Centrepoint Alliance Annual Report 2017

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FY2017 Annual Report · Centrepoint Alliance

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ANNUAL
FINANCIAL
REPORT

For the year ended
30 June 2017

Centrepoint Alliance Limited
and its Controlled Entities
ABN 72 052 507 507

CONTENTS

1 Chairman’s Report

3 Directors’ Report

15 Remuneration Report

25 Auditor’s Independence Declaration

26 Statement of Profit or Loss and Comprehensive Income

27 Statement of Financial Position

28 Statement of Cash Flows

29 Statement of Changes in Equity

30 Notes to the Consolidated Financial Statements

78 Directors’ Declaration

79 ASX Additional Information

Independent Auditor’s Report

86 Corporate Directory

Centrepoint Alliance Limited
and its controlled entities
ABN 72 052 507 507

Annual Financial Report for
the year ended 30 June 2017

Chairman's Report Annual Report 30 June 2017

CHAIRMAN’S
REPORT

Centrepoint Alliance Limited (‘Centrepoint’ or the ‘Company’) has continued
to make significant progress during the financial year ended 30 June 2017
(‘FY17’) in executing its strategy to become the most respected financial
services provider in Australia.

We are pleased to announce a strong result for FY17 with a net profit after
tax of $6.5m (up 51%) and an EBITDA from continuing operations of $5.3m
(up 33%) excluding the legacy claims adjustment. The results include the
sale of the Premium Funding business on 30 December 2016 for $21.4m.
The sale of funding has resulted in Centrepoint focusing solely on its
wealth management business, that is supported by a strong cash position.
Subsequent to the sale, a number of acquisition opportunities have been
investigated without success. As a result, the Board has made the decision
to approve a special dividend of 7.0 cents per share fully franked. In addition,
the Board approved a final dividend of 1.2 cents per share fully franked
reflecting an updated dividend policy based on earnings outlook.

The Group has made a significant investment in people, technology and
client solutions. This investment 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 employee engagement and
satisfaction levels have improved strongly.

The outcomes of our investments have resulted in improved adviser
satisfaction with a net promoter score of +25.61 in Alliance Wealth and +33.3
in Associated Advisory Practices against industry score of -5.5. We have
been successful in expanding adviser numbers and continue to lead the
industry in being an early promoter of managed accounts. Net inflows into
the Ventura Managed Accounts Portfolios (‘vMaps’) solution increased by
71% to $344m, and there has been a solid transformation of revenue to the
contemporary business model.

Centrepoint continues to focus on being a customer-centric wealth
management business. Our primary goal is to improve the quality of
advice and wealth management solutions provided to Australians as well
as capturing the benefits from industry disruption and the move to ‘fee for
service’ advice. A package of virtual service solutions was introduced during
the year to enable advisers to benefit from greater scale and specialist
expertise so they can focus on adding value to their clients. We believe this
strengthens our adviser proposition allowing advice practices to choose from
a menu of investment services that include asset allocation research and
models, implemented portfolios on a wide variety of platforms and a fully
outsourced CIO function.

1 CoreData April 2017 Centrepoint Aliiance Community Research

During the year we have made strategic investments
in R Financial Educators Pty Ltd (RFE) and Australian
Life Development Pty Ltd (ALD). RFE is focused on
establishing joint ventures with accountants to leverage
their client base and provide financial advice. ALD is an
Australian based insurance distribution business offering
non-complex, customer-focused life insurance products
through the financial adviser channel and is expected to
release its products in March 2018.

Centrepoint is well placed to take advantage of the
anticipated growth in the wealth management market
and is using technology to simplify the client experience.
This should enable Centrepoint to attract quality
advice businesses, grow funds under management and
administration and enhance shareholder value.

We remain focused on assessing acquisition
opportunities that fit strategically and can generate
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.

Yours sincerely

Alan Fisher
Chairman

Directors' Report Annual Report 30 June 2017

4
4

DIRECTORS' REPORT

Your Directors present their report for the year ended 30 June 2017.

DIRECTORS
Directors were in office for this entire period unless otherwise stated. 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.

Alan Fisher
BCom, FCA, MAICD
Chair of the Board, Independent
Non-Executive Director

John de Zwart
BEcon, CA
Managing Director and Chief
Executive Officer

Experience and expertise
Alan has extensive and proven experience in restoring
and enhancing shareholder value. He spent 24 years
at world-leading accounting firm Coopers & Lybrand
where he headed and grew the Melbourne Corporate
Finance Division. Following this tenure Alan developed
his own corporate advisory business and in the last 20
years has specialised in M&A, strategic advice, business
restructurings and capital raisings. He is also managing
director of DMC Corporate and Fisher Corporate
Advisory. Alan has previously held the position of CEO
of Pental Limited where he was instrumental in its
successful restructuring.

Alan holds a Bachelor of Commerce from Melbourne
University, is a Fellow of the Institute of Chartered
Accountants and a Member of the Australian Institute of
Company Directors.

Experience and expertise
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 Limited, Tower Limited and AMP Corporate
Superannuation. He has also worked with Westpac,
Credit Suisse and PricewaterhouseCoopers.

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 holds a Bachelor of Economics from the University
of Sydney and is a member of the Institute of Chartered
Accountants.

Alan was appointed as Non-Executive Director and Chair
of the Company on 12 November 2015.

John was appointed as Managing Director and Chief
Executive Officer of the Company on 15 April 2013.

Other current directorships
Alan is currently a non-executive director and chair of
the audit and risk committee of Thorney Technologies
Ltd (ASX: TEK) (appointed 29 August 2014), IDT
Australia Limited (appointed 10 June 2015) and
Bionomics Limited (appointed 1 September 2016).

Former directorships in last 3 years
No former directorships of Australian listed entities.

Special responsibilities
Chair of the Board
Member of the Nomination, Remuneration and
Governance Committee

Interests in shares and options
Nil

Other current directorships
No other directorships of Australian listed entities.

Former directorships in last 3 years
No former directorships of Australian listed entities.

Special responsibilities
Managing Director and Chief Executive Officer
Alternate Member of the Group Investment Committee
for Martin Pretty or Hugh Robertson
(from 21 October 2016)
Member of the Group Investment Committee
(until 21 October 2016)

Interests in shares and options
3,230,743 ordinary shares
4,300,000 ordinary shares held under the Centrepoint
Alliance Limited Executive Loan Funded Share Plan
1,500,000 performance rights held under the
Centrepoint Alliance Limited Performance Rights Plan

Georg Chmiel
Diplom-Informatiker, MBA, CPA
(USA), FAICD
Independent Non-Executive
Director, Chair of the Group Audit
and Risk Committee

Experience and expertise
Georg brings over 23 years of experience in the financial
services industry, online media and real estate industry.
Georg is currently Chief Financial Officer of iFlix Group.
Previously he was Managing Director and CEO of
iProperty Group, the owner of Asia’s No. 1 network of
property portal sites and related real estate services.
He played a key role in finalising the sale of iProperty
Group to REA Group, Southeast Asia’s largest ever
internet buyout. Prior to iProperty Group, Georg was
Managing Director and CEO of LJ Hooker Group with
700 offices across nine countries providing residential
and commercial real estate as well as financial services.

Georg holds a Master of Business Administration from
INSEAD, a Diplom-Informatiker (Computer Science
Degree) from Technische Universität München and is
a member of the American Institute of Certified Public
Accountants and a Fellow of the Australian Institute of
Company Directors.

Georg was appointed as Non-Executive Director of the
Company on 7 October 2016.

Other current directorships
Georg is currently a Non-Executive Director of iCar Asia
Limited (ASX: ICQ) (appointed 1 November 2016) and
has held the position of Chair (since 24 February 2017).
He is also a Non-Executive Director of Mitula Group
Limited (ASX: MUA) (appointed 18 January 2017).

Former directorships in last 3 years
Georg is formerly an Executive and Non-Executive
Director of iProperty Group Limited (ASX: IPP) (4
January 2011 to 21 April 2014), he also held the position
of Managing Director and Chief Executive Officer (21
April 2014 to 16 February 2016).

Special responsibilities
Chair of the Group Audit, Risk and Compliance
Committee (from 21 October 2016)
Member of the Group Audit, Risk and Compliance
Committee (until 21 October 2016)

Interests in shares and options
25,000 ordinary shares

John O’Shaughnessy
MBA, Grad Cert Management,
FFinsia, FGIA, FCIS, MAICD
Independent Non-executive
Director, Chair of the Nomination,
Remuneration and Governance
Committee

Experience and expertise
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 is currently Chairman of Forticode Limited; a
Director of AlphaVista Financial Services Holdings
Pty Limited; a Director on the University of Adelaide’s
International Centre for Financial Services Advisory
Board; a Councillor on the Macquarie University Faculty
of Science and Engineering. He was previously Chairman
of Elevate Australasia Limited; a Director with A. T.
Kearney; and a Director of the Australian Services
Roundtable. John was also Deputy CEO of the Financial
Services Council of Australia.

John holds a Master of Business Administration from
Macquarie University and is a Fellow of the Governance
Institute of Australia, a Fellow of the Financial Securities
Institute of Australia, a Senior Associate of the Australian
and New Zealand Insurance Institute and a member of
the Australian Institute of Company Directors.

John was appointed as Non-Executive Director of the
Company on 28 May 2015.

Other current directorships
No other directorships of Australian listed entities.

Former directorships in last 3 years
No former directorships of Australian listed entities.

Special responsibilities
Chair of the Nomination, Remuneration and
Governance Committee
Chair of the Group Audit, Risk and Compliance
Committee (until 21 October 2016)
Member of the Group Audit, Risk and Compliance
Committee (from 21 October 2016)

Interests in shares and options
100,000 ordinary shares

Directors' Report Annual Report 30 June 2017

Martin Pretty
BA, CFA, Graduate Diploma of
Applied Finance
Non-executive Director, Chair of the
Group Investment Committee

Hugh Robertson
Independent Non-Executive
Director

Experience and expertise
Martin is currently a consultant with the Thorney
Investment Group, a substantial shareholder, and brings
to the Board over 17 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.

Experience and expertise
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 is a senior investment adviser with Bell
Potter. He has worked with a variety of stockbroking
firms including Falkiners stockbroking, Investor First and
Wilson HTM. Previously, Hugh has also held directorships
with NSX Ltd, OAMPS Ltd, Catalyst Recruitment Ltd.

Martin holds a Bachelor of Arts (Honours) from The
University of Melbourne, and a Graduate Diploma
of Applied Finance from Finsia. Martin is a CFA
charterholder.

Martin was appointed as Non-Executive Director of the
Company on 27 June 2014.

Other current directorships
No other directorships of Australian listed entities.

