ANNUAL FINANCIAL REPORT 2021For the year ended 30 June 2021Centrepoint Alliance Limited and its Controlled EntitiesABN 72 052 507 507 Letter from the Chairman
CEO Report
FY21 highlights
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
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Contents. PAGE 2
Annual Report 2021 |
Letter from the Chairman
Letter from the Chairman
Our transformative acquisition of ClearView Advice,
announced after the end of the financial year, will
create scale that will further strengthen our competitive
position. The combined business will include more
than 1,300 advisers and an extended portfolio of
complementary enterprise services and technology
brands. The proposed transaction sees ASX-listed
ClearView Wealth Ltd become a strategic investor in
Centrepoint Alliance, bringing together two strong
brands in the wealth management sector. Shareholders
will have the opportunity to approve the transaction
at the Company’s annual general meeting on
1 November 2021.
On 4 August, Centrepoint Alliance also announced the
appointment of John Shuttleworth as Chief Executive
Officer. I would like to take this opportunity to welcome
John to the Company. As head of our executive team, his
experience and leadership will be critical to Centrepoint
Alliance heading into this next phase of growth.
On 24 August, the Board declared to pay a fully franked
final dividend of 1.0 cent per share on 8 October 2021
based on a record date of 24 September 2021. That
takes dividends paid in relation to the FY21 year to
5.0 cents per share, fully franked.
Throughout the last financial year, management and
staff of Centrepoint Alliance have demonstrated their
capacity to grasp opportunities in what is a challenging
operating environment for the sector. I would like to
thank the team for their ongoing dedication. I would also
like to thank my fellow Board members and shareholders
for their commitment and support over the year.
Alan Fisher
Chairman
Centrepoint Alliance
Dear Shareholders,
As Chair and on behalf of the Board of Directors, it
is my pleasure to present the 2021 Annual Report for
Centrepoint Alliance Limited, a company that commands
an enviable position following a period of significant
industry change.
We are proud to support the advisers and businesses
that make up the Australian financial advice and wealth
management sector. Their contribution is critical to
support Australians navigating the uncertain economic
times ahead and to help preserve and enable the wealth
creation that has been achieved.
Over the last financial year, Centrepoint Alliance has
demonstrated its capacity to support financial advisers
and empower practice owners to focus on their core
business in the face of rising cost and compliance
pressures. More than 2,000 advisers left the profession
in FY21, yet over the same period, Centrepoint Alliance
expanded its network of self-licensed practices and
maintained the number of licensed advisers it supports.
This result reflects very favourably on Centrepoint
Alliance’s ability to respond to the changing needs that
were brought about by the financial services Royal
Commission. The transition to a fee-for-service model
across self-licensed firms is nearing completion, and
the Company has worked hard to retain high-quality
advisers and attract new culturally-aligned professionals.
Investments in technology have opened up our capacity
to create scale while maintaining high levels of service
quality and client satisfaction. With these and other
improvements, the Company has built the foundations
that will underpin its next phase of growth.
Moving forward, our team is focused on leveraging the
competitive position Centrepoint Alliance has built to
realise ongoing and emerging growth opportunities. The
cohort of advisers and practice owners, who are actively
looking to switch licensee solutions providers, represents
a group to who we can readily offer value. We aim to
grow our portfolio implementation solutions business
by focusing on product competitiveness, and we will
continue to invest in the digital infrastructure that will
ensure advisers can remain focused on providing expert
and quality advice.
Source data and further information is
available at centrepointalliance.com.au/FY21
CEO Report
Dear Shareholders,
Welcome to the 2021 Annual Report for Centrepoint
Alliance Limited. In the year to 30 June 2021 (FY21),
our Company strengthened its position as a key
Australian provider of technical, compliance and
business management support to financial advisers
across the country. The Company’s adviser network is
set to grow by more than a quarter, to 1,303 advisers,
with the proposed acquisition of ClearView Advice, as
announced by the Company in August 2021.
In FY21, Centrepoint Alliance delivered results
that defied the challenging industry trends. The
performance of our licensee solutions business
over the year is testament to the value proposition
Centrepoint Alliance offers to self-licensed practices
and to financial advisers. While cost and other
pressures across the industry saw advisers exit the
profession, the Company grew its network of self-
licensed advisers and largely maintained its licensed
authorised representative numbers.
Centrepoint Alliance ended the year with an
additional 16 self-licensed firms, reflecting the growth
opportunity in this market segment and the demand
for our services that support resilient compliance
management frameworks and efficient operations.
Our licensed authorised representative network of
315 advisers at year end compared to 317 at the start
of the year. This result was achieved despite the total
number of advisers dropping by 11.3% over the same
period nationally.
Centrepoint Alliance invested in customer resource
management technology in the year, which delivered
efficiencies and improvements in service delivery
times for advisers. In addition to providing expanded
business intelligence and reporting tools, the
investment delivered a 20% improvement in enquiry
resolution times, with more than nine in ten enquiries
resolved in less than two days.
The transition to a fee-for-service model across our
self-licensed firm network was largely completed by
the end of FY21. This initiative formed an important
part of Centrepoint Alliance’s proactive response
to changes in the sector and realigned revenue-
generating activities to provide greater transparency.
Centrepoint Alliance remains committed to leading
efforts to rebuild trust in the sector in the wake
of the financial services Royal Commission. We
have previously demonstrated how we have made
this a priority and shareholders should expect this
to continue.
CEO Report
| Annual Report 2021
PAGE 3
Our financial performance in FY21 was robust and
featured a return to profitability. Gross revenue grew
6% to $138m, driven by higher advice fees and the
successful integration of Enzumo, the technology
consultancy acquired at the end of FY20. Expenses
declined by 16% on the prior year to $26.5m. Cost
management initiatives reduced management
expenses while the expected wind-down in legacy
claims further reduced outgoings. Earnings before
interest, tax, depreciation and amortisation (EBITDA)
of $3.1m were up significantly from $0.1m in FY20.
These financial improvements allowed us to increase
net profit after tax to $1.8m, up from a loss of $2m in
the prior year.
Looking forward, the Company is well positioned
to further enhance the competitive position it has
established through the significant disruption of recent
years. The transformational acquisition of ClearView
Advice will drive a step change in our capacity to meet
the needs of advisers and firms, and will bring the
Company market-leading services that allow advisers
to focus on their core business. The scale of the Group
post acquisition will provide us with a strong platform
for growth. The transaction is earnings accretive and,
with expected synergies, will result in annualised
EBITDA near $8m.
The business has built a strong foundation for future
growth. The three core pillars underpinning our
strategy are to:
• grow the licensee solutions and build scale and
profitability;
• invest in financial services technology to improve
efficiency and productivity; and
• provide the highest quality portfolio implementation
solutions at the lowest cost.
I commenced with Centrepoint Alliance in August
2021 with a conviction that the Company holds a
market-leading position as the sector emerges from
a period of significant change. The achievements of
FY21 validate this view, and I look forward to updating
shareholders as we continue to deliver on our goals in
the year ahead.
John Shuttleworth
Chief Executive Officer
Centrepoint Alliance
Source data and further information is
available at centrepointalliance.com.au/FY21
PAGE 4
Annual Report 2021
“
Focusing on our core
business has positioned
the Company with a strong
platform for growth that
continues to present an
attractive destination for
advisers. We enter FY22
with a positive outlook for
growth and look forward to
providing quality business
services and support to a
broader range of financial
advice professionals in the
year ahead.
