,081)Net cash flows provided by/(used in) operating activities22(b)4,323 (2,602)Cash Flows from Investing ActivitiesInterest received430 541 Interest and borrowing expenses paid(245)(53)Maturity /(Investment) in term deposits-5,000 Payments to acquire financial assets-(36)Acquisition of intangible assets16(a)(103)(301)Acquisition of property, plant & equipment15(413)(923)Proceeds from sale of property, plant & equipment98 2 Net cash flows (used in)/provided by investing activities(232)4,230 Cash Flows from Financing ActivitiesNet (decrease)/increase in borrowings(1,085)(8,835)Net (decrease)/increase in loan funds advanced(3,513)7,380 Proceeds from issue of share capital-29 Dividends paid10(1,840)(4,036)Net cash flows used in financing activities(6,438)(5,462)Net decrease in cash & cash equivalents(2,347)(3,834)Cash & cash equivalents at the beginning of the year22(a)12,539 16,373 Cash & cash equivalents at the end of the period22(a)10,192 12,539
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
The Consolidated Statement of Changes in Equity is to be read in conjunction with the attached notes included in pages 30 to 79.
PAGE 29
Non- Ordinary Dividend Other Accumulated controlling Total shares reserve reserves losses Total interests equity Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 32,678 17,979 761 (14,878)36,540 118 36,658 ---4,262 4,262 -4,262 Foreign currency translation differences----------4,262 4,262 -4,262 Transfer to dividend reserve-------201,472 ---1,472 -1,472 25--327 -327 -327 -(3,169)--(3,169)-(3,169)34,150 14,810 1,088 (10,616)39,432 118 39,550 40,015 3,820 498 (9,938)34,395 126 34,521 ---5,888 5,888 (8)5,880 ---5,888 5,888 (8)5,880 Transfer to dividend reserve-18,700 -(18,700)---Issue of share capital534 ---534 -534 25--263 -263 -263 20(7,871)--7,871 ----(4,541)--(4,541)-(4,541)32,678 17,979 761 (14,878)36,540 118 36,658 Note 1 During the period, the parent entity (Centrepoint Alliance Limited) offset accumulated losses as at 30 June 2014 of $7,871,000 against share capital as provided for by section 258F of theCorporations Act.Share-based paymentBalance at 30 June 2015Dividends paidTotal comprehensive income for the yearShare capital reduction (note 1)Balance at 1 July 2014Profit for the periodDividends paidBalance at 30 June 2016Total comprehensive income for the yearBalance at 1 July 2015Profit for the periodIssue of share capitalShare-based payment
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
1. Corporate information
The consolidated financial statements of Centrepoint Alliance Limited and its subsidiaries
(collectively, the ‘Group’) for the year ended 30 June 2016 were authorised for issue in accordance
with a resolution of the directors on 23 August 2016.
Centrepoint Alliance Limited is a company limited by shares incorporated in Australia whose shares
are publicly traded on the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’
Report.
Information on the Group’s structure and other related party relationships is provided in Note 24.
2. Summary of significant accounting policies
Basis of preparation
General
The financial report is a general purpose financial report, which has been prepared on a going
concern basis and in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards, Interpretations and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis.
For the purposes of preparing the consolidated financial statements, the Company is a for profit
entity.
Rounding
The Company is a company of the kind referred to in ASIC Corporation’s (Rounding in
Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016 and in accordance with the
Corporations Instrument, amounts in the financial report are presented in Australian dollars and all
values are rounded off to the nearest thousand dollars, unless otherwise indicated.
Compliance with International Financial Reporting Standards
The financial report complies with International Financial Reporting Standards (‘IFRS’) as issued by
the International Accounting Standards Board.
New accounting standards and interpretations
Accounting Standards and Interpretations issued but not yet effective
The Australian Accounting Standards and Interpretations, that have recently been issued or
amended but are not yet effective and have not been adopted by the Group for the annual reporting
period ending 30 June 2016 are set out below. The directors are still assessing the impact of the
new standards for the reporting period ending 30 June 2017 onwards.
PAGE 30
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Title
AASB 15: Revenue from contracts with customers
AASB 15 outlines a single comprehensive model for entities to
use in accounting for revenue arising from contracts with
customers.
The core principle is that an entity recognises revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
AASB 9 Financial Instruments (December 2009), AASB
2009-11 Amendments to Australian Accounting Standards
arising from AASB 9, AASB 2012-6 Amendments to
Australian Accounting Standards – Mandatory Effective
Date of AASB 9 and Transition Disclosures, AASB 2013-9
to Australian Accounting Standards –
Amendments
Conceptual Framework, Materiality
and Financial
Instruments, AASB 2014-1 Amendments to Australian
Accounting Standards, AASB 2014-8 Amendments to
Australian Accounting Standards arising from AASB 9
(December 2009) and AASB 9 (December 2010)
AASB 9 introduces new requirements for classifying and
measuring financial assets.
Through AASB 2013-9, a new hedge accounting model has
been put in place that is designed to be more closely aligned
with how entities undertake risk management activities when
hedging financial and non-financial risk exposures.
AASB 16 Leases
The Standard introduces a single accounting treatment, that is,
recognition of a right-of-use asset and a lease liability.
the previous standard and related
AASB16 supersedes
interpretations and brings in a new definition of a lease that will
be used to identify whether a contract is, or contains, a lease.
Application
date of
standard
Application
date for
Group
1 January 2018
1 July 2018
1 January 2018
1 July 2018
1 January 2019
1 July 2019
PAGE 31
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Title
AASB 9 Financial Instruments (December 2010), AASB
2010-7 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2010), AASB 2012-6
to Australian Accounting Standards –
Amendments
Mandatory Effective Date of AASB 9 and Transition
Disclosures, AASB 2013-9 Amendments to Australian
Accounting Standards
– Conceptual Framework,
Instruments, AASB 2014-1
Materiality and Financial
Amendments to Australian Accounting Standards, AASB
2014-8 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2014) – Application of
AASB 9 (December 2009) and AASB 9 (December 2010)
A revised version of AASB 9 incorporating revised requirements
for the classification and measurement of financial liabilities,
and carrying over of the existing derecognition requirements
from AASB 139 Financial
Instruments: Recognition and
Measurement.
Through AASB 2013-9, a new hedge accounting model has
been put in place that is designed to be more closely aligned
with how entities undertake risk management activities when
hedging financial and non-financial risk exposures.
AASB 9 Financial Instruments (December 2014), AASB
2014-7 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2014)
The final version of AASB 9 brings together the classification
and measurement, impairment and hedge accounting phases of
the IASB’s project to replace AASB 139 Financial Instruments:
Recognition and Measurement. This version adds a new
expected loss impairment model and limited amendments to
classification and measurement for financial assets.
This version supersedes AASB 9 (December 2009) and AASB
9 (December 2010).
AASB 2014-4 Amendments to Australian Accounting
Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
Amends AASB 116 Property, Plant and Equipment and AASB
138 Intangible Assets to provide additional guidance on how the
depreciation or amortisation of property, plant and equipment
and intangible assets should be calculated.
Application
date of
standard
Application
date for
Group
1 January 2018
1 July 2018
1 January 2018
1 July 2018
1 January 2016
1 July 2016
PAGE 32
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Application
date of
standard
Application
date for
Group
1 January 2018
1 July 2018
1 January 2016
1 July 2016
1 January 2016
1 July 2016
1 January 2016
1 July 2016
Title
AASB 2013-9: Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments
Part C makes amendments to a number of Australian
Accounting Standards, including incorporating Chapter 6 Hedge
Accounting into AASB 9 Financial Instruments.
AASB 2014-9 Amendments to Australian Accounting
Standards – Equity Method
in Separate Financial
Statements
Amends AASB 127 Separate Financial Statements, to allow an
entity to account for investments in subsidiaries, joint ventures
and associates in its separate financial statements:
at cost;
in accordance with AASB 9 Financial Instruments, or
using the equity method as described in AASB 128
Investments in Associates and Joint Ventures.
The accounting policy option must be applied for each category
of investment.
AASB 2015-1 Amendments to Australian Accounting
Standards – Annual
to Australian
Accounting Standards 2012-2014 Cycle
Amends a number of pronouncements as a result of the IASB’s
2012-2014 annual improvements cycle. Key amendments
include:
Improvements
AASB 5 – change in methods of disposal;
AASB 7 – servicing contracts and applicability of the
amendments to AASB 7 to condensed interim financial
statements;
AASB 119 – discount rate: regional market issue; and
AASB 134 – Disclosure of information ‘elsewhere’ in the
interim financial report’.
AASB 2015-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to AASB
101
Amends AASB 101 Presentation of Financial Statements to
provide clarification regarding the disclosure requirements in
AASB 101.
Includes narrow-focus amendments to address concerns about
existing presentation and disclosure requirements and to
ensure entities are able to use judgements when applying a
Standard in determining what information to disclose in their
financial statements.
PAGE 33
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
a) Changes in accounting policy, disclosures, standards and interpretations
i) Changes in accounting policies, new and amending standards and interpretations
The Group has adopted the following new and amending Australian Accounting Standards and
AASB Interpretations that are mandatorily effective for the first time for the financial year beginning
1 July 2015:
AASB 2015-3 Amendments to
Australian
Accounting
Standards arising from the
Withdrawal of AASB 1031
Materiality.
AASB 2014-1: Amendments
to Australian Accounting
Standards (Part E – Financial
Instruments)
Completes the withdrawal of references to AASB 1031 in all
Australian Accounting Standards and Interpretations, allowing that
Standard to effectively be withdrawn
The application of AASB 1031 does not impact on the amounts
recognised in the consolidated financial statements.
Makes amendments to Australian Accounting Standards to reflect
the AASB’s decision to defer the mandatory application date of
AASB 9 Financial Instruments to annual reporting periods
beginning on or after 1 January 2018. Part E makes amendments
to reduced disclosure requirements for AASB 7 Financial
Instruments: Disclosures and AASB 101 Presentation of Financial
Statements.
The application of AASB 2014-1 does not have any material
impact on the amounts recognised in the consolidated financial
statements.
The Group has not early adopted any other standard, interpretation or amendment that has been
issued but is not yet effective.
b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company,
Centrepoint Alliance Limited, and its subsidiaries as at 30 June 2016. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls
an investee if and only if the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements, and
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the statement of comprehensive income from the date the Group
gains control until the date the Group ceases to control the subsidiary.
PAGE 34
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Profit or loss and each component of other comprehensive income (‘OCI’) are attributed to the equity
holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss
or retained earnings, as appropriate, as would be required if the Group had directly disposed
of the related assets or liabilities.