Former directorships in last 3 years
No former directorships of Australian listed entities.

Special responsibilities
Chair of the Group Investment Committee
Member of the Group Audit, Risk and Compliance
Committee

Interests in shares and options
Nil

Hugh was appointed as Non-Executive Director of the
Company on 2 May 2016.

Other current directorships
Hugh is currently a Non-Executive Director of AMA
Group Limited (ASX: AMA) (appointed 2 June 2015)
He is also a Non-Executive Director and Chair of the
Audit and Risk Committee of Primary Opinion Limited
(appointed 26 October 2015)

Former directorships in last 3 years
Hugh is formerly a Non-Executive Director of TasFoods
Limited (ASX: TFL) (21 February 2014 to 10 February
2017), he also held the position of Chair (25 May 2015 to
3 September 2015).

Hugh has also held Executive and Non-Executive
Directorship positions with HUB24 Limited (20 April 2011
to 29 February 2016) and Wentworth Holdings Limited
(27 October 2005 to 3 September 2013)

Special responsibilities
Member of the Group Audit, Risk and Compliance
Committee (until 21 October 2016)
Member of the Nomination, Remuneration and
Governance Committee (from 21 October 2016)
Member of the Group Investment Committee (from 21
October 2016)

Interests in shares and options
Nil

COMPANY SECRETARY

Debra Anderson
B. Law (LLB) Hons, Post Graduate Diploma in Legal
Practice, Diploma of Financial Planning, AGIA, ACIS,
MAICD
Senior Corporate Lawyer & Company Secretary

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 13 years and was appointed Company Secretary
in November 2013.

Debra is a qualified Chartered Secretary and is an
Associate of the Institute of Chartered Secretaries and
Administrators and the Governance Institute of Australia
and a member of the Australian Institute of Company
Directors.

Marty Carne
BM, BBus, LLB, LLM, MBA (Grad), GDLP, GCAIF
General Counsel & Company Secretary

Marty joined the Company in April 2016 and holds
executive responsibility for Legal, Professional Standards
and Risk and Claims Management.

Marty holds qualifications in law and business and is
a member of the Queensland Law Society and the
Association of Financial Advisers.

Marty has over 25 years’ experience in regulation and
financial services. Marty has held senior positions with a
range of financial services companies and the Australian
Securities Commission. Marty has strong commercial
and client-centric skills and experience in the delivery of
strategic legal advice and management of risk.

Marty was appointed as joint Company Secretary on 27
April 2017.

Directors' Report Annual Report 30 June 2017

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).

Members

Board of Directors

Nomination,
Remuneration
& Governance
Committee

Group Audit, Risk
& Compliance
Committee

Group Investment
Committee

Held

Attended

Held

Attended

Held

Attended

Held

Attended

A. D. Fisher

J. A. O'Shaughnessy

H. W Robertson

J. M. de Zwart

J Cowan

M Walker

M. P. Pretty

G. Chmiel *

5**

5***

3***

5**

* Appointed 7 October 2016 **Appointed 21 October 2016 ***Change of membership effective 21 October 2016

CORPORATE INFORMATION

Strategies and Prospects
The Group is focused on becoming the most trusted and
respected wealth management organisation in Australia
with the creation of leading business lines in wealth
advice, funds management and life insurance.

ALD is an Australian based insurance distribution
business offering life insurance products through
financial adviser channels. In 2018 ALD will launch
its products and establish their position on licensee
approved product lists and adviser support.

The Wealth business is implementing its strategy to
become a leading client-centric wealth business focused
on customer outcomes and building sustainable financial
advice practices. Our aim is to increase alignment
between advisers and the Group to drive growth. With
a contemporary business model it is well positioned
in an industry that remains very attractive for 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’s strategy with respect to both RFE and ALD
is to grow the long term values of these investments.

The Group is strategically well positioned and benefiting
from the disruption occurring across financial services
as regulatory, technology and consumer driven
change occurs. Being ahead of the curve in creating
a differentiated contemporary client-centric wealth
management business and leveraging scale as a player.
The Group has a strong balance sheet with good
return on capital and will continue to explore further
opportunities to transform the wealth advice market.

RFE is focused on partnering with accounting businesses
to provide advice. The 2017 financial year was RFE’s
start up year, where a number of accountant referral
partnerships were established, and this number is
expected to triple in the next financial year.

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 Securities 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.

The insurance premium funding business was sold on
30 December 2016 to the Bank of Queensland as part of
the Group’s business strategy to focus on and grow the
Wealth business and has established a minority interest
in life insurance.

Principal activities
The principal activities of the Company and its related
entities during the course of the financial year were:

• Licensee and Advice Services, which provides a range

of financial advice and licensee support services
(including licensing, technology, business support,
training, compliance, and professional standards); and,

• Funds Management and Administration, which is
a provider of investment solutions (platforms and
managed portfolios and funds) to financial advisers,
accountants and their clients across Australia.

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 (ASX:
CAF). 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’) operates predominantly in the financial
services industry within Australia and has two core
business segments as outlined above in Principal activities.

Financial Performance
Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA) from continuing operations
for the year to 30 June 2017 was $5.3m, excluding the
legacy claims adjustment of $3.7m in 1H17. (2016: $4.0m).
The 33% increase in EBITDA is a good reflection of the
increasing pace of transformation and growth of the
Wealth business, which is performing well in challenging
markets.

a. Licensee and Advice Services
Description: Provider of a range of financial advice
and licensee support services (including licensing,
technology, business support, training, compliance and
professional standards) to financial advisers, accountants
and their clients across Australia, including xseedwealth
pty ltd (salaried advice) and Centrepoint Alliance
Lending Pty Ltd (‘CALP’).

Business Model: Services are provided to authorised
representatives under its Australian Financial Services
Licences through Professional Investment Services Pty
Ltd and Alliance Wealth Pty Ltd. Similar services are also

provided to other licensees through Associated Advisory
Practices Pty Ltd.

Salaried advice provides strategic financial advice to
clients, and mortgage broking services are also offered
to brokers and financial advisers.

Key Drivers: The number of advice firms, fee income,
operating costs, funds under distribution agreements,
lending volumes and lending margins.

Overview: Licensee and Advice Services operates with
non-institutionally owned financial advisers and operates
in a market alongside large institutions. The market is
attractive with over $2.3 trillion2 in superannuation assets
expected to continue to grow over the next twenty years
and the need for quality advice continuing to grow.

During the year, the salaried advice business changed
its name from Alliance Wealth & Protection Pty Ltd
to xseedwealth pty ltd. The business has performed
strongly in the year and is moving to the next phase
of its growth strategy and increasing the number of
advisers.

The mortgage broking business 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 advice businesses and offers lending
services to financial planning clients.

2 APRA March 2017 Quarterly Superannuation Performance

Directors' Report Annual Report 30 June 2017

The Group continues to focus on being a client-centric
business, which involves improving the quality of advice
and wealth solutions provided to Australians, and
capturing the benefits from industry disruption and the
move to ‘fee for service’ advice.

The Group continues to be successful in recruiting 39
wealth advice firms during the year, representing well
in excess of 100 financial advisers. The quality of the
team and client focus are key to this success, as well as
continued enhancement of services and technologies
across the business.

The Group recently undertook its external client
engagement survey and received a very positive
response from clients. This was further confirmed
through Alliance Wealth Pty Ltd being nominated for
Independent Licensee of the year by CoreData.

Financial Performance: EBITDA excluding the impact of
the change in claims provision methodology was $4.6m
(2016: $4.1m). The growth was driven by the transition
of advisers to the contemporary solutions model and
recruitment of new firms.

b. Funds Management and Administration
Description: Provider of funds management and
platform solutions to financial advisers and their clients
across Australia.

Business Model: The business sources best of breed fund
managers and platforms, constructs portfolio solutions
and managed funds through Investment Diversity Pty
Ltd and Ventura Investment Management Limited.

Key Drivers: Funds under administration, funds under
management, margins and operating costs.

Overview: Funds Management and Administration
provides advisers and their clients with world class
investment solutions across the risk/return spectrum,
which are managed by world class investment managers
and provide a choice of investment styles to deliver on
overall client and business objectives.

During the year the Group has been successful
in expanding the number of advisers using funds
management and platform solutions. The Group is an
early promoter of managed accounts, which has gained
further momentum during the financial period, with
$344m under management and $1.1b of gross inflows.

Financial Performance: EBITDA increased 8% to $4.1m
(2016: $3.8m). Increased adoption by advisers of the
contemporary solutions and improved margins on
contemporary products have contributed to this result.
The Group has invested in the sales team and transition

support during the financial period to deliver future
growth. The business was also impacted by additional
overheads following the sale of premium funding.

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.

d. Minority Investments

On 5 October 2016 the Group made an investment in R
Financial Educators Pty Ltd (RFE) which is establishing
joint ventures with Accountants to leverage their client
base and provide financial advice. The investment is at
start up stage and is growing strongly. Post balance date,
the Group provided a further $1m convertible loan (10%
stake) to fund future growth, taking the total investment
to $2.5m, which represents a 25% economic interest.

An investment in Ginger Group Financial Services
Limited (Ginger Group) was also made during the year
for $0.1m (50% stake), which is focused on providing
support services to financial services organisations and
advisers in New Zealand. Ginger Group has a 37.5% stake
in Kepa Financial Services Limited (Kepa) and as a result,
the Group indirectly holds an 18.75% stake in Kepa.

The Group also took up a minority investment in
Australian Life Development Pty Ltd (ALD) which is
focused on designing, distributing and administering
life insurance products. Refer to Note 14(e) for further
details.

Cash Flows
The Group held $31.2m in cash and cash equivalents as
at 30 June 2017 (2016: $10.2m).

Cash provided by continuing operations was $5.4m
(2016: $5.6m) from which $4.2m was paid out in legacy
claims (2016: $2.8m), $21.4m was received from the sale
of the Premium Funding business resulting in an overall
cash movement of $21.0m in the year (2016: $2.3m).

Financial Position
The Group has net assets at 30 June 2017 of $41.6m
(2016: $39.6m) and net tangible assets of $30.4m (2016:
$26.3m) representing net tangible assets per share of
19.35 cents (2016: 16.94 cents).

The assets and liabilities of the Group declined during
the year following the sale of Premium Funding. The
significant items in the prior period were the Premium
Funding Receivables and interest-bearing liabilities
associated with the receivables.

Risks and 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 client advice
claims in relation to advice provided prior to 1 July
2010.

The provision is based on a detailed review of legacy

claims as the approach moved from a general
provision based on actuarial analysis and projections
to a specific provision for each claim. Actual claims
may exceed the provision and it is impracticable to
quantify the amount of any such additional liability.