”
FY21 highlights
| Annual Report 2021
PAGE 5
FY21 highlights
Gross Revenue
$139.2m gross revenue,
up on FY20 by
6%
Gross Profit
EBITDA up $3.0m
on FY20 to
$3.1m
Expenses down
Expenses down by 15.7%
from FY20 to
$26.5m
Advice technology
solutions
Cash balance
Closing cash balance of
$11.1m
Enzumo Acquisition
Strong financial turnaround
with NPAT of
$1.8m
3c special and 1c ordinary
Dividend paid 26 February 2021
New offers launched
Enzumo Acquisition
Acquisition of three
ClearView advice subsidiaries
Continued investment in technology
to enhance the scalable service
platform for advisers
PAGE 6
Annual Report 2021 |
Directors’ Report
Directors’ Report
For the Year Ended 30 June 2021
The Directors of Centrepoint Alliance Limited (the Company) present their report together with the financial
statements of the consolidated entity, being the Company and its controlled entities (the Group) for the year
ended 30 June 2021.
Directors
Alan Fisher
BCom, FCA, MAICD
Chairman of the Board,
Independent Non-Executive
Director
Appointed on 12 November
2015.
Experience and expertise
Alan is an experienced corporate adviser and public
company director. He has a proven track record of
implementing strategies that enhance shareholder
value. His main areas of expertise include mergers
and acquisitions, public and private equity raisings,
business restructurings and strategic advice. Alan
holds a Bachelor of Commerce from the University
of Melbourne, is a Fellow of the Institute of Chartered
Accountants Australia and New Zealand and a member
of the Australian Institute of Company Directors.
Georg Chmiel
Diplom-Informatiker, MBA,
CPA (USA), FAICD
Independent Non-Executive
Director, Chairman of the
Group, Audit, Risk and
Compliance Committee
Appointed on 7 October
2016.
Experience and expertise
Georg brings over 25 years of experience in the
financial services industry, online media and real
estate industry.
Previously he was Managing Director and CEO of
iProperty Group, the owner of Asia’s market-leading
network of property portal sites. Georg was also
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
and Chief Financial Officer of REA Group (ASX:REA).
Georg holds a Master of Business Administration
from INSEAD, and Diplom-Informatiker (Computer
Science Degree).
Other Current Directorships
Non-Executive Director and Chairman of IDT Australia
Limited (ASX:IDT).
Other Current Directorships
Executive Director and Chairman of iCar Asia Limited
(ASX:ICQ).
Non-Executive Director and Chairman of Audit and
Risk Committees of Bionomics Limited (ASX:BNO) and
Thorney Technologies Limited (ASX:TEK).
Non-Executive Director of Simavita Limited (formerly
ASX:SVA).
Non-Executive Director of PropTech Group Limited
(ASX:PTG).
Non-Executive Director of BUTN Limited (ASX:BTN)
Former Directorships
Nil
Special responsibilities
Chairman of the Board
Former Directorships
Non-Executive Director of Mitula Group Limited
(ASX: MUA) (from 18 January 2017 to 8 January 2019).
Special responsibilities
Chairman of the Group Audit, Risk and Compliance
Committee
Interests in shares and options
Nil
Interests in shares and options
800,000 shares
Directors’ Report
| Annual Report 2021
PAGE 7
Martin Pretty
Graduate Diploma of
Applied Finance, BA, CFA,
GAICD
Appointed on 27 June 2014.
Alexander Beard
BCom, FCA, MAICD
Appointed on 1 January
2020.
Experience and expertise
Martin brings to the Board over 19 years’ experience
in the finance sector. The majority of this experience
was gained within ASX-listed financial services
businesses including Hub24 Limited, Bell Financial
Group Limited and IWL Limited. Martin has also
previously worked as a finance journalist with the
Australian Financial Review.
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 and a graduate of the Australian
Institute of Company Directors.
Other Current Directorships
Non-Executive Chairman of Scout Security Limited
(ASX:SCT) and Non-Executive Director of Spacetalk
Limited (ASX:SPA).
Experience and expertise
Alexander has a long and distinguished career as a
chief executive of ASX-listed CVC Limited and as a
director of numerous public companies over the past
18 years.
Alexander is a professional investor, Fellow of the
Institute of Chartered Accountants Australia and
New Zealand and a member of the Australian
Institute of Company Directors.
Other Current Directorships
Non-Executive Director of Probiotec Limited
(ASX:PBP) and Pure Foods Tasmania Limited
(ASX:PFT). Chairman of HGL Limited (ASX:HNG)
and FOS Capital Limited (ASX:FOS).
Special responsibilities
Chairman of the Nomination, Remuneration and
Governance Committee
Interests in shares and options
555,000 shares directly held
10,443,296 shares indirectly held
Interests in shares and options
105,000 shares
PAGE 8
Annual Report 2021 |
Directors’ Report
Company Secretary
Dr Marty Carne
BM, BBus, LLB, LLM, DBA,
GDLP, GCAIF
Chief Legal Officer and
Company Secretary
Kim Clark
Certificate III in Financial
Services, Graduate
Certificate in Commerce,
Certificate of Banking
Company Secretary
Appointed on 23 September
2020.
Experience and expertise
Experience and expertise
Kim is the Head of Corporate Services for Boardroom
Pty Ltd’s Queensland office and currently acts as
Company Secretary for various ASX listed and unlisted
companies in Australia. Kim is an experienced business
professional with 21 years’ experience in banking and
finance and six years as in-house Company Secretary
of an ASX 300 company prior to joining Boardroom in
April 2013.
Marty joined the Company in April 2016 and holds
executive responsibility for Legal, Professional
Standards, Risk and Claims Management.
Marty has over 27 years’ experience in regulation and
financial services.
Marty has held senior positions with a range of
financial services companies and the Australian
Securities and Investments Commission. Marty has
strong commercial and client-centric skills and
experience in the delivery of strategic legal advice and
risk management.
Marty was appointed as joint Company Secretary on
27 April 2017.
Marty holds qualifications in law and business and is a
member of the Queensland Law Society.
Julian Rockett
BLaw (LLB), BArts (Social Science), Graduate
Diploma of Legal Practice (GDLP)
Company Secretary
Appointed on 27 November 2019. Resigned on
23 September 2020.
Experience and expertise
Julian is a corporate lawyer and Company Secretary.
His legal background includes advising on initial
public offerings, mergers and acquisitions, registered
training organisations and substantial capital raising for
ASX-listed companies.
His corporate secretarial experience for ASX-listed
companies includes representing fin-tech, artificial
intelligence, medical technology, logistics, equity,
resources, mining, building, energy, media and financial
advisory companies.
Directors’ Report
| Annual Report 2021
PAGE 9
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).
Board of Directors
Nomination, Remuneration
and Governance Committee
Group Audit, Risk and
Compliance Committee
Held
Attended
Held
Attended
Held
Attended
8
8
8
8
8
8
8
8
4
4
N/A
N/A
4
4
N/A
N/A
N/A
N/A
4
3
N/A
N/A
4
4
A.D. Fisher
M.P. Pretty
G. Chmiel
A.D.H. Beard
Principal Activities
Centrepoint Alliance Limited and its controlled entities
operates in the financial services industry within
Australia and provides a range of financial advice and
licensee support services (including licensing, systems,
compliance, training and technical advice) and
investment solutions to financial advisers, accountants
and their clients across Australia, as well as mortgage
aggregation services to mortgage brokers.