Non-controlling interests not held by the Group are allocated their share of net profit after tax in the
Consolidated Statement of Profit or Loss and Comprehensive Income and are presented within
equity in the Consolidated Statement of Financial Position, separately from Company shareholders’
equity.
c) Significant accounting judgements, estimates and assumptions
The key assumptions concerning the future and other key sources of estimation and uncertainty at
the end of reporting period, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are described below. The
Group based its assumptions and estimates on parameters available when the consolidated financial
statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the control of the
Group. Such changes are reflected in the assumptions when they occur.
Accounting estimates with significant areas of uncertainty and critical judgements have been applied
to the following;
Intangible assets & Goodwill recoverable amounts – notes 2(l) and 16
Impairment of loan receivables – note 13(b)
Provision for client claims – notes 2(p) and 19
Onerous contracts – note 19
Recognition of deferred tax assets – notes 2(t) and 9
d) Business combinations
Business combinations are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of
the acquisition date fair values of the assets transferred, the liabilities incurred to former owners of
the acquiree, and any equity issued by the acquirer, plus the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is
measured either at fair value or at the proportionate share of the acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred, and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets acquired and liabilities incurred
for appropriate classification and designation in accordance with the contractual terms, economic
PAGE 35
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
conditions, the Group’s operating or accounting policies and other pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the
acquiree.
If a business combination is achieved in stages, the fair value of the previously held equity interest
in the acquiree is remeasured to fair value at the acquisition date through profit or loss. It is then
considered in the determination of goodwill (refer Note 2 (l)).
Any contingent consideration is recognised at fair value at the acquisition date. Contingent
consideration which is classified as an asset or liability that is a financial instrument and within the
scope of AASB 139 Financial Instruments: Recognition and Measurement is measured at fair value
with changes in fair value recognised either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not remeasured and subsequent
settlement is accounted for within equity.
e) Foreign currency
Both the functional and presentation currency of Centrepoint Alliance Limited and its Australian
subsidiaries is Australian dollars (A$).
i) Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective
functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date.
Exchange differences relating to monetary items are included in the statement of comprehensive
income, as exchange gains or losses, in the period when the exchange rates change.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the initial transaction.
ii) Foreign operations
On consolidation, the assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated to Australian dollars at the rate of exchange
prevailing at the date of the transactions. The income and expenses of foreign operations are
translated to Australian dollars at annual average exchange rates.
Foreign currency differences arising on translation for consolidation are recognised in other
comprehensive income. When a foreign operation is disposed of, in part or in full, the relevant
amount in the foreign currency translation reserve (‘FCTR’) is transferred to profit or loss.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a
foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation and are recognised directly in the
FCTR.
f) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position are stated at nominal value and
comprise cash at bank and in hand and short-term deposits with a maturity of three months or less
that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist
of cash and short-term deposits as defined above, net of outstanding bank overdrafts.
PAGE 36
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
g) Loan receivables
All loan receivables are non-derivative financial assets with fixed and determinable payments that
are not quoted in an active market. Such assets are carried at amortised cost using the effective
interest rate method.
i)
Insurance Premium Finance
Loan receivables are comprised of finance provided to customers by way of insurance premium
finance loans. Insurance premium receivables are for terms not exceeding twelve months.
ii) Financial advisers
These are comprised of loans to advisers for terms varying from 1 to 5 years and attract interest at
market rates. The majority of these loans are secured through charges over assets, by guarantees,
or by retention of financial advice fees.
iii) Impairment of loan receivables
Impairment of a loan is recognised when there is objective evidence that not all the principal and
interest can be collected in accordance with the terms of the loan agreement. Impairment is
assessed by specific identification in relation to individual loans and by estimation of expected losses
in relation to loan portfolios where specific identification is impracticable.
Bad debts are written off when identified. If a provision for impairment has been recognised in relation
to a loan, write offs for bad debts are made against the provision. If no provision for impairment has
previously been recognised, write offs for bad debts are recognised as expenses in profit or loss.
h) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are measured at amortised cost using the
effective interest method, less provision for impairment. Collectability of trade receivables is
reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. An allowance for impairment is raised when there is objective evidence that the Group will
not be able to collect the debt. The criterion for impairment is if the debt is 60 days overdue with no
repayments or payment arrangement and/or the debtor is placed in administration or liquidation.
The amount of the impairment allowance is the difference between the asset’s carrying amount and
the present value of estimated future cash flows, discounted at the original effective interest rate.
The amount of the impairment loss is recognised in the profit or loss within other expenses. When
a trade receivable for which an impairment allowance has been recognised becomes uncollectible
in a subsequent period, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against other expenses in profit or loss.
i)
Investments and other financial assets
Investments are initially recognised at cost, including acquisition charges associated with the
investment.
Subsequent to initial recognition, investments are measured at fair value. Gains or losses arising
from changes in the fair value of investments are recognised in the Statement of Profit or Loss and
Comprehensive Income.
For investments that are actively traded in organised financial markets, fair value is determined by
reference to quoted market bid prices at the close of business on the reporting date.
Financial assets are stated at cost where there is no quoted market price and the fair value cannot
be reliably measured.
PAGE 37
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Financial assets (excluding available for sale investments) are reviewed at each reporting date to
determine whether there is objective evidence of impairment. If any such indication exists, the asset’s
carrying amount is written down to the asset’s estimated recoverable amount.
Financial assets and liabilities are offset and the net amount is reported in the Statement of Financial
Position if there is a currently enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis.
i) Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:
The rights to receive cash flows from the asset have expired; or
The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) the Group has transferred substantially all the risks and rewards
of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s
continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original carrying amount of the asset and the
maximum amount of consideration received that the Group could be required to repay.
When continuing involvement takes the form of a written and/or purchased option (including a cash-
settled option or similar provision) on the transferred asset, the extent of the Group’s continuing
involvement is the amount of the transferred asset that the Group may repurchase, except that in
the case of a written put option (including a cash-settled option or similar provision) on an asset
measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the
fair value of the transferred asset and the option exercise price.
ii)
Impairment
The Group assesses at each reporting date, whether there is objective evidence that a financial
asset or group of financial assets are impaired.
The Group considers evidence of impairment for receivables at both a specific asset and collective
level. All individually significant receivables are assessed for specific impairment. All individually
significant receivables found not to be specifically impaired are then collectively assessed for any
impairment that has been incurred but not yet identified. Receivables that are not individually
significant are collectively assessed for impairment by grouping together receivables with similar risk
characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default,
timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to
whether current economic and credit conditions are such that the actual losses are likely to differ
from historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance account against receivables. If a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
PAGE 38
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Impairment losses on available-for-sale investment securities are recognised by transferring the
cumulative loss that has been recognised in other comprehensive income, and presented in the fair
value reserve in equity, to profit or loss. The cumulative loss that is removed from other
comprehensive income and recognised in profit or loss is the difference between the acquisition
cost, net of any principal repayment and amortisation, and the current fair value, less any impairment
loss previously recognised in profit or loss. Changes in impairment provisions attributable to time
value are reflected as a component of interest income.
j) Plant and equipment
At each reporting date, the Group assesses whether there is any indication that an asset may be
impaired. Plant and equipment is carried at cost, net of accumulated depreciation and any
accumulated impairment losses. The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate the carrying value may not be
recoverable.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount.
Where the carrying amount of an asset exceeds its recoverable amount, an impairment loss is
recognised and the asset is written down to its recoverable amount. The recoverable amount of
plant and equipment is the greater of fair value less costs to sell and value in use.
In assessing value in use, estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined by reference to the cash-generating unit to which the asset belongs.
Depreciation is calculated on a diminishing value basis over the estimated useful lives of the assets
as follows:
Plant and equipment
Leasehold improvements
Motor vehicles
2 – 7 years
Lease term
5 years
De-recognition
An item of plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item)
is included in the Statement of Profit or Loss and Comprehensive Income when the asset is
derecognised.
Residual values, useful lives and methods of depreciation of plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.
k) Impairment of non-financial assets other than goodwill
At each reporting date, the Group assesses whether there is any indication that an asset may be
impaired. Non-financial assets are carried at cost, net of accumulated depreciation and any
accumulated impairment losses. The carrying values of non-financial assets are reviewed for
impairment when events or changes in circumstances indicate the carrying value may not be
recoverable.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount.
Where the carrying amount of an asset exceeds its recoverable amount, an impairment loss is
recognised and the asset is written down to its recoverable amount. The recoverable amount of a
non-financial asset is the greater of fair value less costs to sell and value in use.
PAGE 39
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
In assessing value in use, estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
l) Goodwill and intangibles
i) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the
cost of the business combination over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment annually or more frequently, if events or changes in
circumstances indicate that the carrying value may be impaired. As at acquisition date, any goodwill
acquired is allocated to each of the cash-generating units which are expected to benefit from the
acquisition. Impairment is determined by assessing the recoverable amount of the cash-generating
unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less
than the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the disposed operation is included in the carrying amount
of the operation when determining the gain or loss on disposal. Goodwill
these
circumstances is measured based on the relative values of the disposed operation and the portion
of the cash-generating unit retained.
disposed
in
Impairment losses recognised are not subsequently reversed.
ii)
Intangibles
Intangible assets acquired separately are initially measured at cost. The cost of an intangible asset
acquired in a business combination is its fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets
with finite lives are amortised over the useful life and tested for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted for prospectively by changing the
amortisation period or method, as appropriate, which is a change in an accounting estimate. The
amortisation expense on intangible assets with finite lives is recognised in the Statement of Profit or
Loss and Comprehensive Income.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment at least
annually either individually or at the cash-generating unit level. The assessment of indefinite life of
an intangible asset is reviewed each reporting period to determine whether indefinite life assessment
continues to be supportable. If not, the change in the useful life from indefinite to finite is accounted
for as a change in an accounting estimate and is thus accounted for on a prospective basis.
The estimated useful lives in the current and comparative periods are as follows:
Software
Network and Client Lists
2.5 years
5 – 15 years
PAGE 40
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
m) Trade and other payables
Liabilities for trade creditors and other amounts payable are carried at amortised cost and represents
liabilities that arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services for goods and services provided to the Group prior to the end
of the financial year.
Liabilities are recognised, whether or not the liability has been billed to the economic entity.
Deferred cash settlements are recognised at the present value of the outstanding consideration
payable on the acquisition of an asset discounted at prevailing commercial borrowing rates.
n) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration
received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method. Amortised cost is calculated by taking into
account any issue costs, and any discount or premium on settlement.