Class action lawyers and the Australian Securities &
Investments Commission has been active within the
financial advice industry in relation to poor advice and
failed investment products. 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 is supporting retention of
key financial advisers and helping to 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 rebate income – the Group receives rebates
from product issuers in relation to products that it
placed with them prior to the introduction of FOFA.
The natural consequence of FOFA is that as time goes
by and consumers receive advice this grandfathered
rebate income will reduce.

• Loss of key personnel – Centrepoint has a relatively
small team and could be negatively impacted if one
or more of the key team members were to leave. A
comprehensive staff review and feedback process is
actively employed. Regular reviews of remuneration to
ensure market competitiveness are undertaken, and
short-term and long-term incentive programs are in
place for staff.

• Competitor behaviour – the financial services industry

has several participants which have large market
shares and are subsidiaries or operating divisions of
large financial services businesses. The size of these
competitors and their greater access to the resources
of their institutions provide them with a strong position
on which to compete. 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.

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,
General Counsel and Chief Financial Officer are standing
attendees. 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:

• 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 (KPIs) of
both a financial and non-financial nature.

Directors' Report Annual Report 30 June 2017

• Board approved Risk Management Policy and Risk
Framework to assist in the identification, analysis,
evaluation and treatment of Group risks.

Dividends
On 24 August 2017, the Directors of Centrepoint Alliance
Limited declared a final dividend on ordinary shares in
respect of the 2017 financial year. The dividend is to be
paid out of the dividend reserve. The total amount of
the dividend is $1,883,196, which represents 1.2 cents per
share and is fully franked at the corporate income tax
rate of 30%. The record date is 25 September 2017 and
payment date is 9 October 2017.

On 24 August 2017, the Directors of Centrepoint Alliance
Limited declared a special dividend on ordinary shares
in respect of the 2017 financial year. The dividend is to
be paid out of the dividend reserve. The total amount of
the dividend is $10,985,308, which represents 7.0 cents
per share and is fully franked at the corporate income
tax rate of 30%. The record date is 25 September 2017
and payment date is 9 October 2017. The Board has
determined the Dividend Reinvestment Plan (DRP) will
not be offered for either payment.

SHARES AND
PERFORMANCE RIGHTS

Unissued shares
During the year, 1,498,889 performance rights were
vested, of which the Managing Director and Chief
Executive Officer, John de Zwart, was allocated 650,000.
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.

At the date of this report there are 500,000 unissued
ordinary shares subject to options, which are being held
as reserved shares by the Group.

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.

SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS

The Group sold its insurance Premium Funding business
on 30 December 2016 to the Bank of Queensland as
part of the Group’s business strategy to focus on wealth
management. Other than the above, 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 6 July 2017, the Group subscribed to a convertible
loan of $1m in RFE, which represents a 10% stake in
equity if converted.

On 7 July 2017, the Group paid the balance of the
convertible loan for ALD of $3.75m.

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 Chairman’s
Report and 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 STATEMENT
AND PRACTICES

The Group’s Corporate Governance Statement for the
financial year ended 30 June 2017 was approved by the
Board on 24 August 2017. The Corporate Governance
Statement is available on our website: http://www.
centrepointalliance.com.au/investor-centre/corporate-
governance/

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 Instruments
amounts in the Directors' Report and the financial
statements are rounded off to the nearest hundred
thousand dollars, unless otherwise indicated.

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 liabilities insured are legal costs that may be incurred
in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers
of the Group, and any other payments arising from
liabilities incurred by the officers in connection with such
proceedings, other than where such liabilities arise out of
conduct involving a wilful breach of duty by the officers
or the improper use by the officers of their position
or of information to gain advantage for themselves or
someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of
insurance policies are not disclosed as such disclosure is
prohibited under the terms of the contract.

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.

Centrepoint continues to focus
on being a customer-centric
wealth management business.
Our primary goal is to improve
the quality of advice and
wealth management solutions
to Australians.

- Alan Fisher, Chairman

Directors' Report Annual Report 30 June 2017

16
16

REMUNERATION REPORT

This Remuneration Report for the year ended 30 June 2017 outlines the
remuneration arrangements of the Key Management Personnel 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:

A. D. Fisher

Chairman & Director (non-executive)

J. A. O'Shaughnessy

Director (non-executive)

J. M. de Zwart

Managing Director & Chief Executive Officer

H. W. Robertson

Director (non-executive)

M. P. Pretty

G. Chmiel

J. S. Cowan

R. M. Dodd

Director (non-executive)

Director (non-executive) – appointed 7 October 2016

Chief Financial Officer

Chief Executive Officer – Centrepoint Alliance Premium Funding Pty Ltd – Resigned
30 December 2016

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 to provide 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.

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:

GROUP

Net profit/(loss) after tax

EPS (basic) - (cents per share)

EPS (diluted) - (cents per share)

Share price ($)

2017

$'000

6,544

4.41

4.11

0.63

2016

$'000

4,262

2.94

2.75

0.41

2015

$'000

5,880

4.14

3.96

0.50

2014

$'000

3,223

3.20

3.13

0.37

2013

$'000

(7,288)

(8.04)

0.27

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 2017, which was approved by a resolution of
shareholders at the Annual General Meeting on 29 November 2016, is $550,000.

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. Hare Group 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.

Employment Contracts
Details of the terms of employment of the Managing Director & Chief Executive Officer and the named executives are
set out below:

Directors' Report Annual Report 30 June 2017

John de Zwart – Managing Director & Chief Executive Officer

Employment commencement date: 15 April 2013

John Cowan - Chief Financial Officer

Employment commencement date: 12 January 2015

Term: No term specified

Incentives:

Short term incentive

Term: No term specified

Incentives:

Short term incentive

A short-term incentive of $145,000 was paid after the end of the 2016 financial year and on achievement of key
performance targets set by the Board. The key performance targets are measures of underlying EBITDA, growth in
business lines, 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.

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 short-term incentive of $130,000 was paid after the end of the 2016 financial year based on the Group-wide STI
scheme structure.

A short-term incentive for the 2017 financial year will be payable based on the objective and structure outlined in this
Remuneration report.

Long-term incentive – (Refer to page 22 for further details)

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’) as disclosed in
the long-term incentive plans.

CAESP18

Issue of up to 1,500,000 fully paid ordinary CAF shares at 34.0 cents per share, that are legally held by the CAESPT
until satisfaction of the vesting conditions determined on 13 December 2018 as disclosed in the long-term incentive
plans.

CAESP19

Issue of up to 1,500,000 performance rights at 51.0 cents per performance right, that are legally held by the CAESPT
until satisfaction of the vesting conditions determined on 9 December 2019 as disclosed in the long-term incentive
plans.

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.

A retention incentive was approved by the Board in March 2016 and the first payment of $75,000 was made in
September 2016, with the second payment of $75,000 to be made in September 2017. The incentive is subject to
employment criteria.

Long-term incentive – (Refer to page 22 for further details)

CAESP18

Issue of up to 1,200,000 fully paid ordinary CAF shares at 34.0 cents per share, that are legally held by the CAESPT
until satisfaction of the vesting conditions determined on 13 December 2018 as disclosed in the long-term incentive
plans.

CAESP19

Issue of up to 750,000 performance rights at 51.0 cents per performance right, that are legally held by the CAESPT
until satisfaction of the vesting conditions determined on 9 December 2019 as disclosed in the long-term incentive
plans.

Required notice (Executive): 6 months.
Required notice (Company): 3 months.
Termination Entitlement: Statutory entitlements.

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Directors' Report Annual Report 30 June 2017

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
(‘KMP’)*

Shares held in Centrepoint Alliance Limited (Number)

Balance
1 July 2016

Granted as
remuneration

On exercise
of options

Net change
other #

Balance
30 June 2017

Ordinary

2,580,743

100,000

7,387

650,000

3,230,743

100,000

25,000

200,000

207,387

A. Fisher

J. M. de Zwart

M. P. Pretty

J. A. O'Shaughnessy

J. S. Cowan

H. W. Robertson

G. Chmiel2

Former KMP’s

R. M. Dodd1

1 Resigned during the year

2 Appointed 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 conditions no
more favourable than those the Company would have adopted if dealing at arm’s length.

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
employees to strive to achieve stretch performance objectives.

Structure
In August 2016 the Directors approved a new Executive STI scheme based on EBITDA and the achievement of
underlying organisational and team goals. The Target EBITDA is approved by the Board for each financial year.
To be eligible for an STI payment a threshold EBITDA must be met and executives must achieve at least 70% of
their individual performance objectives and minimum job competency and core values ratings. The Target STI
payable to executives is 40% and the Managing Director 50% of Total Fixed Remuneration. The Maximum STI
payable for executives is 60% and the Managing Director 75% of Total Fixed Remuneration. On an annual basis,
after consideration of performance against KPIs the NRGC will review results and determine individual amounts
approved for payment.

For other employees there is an STI scheme where a bonus pool based on results and approved by the Board
is weighted by a two-tiered approach with weightings assigned to each level, being CAF Group results and
individual KPIs.

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 or rights.
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
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 LTI plan 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 the award of 5,300,000 shares to the Managing Director and Chief
Executive Officer and other senior executives of the Group under the CAESP at 52.2 cents per share. The vesting
conditions are subject to the following:

2017 tranche
If the cumulative fully diluted underlying 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
On 15 July 2015, the Board approved the award of 4,550,000 shares to the Managing Director and Chief Executive
Officer and other senior executives of the Group under the CAESP at 34.0 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.

Directors' Report Annual Report 30 June 2017

CAESP19
On 19 December 2016, the Board approved the award of 3,750,000 performance rights to the Managing Director and
Chief Executive Officer and other senior executives of the Group under the CAESP at 51.0 cents per performance
right. These are legally held by the CAESPT and not converted into fully paid ordinary CAF shares until satisfaction of
the vesting conditions determined on 9 December 2019 based on the following:
If the Total Shareholder Return (TSR) for 30 June 2019 financial year is:

• Below 25th percentile, none will vest;

• Between 25th percentile and 49th percentile, 25% of the performance rights will vest;

• Between 50th percentile and 74th percentile, 50% of the performance rights will vest;

• Above 75th percentile, 100% of the performance rights will vest;

Total TSR is a measure of investment return in percentage terms, adjusted for dividends and capital movements, from
the start to the end of the performance period.

The TSR of Centrepoint is compared and ranked to the TSR of each peer group constituent. The rank is converted
to a percentile ranking which is used to determine the proportion of awards vesting based on the above set vesting
schedule.

Option holdings of key management personnel
No options to purchase shares were held by KMP.

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 other than the ones disclosed above.

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 2017. 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.