Operating and
Financial Review
Operating Review
Centrepoint Alliance Limited has achieved solid
performance during a challenging year. The
Group continues to be well positioned in a rapidly
evolving advice industry. The transition to a new
fee for service model is largely complete, and
investments have been made building the capability
of teams and scalable service platforms. The positive
result for the year is attributable to the strong
performance of the licensee solutions business,
diligent expense management and an expected run-
off in legacy funds and administration.
Over the 2021 financial year, the number of financial
advisers operating in the market continued
to decline as pressure on operating margins
and tighter education standards drove advisers
from the industry. Against this backdrop, the Group
finished the year with a total of 315 licensed authorised
representatives, marginally down on 317 in the
prior year.
A large number of advisers continue to express
dissatisfaction with their current licensee, with
intentions to switch over the next 12 months. The
Group is experiencing significant enquiries particularly
from advisers in large institutional licensees. The
Group is well placed to participate in this disruption
by offering a full range of services, delivered to a
consistently high standard within a tight-knit and
supportive advice community.
Extending services to self-licensed firms is a core part
of the Group’s strategy. A growing number of advisers
see self-licensing as an attractive option, however
the regulatory environment is becoming increasingly
complex. The Group is well positioned to assist firms
to run compliant practices and benefit from quality
support services. The Group added 16 new self-
licensed firms during the financial year including three
new wholesale contracts, finishing the year with 149
firms. An additional 23 existing firms were transitioned
to the new fee for service offer. We continue to see
opportunity in the market to attract new firms, with
scope to extend further services to existing firms.
The Group’s revenue from licensee services is
sustainable. The Group’s fees reflect the cost of
providing licensee services. The transition to the new
offer for authorised representatives was completed at
the end of June 2020. The new fee for service model
for self-licensed firms was completed in FY21. Fee
increases did contribute to higher attrition in both
the licensed and self-licensed businesses, but this
has largely run its course. As other participants in the
market have adjusted fees, the risk of being undercut
has reduced. Our pricing in both the licenced and
self-licensed segments is competitive.
PAGE 10
Annual Report 2021 |
Directors’ Report
Service levels remain strong. The Group continued to
invest in delivering service at scale with a high level of
satisfaction. Investment in our underlying technology
and use of Salesforce and Microsoft Azure has assisted
rapid resolution of enquiries, with 93 per cent of
enquiries received being resolved within two days, and
average turnaround times improving by 20 per cent.
Financial Performance and Position
For the financial year ended 30 June 2021, the Group
reported a net profit after tax of $1.8m compared
to a net loss after tax of $2.0m for the financial year
ended 30 June 2020. This is principally a result of an
expense decrease of $4.9m offset by with a revenue
contraction of $1.2m.
The Group continues to invest to strengthen its
compliance capability. Our legal and compliance
team comprise 16 staff dedicated to compliance and
governance functions. The team actively manages
compliance through a robust audit program, key risk
indicator monitoring, policies and standards, and
compliance improvement and education programs.
The Group continued to invest in technology to
enhance the scalable service platform for advisers.
This was done through the upgrade of the CRM
platform, which resulted in improved client satisfaction
as it digitised the enquiry management processes,
therefore enabling the establishment and monitoring
of SLAs across client-facing teams. This resulted in
the ability to deploy business intelligence tools to
automatically generate reports and business insights.
The acquisition of Enzumo in June 2020 has been
successfully embedded. Revenue was broadly
in line with prior year, and total expenses were
down 15% on prior year, driven by prudent cost
management and synergies derived from the Group.
The business provides XPLAN services and solutions
to over 55 Australian Financial Services Licensees
and approximately 900 advice firms reaching
4,000 advisers.
The Funds and Administration business declined
as expected due to the run-off of legacy funds
and administration services. Providing efficient
implementation of advised portfolios remains a
priority. The Group will focus on ongoing partnerships
with market leading providers to ensure advisers
and their clients have access to the highest quality
investments delivered through efficient implemented
portfolio solutions.
The Group has continued to focus on efficiency and
expense management. Operating expenses were
reduced by $4.9m during the year, and expenses
relating to non-recurring prior year claims fell by
$3.6m. The Group achieved savings in employment
costs by removing non-essential management
roles, without compromising key adviser facing and
compliance roles.
30 June
2021
30 June
2020
$’000
$’000
27,057
28,063
(26,518)
1,545
28,800
29,283
(31,452)
(2,169)
1,847
(2,000)
Gross profit from
contracts with
customers
Gross profit
Expenses
Profit/(loss) before tax
Net profit/(loss) for
the year
Gross profit from customer contracts decreased by
$1.7m from the prior year. This is primarily due to the
cessation of platform rebate revenue on 31 December
2020, lower xseedwealth and investment margin
revenue offset in part by an increase in authorised
representative fees, with the final contractual fee
increase to advisers occurring on 1 July 2020. The
Enzumo business acquired in June 2020 generated
$2.5m in revenue during the year.
The decline in expenses of $4.9m is a result of the
Group’s continued focus on cost reduction and
management. The largest savings emanated from
client claims of $3.6m due to the cessation of any
further legacy claims stemming from the Australian
Financial Complaints Authority (AFCA) rules which
ended in June 2020, employment cost savings
of $0.4m (normalised savings of $0.9m including
one-off termination payments) and reduced travel
and entertainment of $0.4m. The Group’s expense
reduction was also driven by the one-off fair value
loss on its loan with RFE of $0.5m recorded at
30 June 2020.
The increase in IT costs of $0.3m and depreciation
and amortisation expense of $0.2m is predominantly
due to the acquisition of the Enzumo business in June
2020 and the impact of AASB 16 on the depreciation
of right-of-use assets pertaining to the Group’s
operating leases.
The Group held net assets at 30 June 2021 of $11.2m
(30 June 2020: $14.9m) and net tangible assets
of $5.2m (30 June 2020: $8.7m) representing net
tangible assets per share of 3.62 cents (30 June 2020:
5.86 cents).
Directors’ Report
| Annual Report 2021
PAGE 11
The Group’s net assets reduced by $3.7m during
the year due to $5.8m of dividends paid in February
2021 offset by $1.8m current year profit and $0.3m
in leave credits from prior year COVID-19 purchased
leave initiative.
The Group held $11.1m in cash and cash equivalents
as at 30 June 2021. Cash receipts during the year
included $3.8m from operations, $2.4m from the
Australian Life Development Pty Ltd (ALD) for loan
repayments, $0.3m on dividend proceeds, $0.1m from
repayment proceeds on RFE convertible loan and
$0.1m interest received.
Cash payments during the year included $5.8m
in dividends paid, $1.2m in claims and $0.8m for
repayment of lease liabilities and finance costs.
Dividends
On 2 February 2021, the Directors of Centrepoint
Alliance Limited declared fully franked dividends
totalling 4.0 cents per share, comprising of 3.0 cents
special dividend and 1.0 cent interim ordinary dividend
in respect of the half year ended 31 December 2020.
The total dividend paid was $5,771,319 (30 June 2020:
nil).
On 24 August 2021, the Directors of Centrepoint
Alliance Limited declared a fully franked ordinary
dividend of 1.0 cent per share in respect of the results
for the year ended 30 June 2021. The total estimated
dividend to be paid is $1,442,830 with 24 September
2021 as the record date and 8 October 2021 as the
payment date.