Borrowing costs are recognised as an expense when incurred. They include interest on bank
overdrafts, bills of exchange and other borrowings. The Group does not currently hold qualifying
assets but, if it did, the borrowing costs directly associated with these assets would be capitalised
(including any other associated costs directly attributable to the borrowing and temporary investment
income earned on the borrowing).
o) Leases
i) Operating Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease assets are not capitalised and rental payments are
expensed on a straight line basis over the lease term.
In the event that lease incentives are received to enter into operating leases, such incentives are
recognised as a liability. The aggregate benefit of the incentives is recognised as a reduction of
rental expense on a straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are consumed.
ii) Finance Leases
Finance leases, which transfer to the Group substantially all the risk and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leased item or, if lower, at the present value of the minimum lease payments. Lease payments are
allocated between finance charges and reduction in the lease liability. Finance charges are charged
directly against income.
Assets acquired under finance leases are capitalised and amortised over the life of the relevant
lease, or where ownership is likely to be obtained on expiration of the lease, over the expected useful
life of the asset.
p) Provisions and employee benefits
i) Provisions (refer to Note 19)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event. It is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the balance sheet date. If the effect of the time value of
money is material, provisions are determined by discounting the expected future cash flows at a pre-
PAGE 41
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
tax rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
The Company recognises a liability to make cash or non-cash distributions to equity holders of the
parent when the distribution is authorised and the distribution is no longer at the discretion of the
Company. A corresponding amount is recognised directly in equity. A provision for claims is
recognised when client claims received by advisers are notified to the Company or the Group
expects to incur liabilities in the future as a result of past advice given. It is measured at the present
value of the future costs that the Group expects to incur to settle the claims.
ii) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services
up to the reporting date. These benefits include wages and salaries, annual leave and long service
leave.
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and other benefits,
expected to be settled wholly within 12 months of the reporting date are measured at the amounts
due to be paid when the liability is settled.
The liability for long service leave is recognised and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is given to the expected future wage and salary
levels, experience of employee departures, and periods of service. Expected future payments are
discounted using market yields at the reporting date on national government bonds with terms to
maturity and currencies that match, as closely as possible, the estimated future cash outflows.
iii) Make good costs for leased property
A provision for make good costs for leased property is recognised when a make good obligation
exists in the lease contracts.
The provision is the best estimate of the present value of the expenditure required to settle the make
good obligation at the reporting date. Future make good costs are reviewed annually and any
changes are reflected in the present value of the make good provision at the end of the reporting
period. The unwinding of the discounting is recognised as a finance cost.
iv) Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions.
An onerous contract is considered to exist where the Group has a contract under which the
unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received from the contract.
q) Share-based payment transactions
i) Equity settled transactions:
The Group provides benefits to its employees, including key management personnel, in the form of
share-based payments, whereby employees render services in exchange for rights over shares
(equity-settled transactions).
Current equity settled transactions are:
Performance rights issued in August 2013;
The Centrepoint Alliance Employee Share Option Plan, which provides benefits to
employees by invitation from the Board; and
The Centrepoint Alliance Employee Share Plan, which provides benefits to employees by
invitation from the Board.
PAGE 42
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
The cost of these equity-settled transactions with employees is measured by reference to the fair
value of the equity instruments at the date at which they are granted.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than
conditions linked to the price of the shares of Centrepoint Alliance Limited (market conditions) if
applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions become fully entitled to
the award (vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the Statement of Profit or
Loss and Comprehensive Income is the product of:
i)
ii)
iii)
the grant date fair value of the award;
the current best estimate of the number of awards that will vest, taking into account such factors
as the likelihood of non-market performance conditions being met; and
the expired portion of the vesting period.
The charge to the Statement of Comprehensive Income for the period is the cumulative amount as
calculated above less the amounts already charged in previous periods. There is a corresponding
entry to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or
fewer awards vest than were originally anticipated to do so. Any award subject to a market condition
is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all
other conditions are satisfied.
If the terms of an equity-settled award are modified, the minimum expense recognised is the expense
had the terms not been modified. An additional expense is recognised for any modification that
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to
the employee, as measured at the date of the modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award
is substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of diluted earnings per share.
Shares in the Group reacquired on market and held by the Employee Share Plan Trust are classified
and disclosed as reserved shares and deducted from equity.
ii) Reserved shares
The Group’s own equity instruments, which are reacquired for later use in employee share-based
payment arrangements (reserved shares), are deducted from equity. No gain or loss is recognised
in the Statement of Comprehensive Income on the purchase, sale, issue or cancellation of the
Group’s own equity instruments.
r) Contributed Equity
Ordinary shares are classified as equity and recognised at the fair value of the consideration received
by the Company. Any transaction cost arising on the issue of ordinary shares is recognised, net of
tax, directly in equity as a reduction of the share proceeds.
PAGE 43
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
s) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when the payment is received.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duty.
The specific recognition criteria described below must also be met before revenue is recognised.
i) Financial advice and product margin revenue
Financial advice and product margin revenue is recorded at the time business is written as at this
point all services have been provided to the customer and the right to receive the revenue is
established.
ii) Service revenue
Revenue for services provided is recognised at the point of delivery of the service to clients.
iii) Ongoing revenue
Ongoing financial advice fee revenue is recorded monthly for ongoing services provided to clients.
iv) Interest income – Insurance Premium Funding
Interest income from insurance premium funding and asset finance operations is brought to account
using the effective interest rate method which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial
asset. Loan commission costs and over-riding commission costs are amortised over the expected
life of the loan.
v) Document fees – Insurance Premium Funding
Fee income is recognised when services are rendered and the right to receive the payment is
established.
vi) Dividend and distribution income
Dividend and distribution revenue is recognised when the right to receive a dividend has been
established. Dividends received from associates are accounted for in accordance with the equity
method of accounting.
t) Taxation
Income Tax
i)
The income tax expense for the period represents the tax payable on the pre-tax accounting profit
adjusted for changes in the deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements,
and unused tax losses.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of profit and loss.
a) Current tax
Current tax assets and liabilities for the period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date in the countries where the
Group operates and generates taxable income.
PAGE 44
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
b) Deferred tax
Deferred tax assets and liabilities are recognised for all deductible and taxable temporary
differences at the tax rates that are expected to apply to the year when the asset is realised or
liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted
at the reporting date.
Deferred income tax liabilities are recognised on all taxable temporary differences except:
When the deferred income tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and that, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; or
In respect of taxable temporary difference associated with investments in subsidiaries,
associates or interests in joint ventures, when the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences, carry forward tax credits
and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that
taxable profit will be available against which deductible temporary differences, unused tax credits
and unused tax losses can be utilised, except:
When a deferred tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss;
In respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are recognised only to the
extent that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at
each reporting date and are recognised to the extent that it has become probable that future taxable
profit will allow a deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when an asset is realised or a liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and deferred tax assets and liabilities relate to the
same taxable entity and the same taxation authority.
c) Tax consolidation legislation
Centrepoint Alliance Limited and its wholly-owned Australian controlled entities implemented tax
grouping under the tax consolidation legislation as of 1 July 2007.
The head entity, Centrepoint Alliance Limited and the controlled entities in the tax consolidated group
continue to account for their own current and deferred tax amounts. The Group has applied the
Group allocation approach in determining the appropriate amount of current taxes and deferred
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, Centrepoint Alliance Limited also recognises
current tax liabilities (or assets) and deferred tax assets arising from unused tax losses and unused
tax credits assumed from controlled entities in the tax consolidated group.
PAGE 45
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Assets or liabilities arising under tax funding agreements with tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the Group. Details of the tax
funding agreement are disclosed in note 9.
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution from) wholly owned tax
consolidated entities.
ii) Goods and Services Tax (‘GST’)
Revenues, expenses and assets are recognised net of the amount of GST except:
When the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as an expense item as applicable; and
When receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, a taxation authority is included as part of
receivables or payables in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component
of cash flows arising from investing and financing activities, which is recoverable from, or payable
to, a taxation authority, are classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, a taxation authority.
u) Earnings per share (‘EPS’)
Basic EPS is calculated as net profit attributable to members of the Company, adjusted to exclude
any costs of servicing equity (other than dividends) and preference dividends, divided by the
weighted average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members of the Company, adjusted for:
Costs of servicing equity (other than dividends) and preference share dividends;
The after tax effect of dividends and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and
Other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
and adjusted for any bonus element.
v) Comparative information
Certain adjustments have been made to the prior year’s financial statements to enhance
comparability with the current year’s financial statements. As a result, certain line items have been
amended in the financial statements. Comparative amounts have been adjusted to conform to the
current year’s presentation.
PAGE 46
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
3. Financial risk management
a) Risk exposures and responses
The Group’s principal financial instruments comprise receivables, payables, bank and other loans,
bank overdrafts, finance leases, cash and short-term deposits.
The Group manages its exposure to key financial risks in accordance with the Group's financial risk
management policy. The objective of the policy is to support the delivery of the Group's financial
targets whilst protecting future financial security.
The main risks arising from the Group’s financial instruments are credit risk, interest rate risk, and
liquidity risk. The Group uses different methods to measure and manage different types of risks to
which it is exposed. These include monitoring levels of exposure to interest rate and assessments
of market forecasts for interest rates. Ageing analyses and monitoring of specific credit allowances
are undertaken to manage credit risk and liquidity risk is monitored through the development of
regular short and long-term cash flow forecasts.
Primary responsibility for identification and control of financial risks rests with the Group Audit, Risk
and Compliance Committee under the authority of the Board. The Board reviews and agrees policies
for managing each of the risks identified below.
b) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents,
interest bearing receivables and trade and other receivables. The Group's exposure to credit risk
arises from potential default of the counter-party, with a maximum exposure equal to the carrying
amount of these assets (as outlined in each applicable note).
The Group’s maximum exposure to credit risk for interest bearing receivables and trade receivables
at the reporting date is limited to Australia.
The Group has credit insurance cover for the majority of its insurance premium funding loan
receivables but does not hold any credit derivatives to offset its other credit exposures. The terms of
the credit insurance cover include an aggregate first loss limited to $250,000.
The Group trades only with recognised, creditworthy third parties and the majority of the Group’s
cash balances are held with National Australia Bank Limited and Westpac Banking Corporation.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit
verification procedures. In addition, all receivable balances are monitored on an ongoing basis with
the result that the Group's exposure to bad debts is monitored and managed.