2017

2016

96,598

61,132

87,108

47,554

157,730

134,662

Taxation services provided by Deloitte Touche Tohmatsu

Other regulatory services

Total

Signed in accordance with a resolution of the directors.

A. D. Fisher
Chairman

24 August 2017

Auditor's Independence Declaration Annual Report 30 June 2017

Consolidated Statement of Profit or Loss and Comprehensive Income for the year ended 30 June 2017

Deloitte Touche Tohmatsu
ABN 74 490 121 060
Riverside Centre
Level 25
123 Eagle Street
Brisbane QLD 4000
Deloitte Touche Tohmatsu
Tel: +61 7 3308 7000
ABN 74 490 121 060
Fax: +61 7 3308 7001
Riverside Centre
www.deloitte.com.au
Level 25
123 Eagle Street
Brisbane QLD 4000

Tel: +61 7 3308 7000
Fax: +61 7 3308 7001
www.deloitte.com.au

Board of Directors
Centrepoint Alliance Limited
Level 9, 10 Bridge Street
Sydney, NSW, 2000

Dear Directors
Board of Directors
Centrepoint Alliance Limited
Level 9, 10 Bridge Street
Auditor’s Independence Declaration to Centrepoint Alliance Limited
Sydney, NSW, 2000

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
Dear Directors
declaration of independence to the Directors of Centrepoint Alliance Limited.

As lead audit partner for the audit of the financial report of Centrepoint Alliance Limited for the year
Auditor’s Independence Declaration to Centrepoint Alliance Limited
ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
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.

the auditor independence requirements of the Corporations Act 2001 in relation to the audit
any applicable code of professional conduct in relation to the audit.

•
•

As lead audit partner for the audit of the financial report of Centrepoint Alliance Limited for the year
Yours sincerely
ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:

•
•

the auditor independence requirements of the Corporations Act 2001 in relation to the audit
any applicable code of professional conduct in relation to the audit.

DELOITTE TOUCHE TOHMATSU

Yours sincerely

David Rodgers
Partner
DELOITTE TOUCHE TOHMATSU
Chartered accountants
Brisbane, 24 August 2017

David Rodgers
Partner
Chartered accountants
Brisbane, 24 August 2017

Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited

CONTINUING OPERATIONS

Revenue

Advice and financial product revenue (gross)

Advice and financial product fees

Advice and financial product revenue (net)

Interest income

Other revenue

Gross Profit

Expenses

Borrowing expenses

Employee related expenses

Marketing and promotion

Travel and accommodation

Property costs

Subscriptions & licences

Professional services

Client claims

IT and communication expenses

Depreciation and amortisation

Other general and administrative expenses

Profit before tax from continuing operations

Income tax (expense)/benefit

Net (loss)/profit from continuing operations after tax

Discontinued operations

Profit after tax from discontinued operations

Net profit for the year

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Net profit attributable to:

Owners of the parent

Net profit for the period

Total comprehensive profit attributable to:

Owners of the parent

Total comprehensive profit for the period

Earnings per share for profit attributable to the ordinary equity holders
of the parent

Basic earnings per share

Diluted earnings per share

Basic (loss)/earnings per share from continuing operations

Diluted (loss)/earnings per share from continuing operations

2017

Note

$'000

2016

$'000

128,624

115,140

(97,193)

(84,584)

31,431

30,556

458

362

444

960

32,251

31,960

(53)

(100)

4(a)

(18,609)

(18,207)

(481)

(949)

(710)

(1,309)

(1,180)

20(a)

(4,193)

(1,195)

(1,106)

(2,290)

(638)

(531)

(2,425)

(1,367)

(883)

(252)

(1,120)

(1,977)

(2,109)

(32,075)

(29,609)

176

(264)

(88)

6,632

6,544

2,351

402

2,753

1,509

4,262

Cents

4.41

4.11

(0.06)

2.94

2.75

1.90

1.77

The Consolidated Statement of Profit or Loss and Comprehensive Income is to be read in conjunction with the attached notes included in pages 31 to 77.

Consolidated Statement of Financial Position as at 30 June 2017

Consolidated Statement of Cash Flows for the year ended 30 June 2017

ASSETS

Current

Cash and cash equivalents

Trade and other receivables

Interest bearing receivables

Other assets

Total current assets

Non-current

Interest bearing receivables

Investments

Other assets

Property, plant & equipment

Intangible assets & goodwill

Deferred tax assets

Total non-current assets

TOTAL ASSETS

LIABILITIES

Current

Trade and other payables

Interest bearing liabilities

Lease incentives

Provisions

Current tax liability

Total current liabilities

Non-current

Lease incentives

Provisions

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Accumulated losses

Equity attributable to shareholders

Non-controlling interests

TOTAL EQUITY

2017

Note

$'000

2016

$'000

6(a)

31,242

11,362

345

529

10,192

11,696

125,848

4,558

43,478

152,294

1,642

1,632

1,015

976

2,231

9,018

16,514

460

1,048

1,441

3,831

9,395

16,211

5(d)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers

Cash paid to suppliers and employees

Cash provided by operations

Claims and litigation settlements

Net cash flows provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received

Interest and borrowing expenses paid

Payments to acquire financial assets

Proceeds from sale of interest in a subsidiary

Acquisition of intangible assets

Acquisition of property, plant & equipment

Proceeds from sale of property, plant & equipment

2017

Note

$'000

2016

$'000

141,031

118,574

(135,614)

(112,951)

5,417

5,623

(4,216)

(2,809)

1,201

2,814

458

(12)

(3,022)

21,422

(362)

(213)

430

(245)

(103)

(413)

20(a)

6(b)

17(a)

59,992

168,505

Net cash flows provided/(used in) by investing activities

18,271

(233)

9,109

34,534

Net (decrease)/increase in borrowings

CASH FLOWS FROM FINANCING ACTIVITIES

8,020

372

84,013

183

8,312

(1)

Net (decrease)/increase in loan funds advanced

Loan repayments received from advisors

Dividends paid

Net cash flows used in financing activities

(26)

(1,085)

(3,512)

108

(5,136)

(1,840)

(5,054)

(6,437)

Net increase/(decrease) in cash & cash equivalents

(14,418)

(3,856)

Profit after tax from discontinued operations

Cash & cash equivalents at the beginning of the year

Cash & cash equivalents at the end of the period

18(a)

6(a)

6,632

10,192

31,242

1,509

12,539

10,192

17,533

127,041

252

590

842

18,375

41,617

284

1,630

1,914

128,955

39,550

34,673

15,689

34,150

15,898

(8,863)

(10,616)

41,499

39,432

118

41,617

39,550

The Consolidated Statement of Financial Position is to be read in conjunction with the attached notes included in pages 31 to 77.

The Consolidated Statement of Cash Flows is to be read in conjunction with the attached notes included in pages 31 to 77.

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Basis of preparation
1. Corporate information .............................................................................................................................................................................................. 31

2. Summary of significant accounting policies ................................................................................................................................................. 31

Financial performance
3. Segment information ...............................................................................................................................................................................................34

4. Revenue and expenses ........................................................................................................................................................................................... 37

5. Income tax ................................................................................................................................................................................................................... 39

6. Notes to cash flow statement .............................................................................................................................................................................. 43

7. Commitments .............................................................................................................................................................................................................. 44

Working Capital
8. Trade and other receivables and payables ..................................................................................................................................................... 45

Shareholder returns
9. Dividends ..................................................................................................................................................................................................................... 46

10. Earnings per share (‘EPS’) ................................................................................................................................................................................... 47

Capital and funding structure
11. Contributed equity ................................................................................................................................................................................................... 48

12. Reserves ...................................................................................................................................................................................................................... 49

13. Interest-bearing liabilities ..................................................................................................................................................................................... 49

Capital Investment
14. Interest-bearing receivables .............................................................................................................................................................................. 50

15. Investments.................................................................................................................................................................................................................. 53

16. Property, plant and equipment .......................................................................................................................................................................... 54

17. Intangibles .................................................................................................................................................................................................................... 56

18. Discontinued operations ...................................................................................................................................................................................... 59

Risk Management
19. Financial risk management ................................................................................................................................................................................... 61

20. Provisions .................................................................................................................................................................................................................... 67

21. Contingent liabilities ................................................................................................................................................................................................ 70

Other information
22. Remuneration of auditors .................................................................................................................................................................................... 71

23. Information relating to Centrepoint Alliance Limited (the ‘Company’) ......................................................................................... 71

24. Related party disclosures ................................................................................................................................................................................... 73

25. Share-based payment plans .............................................................................................................................................................................. 74

26. Events after reporting period ........................................................................................................................................................................... 77

Notes to the Consolidated Financial Statements Annual Report 30 June 2017

1. CORPORATE INFORMATION

The consolidated financial statements of Centrepoint Alliance Limited (the ‘Company’ or the ‘Parent Entity’) and its
subsidiaries (the ‘Group’) for the year ended 30 June 2017 were authorised for issue in accordance with a resolution
of the Directors on 24 August 2017.

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 disclosures is provided in Note 24.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation
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.

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 ended 30 June 2017 are set out
below. The Directors are still assessing the impact of the new standards for the reporting period ending 30 June 2018
onwards.

Title

Application date
of standard

Application date
for Group

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 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 16 Leases
The Standard introduces a single accounting treatment, that is,
recognition of a right-of-use asset and a lease liability.

AASB16 supersedes the previous standard and related interpretations
and brings in a new definition of a lease that will be used to identify
whether a contract is, or contains, a lease.

1 January 2018

1 July 2018

1 January 2018

1 July 2018

1 January 2019

1 July 2019

AASB 2016-1 Amendments to Australian Accounting Standards –
Recognition of Deferred Tax Assets for Unrealised Losses

1 January 2017

1 July 2017

AASB 2016-5 Amendments to Australian Accounting Standards –
Classification and Measurement of Share-based Payment Transactions

1 January 2018

1 July 2018

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201733

3. 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:

• Licensee and Advice Services – provides Australian Financial Services Licence related services to financial advisers

and their clients and mortgage broking services

• Funds Management and Administration – provides investor directed portfolio services and investment management

services to financial advisers and their clients

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 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.

a. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company, Centrepoint Alliance
Limited, and its subsidiaries as at 30 June 2017.