Shares and Performance Rights
In April 2021, the Board approved the modifications
to the exercise prices of the 7,850,000 CESP 21
performance rights that were issued to Executives and
Senior Management of the Group in the 2019 financial
year. The exercise prices changed from 28.0 cents to
22.0 cents and 32.0 cents to 25.0 cents respectively.
Due to the resignation of senior executives and senior
leaders including the former CEO, there remains
5,150,000 performance rights at 30 June 2021.
The vesting date of these performance rights is 1
September 2021.
There has been no change to the 4,000,000
performance rights that were issued under the
CESP 22.
Significant Changes in the State
of Affairs
There have been no significant changes in state of
affairs of the Group during the year and up to the date
on this report.
Events Subsequent to the Balance
Sheet Date
The Board continued with its strategic review
to seek out and pursue inorganic opportunities.
Consistent with this review, on 24 August, the Group
has entered into a Share Purchase Agreement for
ClearView’s financial advice businesses (ASX Code:
CVW) in exchange for $15.2m, made up of $3.2m in
cash and a strategic 25% equity stake in the Group
(issue price 25c). ClearView financial advice provides
market leading licensing and financial advice support
services. The acquisition will enable the Group to
realise strategic value and synergies between the
two businesses.
John Shuttleworth was appointed Centrepoint
Alliance’s new Chief Executive Officer on 4 August
2021. He is based in the Sydney Head Office. John
has in-depth experience in financial services and has
demonstrated leadership in established and new
businesses and will assist the Group in its next phase
of growth.
The impact of COVID-19 is ongoing and while the
Group has not suffered any material adverse impacts
up to 30 June 2021, it is not practicable to estimate
the potential impact (positive or negative), after the
reporting date. The situation continues to develop
and is dependent on measures imposed by Federal
and State Governments and other countries, such as
maintaining social distancing requirements, quarantine,
travel restrictions and any economic stimulus that may
be provided.
Other than the dividend declared as mentioned
above, there are no other matters or events which
have arisen since the end of the financial year 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 Group
(including COVID-19 considerations) and the expected
results of those operations in future financial years
have been addressed in the Operating and Financial
Review and in the subsequent events disclosure, Note
21. The Directors are not aware of any other significant
material likely developments requiring disclosure.
Environmental Regulation
The Group’s operations are not regulated by any
significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
PAGE 12
Annual Report 2021 |
Directors’ Report
Corporate Governance Statement
and Practices
The Group’s Corporate Governance Statement for
the financial year ended 30 June 2021 was approved
by the Board on 24 August 2021. The Corporate
Governance Statement is available on the Group’s
website: 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, BDO Audit Pty
Ltd, 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 BDO Audit Pty Ltd
during or since the end of the financial year.
Rounding
The Company is a company of the kind referred
to in the Australian Securities and Investment
Commission’s (ASIC’s) Corporation’s (Rounding in
Financial/Directors’ Reports) Instrument 2016/191
dated 24 March 2016, and in accordance with that
Instrument, amounts in the financial report are
presented in Australian dollars and have been rounded
off to the nearest thousand dollars, unless otherwise
stated.
Indemnification and Insurance of
Directors and Officers
During the financial year, the Group 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 Act).
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.
Remuneration Report
| Annual Report 2021
PAGE 13
Remuneration Report
The Remuneration Report for the year ended 30 June 2021 outlines the remuneration arrangements of the Key
Management Personnel of the Group in accordance with the requirements of 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 and Governance Committee (NRGC)
• Employment contracts
• Details of remuneration
• Shareholdings of Key Management Personnel
• Option holdings of Key Management Personnel
• Other transactions with Key Management Personnel and their related parties.
For the purposes of the 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
M.P. Pretty
G.J. Chmiel
Chair and Director (non-executive)
Director (non-executive)
Director (non-executive)
A.D.H. Beard
Director (non-executive)
A.G.R. Benbow
Chief Executive Officer (resigned 28 May 2021)
B.M. Glass
Chief Financial Officer
J.G. Shuttleworth
Chief Executive Officer (appointed 4 August 2021)
There were no further 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 competition 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, internal relativities where appropriate, and
external advice on policies and practices.
Short-term incentives in the form of potential cash bonuses are made available to Executive KMP. Any award is
based on the achievement of pre-determined objectives.
Long-term incentives are made available to certain Executive KMP in the form of performance rights, shares or
options. The Directors consider these to be the best means of aligning incentives of Executive KMP with the
interests of shareholders.
The remuneration of Non-Executive Directors of the Company consists only of Directors’ fees.
PAGE 14
Annual Report 2021 |
Remuneration Report
Group Performance
Shareholder returns for the last five years have been as follows:
GROUP
Net profit/(loss) after tax – ($’000)
EPS (basic) – (cents per share)
EPS (diluted) – (cents per share)
Share price ($)
Dividends paid – (cents per share)
2021
1,847
1.28
1.18
0.22
4.00
2020
2019
2018
restated
(2,000)
(1,576)
(6,884)
(1.35)
(1.35)
0.09
–
(1.06)
(1.06)
0.10
–
(4.62)
(4.62)
0.38
9.40
2017
6,544
4.41
4.11
0.63
3.45
Nomination, Remuneration and 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 Act in terms of appointment and termination. The Company applies the ASX listing rules that specify
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 2021, 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.
Executive Directors (of which there are none) and executives are employed under contracts or agreed
employment arrangements that specify remuneration amounts and conditions.
The Board has introduced an incentive system for Executives and senior employees based on issuing
performance rights 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 KMPs, where they exist, are shown in the succeeding sections.
Remuneration Report
| Annual Report 2021
PAGE 15
Employment Contracts
Details of the terms of employment of the named KMP Executives are set out below:
John Shuttleworth
Chief Executive Officer
Employment period:
4 August 2021
Term:
No term specified
Discretionary incentives:
Short-term incentive
Brendon Glass
Chief Financial Officer
Employment commencement date:
4 June 2020
Term:
No term specified
Discretionary incentives:
Short-term incentive
Eligible from the date of appointment to participate
in the Company’s short-term incentive plan, the terms
of which are at the absolute discretion of the Board.
Eligible to receive a short-term incentive of up to
50% of base salary in respect of each financial year in
which Mr Shuttleworth is employed by the Company.
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.
Required notice by Executive and Company:
Six months
Long-term incentive
Eligible to participate in the Company’s Employee
Share Plan, with the terms of any offer of securities
at the absolute discretion of the Board, and
subject to shareholder approval in the event that
Mr Shuttleworth is appointed as a Director of
the Company.
Required notice by Executive and Company:
Six months.
Termination entitlement:
Statutory entitlements and so much of the total
fixed remuneration as is due and owing on the
date of termination. Also, any short-term incentive
or long-term incentive not vested may be paid or
granted at the discretion of the Board.
PAGE 16
Annual Report 2021 |
Remuneration Report
Angus Benbow
Chief Executive Officer
Employment commencement date:
2 April 2018–28 May 2021
Term:
No term specified
Discretionary incentives:
Short-term incentive
A short-term incentive of $308,750 was paid
in September 2020 in recognition of the CEO’s
achievements and per below:
A short-term incentive to the value of $237,500 at
target (50% of fixed salary) up to a potential STI to a
value of $356,250 (75% of fixed salary).
Due to the CEO’s resignation on 28 May 2021, a
short-term incentive for the 2021 financial year will
not be paid.