Outlined below are the requirements for collateral, credit quality and concentration levels for the
various categories of receivables.
i) Trade and other receivables
The Group does not have any significant credit risk exposure to any single counter-party or any
group of counter-parties having similar characteristics. Trade and other receivables relate mainly to
financial advice revenue and product margins earned as a financial dealer group and the majority is
receivable from major financial institutions with high credit-ratings assigned by international credit-
rating agencies. The Group does not require collateral in respect of trade and other receivables.
ii) Loans receivable – insurance premium funding
Wherever possible, collateral is obtained on the insurance premium funding receivables in the form
of cancellable insurance policies. In the majority of cases insurance policies can be cancelled or
PAGE 47
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
terminated in the event of loan default, and the Group is generally entitled to the proceeds from any
returned premiums net of other costs.
A risk assessment process is used for new loan applications, which ranges from credit background
checks to formal reviews by a credit committee and, where appropriate, the obtaining of guarantees
from directors and/or related entities. Each new loan is assessed in terms of total exposure risk to
the customer concerned and pre-determined limits are applied to ensure appropriate analysis and
approval procedures are applied.
Concentration levels of loan assets are monitored continuously to ensure that there are no significant
concentrations of credit risk within the Group. Loans are provided to a large number of customers
who are generally not related.
iii) Loans receivable – investment advisers
Loans to advisers have terms ranging from 1 to 5 years. Full credit submissions are prepared and
reviewed and security is usually obtained in the form of charges over assets or guarantees and
financial advice fees payable.
In some cases repayments are deducted from weekly financial advice fee payments.
iv) Ageing analysis
At reporting date, the ageing analysis of receivables is as follows:
No further credit is provided to PDNI debtors until full repayment of overdue amounts is made.
Payment terms for some PDNI debtors have been re-negotiated to aid recovery. Each operating unit
has been in direct contact with the relevant debtor and is satisfied that payment will be received in
full.
Impairment analysis is included at note 13.
PAGE 48
Ageing Analysis 0-30 31-60 61-90 Days 61-90 Days +91 Days +91 Days TotalDaysDaysPDNICIPDNICI $'000 $'000 $'000 $'000 $'000 $'000 $'000 Trade receivables11,69611,09431141-430-Loan receivables - IPF126,160124,076744274256232578Loan receivables - Adviser1,2191671914-588431Ageing Analysis 0-30 31-60 61-90 Days 61-90 Days +91 Days +91 Days TotalDaysDaysPDNICIPDNICI $'000 $'000 $'000 $'000 $'000 $'000 $'000 Trade receivables11,37510,75650121-448-Loan receivables - IPF122,973120,431783365305249840Loan receivables - Adviser1,09517113121433465* Past due not impaired (PDNI)** Considered impaired (CI)20162015
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
c) Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
debt obligations as disclosed in note 18. The Group adopts a policy to minimise exposure to interest
rate risk by depositing excess funds in interest bearing accounts at a variable rate or with short date
maturities.
At reporting date, the Group had the following mix of financial assets and liabilities exposed to
interest rate risk:
PAGE 49
Interest Rate RiskFixedFixedVariable<= 6 Months> 6 Months % $'000 $'000 $'000 Financial AssetsCash and term deposits3.12%125-10,067Loan receivables - insurance premium funding10.97%51,02275,138-Loan receivables - investment advisers15.31%240979-Security deposits--1,778-51,38777,89510,067Financial LiabilitiesReceivables finance facility - insurance premium funding3.25%83,987--Equipment hire and software finance3.25%26--84,013--Net Exposure(32,626)77,89510,067FixedFixedVariable<= 6 Months> 6 Months % $'000 $'000 $'000 Financial AssetsCash and term deposits3.38%4,125-8,414Loan receivables - insurance premium funding11.54%55,71667,258-Loan receivables - investment advisers16.49%159936-Security deposits--1,143-60,00069,3378,414Financial LiabilitiesReceivables finance facility - insurance premium funding3.84%85,143--Equipment hire and software finance3.25%89160-85,232160-Net Exposure(25,232)69,1778,41420162015 Weighted average effective interest rate Weighted average effective interest rate
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
The Group’s objective is to minimise exposure to adverse risk and therefore it continuously analyses
its interest rate exposure. Within this analysis consideration is given to potential renewals of existing
positions, alternative financing, alternative hedging positions and the mix of fixed and variable
interest rates. Individual insurance premium funding loans are at fixed interest rates however the
book consists of thousands of small loans with new loans written daily. The average term of the
loans is 10.5 months resulting in the average duration of the book being 4 to 5 months. Movements
in borrowing interest rates can be passed on quickly to new borrowers with the result that the average
interest rate of the book responds relatively quickly to changes in market interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the
reporting date. If interest rates had moved, as illustrated in the table below, with all other variables
held constant, consolidated post tax profit and equity would have been affected as follows:
The movements in profit are due to higher/lower interest costs from variable rate debt and cash
balances. The movement in other comprehensive income is the same because there are no cash
flow hedges in use.
Significant assumptions used in the interest rate sensitivity analysis include:
a) Reasonably possible movements in interest rates were determined based on the Group’s current
credit rating and mix of debt, relationships with finance institutions.
b) The level of debt that is expected to be renewed.
c) The net exposure is representative of the expected exposure in the twelve months from reporting
date.
PAGE 50
20162015 $'000 $'000 Judgements of reasonably possiblemovements:+1%(342)(356)-1%342 356 Higher/(lower)
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
d) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of instruments such as bank overdrafts, bank loans, subordinated debt, preference shares,
finance leases and other committed available credit lines from time to time as required. The Group’s
unused facility limits are stated in note 18(c).
The Group’s policy is to match debt with the nature and term of the underlying assets. At reporting
date over 99% of the Group’s financial assets mature in less than 12 months. The insurance premium
funding interest bearing receivable, which is the majority of the receivables, consists of multiple small
loans with an average maturity of 4 to 5 months.
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments
and interest resulting from recognised financial liabilities. The respective undiscounted cash flows
for the respective upcoming fiscal years are presented. Cash flows for financial liabilities without
fixed amount or timing are based on the conditions existing as at reporting date.
i) Maturity analysis of financial assets and liability based on management’s expectation:
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows
and outflows. Leasing obligations, trade payables and other financial liabilities mainly originate from
the financing of assets used in ongoing operations such as property, plant, equipment and
investments in working capital e.g. trade receivables. These assets are considered in the Group’s
overall liquidity risk. To monitor existing financial assets and liabilities as well as to enable an
effective controlling of future risks, the Group has established reporting requirements which monitor
maturity profiles and anticipated cash flows from Group assets and liabilities.
The tables below are based on the carrying values at reporting date and includes future interest
receivable or payable.
PAGE 51
<= 6 Months6-12 Months1-5 YearsTotalFinancial Assets $'000 $'000 $'000 $'000 Cash and term deposits10,192--10,192Trade and commissions receivable11,450245211,697Loan receivables - insurance premium funding51,02275,138-126,160Loan receivables - investment advisers245888861,219Security deposits730-1,0481,77873,63975,4711,936151,046Financial LiabilitiesTrade and other payables34,534--34,534Other liabilities9191284466Receivables finance facility37,91246,075-83,987Equipment hire and software finance26--2672,56346,166284119,013Net Maturity1,07629,3051,65232,0332016
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
e) Foreign currency risk
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to
exchange rate fluctuations arise.
Sensitivity analysis is based on the exchange rate risk exposures in existence at the reporting date.
If exchange rates had moved 1%, with all other variables held constant, consolidated post tax profit
and equity would have been affected by approx. $15,000.
PAGE 52
<= 6 Months6-12 Months1-5 YearsTotalFinancial Assets $'000 $'000 $'000 $'000 Cash and term deposits12,539--12,539Trade and commissions receivable11,254121-11,375Loan receivables - insurance premium funding55,71667,258-122,974Loan receivables - investment advisers159428941,095Security deposits352-7911,14380,02067,4211,685149,126Financial LiabilitiesTrade and other payables34,33790-34,427Other liabilities9191467649Receivables finance facility38,55146,592-85,143Equipment hire and software finance89857524973,06846,858542120,468Net Maturity6,95220,5631,14328,6582015
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
f) Market and price risk
The Group’s exposure to commodity and equity securities price risk is significant because a portion
of the Group’s net advice and investment products revenue is governed by the amount of funds
under management or under advice, which is impacted by the market price of equities and other
investment assets.
This risk is effectively a feature of the financial advice industry and cannot easily be managed.
However, the increasing proportion of fee for service revenue and the ability of the Group to adjust
resource inputs in relation to market movements decreases the level of risk.
g) Fair value of financial instruments
The Group uses various methods in estimating the fair value of a financial instrument. The objective
of valuation techniques is to arrive at a fair value measurement that reflects the price that would be
received to sell the asset or paid to transfer the liability in an orderly transaction between market
participants at the measurement date. The methods comprise:
Level 1 – the fair value is calculated using quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2 – the fair value is estimated using inputs other than quoted (unadjusted) market prices
included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on
observable market data.
Quoted (unadjusted) market price represents the fair value determined based on quoted prices on
active markets as at the reporting date without any deduction for transaction costs. The fair value of
listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as
present value techniques, comparison to similar instruments for which market observable prices
exist and other relevant models used by market participants. These valuation techniques use both
observable and unobservable market inputs.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the
Group determines whether transfers have occurred between levels in their hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) as the end of each reporting period.
There were no transfers between categories during the year.
The following methods and assumptions are used to determine the net fair values of financial assets
and liabilities.
Cash and Cash equivalents: Fair value approximates the carrying amount as these assets are
receivable on demand or short term in nature.
Interest Bearing Receivables: For fixed rate loans, excluding impaired loans, fair value is determined
by discounting expected future cash flows by the RBA Indicator Lending Rate for 3 year fixed small
business loans adjusted using quoted BBSW interest rates to reflect the average remaining term of
the loans as at 30 June 2016.
The calculated fair value using this Level 3 methodology approximates carrying value. Increasing
the interest rate used to discount future cash flows by 1% would reduce fair value by less than
$377,000.
For variable rate loans, excluding impaired loans, fair value approximates the carrying amount as
they are repriced frequently.
PAGE 53
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Interest Bearing Liabilities: The carrying values of variable rate interest bearing liabilities
approximate their fair value as they are short term in nature and reprice frequently.
4. Segment information
The Group has organised its businesses and identified two reportable segments based on the nature
of the products and services provided and the markets in which it operates. Internal reports are
regularly reviewed by the Managing Director and Chief Executive Officer on this basis.
The Group’s reportable segments are:
Wealth – provides Australian Financial Services Licence related services, investor directed
portfolio services and investment management services to financial advisers and their clients.
Lending – provides insurance premium funding and mortgage broking services.