Subsidiaries are entities that are controlled by the Company. The financial results and financial position of the
subsidiaries are included in the consolidated financial statements from the date control commences until the date
control ceases. A list of the Company’s controlled entities (subsidiaries) is included in Note 24.

b. 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 – note 17
• Impairment of loan receivables – note 14(b)
• Provision for client claims – note 20
• Onerous contracts – note 20
• Recognition of deferred tax assets – note 5

c. 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.

d. 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017 Licensee
& Advice
Services

Funds
Management &
Administration

Lending

Corporate &
Unallocated

Consolidated

Licensee
& Advice
Services

Funds
Management &
Administration

Wealth
Total

Corporate &
Unallocated

Consolidated

Year ended 2017

$'000

Year ended 2016

$'000

Revenue

External customers

Inter-segment revenue

Interest income

Segment revenue

Inter-segment elimination

Total revenue

Segment results

Borrowing expenses

Client claims

Depreciation & amortisation

Impairment of assets

Inter-segment expenses

23,905

7,821

31,726

121

150

24,026

7,850

31,876

(39)

(4,182)

(530)

(134)

16,432

(0)

(11)

(103)

3,318

(39)

(4,193)

(633)

(134)

19,750

(19,750)

Segment profit/(loss) before tax

4,033

4,047

(3,871)

Inter-segment elimination

Profit before tax

Balance Sheet at 30 June 2017

Current assets

Interest-bearing receivables

Other current assets

Total current assets

Non-current assets

345

12,101

12,446

5,559

Interest-bearing receivables

216

Other non-current assets

Total non-current assets

Total Assets

Current liabilities

Other current liabilities

Total current liabilities

Non-current liabilities

Other non-current liabilities

Total non-current liabilities

Total Liabilities

Net Assets

6,028

6,244

18,690

12,349

447

12,796

5,894

345

17,660

18,005

216

6,145

6,361

117

5,676

24,366

1,881

3,795

14,230

447

14,677

9,689

6,000

308

6,375

(14)

(473)

25,473

1,426

8,727

10,153

35,626

3,303

395

3,698

31,928

31,793

6,000

458

38,251

(6,000)

32,251

(53)

(4,193)

(1,106)

(130)

176

345

43,133

43,478

1,642

14,872

16,514

59,992

17,533

842

18,375

41,617

Revenue

External customers

Inter-segment revenue

Interest income (gross)

Segment revenue

Inter-segment elimination

Total revenue

Segment results

Borrowing expenses

Client claims

Depreciation & amortisation

Impairment of assets

Inter-segment expenses

24,734

3,500

137

28,371

(366)

(252)

(1,737)

(2,473)

6,782

31,516

3,500

186

6,831

35,202

(1)

(176)

788

(367)

(252)

(1,913)

(1,685)

5,900

258

6,158

267

(64)

1,685

Segment profit before tax

2,077

3,636

5,713

(3,360)

Inter-segment elimination

Profit before tax

Balance Sheet at 30 June 2016

Current assets

Interest-bearing receivables

Other current assets

Total current assets

Non-current assets

Interest-bearing receivables

Other non-current assets

Total non-current assets

Total Assets

Current liabilities

Interest bearing liabilities

Other current liabilities

Total current liabilities

Non-current liabilities

Other non-current liabilities

Total non-current liabilities

Total Liabilities

Net Assets

208

13,004

13,212

460

6,850

7,310

20,522

16,738

16,824

1,499

18,323

2,199

2,703

190

2,893

830

2,063

208

15,707

15,915

460

7,040

7,500

23,415

6,677

8,039

14,716

17,568

17,654

1,499

19,153

4,262

358

365

723

13,993

The Inter-segment sales are carried out on an arm’s length basis and are eliminated on consolidation.

31,516

9,400

444

41,360

(9,400)

31,960

(100)

(252)

(1,977)

2,353

208

22,384

22,592

460

15,079

15,539

38,131

17,926

18,012

1,864

19,876

18,255

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

4. REVENUE AND EXPENSES

Interest income

Interest expense

Bank fees & other

Interest income (net)

Cost recoveries from advisers

Retail and wholesale asset and service fees

Other

Total other revenue

2017

2016

$'000

458

(12)

(41)

405

265

362

444

(62)

(38)

344

538

161

261

960

Rate of Interest

Average Balance

Interest

Average Rate p.a.

Loan receivables

Cash and deposits

2017

2016

2017

2016

2017

$'000

2016

692

251

23,611

11,323

376

353

11.96%

30.63%

1.59%

3.12%

a. Employee benefit expenses

Wages and salaries

Share-based compensation expense

Termination costs

Total employee benefit expenses

2017

2016

$'000

18,313

17,556

136

160

327

324

18,609

18,207

Key accounting policies

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. 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.

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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201739

5. INCOME TAX

a. Income tax (benefit)/expense
The major components of income tax expense for the years ended 30 June 2017 and 2016 are:

d. Recognised deferred tax assets and liabilities
Deferred income tax relates to the following:

Current income tax

Current income tax charge

Adjustment to current tax of prior period

Deferred income tax

Utilisation of previously unrecognised tax losses

Adjustment to deferred tax of prior period

2017

2016

$'000

256

867

(1,345)

Income tax expense/(benefit) reported in the income statement

264

(402)

b. Amounts charged or credited directly to equity
No income tax was charged directly to equity for the year ended 2017 (2016: Nil).

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:

2017

2016

Deferred tax liabilities

Deferred revenue

Gross deferred tax liabilities

Deferred tax assets

Provisions for claims

Provisions for doubtful debts

Provision for impairment of loan receivables

Provision for leases

General accruals and other costs

Employee benefits

Tax losses available

Accounting profit before tax from continuing operations

176

2,351

Net deferred tax assets

$'000

Gross deferred tax assets

Statement of Financial
Position

Statement of
Comprehensive Income

2017

2016

2017

2016

$'000

(192)

1,403

1,499

195

563

999

4,473

9,210

9,018

(6)

1,577

1,405

(78)

429

658

1,150

4,260

9,401

9,395

(186)

(174)

156

(234)

(95)

(151)

213

(2)

(827)

(246)

153

429

(122)

292

(191)

(297)

At the Company's statutory income tax rate of 30% (2016: 30%)

Non-deductible expenses

Utilisation of previously unrecognised tax losses

Adjustment in respect of current tax of prior years

Adjustment in respect of deferred tax of prior years

203

705

162

(1,345)

Aggregate income tax expense/(benefit)

264

(402)

The Group recognised a deferred tax asset to account for the benefit of past losses. The recognition of this asset
is subject to estimation uncertainty as the utilisation of the deferred tax asset is dependent on estimates 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

e. Unrecognised tax losses
The Group has the following Australian tax losses for which no deferred tax assets are recognised at reporting date.

Key accounting policies

Revenue losses

Capital losses

Total unrecognised

2017

2016

$'000

29,609

35,953

65,562

29,609

29,097

58,706

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

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 amounts to assist with its obligations to pay tax instalments. These amounts are
payable at call.

Taxation

i. Income Tax

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.

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; or

• 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017
43

b. Reconciliation of net profit after tax to net cash provided by operating activities

Net (loss)/profit after income tax from continuing operations

(88)

2,753

Adjustments to reconcile profit before tax to net cash flows:

2017

2016

$'000

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.

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.

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.

Depreciation and amortisation

Loss on disposal of non-current assets

Interest received

Interest expense

Share based compensation expense

Tax expense

Working capital adjustments:

(Increase)/decrease in assets:

Trade and other receivables

Other assets

Deferred tax assets

(Decrease)/increase in liabilities:

Trade and other payables

Provisions for employee entitlements

Provision for client claims

Provision for property make good

Provision for onerous lease

Provision for tax

1,106

(458)

136

264

334

4,058

377

(3,551)

(488)

(65)

(120)

(659)

312

1,201

2,141

(430)

245

471

299

(320)

(439)

(2)

(368)

247

(2,557)

(116)

1,002

(144)

2,812

6. NOTES TO CASH FLOW STATEMENT

a. Reconciliation of cash & cash equivalents

Net cash from operating activities from continuing operations

7. COMMITMENTS

Cash at bank

Total

2017

2016

$'000

31,242

10,192

Contracted operating lease expenditure
The Group has entered into commercial leases on certain properties expiring at various times up to 5 years from
the 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.

Not later than one year

Later than one year but not later than five years

Later than five years

Total

2017

$'000

2016

$'000

2,272

2,394

4,666

2,300

5,207

7,507

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

8. TRADE AND OTHER RECEIVABLES AND PAYABLES

Key accounting policies

Current

Commissions receivable

Trade receivables

Total

An ageing analysis is provided in note 19(b)(iii).

Current

Insurance premium funding - commissions payable

Insurance premium funding - premiums payable

Amounts payable to financial advisers

Trade payables

Other creditors and accrued expenses

Total

2017

2016

$'000

8,570

2,792

11,362

10,799

897

11,696

2017

2016

$'000

6,292

1,182

1,635

9,109

900

22,057

8,225

1,239

2,113

34,534

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.

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 19.

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 180 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.

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.

9. DIVIDENDS

Dividends payable are recognised when declared by the Company.

a. Dividends paid or payable

The following fully franked dividends were provided for or paid during the year:
Dividends paid on ordinary shares

2017

2016

$'000

5,136

3,169

2017

2016

$'000

b. Franking credit balance

Franking account balance as at the end of the financial year

23,886

26,682

The tax rate at which paid dividends were franked is 30%. Franking credits are reported on a tax paid basis.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

10. EARNINGS PER SHARE (‘EPS’)

The following reflects the income used in the basic and diluted EPS computations:

a. Profit used in calculating profit per share

Net profit attributable to ordinary equity holders of the Company

Net profit attributable to ordinary equity holders of the Company from
discontinued operations

Net (loss)/profit attributable to ordinary equity holders of the Company from
continuing operations

2017

$'000

2016

$'000

6,544

6,632

4,262

1,509

(88)

2,753

11. CONTRIBUTED EQUITY

a. Paid up capital

Ordinary shares

Reserved shares

References

2017

$’000

2016

$’000

(i)

(ii)

39,108

(4,435)

34,673

38,585

(4,435)

34,150

Number of
Shares

2017

$’000

Number of
Shares

2016

$’000

b. Weighted average number of shares

i. Ordinary shares (issued & fully paid)

Weighted average number of ordinary shares (excluding reserved shares)

148,533,913

144,969,010

Balance at start of year

155,434,080

38,585

148,300,806

36,178

Effect of dilution:
Performance rights and LTI shares

10,863,470

10,250,271

Movements during the year:-

Weighted average number of ordinary shares (excluding reserved shares)
adjusted for the effect of dilution

159,397,383

155,219,281

Basic earnings per share from discontinued operations

Basic (loss)/earnings per share from continuing operations

Basic earnings per share

Diluted earnings per share

4.47

(0.06)

4.41

4.11

1.04

1.90

2.94

2.75

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.

c. Information on the classification of securities

Reserved shares (Centrepoint Alliance Employee Share 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.

Key accounting policies

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.