Long-term incentive
The 2,700,000 performance rights issued to the CEO
on 29 February 2019 under the Company’s approved
Long-Term Incentive Plan (LTIP) has been forfeited
upon resignation.
Required notice by Executive and Company:
Six months
Termination entitlement:
Statutory entitlements and so much of the total fixed
remuneration as is due and owing on the date of
termination.
This included an ex-gratia payment of $226,653 and a
six-month notice-in-lieu payment of $226,653 paid in
June 2021 upon resignation.
Those Executives that do not meet the KMP definition are not included here.
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Remuneration Report
| Annual Report 2021
PAGE 19
Shareholdings of Key Management Personnel
Shares held in Centrepoint Alliance Limited (number)
Balance
1 July 2020
Granted as
remuneration
On exercise
of options
Net change
of other1
Balance
30 June 2021
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
A.D. Fisher
M.P. Pretty
G.J. Chmiel
A.G.R. Benbow2
A.D.H. Beard
B.M. Glass
–
105,000
800,000
1,198,434
10,998,296
–
Objective
Short-term incentives
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
105,000
800,000
1,198,434
10,998,296
–
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.
Long-term incentives
The objective of long-term incentives (LTI) is to reward executives and certain senior managers
in a manner that aligns remuneration with the creation of shareholder wealth. As such, LTI grants
are only made to executives and certain senior managers 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
Short-term incentives
In August 2017 the Directors approved a new executive STI scheme based on earnings before
interest, tax, depreciation and amortisation (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% (CEO is 50%) of Total
Fixed Remuneration. The Maximum STI payable for executives is 60% (CEO 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
Centrepoint Group results and individual KPIs.
Long-term incentives
LTI awards to executives are made under the executive LTI plans 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.
1. 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. Shares include indirect interests.
2. Resigned during the current financial year.
PAGE 20
Annual Report 2021 |
Remuneration Report
Awards
Long-term incentives
Centrepoint Alliance Employee Share Plan (CAESP17 and CAESP18)
On 21 November 2017, the Board and the CAESPT approved the termination of participants
(including the former Managing Director and Chief Executive Officer and other senior executives)
in the CAESP17 and CAESP18 plans. The participants’ loan shares were purchased by the CAESPT
at $0.59 per share (which was the equivalent to the ASX market close price of CAF shares on
17 November 2017) in accordance with the plan rules.
The LTI awards – CAESP17 and CAESP18, were terminated in the 30 June 2019 financial year.
The 8,050,000 ordinary shares associated with these plans, and legally held by the CAESPT,
were cancelled in 2019 financial year, following approval by shareholders at the 2018 Annual
General Meeting.
Centrepoint Employee Share Plan (CESP19)
The Board approved the grant of 3,750,000 performance rights on 19 December 2016 to the former
Managing Director and Chief Executive Officer and other senior executives of the Group under the
CESP at 51.0 cents per performance right. All of these performance rights have lapsed unvested.
CESP20
On 2 October 2017, the Board approved the grant of 700,000 performance rights to the senior
executives of the Group under the CESP at 41.0 cents per performance right.
As the vesting conditions were not satisfied on the vesting date of 24 September 2020, these
shares lapsed.
CESP21
On 7 February 2019, the Board approved the grant of 6,850,000 performance rights to the
senior executives and other senior leaders of the Group under the CESP at 0.0144 cents per
performance right. The Board approved the grant of 2,700,000 performance rights on 28
February 2019 to the CEO under the CESP at 0.0199 cents per performance right.
These are legally held by the CESPT and not converted into fully paid ordinary CAF shares until
satisfaction of the vesting conditions determined on 1 September 2021 based on the following:
If the absolute Total Shareholder Return (TSR) for the financial year ended 30 June 2021 is:
• Target share price hurdle of 28.0 cents, 50% of the performance rights will vest;
• Stretch share price hurdle of 32.0 cents, 100% of the performance rights will vest.
The VWAP1 at the start of the performance period – being 1 February 2019, was $0.10 for the
awards granted on 7 February 2019.
The VWAP at the start of the performance period – being 25 February 2019, was $0.12 for the
awards granted on 28 February 2019.
In April 2021 modifications made to the CESP21 exercise prices from 28.0 cents to 22.0 cents, and
32.0 cents to 25.0 cents, respectively. Due to resignation of senior executives and senior leaders
including the CEO, there remains 5,150,000 performance rights at 30 June 2021.
CESP22
The Board approved the grant of 4,000,000 performance rights on 20 February 2020 to senior
executives of the Group under the CESP at $0.0579 per performance right.
These are legally held by the CESPT and not converted into fully paid ordinary CAF shares until
satisfaction of the vesting conditions determined on 1 December 2022 based on the following:
If the absolute Total Shareholder Return (TSR) for 30 June 2022 financial year is:
• Target share price hurdle of 18.0 cents, 50% of the performance rights will vest;
• Stretch share price hurdle of 20.0 cents, 100% of the performance rights will vest.
The Volume Weighted Average Price (VWAP) at the start of the performance period –
29 November 2019, was $0.13 for the awards granted on 31 January 2020.
CEO Transitional Terms (short-term and long-term incentives)
The new CEO will be eligible for discretionary annual incentive plans, the terms of which are at
the absolute discretion of the Board. Refer to page 13, Employment Contracts for further details.
1. Volume Weighted Average Price of Centrepoint Shares traded on the Australian Securities Exchange and hi-X Australia during the 10 trading
days prior to and including the start date of the performance period.
Remuneration Report
| Annual Report 2021
PAGE 21
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 – BDO Audit Pty Ltd (2020: 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 2021. The
Independence Declaration which forms part of this report is on page 20.
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.
Fees for the audit or review of the statutory financial report and assurance
services that are required by legislation to be provided by the auditor
Fees for other services
Signed in accordance with a resolution of the Directors.
2021
$’000
360
90
450
2020
$’000
497
60
557
A.D. Fisher
Chair
24 August 2021
PAGE 22
Annual Report 2021 |
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM AMAN TO THE DIRECTORS OF CENTREPOINT ALLIANCE
LIMITED
As lead auditor of Centrepoint Alliance Limited for the year ended 30 June 2021, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Centrepoint Alliance Limited and the entities it controlled during the
period.
Tim Aman
Director
BDO Audit Pty Ltd
Sydney
24 August 2021
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
| Annual Report 2021
PAGE 23
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Low value and variable costs related to property and equipment
13(a)
Revenue
Revenue from contracts with customers
Contractual payments to advisers
Gross profit from contracts with customers
Interest income
Other income
Gross Profit
Expenses
Employee related expenses
Professional services
Depreciation and amortisation
Subscriptions and licences
IT and communication expenses
Marketing and promotion
Travel and accommodation
Expected credit loss expenses
Finance costs
Client claims
Property costs
Fair value loss on financial instrument
Other general and administrative expenses
Profit/(loss) before tax
Income tax (benefit)
Net profit/(loss) for the year
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR
Net profit/(loss) attributable to:
Owners of the parent
Non-controlling interests
Net profit/(loss) for the year
Total comprehensive profit/(loss) attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive profit/(loss) for the year
Earnings/(loss) per share for profit/(loss) attributable to the
ordinary equity holders of the parent
Basic profit/(loss) cents per share
Diluted profit/(loss) cents per share
Note
4(a)
4(a)
4(b)
4(c)
2021
$’000
138,176
(111,119)
27,057
175
831
2020
$’000
130,480
(101,680)
28,800
417
66
28,063
29,283
4(d)
(17,030)
(17,470)
4(e)
13(a)
7.3.2
5(a)
(2,072)
(1,581)
(1,325)
(765)
(526)
(366)
(227)
(143)
(99)
(36)
(5)
–
(2,343)
(26,518)
1,545
(302)
1,847
1,847
(2,379)
(1,368)
(1,401)
(428)
(732)
(306)
(612)
(271)
(57)
(3,608)
(19)
(530)
(2,271)
(31,452)
(2,169)
(169)
(2,000)
(2,000)
1,847
(2,000)
–
–
1,847
(2,000)
1,847
(2,000)
–
–
1,847
(2,000)
Cents
1.28
1.18
Cents
(1.35)
(1.35)
9
9
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with
the attached Notes.