Board, corporate finance, company secretarial and other administrative functions of the Company
not allocated to the above reportable segments are identified as corporate and unallocated.
The Group operated only in Australia and New Zealand during the reporting period. A detailed review
of these segments is included in the Directors’ Report.
The accounting policies of the reportable segments are the same as the Group’s accounting policies
described in note 2. The Group does not currently manage its assets and liabilities on an individual
segment basis.
PAGE 54
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
PAGE 55
Licensee & Advice Services Funds Management & Administration Wealth Total Lending Corporate & Unallocated Consolidated Year ended 2016 $'000 $'000 $'000 $'000 $'000 $'000 RevenueExternal customers23,141 6,657 29,798 1,677 -31,475 Inter-segment revenue2,632 788 3,420 602 7,585 11,607 Interest income137 49 186 14,364 258 14,808 Borrowing expenses(364)(1)(365)(4,305)268 (4,403)Segment revenue25,546 7,493 33,039 12,338 8,111 53,488 Inter-segment elimination(11,607)Total revenue41,881 Segment resultsClient claims(245)-(245)(7)-(252)Depreciation & amortisation(1,691)(176)(1,867)(209)(64)(2,140)Impairment of assets7 -7 (609)-(602)Segment profit before tax1,750 3,636 5,385 2,536 (3,360)4,561 Inter-segment elimination-Profit before tax4,561 Balance Sheet at 30 June 2016Current assetsInterest bearing receivables208-208125,642-125,850 Other current assets13,0042,70315,7074,0606,67726,444 Total current assets13,2122,70315,915129,7026,677152,294 Non-current assetsInterest bearing receivables460- 460- -460 Other non-current assets6,8501907,0406728,03915,751 Total non-current assets7,3101907,5006728,03916,211 Total Assets20,5222,89323,415130,37414,716168,505 Current liabilitiesInterest bearing liabilities86-8683,928-84,014 Other current liabilities16,73883017,56825,10135843,027 Total current liabilities16,82483017,654109,029358127,041 Non-current liabilitiesInterest bearing liabilities----- -Other non-current liabilities1,499-1,499503651,914 Total non-current liabilities1,499-1,499503651,914 Total Liabilities18,32383019,152109,079723128,955 Net Assets2,1992,0634,26221,29513,99339,550
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
The Inter-segment sales are carried out on an arm’s length basis and are eliminated on
consolidation. Revenue from one customer amounted to $5,707,166 (2015: $6,320,970) arising from
sales in the Wealth segment.
PAGE 56
Licensee & Advice Services Funds Management & Administration Wealth Total Lending Corporate & Unallocated Consolidated Year ended 2015 $'000 $'000 $'000 $'000 $'000 RevenueExternal customers24,061 6,038 30,099 1,856 -31,955 Inter-segment revenue689 374 1,063 (294)15,663 16,432 Interest income (gross)154 49 203 15,096 337 15,636 Borrowing expenses(280)(1)(281)(5,238)222 (5,297)Segment revenue24,624 6,460 31,084 11,420 16,222 58,726 Inter-segment elimination(16,432)Total revenue42,294 Segment resultsClient claims(2,606)-(2,606)--(2,606)Depreciation & amortisation(1,354)(255)(1,609)(304)(127)(2,041)Impairment of assets10 -10 (517)-(507)Segment profit before tax193 2,886 3,079 2,086 13,603 18,768 Inter-segment elimination(16,215)Profit before tax2,553 Balance Sheet at 30 June 2015Current assetsInterest bearing receivables207-207122,260-122,467 Other current assets12,2366,13818,3744,3085,60928,291 Total current assets12,4436,13818,581126,5685,609150,758 Non-current assetsInterest bearing receivables330-330--330 Other non-current assets9,1772759,4528957,19917,546 Total non-current assets9,5072759,7828957,19917,876 Total Assets21,9506,41328,363127,46312,808168,634 Current liabilitiesInterest bearing liabilities174-17485,143- 85,317 Other current liabilities18,11583218,94724,25546043,662 Total current liabilities18,28983219,121109,398460128,979 Non-current liabilitiesInterest bearing liabilities75-75--75 Other non-current liabilities2,586-2,586602762,922 Total non-current liabilities2,661-2,661602762,997 Total Liabilities20,95083221,782109,458736131,976 Net Assets1,0005,5816,58118,00512,07236,658
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
5.
Interest revenue
6. Other revenue
PAGE 57
20162015 $'000 $'000 Insurance premium fundingInterest income14,378 15,096 Interest expense(2,994)(3,591)Bank fees & other(1,307)(1,646)Interest income (net)10,077 9,859 OtherInterest income430 540 Interest expense(63)(18)Bank fees & other(39)(42)Interest income (net)328 480 Total Interest income (gross)14,808 15,636 Borrowing expenses(4,403)(5,297)Interest income (net)10,405 10,339 Rate of Interest201620152016201520162015 $'000 $'000 $'000 $'000 % % 131,026130,81414,37815,09610.97%11.54% Loan receivables - investment advisers 503529778715.31%16.49% Cash and deposits 11,32313,4043534533.12%3.38% Loan receivables - premium funding Average BalanceInterestAverage Rate p.a.20162015 $'000 $'000 Cost recoveries from advisers538 521 Retail and wholesale asset and service fees161 89 Other221 122 Total other revenue920 732
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
7. Expenses
PAGE 58
20162015 $'000 $'000 a) Employee benefit expensesWages and salaries21,845 21,834 Share based compensation expense327 263 Termination costs388 221 Total employee benefit expenses22,560 22,318 b) Other general and administrative expensesAudit fees398 361 Directors fees and expenses304 367 Entertainment114 232 Foreign exchange loss4 1 Printing, stationary and postage141 206 Other expenses965 1,314 Total other general and administrative expenses1,926 2,481
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
8. Remuneration of auditors
The primary auditor of Centrepoint Alliance Limited was Deloitte Touche Tohmatsu.
9.
Income tax
a) Income tax (benefit)/expense
The major components of income tax expense for the years ended 30 June 2016 and 2015 are:
b) Amounts charged or credited directly to equity
No income tax was charged directly to equity for the year ending 2016 (2015: Nil).
PAGE 59
20162015 $ $ Amounts received or due and receivable by Deloitte Touche Tohmatsu Audit of the financial report of the entity and other entitiesin the consolidated group232,451 220,000 Other services in relation to the entity and other entitiesin the consolidated group Taxation services - Deloitte Touche Tohmatsu87,108 10,395 Other regulatory audit services47,554 55,000 367,113 285,395 Amounts received or due and receivable by other audit firms for: Audit fees - managed funds & international businesses79,241 74,201 79,241 74,201 (a) Income tax expense 2016 2015 $'000 $'000 Current income taxCurrent income tax charge1,530 912 Adjustment to current tax of prior period33 (34)Tax adjustment in respect to non-consolidated entities52 -Deferred income taxUtilisation of previously unrecognised tax losses(1,345)(4,270)Adjustment to deferred tax of prior period29 65 Income tax expense reported in the income statement299 (3,327)
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
c) Reconciliation between aggregate tax expense recognised in the income statement
and tax expense calculated per the statutory income tax rate
The difference between income tax expense provided in the financial statements and the prima
facie income tax expense is reconciled as follows:
d) Recognised deferred tax assets and liabilities
Deferred income tax relates to the following:
In the prior year, the Group recognised a deferred tax asset to account for the benefit of past losses
for the first time as expectation of future profitability strengthened. The recognition of this asset is
subject to estimation uncertainty as the utilisation of the deferred tax asset is dependent on estimates
PAGE 60
2016 2015 $'000 $'000 Accounting profit before tax from continuing operations4,561 2,553 At the Company's statutory income tax rate of 30% (2015: 30%)1,368 766 Non-deductible expenses162 146 Utilisation of previously unrecognised tax losses(1,345)(4,270)Tax adjustment in respect to non-consolidated entities52 -Adjustment in respect of current tax of prior years33 (34)Adjustment in respect of deferred tax of prior years29 65 Aggregate income tax expense/(benefit)299 (3,327)2016201520162015 $'000 $'000 $'000 $'000 Deferred tax liabilitiesDeferred revenue(6)(4)(2)1,053 Intangibles - net of impairment(409)(612)203 254 Gross deferred tax liabilities(415)(616)201 1,307 Deferred tax assetsProvisions for claims2,982 4,055 (1,073)(1,557)Provision for impairment of loan receivables331 380 (50)1 Provision for leases429 -429 -Deferred fee income- --(25)General accruals448 485 (37)(127)Employee benefits1,150 1,127 24 (121)Prepaid revenue78 75 3 4,270 Utilisation of previously unrecognised tax losses5,280 4,270 1,010 -Applied revenue tax losses(1,020)(302)(718)(302)Deferred transaction costs132 220 (88)(114)Gross deferred tax assets9,810 10,310 (500)2,025 Net deferred tax assets9,395 9,694 Statement of Profit or Loss and Comprehensive Income Statement of Financial Position
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
of future taxable profits in excess of the profits arising from the reversal of existing taxable temporary
differences. In addition, the utilisation of certain acquired tax losses is also subject to fractioning
under Australian tax legislation which effectively prescribes the rate at which such acquired tax
losses may be offset against the Group’s taxable income. Given that the available fraction of the
transferred losses is based on the relative market value of the Group, the determination of the
available fraction is subject to some uncertainty. The application of fractioning means that the
number of years it will take to recognise the losses against taxable profits is increased
significantly. Management have applied judgement in recognising a deferred tax asset relating to
prior tax losses of $4.3m at 30 June 2016 and following this judgement has unrecognised tax losses
of $58.7m (2015: $63.2m).
e) Unrecognised tax losses
The Group has the following Australian tax losses for which no deferred tax assets are recognised
at reporting date.
The above losses are available indefinitely for offset against future taxable income and capital gains
subject to continuing to meet relevant statutory tests.
f)
Tax consolidation
i) Tax effect accounting by members of the tax consolidated group
a) Measurement method adopted under AASB interpretation 1052 Tax Consolidation
Accounting
The head entity and the controlled entities in the tax consolidated group continue to account
for their own current and deferred tax amounts. The Group has applied the ‘separate
taxpayer within group’ approach whereby the Company measures its current and deferred
taxes as if it continued to be a separately taxable entity in its own right, with adjustments for
its transactions that do not give rise to a tax consequence for the group or that have a
different tax consequence at the level of the Group. The current and deferred tax amounts
are measured by reference to the carrying amount of assets and liabilities in the Statement
of Financial Position and their tax bases applying under the tax consolidation, this approach
being consistent with the broad principles in AASB 112 Income Taxes. The nature of the tax
funding agreement is discussed further below.