- Share issue - long-term incentive plan

1,498,889

- Share issue - dividend reinvestment plan

523

2,750,000

4,383,274

935

1,472

On issue at end of year

156,932,969

39,108

155,434,080

38,585

ii. Reserved shares

Balance at start of year

(8,050,000)

(4,435)

(5,300,000)

(3,500)

Movements during the year:-

- Share issue - long-term incentive plan

(2,750,000)

(935)

On issue at end of year

(8,050,000)

(4,435)

(8,050,000)

(4,435)

Total contributed equity

148,882,969

34,673

147,384,080

34,150

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 2017 financial year of 1.2 cents
per ordinary share amounting to $1,883,196 (2016: $1,865,209) and a special dividend in respect of the 2017 financial
year of 7.0 cents per ordinary share amounting to $10,985,308 (2016: Nil). No provision has been recognised as at 30
June 2017

Key accounting policies

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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

12. RESERVES

Employee equity benefits reserve

Dividend reserve

Total

a. Employee equity benefits reserve

Balance at start of year

Value of share-based payments provided or which vested during the year

Balance at end of year

2017

2016

$'000

1,224

14,465

15,689

1,088

14,810

15,898

2017

2016

$'000

1,088

136

1,224

761

327

1,088

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 1,498,889 of performance rights issued in a prior financial year vested and were issued to
the Managing Director & Chief Executive Officer and other senior executives of the Group as follows:

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 19 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.

Key accounting policies

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 as well as 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).

No. of shares

Vesting period

Issue price

Fair value at
issue date

14. INTEREST-BEARING RECEIVABLES

650,000

848,889

3 years

$0.360

$0.340

$0.320

$0.302

Managing Director

Senior Executives

b. Dividend reserve

Balance at start of year

Dividends paid

Transfer from current year profits

Balance at end of year

13. INTEREST-BEARING LIABILITIES

Current

Receivables finance facility - Insurance Premium Funding

Equipment hire and software finance liabilities

Total

2017

2016

$'000

14,810

(5,136)

4,791

17,979

(3,169)

14,465

14,810

2017

2016

$'000

83,987

84,013

Current

Loan receivables - Insurance Premium Funding

Provision for impairment - collective

Provision for impairment - specific

Loan receivables - Investment advisers

Provision for impairment - specific

Total current interest-bearing receivables

Non-current

Loan receivables - Investment advisers

Convertible loans

Provision for impairment - specific

Total non-current interest-bearing receivables

2017

$'000

2016

$'000

435

(90)

345

711

1,426

(495)

1,642

126,160

(245)

(275)

125,640

328

(120)

208

125,848

891

(431)

460

a. Terms and conditions
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 were secured through charges over assets, by guarantees, or by
retention of financial advice fees.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017
51

b. Impairment of loan receivables
Impairment expense amounts are included in the Statement of Profit or Loss and Comprehensive Income under
‘Other general and administrative expenses’.

Allowance for Impairment

Opening Balance

Movement in the allowance is as follows

Adjustment for disposal of subsidiary

Allowance for impairment

Bad debts written-off (gross)

Closing balance

Receivables impairment expense

Impairment expense

Bad debts (recovery)/written-off directly

Amounts recovered against debts previously written-off

Total expense

2017

$'000

2016

$'000

1,071

1,286

(522)

585

134

1,094

(1,309)

1,071

1,101

(7)

(492)

602

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

Total of loan receivables with allowance

Specific allowance for impairment

Non-accrual loans included in loan receivables (net)

Interest foregone on non accrual loans

2017

$'000

2016

$'000

1,373

(275)

1,098

“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 were not brought to account as income
unless actually received.

An ageing analysis of loan receivables is provided in note 19(b)(iii).

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 19.

The Group subscribed to $5m in a convertible loan in
Australian Life Development Pty Ltd (ALD) that will
provide seed funding to the ALD business. The first
advance of $1.25m was made in February 2017 with the
remaining amount of $3.75m transferred in July 2017 on
achievement of certain milestones.

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.

Convertible notes
Convertible notes are initially recognised at cost,
including acquisition charges associated with the loan.
Subsequent to initial recognition, the convertible loans
are measured at amortised cost using the effective
interest method, less any impairment. Interest income is
recognised by applying the effective interest rate.

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.

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.

As part of the convertible note arrangements, the Group
has also been granted four call options of $1.75m each
(totalling $7.0m) to purchase shares which expire by
January 2020. Based on results achieved, a potential
equity interest of up to 80% by the end of the expiration
period could materialise.

e. Convertible Notes

Australian Life Development (ALD)

Key accounting policies

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. 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.

ii. 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201753

15. INVESTMENTS

16. PROPERTY, PLANT AND EQUIPMENT

Investments

Total investments

2017

2016

$'000

1,632

R Financial Educators (RFE)
In October 2016, an investment of $1.5m was made in RFE which represents a 15% stake of equity.

An investment in Ginger Group was also made during the year for $0.1m which increased the Group’s equity interest
to 50%.

Key accounting policies

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.

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.

Cost

At 1 July 2015

Additions

Disposals

At 30 June 2016

Additions

Disposals

At 30 June 2017

Depreciation and impairment

At 1 July 2015

Depreciation charge for the year

Disposals

At 30 June 2016

Depreciation charge for the year

Disposals

At 30 June 2017

Net carrying value

At 30 June 2017

At 30 June 2016

Leasehold Improvements

Plant & Equipment

Total

$’000

1,677

364

(39)

2,002

(16)

1,986

616

710

(79)

1,247

275

1,522

464

755

3,206

4,883

(140)

3,115

213

(542)

413

(179)

5,117

213

(558)

2,786

4,772

2,187

263

(21)

2,429

186

(341)

2,274

512

686

2,803

973

(100)

3,676

461

(341)

3,796

976

1,441

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201755

Key accounting policies

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

De-recognition

2 – 7 years

Lease term

5 years

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.

17. INTANGIBLE ASSETS

a. Reconciliation of carrying amounts at the beginning and end of the year

Goodwill

Software

Network &
Client Lists

Total

$'000

Period ending 30 June 2017

At 1 July 2016 net of accumulated amortisation
and impairment

Disposals

Additions

Amortisation

2,132

(1,176)

337

(141)

(88)

1,362

347

(557)

3,831

(1,317)

362

(645)

At 30 June 2017 net of accumulated
amortisation and impairment

956

123

1,152

2,231

At 30 June 2017

Cost

Accumulated amortisation and impairment

Net carrying value

Year ending 30 June 2016

At 1 July 2015 net of accumulated amortisation
and impairment

Additions

Amortisation

At 30 June 2016 net of accumulated
amortisation and impairment

At 30 June 2016

Cost

Accumulated amortisation and impairment

Net carrying value

1,209

(253)

956

2,132

3,786

10,372

(3,663)

(9,220)

123

1,152

774

103

(540)

2,039

(677)

15,367

(13,136)

2,231

4,945

103

(1,217)

2,132

337

1,362

3,831

2,385

(253)

2,132

3,913

(3,576)

337

10,025

(8,663)

1,362

16,323

(12,492)

3,831

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201757

b. Description of the Group’s intangible
assets

i. Goodwill

Cash generating units (‘CGU’)

The Premium Funding business was sold during the
year, resulting in the release of goodwill of $1,176,000.

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.

Other CGUs 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 2017 of $1,152,000 (2016: $1,362,000).

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 there
were no indicators of impairment in any CGUs and
goodwill only exists within the Centrepoint Alliance
Lending Pty Ltd CGU and Ventura Investment
Management Limited CGU, impairment testing was
only performed for these 2 CGUs.

Management is of the view that core assumptions
such as cost of equity and terminal growth rate are
the same across these 2 CGUs.

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 1.00% (2016: 2.50%)

• Cost of equity: 12.35% (2016: 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 CGUs.

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 4 years.

• Cash flows associated with remaining advisers

and clients are inflated only at CPI with no growth
assumed.

• Cost of equity: 12.35% (2016: 12.35%)

The testing resulted in no impairment losses (2016:
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 $86,463 (2016: $248,614).

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.

Key accounting policies

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.

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

2.5 years

Network and Client Lists

5 – 15 years

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.

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.

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 disposed in these circumstances
is measured based on the relative values of the
disposed operation and the portion of the cash-
generating unit retained.

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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201718. DISCONTINUED OPERATIONS

On 30 December 2016, the Group completed the sale of Centrepoint Alliance Premium Funding (CAPF) at which
point it met the criteria for being classified as discontinued operations.

CAPF was a separate operating and reportable segment of the Group in prior reporting periods (refer to Note 3
Segment information). This operating segment was not previously classified as held for sale or as a discontinued
operation. The comparative Statements of Comprehensive Income of the Group have been restated to show
discontinued operations separately from continuing operations.

a. Analysis of profit for the year from discontinued operations
The results set out below represent the discontinued operations of CAPF.

Net operating income

Total expenses

Profit before income tax

Income tax expense

Net profit from discontinued operations

Gain on sale of discontinued operations before tax

Income tax benefit associated with sale

Gain on sale of discontinued operations after tax

Total net profit from discontinued operations

Attribute to owners

Non-controlling interests

2017

$'000

2016

$'000

5,285

(3,019)

2,266

(669)

1,597

5,035

6,632

9,110

(6,899)

2,211

(702)

1,509

b. Effect of disposal on the financial position of the Group
The assets and liabilities of CAPF discontinued operations removed from the Group’s balance sheet at the date that
control was lost (30 December 2016) is set out below. In line with accounting standard requirements comparative
information of the Group’s balance sheet for CAPF has not been restated.

ASSETS

Cash and cash equivalents

Trade and Other Receivables

Interest-Bearing Receivables

Other Assets

Property, Plant & Equipment

Intangible Assets

Deferred Tax Asset

TOTAL ASSETS

LIABILITIES

Trade and other payables

Interest-Bearing Liabilities

Provisions

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed Equity

Retained earnings

TOTAL EQUITY

c. Cash flows provided by/(used) from discontinued operations

Net cash flows provided by operating activities

Net cash flows used in investing activities

Net cash flows used in financing activities

Net change in cash and cash equivalents

Cash & cash equivalents at the beginning of the year

Cash & cash equivalents at the end of the period

2017

$'000

2016

$'000

7,291

122

143,088

4,151

168

145

390

125,701

3,455

144

121

408

155,355

129,858

15,458

125,000

607

141,065

26,279

83,988

791

111,058

14,290

18,800

12,500

1,790

14,290

2017

$'000

13,365

(142)

(6,000)

7,223

7,252

12,500

6,300

18,800

2016

$'000

4,282

(35)

(4,350)

(58)

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201761

19. FINANCIAL RISK MANAGEMENT

iii. Ageing analysis

At reporting date, the ageing analysis of receivables is as follows:

Ageing Analysis

Total

0-30
Days

31-60
Days

2017

61-90
Days

PDNI

61-90
Days

+91 Days

PDNI

$'000

Trade receivables

11,362

11,066

Loan receivables - Adviser

1,146

157

266

(28)

486

495

Ageing Analysis

Total

0-30
Days

31-60
Days

2016

61-90
Days

PDNI

61-90
Days

+91 Days

PDNI

$'000

Trade receivables

11,696

11,094

Loan receivables - IPF

126,160

124,076

Loan receivables - Adviser

1,219

167

744

141

274

256

430

232

588

578

431

* Past due not impaired (PDNI)

** Considered impaired (CI)

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 14.