PAGE 24
Annual Report 2021 |
Consolidated Statement of Financial Position
Consolidated Statement of
Financial Position
ASSETS
Current
Cash and cash equivalents
Trade and other receivables
Loan receivables
Other assets
Total current assets
Non-current
Loan receivables
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets and goodwill
Deferred tax assets
Other assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current
Lease liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Equity attributable to shareholders
Non-controlling interests
TOTAL EQUITY
Note
7.1.1
7.1.2
7.1.3
7.1.3
7.1.4
12
13(b)
14
5(c)
7.1.5
7.1.6
15
7.1.6
15
10(a)
11
2021
$’000
2020
$’000
11,130
6,664
1,108
1,024
12,187
7,835
2,448
1,272
19,926
23,742
99
116
295
516
3,084
2,881
114
7,105
27,031
9,814
438
5,170
15,422
52
370
422
15,844
11,187
34,301
6,227
1,199
116
424
954
3,622
2,578
–
8,893
32,635
9,960
708
6,309
16,977
280
527
807
17,784
14,851
34,301
12,918
(29,459)
(32,486)
11,069
118
11,187
14,733
118
14,851
The Consolidated Statement of Financial Position is to be read in conjunction with the attached Notes.
Consolidated Statement of Cash Flows
| Annual Report 2021
PAGE 25
Consolidated Statement of Cash Flows
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
Proceeds from interest bearing loan
Acquisition of intangible assets
Acquisition of property, plant and equipment
Acquisition of subsidiary
Dividends received from investments
Proceeds from convertible loan
Note
2021
$’000
2020
$’000
139,592
143,858
(135,820)
(138,058)
15(a)
6(a)
14.1.1
12
3,772
(1,152)
2,620
131
2,434
(12)
(58)
–
285
140
5,800
(1,705)
4,095
386
2,500
(173)
(37)
(1,500)
–
–
Net cash flows provided by investing activities
2,920
1,176
Cash Flows from Financing Activities
Repayment of lease liabilities
Finance costs
Dividends paid
Payments in respect of share buy-backs and costs
4(e)
8(a)
(800)
(26)
(5,771)
–
(599)
(30)
–
(372)
Net cash flows used in financing activities
(6,597)
(1,001)
Net (decrease)/increase in cash and cash equivalents
(1,057)
4,270
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
12,187
11,130
7,917
12,187
The Consolidated Statement of Cash Flows is to be read in conjunction with the attached Notes.
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Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 27
Notes to the Consolidated Financial
Statements
Basis of Preparation
1. Corporate information ............................................................................................................................................. 28
2. Summary of significant accounting policies .................................................................................................. 28
Financial performance
3. Segment information ..............................................................................................................................................30
4. Revenue and expenses ........................................................................................................................................... 33
5. Income tax ................................................................................................................................................................. 35
6. Notes to Statement of Cash Flows ...................................................................................................................39
Working capital
7. Financial assets, liabilities and related financial risk management ....................................................... 40
Shareholder returns
8. Dividends .....................................................................................................................................................................56
9. Earnings per share ................................................................................................................................................... 57
Capital and funding structure
10. Contributed Equity................................................................................................................................................. 58
11. Reserves ......................................................................................................................................................................59
Capital investment
12. Property, plant and equipment ........................................................................................................................ 60
13. Leases (Group as a lessee) .................................................................................................................................. 61
14. Intangible assets ....................................................................................................................................................63
Risk management
15. Provisions ...................................................................................................................................................................69
16. Contingent liabilities .............................................................................................................................................. 71
Other information
17. Remuneration of auditors ..................................................................................................................................... 72
18. Information relating to Centrepoint Alliance Limited ............................................................................... 73
19. Related party disclosures ................................................................................................................................... 74
20. Share-based payment plans .............................................................................................................................. 76
21. Events subsequent to the balance sheet date ........................................................................................... 78
PAGE 28
Annual Report 2021 |
Notes to the Consolidated Financial Statements
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
2021 were authorised for issue in accordance with a
resolution of the Directors on 24 August 2021.
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 19.
2. Summary of significant
accounting policies
Basis of preparation
The financial report is a general-purpose financial
report, which has been prepared in accordance with
the requirements of the Act, Australian Accounting
Standards, Interpretations and other authoritative
pronouncements of the Australian Accounting
Standards Board (AASB). The financial report has also
been prepared on a historical cost basis, except for
certain financial assets that have been measured at
fair value. Where necessary, comparative information
has been updated to be consistent with the current
reporting period.
For the purposes of preparing the consolidated
financial statements, the Group is a for-profit entity.
The financial report has been prepared on the going
concern basis, which contemplates continuity of
normal business activities and the realisation of assets
and settlement of liabilities in the ordinary course
of business.
AASB 101 Presentation of Financial Statements
requires management to assess the entity’s ability
to continue as a going concern. In making the
assessment, the standard requires that all available
information about the future 12 months from
the reporting period or date of issue of financial
statements, needs to be taken into consideration. Any
material uncertainties that cast significant doubt on
the capability to continue as a going concern such
as scope of the impact on future costs and revenues,
need to be disclosed in the financial statements.
COVID-19 was reported to the World Health
Organisation as an unknown virus in December 2019
and spread worldwide throughout the year 2020
and continues in 2021. Initially, the effects of the virus
impacted the travel industry and education providers,
however the impact escalated and has created
significant instability in financial and commodities
markets globally. Both Federal and State Governments
have implemented various stimulus packages to
provide both financial and non-financial assistance to
affected organisations.
The Group considered the impacts COVID-19 has had,
or may have, on the Group and prepared the financial
report based on the known information. Other than
as indicated in specific notes, the Group does not
foresee any significant uncertainties with respect to
events or conditions, which may impact unfavourably
as at the reporting date or subsequently as a result
of COVID-19.
Sufficient cash reserves are projected over the next
14 months. The final monthly repayments of the
deferred GST and PAYG taxation obligations for the
COVID-19 stimulus benefit were paid on 6 August 2021
to the Australian Taxation Office (ATO). Inflows are
projected to increase factoring in the Enzumo business
and growth in advisers, which correlates to growth
in adviser fees and subscriptions. Outflows over the
projected period relate to general operational spend.
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 and revised Standards
The Group has adopted all of the new or amended
Accounting Standards and Interpretations issued by
the AASB that are mandatory for the current reporting
period. Any new or amended Accounting Standards
or Interpretations that are not yet mandatory have not
been early adopted.