In addition to its own current and deferred tax amounts, the head entity also recognises
current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses
and unused tax credits assumed from controlled entities in the tax consolidated group.
b) Nature of the tax funding agreement
Members of the tax consolidated group have entered into a tax funding agreement. Under
the funding agreement the funding of tax within the Group is based on taxable profit. The
tax funding agreement requires payments to/from the head entity to be recognised via an
inter-entity receivable (payable) which is at call.
The amounts receivable or payable under the tax funding agreement are due upon receipt
of the funding advice from the head entity, which is issued as soon as practicable after the
end of each financial year. The head entity may also require payment of interim funding
PAGE 61
20162015 $'000 $'000 Revenue losses29,609 34,092 Capital losses29,097 29,097 Total unrecognised58,706 63,189
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
amounts to assist with its obligations to pay tax instalments. These amounts are payable at
call.
10. Dividends
Dividends payable are recognised when declared by the Company.
The tax rate at which paid dividends were franked is 30%. Franking credits are reported on a tax
paid basis.
11. Earnings per share (‘EPS’)
The following reflects the income used in the basic and diluted EPS computations:
There have been no other transactions involving ordinary shares or potential ordinary shares that
would significantly change the number of ordinary shares or potential ordinary shares outstanding
between the reporting date and the date of completion of these financial statements.
PAGE 62
20162015 $'000 $'000 the year:Dividends paid on ordinary shares3,1694,54120162015 $'000 $'000 Franking account balance as at the end of the financial year26,682 28,040 b) Franking credit balanceThe following fully franked dividends were provided for or paid duringa) Dividends paid or payable20162015 $'000 $'000 a) Profit used in calculating profit per shareNet profit attributable to ordinary equity holders of the Company4,262 5,888 Net profit attributable to ordinary equity holders of the Company4,262 5,888 from continuing operationsb) Weighted average number of shares No. of No. of Weighted average number of ordinary shares (excluding reserved shares)144,969,010142,151,048Effect of dilution:Performance rights and LTI shares10,250,2716,442,922155,219,281 148,593,970 Weighted average number of ordinary shares (excluding reserved shares) adjusted for the effect of dilution
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
c) Information on the classification of securities
Reserved shares (Centrepoint Alliance Employee Share Plan)
During the year 2,750,000 shares were issued to the Centrepoint Alliance Employee Share Plan
Trust on behalf of employees under the rules of the Plan. As at reporting date 8,050,000 reserved
shares were held by the Trust and are excluded from the calculations of earnings per share because
they are treated as reserved shares under AASB 132 Financial Instruments: Presentation.
12. Trade and other receivables
An ageing analysis is provided in note 3(b)(iv).
13. Interest bearing receivables
PAGE 63
20162015 $'000 $'000 CurrentCommissions receivable10,799 10,267 Trade receivables897 1,108 Total11,696 11,375 20162015 $'000 $'000 CurrentLoan receivables - Insurance premium funding126,160 122,973 Provision for impairment - collective(245)(188)Provision for impairment - specific(275)(525)125,640 122,260 Loan receivables - Investment advisers328 311 Provision for impairment - specific(120)(104)208 207 Total current interest bearing receivables125,848 122,467 Non-currentLoan receivables - Investment advisers891 784 Provision for impairment - specific(431)(454)Total non-current interest bearing receivables460 330
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
a) Terms and conditions
Insurance Premium Funding loans are fixed interest loans with an average term of 10.6 months.
Repayments are made monthly in advance in accordance with the terms of the loan contract.
Loans due from investment advisers have terms ranging from 1 to 5 years and varying interest terms
at or above commercial rates. The majority of these loans are secured through charges over assets,
by guarantees, or by retention of financial advice fees.
b) Impairment of loan receivables
Impairment expense amounts are included in the Statement of Profit or Loss and Comprehensive
Income under ‘impairment of assets’.
All interest bearing receivables are reviewed and graded according to the anticipated level of credit
risk. The classification adopted is described below:
“Non-accrual loans” are loan receivables where the debt has been written down to recoverable value.
Once classified as a non-accrual loan, interest accruing on insurance premium funding loans is not
brought to account as income unless actually received.
An ageing analysis of loan receivables is provided in note 3(b) (iv).
c) Related party receivables
There are currently no related party receivables.
d) Fair value and risk management
The carrying value of interest bearing receivables approximates their fair value.
Credit risk, interest rate risk and currency risk is addressed in note 3.
PAGE 64
20162015 $'000 $'000 (i)Allowance for ImpairmentOpening Balance1,286 1,445 Movement in the allowance is as followsAllowance for impairment1,094 715 Bad debts written off (gross)(1,309)(874)Closing balance1,071 1,286 (ii)Receivables impairment expenseImpairment expense1,101 725 Bad debts (recovery)/written off directly(7)(10)Amounts recovered against debts previously written off(492)(208)Total expense602 507 20162015 $'000 $'000 (iii)Non-Accrual LoansTotal of loan receivables with allowance1,373 1,542 Specific allowance for impairment(275)(525)Non-accrual loans included in loan receivables (net)1,098 1,017 Interest foregone on non accrual loans41 65
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
14. Other assets
15. Property, plant and equipment
PAGE 65
20162015 $'000 $'000 CurrentSecurity deposits730 352 Prepayments3,828 4,025 Total4,558 4,377 Non-currentSecurity deposits1,048 791 Other36 36 Total1,084 827 Leasehold Improvements Plant & Equipment Total $’000 $’000 $’000 CostAt 1 July 20141,281 5,746 7,027 Additions459 464 923 Disposals(63)(3,004)(3,067)At 30 June 20151,677 3,206 4,883 Additions364 49 413 Disposals(39)(140)(179)At 30 June 20162,002 3,115 5,117 Depreciation and impairmentAt 1 July 2014411 4,653 5,064 Depreciation charge for the year265 390 655 Impairment---Disposals(60)(2,856)(2,916)At 30 June 2015616 2,187 2,803 Depreciation charge for the year710 263 973 Impairment---Disposals(79)(21)(100)At 30 June 20161,247 2,429 3,676 Net carrying valueAt 30 June 2016755 686 1,441 At 30 June 20151,061 1,019 2,080
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
16. Intangible assets
a) Reconciliation of carrying amounts at the beginning and end of the year
b) Description of the Group’s intangible assets
i) Goodwill
Cash generating units (‘CGU’)
Goodwill of $1,176,000 was created as a result of the reverse acquisition of Centrepoint Alliance
Limited by Centrepoint Wealth Pty Ltd in December 2010. It represents goodwill on the insurance
premium funding business.
PAGE 66
Goodwill Software Network & Client Lists Total Period ending 30 June 2016 $'000 $'000 $'000 $'000 At 1 July 2015 net of accumulated amortisation and impairment2,132 774 2,039 4,945 Additions-103 -103 Impairment----Amortisation-(540)(677)(1,217)At 30 June 2016 net of accumulated amortisation and impairment2,132 337 1,362 3,831 At 30 June 2016Cost2,385 3,913 10,025 16,323 Accumulated amortisation and impairment(253)(3,576)(8,663)(12,492)Net carrying value2,132 337 1,362 3,831 Year ending 30 June 2015At 1 July 2014 net of accumulated amortisation and impairment2,132 1,010 2,887 6,029 Additions-301 -301 Impairment----Amortisation-(537)(848)(1,385)At 30 June 2015 net of accumulated amortisationand impairment2,132 774 2,039 4,945 At 30 June 2015Cost2,385 3,810 10,025 16,220 Accumulated amortisation and impairment(253)(3,036)(7,986)(11,275)Net carrying value2,132 774 2,039 4,945
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Goodwill was also created during 2012 on the acquisitions of the externally owned interests in
Ventura Investment Management Ltd of $93,000 and in Centrepoint Alliance Lending Pty Ltd
(previously Centrepoint Lending Solutions Pty Ltd) of $863,000, (net of an impairment of $253,000).
Other CGU’s include Professional Investment Services Pty Ltd and Investment Diversity Pty Limited.
Goodwill is tested on an annual basis and when there is an indication of potential impairment.
ii) Networks and client lists
Intangible assets in the form of adviser network businesses and adviser client lists acquired to
expand the adviser network. These had a total book value at 30 June 2016 of $1,362,000 (2015:
$2,039,000).
iii) Software
The Group has developed or acquired software, which are being amortised over their expected
useful lives.
c) Impairment tests for goodwill and intangibles
i) Goodwill
Goodwill is tested annually for impairment by calculation of value in use at the CGU level. As no
indicator of impairment were in any CGU’s and goodwill only exists within the Centrepoint Alliance
Lending Pty Ltd CGU, Ventura Investment Management Limited CGU and Centrepoint Alliance
Premium Funding Pty Ltd CGU, impairment testing was only performed for these 3 CGU’s.
Management is of the view that core assumptions such as cost of equity and terminal growth rate
are the same across these 3 CGU’s.
Value in use is calculated using discounted cash flow projections for five years and terminal values
prepared from current forecasts using the following assumptions:
Terminal growth rate 2.50% (2015: 2.50%)
Cost of equity: 12.35% (2015: 12.35%)
The testing resulted in no impairment being required.
The value in use model is not materially sensitive to any of the above assumptions. Sensitivity
suggests that no reasonable change in any assumptions gives rise to impairment.
No indicators of impairment are noted for the remaining CGU’s.
PAGE 67
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
ii) Networks and client lists
Adviser networks and client lists are regularly tested for impairment by calculation of value in use
when indicators of potential impairment arises.
Value in use is calculated using discounted cash flow projections associated with the applicable
asset using the following assumptions:
The number of revenue generating advisers and clients declines to nil over the remaining
useful life of 5 years.
Cash flows associated with remaining advisers and clients are inflated only at CPI with no
growth assumed.
Cost of equity: 12.35% (2015: 12.35%)
The testing resulted in no impairment losses (2015: Nil).
The value in use calculations are most sensitive to the remaining useful life assumption. Sensitivity
analysis indicates that a decrease in the assumed useful life of 1 year would have resulted in an
impairment expense of $248,614 (2015: $226,000).
iii) Software
The value of the developed or acquired software of the Group is amortised on a straight line basis
over a 2.5 year period, which the directors assess as the intangible asset’s useful life. No software
is considered to be impaired.
17. Trade and other payables
a) Terms and conditions
Trade and other payables are non-interest bearing. The trade payables relate principally to financial
advice fees payable to advisers and insurance premiums and commissions payable to insurance
brokers.