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.

A risk assessment process was 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
was assessed in terms of total exposure risk to the
customer concerned, pre-determined limits were
applied to ensure appropriate analysis and approval
procedures were applied.

Concentration levels of loan assets were monitored
continuously to ensure that there are no significant
concentrations of credit risk within the Group. Loans
were provided to a large number of customers who
are generally not related.

ii. 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.

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 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201763

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 below. 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.

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.

At reporting date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk:

2017

Fixed

Variable

Weighted average
effective interest
rate

≤ 6
Months

> 6
Months

$'000

1.59%

24,517

6,725

11.96%

182

24,699

2016

964

1,017

1,981

6,725

Weighted average
effective interest
rate

Fixed

Variable

≤ 6
Months

> 6
Months

$'000

3.12%

125

10,067

Financial Assets

Cash and term deposits

Loan receivables - investment advisers

Security deposits

Net Exposure

Financial Assets

Cash and term deposits

Loan receivables - insurance premium funding

10.97%

51,022

75,138

Loan receivables - investment advisers

Security deposits

15.31%

240

979

1,778

51,387

77,895

10,067

Financial Liabilities

Receivables finance facility - insurance premium
funding

3.25%

83,987

Equipment hire and software finance

3.25%

84,013

Net Exposure

(32,626)

77,895

10,067

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.

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 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.

Financial Assets

≤ 6 Months

6-12 Months

1-5 Years

Total

$’000

$'000

2017

Cash and term deposits

Trade and commissions receivable

Loan receivables - investment advisers

Security deposits

Financial Liabilities

Trade and other payables

Other liabilities

31,242

11,234

181

42,662

9,109

9,125

139

254

393

(11)

711

1,017

1,717

252

31,242

11,362

1,146

1,022

44,772

9,109

284

9,393

Net Maturity

33,537

377

1,465

35,379

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201765

Financial Assets

≤ 6 Months

6-12 Months

1-5 Years

Total

$’000

$'000

2016

Cash and term deposits

Trade and commissions receivable

Loan receivables - insurance premium funding

Loan receivables - investment advisers

Security deposits

Financial Liabilities

Trade and other payables

Other liabilities

Receivables finance facility

Equipment hire and software finance

Net Maturity

10,192

11,450

51,022

245

730

245

75,138

73,639

75,471

34,534

37,912

72,563

1,076

46,075

46,166

29,305

886

1,048

1,936

284

1,652

10,192

11,697

126,160

1,219

1,778

151,046

34,534

466

83,987

119,013

32,033

e. Foreign currency risk
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate
fluctuations arise.

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) at 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 small business loans adjusted using quoted BBSW
interest rates to reflect the average remaining term of the loans as at 30 June 2017.

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 $11,460 (2016: $377,000).

For variable rate loans, excluding impaired loans, fair value approximates the carrying amount as they are repriced
frequently.

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.

Key accounting policies

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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017
67

20. PROVISIONS

Current

Provision for adviser client claims

Provision for employee entitlements

Property make good

Onerous lease

Total

Non-current

Provision for adviser client claims

Provision for employee entitlements

Property make good

Onerous lease

Total

2017

2016

$'000

4,589

3,093

255

8,020

182

232

590

4,743

3,057

429

8,312

706

352

572

1,630

2017

2016

$'000

a. Movement in provision for adviser client claims

Opening balance

4,743

7,300

b. Movement in provision for employee benefits

Opening balance

Movement in the provision is as follows:

Provision for year

Reduction resulting from re-measurement without cost

Leave and other employee benefits paid

Closing balance

c. Movement in provision for property make good

Opening balance

Movement in the provision is as follows:

Provision for year

Disposal of subsidiary

Closing balance

Movement in the provision is as follows:

Claims provisioning expense during the period

Claims settlements & fees paid (net of recoveries)*

Closing balance

* Movement excludes $43k (2016: $78k) from claims arising from advice post 30 June 2010.

4,150

(4,216)

4,677

174

(2,731)

4,743

d. Movement in provision for onerous lease

Opening balance

Movement in the provision is as follows:

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 Group makes a specific
provision for claims arising from advice provided prior to 1 July 2010.

During the financial period, the Group changed the methodology used to estimate the provision. In prior
periods, a general provision was maintained based on an actuarial model of past claims, reviewed annually by
independent actuaries. A specific provision has been established based on the best estimate of all open claims
and an allowance for claims not reported. The change in methodology was adopted as the number of open
claims and the incidence of new claims is expected to continue to reduce over time. The statute of limitations
provides a general limitation period of 6 years from the time a cause of action arises to bring legal proceedings
and this has the impact of reducing and ultimately diminishing the value of new claims.

The impact of the change in methodology was an increase in the claims provision of $3,698,300.

Claims are expected to be reported and resolved by approximately 2021. 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 year

Onerous lease unwind

Sub-lease reduction

Closing balance

Provision for onerous lease contract
In the previous financial year, the Gold Coast office was consolidated from two floors to one and an onerous contract
was created for the unused space. This resulted in the creation of an onerous lease provision for $1,001,000.

During the year, management secured a tenant to sub-lease the unused space in the Gold Coast office for the
remaining duration of the lease, being to October 2018. As a result, the onerous lease provision was reduced by
$134,667 in the current period and this benefit was included in property expenses. The remaining amount of the
onerous lease provision is split between a current provision of $254,882 and non-current provision of $87,521.

2017

2016

$'000

3,763

3,515

2,954

(3,442)

3,275

2,885

(133)

(2,504)

3,763

2017

2016

$'000

435

551

(120)

315

(116)

435

2017

2016

$'000

1,001

(523)

(135)

343

1,001

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

21. 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 a specific provision
as described in Note 20.

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.

There were no other contingent liabilities at reporting date.

Key accounting policies

Provisions and employee benefits

i. Provisions

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-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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201722. REMUNERATION OF AUDITORS

The primary auditor of Centrepoint Alliance Limited was Deloitte Touche Tohmatsu.

Amounts received or due and receivable by Deloitte Touche Tohmatsu

Audit of the financial report of the entity and other entities

in the consolidated group

224,074

232,451

2017

2016

$'000

Other services in relation to the entity and other entities

in the consolidated group

Taxation services - Deloitte Touche Tohmatsu

Other regulatory audit services

Amounts received or due and receivable by other audit firms for:

Audit fees - managed funds & international businesses

96,598

61,132

381,804

53,220

87,108

47,554

367,113

79,241

23. INFORMATION RELATING TO CENTREPOINT
ALLIANCE LIMITED (THE ‘COMPANY’)

The Consolidated Financial Statements of the Company are:

Current assets

Non-current assets

Current liabilities

Net Assets

Issued capital

Employee equity benefits reserve

Dividend reserve

Accumulated profit

Total Shareholder Equity

Net profit after tax of the parent entity

Total comprehensive income of the parent entity

2017

2016

$'000

54,939

8,370

(39)

63,270

37,934

13,971

11,365

63,270

11,285

41,195

17,144

(373)

57,966

37,411

1,089

14,594

4,872

57,966

4,791

At reporting date the Company has given nil guarantees to external parties (2016: $45,804).

Contractual operating lease expenditure commitments of the Company are as follows:

Not later than one year

Later than one year but not later than five years

Total

2017

2016

$'000

1,091

740

1,831

1,031

1,831

2,862

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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017

24. RELATED PARTY DISCLOSURES

a. Information relating to subsidiaries

Name

Centrepoint Funding

Country of
Incorporation

Ownership
Interest

2017

2016

Principal Activity

Centrepoint Alliance Lending Pty Ltd

Australia

100%

100% Mortgage broker / aggregator

Centrepoint Alliance Premium Funding Pty Ltd

Australia

Alliance Premium Funding Limited

New Zealand

100% Insurance premium funding

Licensee & Advice Services

Alliance Wealth Pty Ltd

Australia

100%

100% Financial advice

Associated Advisory Practices Pty Ltd

Australia

100%

100% AFSL licensee support services

xseedwealth pty ltd (formally Alliance Wealth &

Protection Pty Ltd)

Australia

100%

100% Salaried advice

Professional Investment Services Pty Ltd

Australia

100%

100% Financial advice

Funds Management & Administration

Investment Diversity Pty Ltd

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

Australia

100%

100% Service company

Centrepoint Wealth Pty 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

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 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties
(2016: 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:

Short-term employee benefits

Post-employment benefits

Long-term benefits

Share-based payments

Termination/resignation benefits

Total compensation

2017

2016

$'000

2,217

111

1,572

149

361

2,328

2,088

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.

Professional Accountants Pty Ltd

Australia

100%

100% Loans to adviser network

ii. Centrepoint Alliance Employee Share Plan (‘CAESP’)

Advisers Worldwide (NZ) Limited**

New Zealand

100%

100% Dormant

Ausiwi Limited**

New Zealand

100%

100% Dormant

Professional Investment Holdings (NZ) Limited**

New Zealand

Professional Investment Services (NZ) Limited**

New Zealand

Professional Lending Services Limited**

New Zealand

R Financial Educators Pty Ltd

Australia

43%

38%

15%

Ginger Group Financial Services Limited

New Zealand

50%

** Currently under Solvent Voluntary Liquidation

43% Dormant

38% Dormant

Business partnering/ Financial

advice

Financial advice

b. Ultimate parent
The ultimate holding company is Centrepoint Alliance Limited, a company incorporated and domiciled in Australia.

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.

b. Recognised share-based payment expenses

Expense arising from equity-settled share-based payment transactions under the
CAESP

Expense arising from performance rights

Total

2017

2016

$'000

659

(523)

136

377

(50)

327

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 201775

c. Movements during the year
All current option awards are fully vested at reporting date. There are 8,050,000 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
which were issued during the year.