The following Accounting Standards and
Interpretations are most relevant to the Group:
• Conceptual Framework for Financial Reporting
(Conceptual Framework)
The Group has adopted the revised Conceptual
Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition
criteria as well as new guidance on measurement
that affects several Accounting Standards, but
it has not had a material impact on the Group’s
financial statements.
Standards and interpretations issued but
not yet effective
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted by the Group for the annual
reporting year ended 30 June 2021.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 29
Foreign currency
Both the functional and presentation currency of the
Group is Australian dollars ($).
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 Profit or Loss and Other
Comprehensive Income, as exchange gains or losses,
in the year 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.
2. Summary of significant
accounting policies continued
Basis of consolidation
The consolidated financial statements comprise
the financial statements of the Company and its
subsidiaries as at 30 June 2021.
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 19.
Significant accounting judgements,
estimates and assumptions
The key assumptions concerning the future and other
key sources of estimation and uncertainty at the end
of the financial year, 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 and goodwill recoverable amounts
– Note 14
• Provision for client claims – Note 15
• Recognition of deferred tax assets – Note 5
• Adviser service fees – Note 16
PAGE 30
Annual Report 2021 |
Notes to the Consolidated Financial Statements
3. Segment information
Key accounting policies
Operating Segments
Under AASB 8 Operating Segments, the Group determines and presents operating segments based on the
nature of the products and services provided and the markets in which it operates. The senior executives of the
Group are the chief operating decision makers.
Board, corporate finance, company secretarial and other administration functions of the Group not allocated to
the other reportable segments are identified as Corporate and Unallocated.
The operating segments identified are below:
Business segment
Operations
Licensee and advice services
Fund management and administration
Consulting services
This segment represents the business that provides Australian
Financial Services Licensee services to financial advisers and their
clients and mortgage broking services.
This segment provides investor directed portfolio services and
investment management services to financial advisers, accountants
and their clients.
This segment represents the business that provides consulting to
both self-licenced advisers and licensees.
The corporate and unallocated balances represent corporate finance, company secretarial and other
administration functions of the Group that are not considered an operating segment.
The Group operated only in Australia during the financial year. 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.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 31
3. Segment information continued
Year ended 30 June 2021
$’000
$’000
$’000
$’000
$’000
Licensee
& Advice
Services
Funds
Management &
Administration
Consulting
Services
Corporate &
Unallocated
Total
Segment revenue
Revenue from contracts with customers
Authorised representative fees
Advice revenue
Product revenue
Virtual services
Licensing and managed services
Consulting services
Contractual payments to advisers
Advice revenue paid to advisers
Fees paid to advisers/fund managers
Gross profit from contracts with customers
Interest income
Other income
11,083
110,628
2,792
1,633
1,541
–
(107,591)
(262)
19,824
9
653
–
–
9,617
–
–
–
–
(3,064)
6,553
120
–
Total segment gross profit
20,486
6,673
–
–
–
248
–
893
–
(202)
939
–
37
976
–
–
–
–
(256)
(3)
11,083
110,628
12,409
1,881
1,285
890
– (107,591)
–
(3,528)
(259)
27,057
46
141
175
831
(72)
28,063
(6)
–
(60)
–
(99)
(36)
(227)
(1,251)
(1,581)
(13)
–
(246)
409
–
–
(143)
14,724
–
13,413
(1,859)
(7,146)
(76)
1,545
(302)
1,847
(33)
(36)
(103)
(130)
(13,260)
(13,562)
3,644
(226)
3,870
–
–
–
–
(1,464)
(1,464)
4,638
–
4,638
409
(7,070)
3,870
4,638
409
(7,070)
1,847
16,203
(9,218)
6,985
22,697
(105)
22,592
1,910
(119)
1,791
(13,779)
27,031
(6,402)
(15,844)
(20,181)
11,187
Other material expenses
Interest charges and interest on lease
liabilities
Client claims
Depreciation and amortisation
Impairment of assets
Inter-segment expenses1
Total other material expenses
Segment profit/(loss) before tax
Income tax (benefit)
Segment profit/(loss) after tax
Total comprehensive income/(loss)
for the year
Statement of Financial Position
at 30 June 2021
Total assets
Total liabilities
Net assets
1.
Inter-segment expenses represent employee related costs and other expenses paid centrally, which are allocated to the segments in
which they are incurred. Year on year inter-segment expense reduction for Licensee and Advice Services, and Funds Management and
Administration, is primarily due to headcount reduction as part of the overall Group expense saving initiative. The acquisition of Enzumo in
June 2020 resulted in additional segment revenue stream, Consulting Services. Enzumo also generated Licensing and Managed Services
revenue which is captured within the Licensee & Advice Services segment.
PAGE 32
Annual Report 2021 |
Notes to the Consolidated Financial Statements
3. Segment information continued
Year ended 30 June 2020
Segment revenue
Revenue from contracts with customers
Authorised representative fees
Advice revenue
Product revenue
Virtual services
Contractual payments to advisers
Advice revenue paid to advisers
Fees paid to advisers/fund managers
Gross profit from contracts with customers
Interest income
Other income
Total segment gross profit
Other material expenses
Interest charges and Interest on lease
liabilities
Client claims
Depreciation and amortisation
Fair value loss on the financial instrument
Expected credit loss expenses
Inter-segment expenses1
Total other material expenses
Segment profit/(loss) before tax
Income tax (benefit)
Segment profit/(loss) after tax
Total comprehensive income/(loss)
for the year
Statement of Financial Position
at 30 June 2020
Total assets
Total liabilities
Net assets
Licensee
& Advice
Services
Funds
Management &
Administration
Corporate &
Unallocated
$’000
$’000
$’000
7,936
100,890
9,499
922
(96,580)
(1,330)
21,337
22
91
21,450
(13)
(3,618)
(1,044)
–
(263)
(14,575)
(19,513)
598
(155)
753
–
–
11,231
–
–
(3,770)
7,461
171
(23)
7,609
–
10
(75)
–
–
(1,740)
(1,805)
5,189
–
5,189
–
2
–
–
–
–
2
224
(2)
224
(44)
–
(249)
(530)
(8)
16,315
15,484
(7,956)
(14)
(7,942)
Total
$’000
7,936
100,892
20,730
922
(96,580)
(5,100)
28,800
417
66
29,283
(57)
(3,608)
(1,368)
(530)
(271)
–
(5,834)
(2,169)
(169)
(2,000)
753
5,189
(7,942)
(2,000)
10,862
(9,728)
1,134
18,430
(477)
17,953
3,343
(7,579)
(4,236)
32,635
(17,784)
14,851
1.
Inter-segment expenses represent employee related costs and other expenses paid centrally, which are allocated to the segments in
which they are incurred. Year on year inter-segment expense reduction for Licensee and Advice Services, and Funds Management and
Administration, is primarily due to executive employment costs retained in the Corporate segment for 30 June 2020, $1.5m and $0.1m
respectively. Non-executive headcount savings have contributed to a further $0.5m saving for Licensee and Advice Services, and $0.6m saving
for Funds Management and Administration as part of the overall Group expense saving initiative.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 33
4. Revenue and expenses
(a) Revenue from contracts with customers
(AASB 15 Revenue from contracts with
customers)
Revenue is recognised at an amount that reflects the
consideration to which the Group is expected to be
entitled in exchange for transferring goods or services
to a customer. For each contract with a customer,
the Group: identifies the contract with a customer;
identifies the performance obligations in the contract;
determines the transaction price which takes into
account estimates of variable consideration and the
time value of money; allocates the transaction price to
the separate performance obligations on the basis of
the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises
revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
The Group recognises the different types of revenue
as follows:
Authorised representative fees: On a monthly basis,
the financial advisers are billed for AFSL licensing fees
in line with the contract between the Group and the
adviser. The Group’s obligation under this contract
is to provide support to advisers and access to one
of the Group’s AFSLs to enable them to sell financial
advice. The fees charged to the adviser are based on
a fixed fee structure outlined in the contract with the
adviser. Revenue is recognised on a monthly basis as
services are provided to the advisers.