Other creditors and accrued expenses relate mainly to operating expenses and are normally payable
within 60 days.
PAGE 68
20162015 $'000 $'000 CurrentInsurance premium funding - commissions payable900 544 Insurance premium funding - premiums payable22,057 21,766 Amounts payable to financial advisers8,225 7,931 Trade payables1,239 1,889 Other creditors and accrued expenses2,113 2,297 Total34,534 34,427
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
b) Fair value
Due to the short term nature of the majority of the current trade and other payables, their carrying
value is assumed to approximate their fair value.
c) Financial guarantees
No guarantees have been given over trade and other payables.
d) Related party payables
For terms and conditions relating to related party payables refer to note 24.
e) Interest rate, foreign exchange and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 3.
18. Interest bearing liabilities
a) Fair value of interest bearing liabilities
Interest bearing liabilities are carried at amortised cost. The carrying value of borrowings
approximates their fair value.
b) Financial risk
Refer to note 3 for interest rate risk and liquidity risk. There is no exchange rate risk as the interest
bearing liabilities are documented and payable in Australian dollars.
c) Finance facilities
Centrepoint Alliance Premium Funding Pty Ltd has a multi option facility, including an insurance
premium funding receivables finance facility with the National Australia Bank Limited (‘NAB’) &
Bendigo and Adelaide Bank (‘BAAB’). It is secured by a registered mortgage debenture over all the
assets and undertakings of that company. In addition, amounts advanced under the receivables
finance facility are secured by the partial assignment to the NAB/BAAB of loan contract receivables
and an unlimited interlocking guarantee and indemnity given by the Company. Subsequent to year
end, the Company changed its financing arrangements (refer to Note 28 for details).
PAGE 69
20162015 $'000 $'000 CurrentReceivables finance facility - insurance premium funding83,987 85,143 Equipment hire and software finance liabilities26 174 Total84,013 85,317 Non-currentEquipment hire and software finance liabilities-75 Total-75
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
The Group’s finance facilities and their usage as at reporting date was as follows:
d) Defaults and breaches
There were no defaults or breaches of lending covenants during the year.
19. Provisions
PAGE 70
AccessibleUsedUnused $'000 $'000 $'000 30 June 2016NAB Multi option facility103,476 61,425 42,051 BAAB Multi option facility33,524 22,641 10,883 137,000 84,066 52,934 30 June 2015NAB Multi option facility115,232 65,112 50,120 BAAB Multi option facility34,768 20,030 14,738 150,000 85,142 64,858 20162015 $'000 $'000 CurrentProvision for adviser client claims4,7435,500 Provision for employee entitlements3,0573,092 Property make good83319 Onerous lease429-Total8,3128,911 Non-currentProvision for adviser client claims-1,800 Provision for employee entitlements706423 Property make good352232 Onerous lease572-Total1,6302,455 20162015 $'000 $'000 a) Movement in provision for adviser client claimsOpening balance7,300 13,775 Movement in the provision is as follows:Claims provisioning expense during the period174 2,369 Claims settlements & fees paid (net of recoveries)*(2,731)(8,844)Closing balance4,743 7,300 * Movement excludes $77,659 (2015: $236,846) from claims arising from advice post 30 June 2010.
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
Provision for adviser client claims
The provision for adviser client claims is the estimated cost of resolving claims from clients arising
from financial advice provided prior to 1 July 2010 by Authorised Representatives of the Group. The
provision is the estimated cost of resolving reported and ‘incurred but not reported’ (‘IBNR’) claims.
The estimate was determined by reference to an independent actuarial valuation assessment in July
2016 that used internal historical data on claims up to 30 June 2016. It is measured based on the
present value of future costs that the Group expects to incur to resolve such claims. The actuarial
model does not project claims from class actions. Class action lawyers have been active within the
financial services industry in relation to failed investment products and there is an unquantifiable risk
that such action may be taken against a Group subsidiary in the future. Claims are expected to be
reported and resolved over a period between zero and five years. Resolution is dependent on the
circumstances of each claim and the level of complexity involved. Any costs are offset against the
provision as incurred.
Provision for onerous lease contract
During the year, the Group undertook a review of all its premises. The review resulted in merging
the two Brisbane office locations, closing the Adelaide office utilising a “working from home” model
and moving the North Sydney office to Sydney CBD. The locations vacated at the end of their lease
period are Brisbane and Adelaide. Further the Gold Coast office has consolidated from two floors
to one, and a result of this change is that an onerous contract now exists for the unused space.
PAGE 71
20162015$'000$'000b) Movement in provision for employee benefitsOpening balance3,515 4,120 Movement in the provision is as follows:Provision for year2,885 2,703 Reduction resulting from re-measurement without cost(133)(584)Leave and other employee benefits paid(2,504)(2,724)Closing balance3,763 3,515 20162015$'000$'000(c) Movement in provision for property make goodOpening balance551 288 Movement in the provision is as follows:Provision for year(116)263 Property make good expenditure--Closing balance435 551 20162015$'000$'000(d) Movement in provision for onerous leaseOpening balance--Movement in the provision is as follows:Provision for year1,001 -Onerous lease expenditure--Closing balance1,001 -
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
A review has assessed the likely offset from sub-leasing the Gold Coast premises for the lease
period to October 2018, and application of the appropriate accounting treatment results in
establishing a provision for onerous lease contracts of $1,001,000 that will be amortised over this
period. This has been split between a current provision of $429,000 and non-current provision of
$572,000. The associated expense is included in property expenses. In addition, there is an impact
on leasehold assets that results in bringing forward depreciation of $300,000. The total profit and
loss impact reported in this financial year is $1,301,000. Management are pursuing sub-lease
opportunities and if a tenant is found, this will reduce the amount of provision.
20. Contributed equity
b) Capital management
The Company’s capital is currently only comprised of shareholder funds. When managing capital,
management's objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to
maintain a capital structure that ensures the lowest cost of capital available to the entity.
Subsequent to balance date the directors declared a final dividend in respect of the 2016 financial
year of 1.2 cents per ordinary share amounting to $1,865,209 (2015: $1,779,610). No provision has
been recognised as at 30 June 2016 (2015: Nil).
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20162015Reference $'000 $'000 a) Paid up capitalOrdinary shares(i)38,585 36,178 Reserved shares(ii)(4,435)(3,500)34,150 32,678 Number of 2016 Number of 2015 shares $'000 shares $'000 i) Ordinary shares (issued & fully paid)Balance at start of year148,300,806 36,178 142,789,724 41,188 Movements during the year:-- Share issue - long-term incentive plan2,750,000 935 4,514,284 2,356 - Share issue - dividend reinvestment plan4,383,274 1,472 996,798 505 - Share capital s258F reduction---(7,871)On issue at end of year155,434,080 38,585 148,300,806 36,178 ii) Reserved sharesBalance at start of year(5,300,000)(3,500)(856,431)( 1,173 )Movements during the year:-- Issue of share to executive--70,715 29 - Share issue - long term incentive plan(2,750,000)(935)(4,514,284)( 2,356 )On issue at end of year(8,050,000)(4,435)(5,300,000)( 3,500 )Total contributed equity147,384,080 34,150 143,000,806 32,678
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
21. Reserves
The employee equity benefits reserve is used to record the value of share based payments provided
to employees, including KMP, as part of their remuneration.
During the current period, the following shares were issued to the Managing Director and Chief
Executive Officer and other senior executives of the Group under the Centrepoint Alliance Share
Plan (‘CAESP’). Participants were provided with an interest free non-recourse loan to fund their
acquisition of the shares. This arrangement is equivalent to a call option over the shares and
accordingly it has been valued using the Black Scholes model as follows:
22. Notes to cash flow statement
a) Reconciliation of cash & cash equivalents
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20162015 $'000 $'000 Employee equity benefits reserve1,088 761 Dividend reserve14,810 17,979 Total15,898 18,740 a) Employee equity benefits reserve20162015$'000$'000Balance at start of year761 498 Value of share based payments provided or which vested during the year327 263 Value of share based payments expired during the year--Balance at end of year1,088 761 SharesNo. ofVestingIssueFair Value atsharesperiodpriceissue dateManaging Director1,500,000 3 years$0.340$0.207Senior Executives2,250,000 3 years$0.340$0.207b) Dividend reserve20162015$'000$'000Balance at start of year17,979 3,820 Dividends paid(3,169)(4,541)Transfer from current year profits-18,700 Balance at end of year14,810 17,979 20162015 $'000 $'000 Cash at bank10,192 12,539 Total10,192 12,539
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
b) Reconciliation of net profit after tax to net cash provided by operating activities
c) Non-cash financing and investing activities
During the current year, the Group entered into the following non-cash financing activities which are
not reflected in the consolidated Statement of Cash Flows:
In relation to the final dividend declared at 30 June 2015, 2,288,772 shares were issued
under the Centrepoint Alliance dividend reinvestment plan at 1.20 cents per share totalling
$754,837.
In relation to the interim dividend declared at December 2015, 2,094,502 shares were issued
under the Centrepoint Alliance dividend reinvestment plan at 1.00 cents per share totalling
$717,311.
There were no non-cash investing transactions not reflected in the Statement of Cash Flows.
PAGE 74
20162015$'000$'000Net profit after income tax4,262 5,880 Adjustments to reconcile profit before tax to net cash flows:Depreciation and amortisation2,141 2,040 Foreign exchange (gain)/loss-(1)Impairment of intangibles assets and receivables-507 Loss on disposal of non-current assets30 143 Interest received(430)-Interest expense245 53 Dividend received from investments-(541)Share based compensation expense471 263 Tax expense299 (3,327)Working capital adjustments:(Increase)/decrease in assets:Trade and other receivables(320)1,274 Other assets(438)(293)Deferred tax assets(2)(5)(Decrease)/increase in liabilities:Trade and other payables(367)(1,779)Provisions for employee entitlements248 (604)Provision for client claims(2,557)(6,476)Provision for property make good(116)263 Provision for onerous lease1,001 -Provision for tax(144)1 Net cash from operating activities4,323 (2,602)
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
23. Information relating to Centrepoint Alliance Limited (the ‘Company’)
The Consolidated Financial Statements of the Company are:
At reporting date the Company had given guarantees to external parties totalling $45,804 (2015:
$45,804). In addition the Company has given an unlimited interlocking guarantee and indemnity to
the National Australia Bank as a condition of its banking facility arrangements to secure the
borrowings of Centrepoint Alliance Premium Funding Pty Ltd.