Key accounting policies

Share-based payment transactions

i. Equity settled transactions:

2017

2016

WAEP*

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).

i. Shares under the CAESP

Outstanding at beginning of period

10,885,001

0.19

5,585,001

New share awards

5,300,000

Forfeited during the period

(2,835,001)

0.21

Outstanding at end of period

8,050,000

0.18

10,885,001

0.17

0.21

0.19

ii. Options under CAESOP

Outstanding at beginning of period

400,000

0.40

400,000

0.40

Issued during the period

Expired during the period

Outstanding at end of period

iii. Performance rights

Outstanding at beginning of period

Issued during the period

Vested during the period

Expired during the period

Outstanding at end of period

(400,000)

3,566,666

3,750,000

(1,498,889)

(2,067,777)

3,750,000

400,000

0.40

3,700,000

(133,334)

3,566,666

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.

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.

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. the grant date fair value of the award;

ii. 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

iii. 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.

Notes to the Consolidated Financial Statements Annual Report 30 June 2017Notes to the Consolidated Financial Statements Annual Report 30 June 2017
Notes to the Consolidated Financial Statements Annual Report 30 June 2017

Directors' Declaration Annual Report 30 June 2017

26. EVENTS AFTER THE REPORTING PERIOD

The following matters have occurred subsequent to the year end:

On 6 July 2017, the Group subscribed to a convertible loan of $1m in RFE which represents a 10% stake in equity if
converted.

On 7 July 2017, the Group paid the balance of the convertible loan for ALD of $3.75m.

On 24 August 2017, the Directors of Centrepoint Alliance Limited declared a final dividend on ordinary shares in respect of
the 2017 financial year. The dividend is to be paid out of the dividend reserve. The total amount of the dividend is $1,883,196
which represents 1.2 cents per share and is fully franked at the corporate income tax rate of 30%. The record date is 25
September 2017 and payment date is 9 October 2017.

On 24 August 2017, the Directors of Centrepoint Alliance Limited declared a special dividend on ordinary shares in respect
of the 2017 financial year. The dividend is to be paid out of the dividend reserve. The total amount of the dividend is
$10,985,308 which represents 7.0 cents per share and is fully franked at the corporate income tax rate of 30%. The record
date is 25 September 2017 and payment date is 9 October 2017.

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.

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 2017 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 2017

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 ended 30 June 2017.

On behalf of the Directors:

A. D. Fisher
Chairman

24 August 2017

Partnering
for growth

Centrepoint Alliance Limited
ABN 72 052 507 507

Level 9, 10 Bridge St, Sydney NSW 2000

+61 2 9921 6900 | centrepointalliance.com.au

ASX Additional Information Annual Report 30 June 2017

80
80

Additional Information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current at 26 September 2017.

1. CLASS OF SECURITIES AND VOTING RIGHTS

a. Ordinary shares
Ordinary shares of the Company are listed (quoted) on the ASX. There are 1,697 holders of ordinary shares, holding
156,932,969 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

No. of ordinary shareholders

No. of performance right holders

Size of holding

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,000 and over

The number of shareholdings held in less than marketable parcels is 271.

3. SUBSTANTIAL SHAREHOLDERS

The names of substantial holders in the Company who have notified the Company in accordance with section 671B of
the Corporations Act 2001 are set out below:

Ordinary Shareholders

TIGA Trading Pty Ltd

Adam Smith Asset Management Pty Ltd

River Capital Pty Ltd

Fully paid

No. of Shares

41,596,497

10,069,911

5,689,719

4. TWENTY LARGEST HOLDERS OF QUOTED EQUITY
SECURITIES

Ordinary Shareholders

1 UBS Nominees Pty Ltd

2 HSBC Custody Nominees (Australia) Limited

Fully paid

No. of Shares

% Held

32,471,759

20.69

29,779,676

18.98

3 Citicorp Nominees Pty Limited

9,589,344

4 Centrepoint Alliance Services Pty Ltd

8,050,000

5 RBC Investor Services Australia Nominees Pty Ltd

6 J P Morgan Nominees Australia Limited

7 One Managed Invt Funds Ltd

8 National Nominees Limited

7,460,831

5,388,769

4,943,217

2,931,374

9 Mr Richard John Nelson + Mrs Kaye Marie Nelson

2,729,660

310

473

217

598

10 Griffin Fund Management Pty Ltd

11 HSBC Custody Nominees (Australia) Limited - A/C 2

12 Optimar Pty Ltd

13 Supertco Pty Ltd

14 Soba Pty Ltd

15 Waylex Pty Ltd

16 Fetterpark Pty Ltd

1,991,231

1,851,405

1,792,008

1,500,000

1,352,652

1,275,193

1,200,000

17 Mr Daniel Baron Droga + Mrs Lyndell Droga

1,000,000

18 Mr Daryl John Griffiths

19 Edsonmere Pty Ltd

20 Austin Superannuation Pty Ltd

909,500

829,600

739,075

117,785,294

75.05

6.11

5.13

4.75

3.43

3.15

1.87

1.74

1.27

1.18

1.14

0.96

0.86

0.81

0.76

0.64

0.58

0.53

0.47

Independent Auditor's Report Annual Report 30 June 2017

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

Independent Auditor’s Report to the
members of Centrepoint Alliance Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Centrepoint Alliance Limited (the “Company”) and
its subsidiaries (the “Group)”, which comprises the consolidated statement of financial
position as at 30 June 2017, the consolidated statement of profit or loss and
comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:

(i)

(ii)

giving a true and fair view of the Group’s financial position as at 30 June 2017 and
of its financial performance for the year then ended; and

complying with Australian Accounting Standards and the Corporations Regulations
2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are
in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our
other ethical responsibilities in accordance with the Code.

further described

We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of the Company, would be in the same terms if given
to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report for the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited

Key Audit Matter

Provision for adviser client claims

How the scope of our audit responded to the Key
Audit Matter
Our procedures, performed in conjunction with our
actuarial specialists, included but were not limited to:

financial

As disclosed in note 20a, the Group has provided $4.7m
for the estimated cost of resolving adviser client claims
authorised
for
representatives of the Group prior to 1 July 2010. As
disclosed, the Group does not believe it is appropriate to
recognise any provision for financial advice provided post
1 July 2010.

provided

advice

The determination of the provision for adviser client
claims requires management to exercise significant
judgement to estimate the likely value of claims already
reported and the estimated volume and value of
unreported claims.

Recoverability of deferred tax assets

As disclosed in note 5d and 5e, the Group has recognised
deferred tax assets of $9.0m including $4.5m of revenue
tax losses that the Group expects to utilise against future
taxable profits. In addition Group has unrecognised
revenue losses of $29.6m and capital losses of $36.0m.

The ability to recognise deferred tax assets is dependent
on the estimation of future taxable profits against which
the deferred tax assets can be utilised. Significant
judgement is required in forecasting future taxable profit.

In addition, the Group makes an estimate of the extent
of carried forward losses that can be utilised against
future taxable profits due to the available fraction concept
set out in the Income Tax Assessment Act 1997. This
applies due to changes in the group structure over time.

•

the

provisioning

process
Understanding
management undertook to estimate the claims
provision including management’s process to
assess whether a provision is required for
financial advice provided post 1 July 2010.

Evaluating controls over the completeness of the
data in the claims database.

Selecting a sample of open claims and agreeing
details to underlying records and external
correspondence to assess the accuracy of the
data used to estimate the cost of settling open
claims and the value and volume of unreported
claims.

Selecting a sample of claims paid to evaluate
historical forecasting accuracy and the accuracy
of the movement in the provision due to settled
claims.

Challenging the core assumptions applied by
management in estimating claim volume for
unreported claims and value per claim with
regard to historical claims experience.

We have also assessed the appropriateness of the
disclosures included in note 20a to the financial report.

Our procedures, performed with the support of our tax
specialists, included but were not limited to:

•

the

reasonableness

(including but not

Challenging
of
management’s estimation of future taxable
the
profits
reasonableness of estimates of growth
in
financial advice
and assessing
revenues)
whether these estimates were consistent with
the forecasts used as part of the impairment
testing of goodwill and intangible assets.

limited

Evaluating the competence, capabilities and
objectivity of management’s external tax expert
used to assess the available fraction.

Challenging the appropriateness of the available
fraction applied to estimate the extent to which
carried forward tax losses can be recognised as
a deferred tax asset.

We have also assessed the appropriateness of the
disclosures included in note 5(d) and 5(e) to the financial
report.

Independent Auditor's Report Annual Report 30 June 2017

Other Information

The directors are responsible for the other information. The other information comprises
the information included in the Group’s annual report for the year ended 30 June 2017,
but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of
the Group to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to
do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We
also:

•

Identify and assess the risks of material misstatement of the financial report,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the
underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
financial report. We are responsible for the direction, supervision and performance
of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were
of most significance in the audit of the financial report of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.

Independent Auditor's Report Annual Report 30 June 2017

CORPORATE DIRECTORY

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 15 to 23 of the Directors’
Report for the year ended 30 June 2017.

In our opinion, the Remuneration Report of Centrepoint Alliance Limited, for the year
ended 30 June 2017, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.

DELOITTE TOUCHE TOHMATSU

David Rodgers
Partner
Chartered Accountants
Brisbane, 24 August 2017

AUDITOR

Deloitte Touche Tohmatsu
Riverside Centre
Level 25, 123 Eagle Street
Brisbane Queensland 4000
Australia

REGISTERED
ADDRESS

Centrepoint Alliance Limited
Registered address and head office:
Level 9, 10 Bridge Street,
Sydney New South Wales 2001,
Australia

GPO Box 1322,
Melbourne Victoria 3001,
Australia

Telephone:
(within Australia) 1300 557 598
(outside Australia) +61 2 8987 3000

Facsimile: +61 2 8987 3075

Website: www.centrepointalliance.com.au

ANNUAL GENERAL
MEETING

10:30am (Sydney time)
Tuesday, 28 November 2017

Deloitte Touche Tohmatsu
Grosvenor Place,
Level 10, 225 George Street,
Sydney New South Wales
Australia

SECURITIES EXCHANGE
LISTING

Centrepoint Alliance Limited’s shares are listed on
the Australian Securities Exchange (ASX) and
are traded under the ASX code CAF

SHARE REGISTRY

Computershare Investor Services Pty Limited
Level 11, 172 St George’s Terrace,
Perth Western Australia 6000,
Australia

GPO Box 2975,
Melbourne Victoria 3001,
Australia

Telephone:
(within Australia) 1300 763 925
(outside Australia) +61 3 9415 4870

Facsimile: +61 3 9473 2500

Email: web.queries@computershare.com.au
Website: www.computershare.com.au

Centrepoint is well placed
to take advantage of the
anticipated growth in the
wealth management market
and is using technology to
simplify the client experience.

- Alan Fisher, Chairman

1300 557 598
centrepointalliance.com.au

Notes to the Consolidated Financial Statements Annual Report 30 June 2017

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