Contractual operating lease expenditure commitments of the Company are as follows:
The Company has various corporate services agreements for IT and telecommunications hardware
and support. The agreements have terms between 1 and 3 years with options to renew at expiry of
the initial term on a month to month basis.
PAGE 75
20162015 $'000 $'000 Current assets41,195 37,483 Non-current assets17,144 16,935 Current liabilities(373)(664)Non-current liabilities--Net Assets57,966 53,754 Issued capital37,411 35,006 Employee equity benefits reserve1,089 761 Dividend reserve14,594 17,906 Accumulated profit4,872 81 Total Shareholder Equity57,966 53,754 Net profit after tax of the parent entity4,791 18,781 Total comprehensive income of the parent entity4,791 18,781 20162015 $'000 $'000 Not later than one year1,031 1,026 Later than one year but not later than five years1,831 1,929 Total 2,862 2,955
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
24. Related party disclosures
a) Information relating to subsidiaries
PAGE 76
Name 20162015 Centrepoint Funding Centrepoint Alliance Lending Pty Ltd (formerly Centrepoint Lending Solutions Pty Ltd) Australia 100%100% Mortgage broker / aggregator Centrepoint Alliance Premium Funding Pty Ltd Australia 100%100% Insurance premium funding Alliance Premium Funding Limited New Zealand 100%100% Insurance premium funding Licensee & Advice Services Alliance Wealth Pty Ltd (formerly AAP Advantage Pty Ltd) Australia 100%100% Financial advice Associated Advisory Practices Pty Ltd Australia 100%100% AFSL licensee support services Alliance Wealth & Protection Pty Ltd (formerly Associated Advisory Practices (No 2) Pty Ltd) Australia 100%100% Salaried advice Professional Investment Services Pty Ltd Australia 100%100% Financial advice Funds Management & Administration Investment Diversity Pty Ltd (formely Investment Diversity Limited) Australia 100%100% Packages investment platforms Ventura Investment Management Ltd Australia 100%100% Packages managed funds Corporate Centrepoint Alliance Services Pty Ltd Australia 100%100% Trustee – Employee share plan Centrepoint Services Pty Ltd (formerly Centrepoint Adviser Services Pty Ltd) Australia 100%100% Service company Centrepoint Wealth Pty Ltd (formerly Professional Investment Holdings Ltd) Australia 100%100% Holding company De Run Securities Pty Ltd Australia 56%56% Financial services Imagine Your Lifestyle Pty Ltd Australia 100%100% Dormant Professional Accountants Pty Ltd Australia 100%100% Loans to adviser network Advisers Worldwide (NZ) Limited** New Zealand 100%100% Dormant Ausiwi Limited** New Zealand 100%100% Dormant Professional Investment Holdings (NZ) Limited** New Zealand 43%43% Dormant Professional Investment Services (NZ) Limited** New Zealand 43%43% Dormant Professional Lending Services Limited** New Zealand 38%38% Dormant Country of Incorporation Ownership Interest ** Currently under Solvent Voluntary Liquidation Principal Activity
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
b) Ultimate parent
The ultimate holding company is Centrepoint Alliance Limited, a company incorporated and
domiciled in Australia.
c) Terms and conditions of transactions with related parties other than KMP
Sales to and purchases from related parties are made on terms equivalent to those that prevail in
arm’s length transactions. Outstanding balances at year end are unsecured and interest free and
settlement occurs in cash. There have been no guarantees provided or received for any related party
receivables or payables. For the year ended 30 June 2016, the Company has not recorded any
impairment of receivables relating to amounts owed by related parties (2015: Nil). An impairment
assessment is undertaken each financial year through examination of the financial position of related
parties and the market in which a related party operates.
d) Transactions with key management personnel
The aggregate compensation made to directors and other members of key management personnel
of the Company and the Group is set out below:
25. Share based payment plans
a) Types of share-based payment plans
i) Performance Rights
Performance rights are rights that can be converted to fully paid ordinary shares in the Company for
no monetary consideration subject to specific performance criteria, as determined by the Board for
each issue of rights, being achieved.
ii) Centrepoint Alliance Employee Share Plan (‘CAESP’)
The purpose of the CAESP is to provide employees with an opportunity to acquire a financial interest
in the Company, which will align their interests more closely with shareholders and provide a greater
incentive to focus on the Company’s longer-term goals.
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20162015 $'000 $'000 Short term employee benefits1,572 1,728 Post employment benefits149 118 Long-term benefits6 224 Share based payments361 163 Termination/resignation benefits-52 Total compensation2,088 2,285
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
b) Recognised share-based payment expenses
c) Movements during the year
All current option awards are fully vested at reporting date. There are 10,600,000 shares which are
held within the CAESP which are not yet vested. The Board approved the vesting of 1,498,889 of
3,566,666 performance rights, however they are currently unissued.
d) Option pricing model
The fair value of the shares issued under the CAESP, the options issued under the CAESOP and
the performance rights are estimated as at the date of allocation using the Black Scholes Model
taking into account the terms and conditions upon which they were granted and market based inputs
as at the grant date.
PAGE 78
20162015 $'000 $'000 Expense arising from equity-settled share-based payment transactions under the CAESP377 120 Expense arising from performance rights(50)143 Total327 263 No WAEP* No WAEP* (i) Shares under the CAESPOutstanding at beginning of period5,585,001 0.49 285,001 0.40 New share awards5,300,000 0.34 5,300,000 0.50 Expired during the period----Outstanding at end of period10,885,001 0.42 5,585,001 0.49 (ii) Options under CAESOPOutstanding at beginning of period400,000 0.40 400,000 0.40 Issued during the period----Expired during the period----Outstanding at end of period400,000 0.40 400,000 0.40 (ii) Performance rightsOutstanding at beginning of period3,700,000 -3,700,000 -Issued during the period----Expired during the period(133,334)---Outstanding at end of period3,566,666 -3,700,000 -*WAEP is weighted average exercise price20162015
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
30 June 2016
26. Commitments
a) Contracted operating lease expenditure
The Group has entered into commercial leases on certain properties expiring at various times up to
5 years from reporting date. The leases have varying terms, options and rent renewals. On renewal,
if applicable, the terms are renegotiated. The Company has also entered into corporate services
agreements for IT and telecommunications hardware and support. The agreements have terms
between 1 and 3 years with options to renew at expiry of the initial term on a month to month basis.
27. Contingent liabilities
The nature of the financial advice business is such that from time to time advice given by the Group
or its Authorised Representatives results in claims by clients for compensation.
The Group has provided for claims arising from advice provided prior to 1 July 2010 based on an
actuarial model of past claims as described in Note 19. The actuarial model is based on assumptions
including the application of the statute of limitations. A change in approach to statute of limitations
will impact claims paid. The actuarial model does not project claims from class actions. Class action
lawyers have been active within the financial advice industry in relation to failed investment products
and there is an unquantifiable risk that such action may be taken against a Group subsidiary in the
future.
At the date of this report the directors are not aware of any other material contingent claims in relation
to advice provided after 1 July 2010.
A notification for a breach of warranty in relation to the sale of an overseas subsidiary in 2012 has
been received by Centrepoint Alliance Limited. An amended statement of claim includes an alleged
breach relating to an overstatement of assets and alleged incorrect GST treatment related to
commissions. The alleged breach is currently being investigated.
There were no other contingent liabilities at reporting date.
28. Events after the reporting period
The following matters have occurred subsequent to the year end:
On 23 August 2016, the directors of Centrepoint Alliance Limited declared a final dividend on
ordinary shares in respect of the 2016 financial year. The dividend is to be paid out of the dividend
reserve. The total amount of the dividend is $1,865,209 which represents 1.2 cents per share and
is fully franked at the corporate income tax rate of 30%. The record date is 26 September 2016 and
payment date is 19 October 2016.
On 1 July 2016 a new receivables finance facility provided by National Australia Bank was approved
and implemented. The new facility is able to meet our growth ambitions, with lower rates, fees and
capital requirements.
There are no other matters or events which have arisen since the end of the financial period which
have significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent financial years.
PAGE 79
20162015 $'000 $'000 Not later than one year2,300 2,089 Later than one year but not later than five years5,207 4,011 Later than five years--Total 7,507 6,100
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Declaration
30 June 2016
In accordance with a resolution of the directors of Centrepoint Alliance Limited, I state that:
1.
In the opinion of the directors:
(a) the financial statements and notes of Centrepoint Alliance Limited for the financial year
ended 30 June 2016 are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the consolidated entity’s financial position as at
30 June 2016 and of its performance for the year ended on that date; and
ii) complying with Australian Accounting Standards (including
the Australian
Accounting Interpretations) and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 2; and
(c) 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.
This declaration has been made after receiving the declarations required to be made to the
directors by the chief executive officer and chief financial officer in accordance with section
295A of the Corporations Act 2001 for the financial year ending 30 June 2016.
On behalf of the directors:
A. D. Fisher
Chairman
23 August 2016
PAGE 80
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
ASX Additional Information
30 June 2016
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in
this report is as follows. The information is current as at 1 August 2016.
1. Class of securities and voting rights
a) Ordinary shares
Ordinary shares of the Company are listed (quoted) on the ASX. There are 1,713 holders of ordinary
shares, holding 155,434,080 fully paid ordinary shares.
Holders of ordinary shares are entitled to one vote per share when a poll is called, otherwise each
member present at a meeting or by proxy has one vote on a show of hands.
b) Performance rights
A performance right is a right that can be converted to an ordinary fully paid share in the Company
for no monetary consideration subject to specific performance criteria being achieved. Details of
Performance rights are not quoted on the ASX and do not have any voting rights.
2. Distribution of shareholders and performance rights
The number of shareholdings held in less than marketable parcels is 320.
3. Substantial shareholders
PAGE 81
1 - 1,0003001,001 - 5,0004715,001 - 10,00023010,001 - 100,0006001100,000 and over1124 No. of ordinary shareholder No. of performance right holders Size of holding No. of % Held 43,316,262 27.87%Adam Smith Asset Management Pty Ltd11,460,556 7.37%9,585,041 6.17%Fully paid TIGA Trading Pty Ltd Ordinary Shareholders River Capital Pty Ltd
CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES
ASX Additional Information
30 June 2016
4. Twenty largest holders of quoted equity securities
PAGE 82
No. of % Held 1 UBS Nominees Pty Ltd31,749,48920.43% 2 HSBC Custody Nominees (Australia) Limited15,116,1509.73% 3 J P Morgan Nomninees Australia Limited11,460,5627.37% 4 Citicorp Nominees Pty Limited9,589,0416.17% 5 National Nominees Limited9,029,7205.81% 6 Centrepoint Alliance Services Pty Ltd
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