Advice revenue: Commission is received from product
providers earned either at inception or renewal of
products on the approved product list. Under the
contract with the adviser, the Group receives the
full commission from the product provider and
subsequently pays this in full to the adviser unless
there is a specific arrangement with the adviser to
retain a proportion of commission to satisfy their
authorised representative fee. Based on the agreement
between the Group and the advisers, the advisers act
as a corporate authorised representative of the Group
and that the Group has the ultimate responsibility with
the end customers. The Group is therefore considered
the principal in these arrangements. Where the
advisers are employed by the Group, the commission
earned is retained within the Group.
Product revenue: The Group earns revenue from its
customers through the provision of fund management
services to its customers. Under this arrangement, the
fee charged is calculated based on a fixed percentage
of Funds Under Management and Administration
(FUMA) as stated in the contract with the customer.
Revenue is recognised as the service is provided,
given the customer is receiving and consuming the
benefits as they are provided by the Group. Included
within investment products revenue are rebates paid
to the Group by platform providers who offer the
advisers insurance, superannuation and investment
solutions. The Group performance obligation is to act
as a partner for the platform providers, enabling them
access to the adviser network. The rebate earned
by the Group is dependent on the nature of the
underlying product, either based on in-force policies
or funds under management invested through the
platform. Revenue is recognised monthly based on
Management’s best estimate using the most recent
information provided by the platform provider and is
trued up based on rebate receipts as and when they
are received from the platform provider. As per the
findings of the Royal Commission into Misconduct in
the Banking, Superannuation and Financial Services
Industry, all conflicted platform remuneration ceased
on 31 December 2020.
Virtual services: The Group provides a menu of
third-party services to its adviser network. Those
services with the greatest take-up are paraplanning
and outsourced administration support. Other
services include investment research, HR services and
software. The Group sources third party providers and
continually assesses the performance of providers
to ensure quality standards are maintained. The
Group derives margin from some services through
negotiating competitive wholesale fees and sharing
these benefits with advisers in its network. Revenue
is recognised on a monthly basis as services are
provided to the advisers.
Licensing and managed services: On a monthly basis,
the Group charges fixed fees for admission to the
customised platform (licence fees) and technological
support provided to the client (managed services).
Revenue is recognised on a monthly basis as services
are provided.
Consulting services: The acquisition of Enzumo
in June 2020 expanded the Group’s revenue
stream to include ‘Consulting services’ in Segment
reporting. The Group now earns revenue from the
provision of XPLAN consulting, XPLAN configuration
and a comprehensive suite of advice delivery
services. Enzumo leverages the knowledge of
solution specialists to design, develop and deploy
customisations to XPLAN sites. Revenue is recognised
on an over time basis when the performance
obligations are met.
(b) Interest income
Per AASB 9 Financial Instruments, interest income
from a financial asset is accrued on a time basis,
by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that
asset’s net carrying amount on initial recognition.
PAGE 34
Annual Report 2021 |
Notes to the Consolidated Financial Statements
4. Revenue and expenses continued
(c) Gross profit
Other income represents other sundry income received by the Group.
Revenue
Revenue from contracts with customers
4(a)
Authorised representative fees
Advice revenue
Product revenue
Virtual services
Licensing and managed services
Consulting services
2021
$’000
11,083
110,628
12,409
1,881
1,285
890
2020
$’000
7,936
100,892
20,730
922
–
–
Total revenue from contracts with customers
138,176
130,480
Contractual payments to advisers
Advice revenue paid to advisers
Fees paid to advisers/fund managers
Total contractual payments to advisers
Gross profit from contracts with customers
Interest income
Other income
Cost recoveries from advisers
Retail and wholesale asset and service fees
Other
Total other income
Gross profit
4(b)
(107,591)
(3,528)
(111,119)
27,057
175
305
–
526
831
(96,580)
(5,100)
(101,680)
28,800
417
25
41
–
66
28,063
29,283
(d) Employee related expenses
Employee related expenses represent employee costs payable by the Group.
Employee related expenses
Wages and salaries
Share-based compensation expense
Termination costs
Total employee related expenses
4(d)
2021
$’000
16,072
260
698
17,030
2020
$’000
17,088
308
74
17,470
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 35
4. Revenue and expenses continued
(e) Finance costs
The table below summarises the finance costs for the Group:
Finance costs
Bank interest charges
Interest on lease liabilities
Interest on loans
Total finance costs
5. Income tax
(a) Income tax (benefit)
2021
$’000
2020
$’000
4(e)
55
26
18
99
27
30
–
57
2020
$’000
(169)
(169)
The major components of income tax (benefit) for the years ended 30 June 2021 and 30 June 2020 are:
Deferred income tax
Deferred income tax charge
Income tax (benefit)
2021
$’000
(302)
(302)
(b) Reconciliation between aggregate tax (benefit) recognised in the income statement
and tax (benefit) calculated per the statutory income tax rate
The difference between income tax (benefit) provided in the financial statements and the prima facie income tax
(benefit) is reconciled as follows:
Profit/(loss) before tax
At the Company’s statutory income tax rate of 30% (2020: 30%)
Non-deductible expenses
Non-assessable income
Derecognition of deferred tax on increase of provision for claims
Utilisation of tax losses
Adjustment in respect of current tax of prior years
Aggregate income tax (benefit)
2021
$’000
1,545
464
125
(88)
(526)
(198)
(79)
(302)
2020
$’000
(2,169)
(651)
268
–
526
(305)
(7)
(169)
In the current year there has been a significant reduction in provisions that gave rise to deferred tax assets. The
size of the reduction in provisions, particularly those related to legacy claims and doubtful debts, was greater
than taxable profit. Accordingly, a significant deferred tax expense has been recognised in the prior year as no
further tax losses are being recognised as noted below.
PAGE 36
Annual Report 2021 |
Notes to the Consolidated Financial Statements
5. Income tax continued
(c) Recognised deferred tax assets and liabilities
Deferred income tax relates to the following:
Deferred tax liabilities
Prepayments
Gross deferred tax liabilities
Deferred tax assets
Provisions for claims
Provisions for doubtful debts
Provision for impairment of loan receivables
Lease liabilities
General accruals and other costs
Employee benefits
Gross deferred tax assets
Net deferred tax assets
(d) Unrecognised tax losses
Statement of
Financial Position
2021
$’000
2020
$’000
(7)
(7)
564
752
389
66
84
1,033
2,888
2,881
(11)
(11)
378
699
337
84
134
957
2,589
2,578
The Group has the following Australian tax losses for which no deferred tax assets are recognised at
reporting date.
Revenue losses
Capital losses
Total unrecognised losses
2021
$’000
25,901
35,953
61,854
2020
$’000
26,626
35,953
62,579
The utilisation of certain acquired tax losses is also subject to fractioning under Australian tax legislation, which
effectively prescribes the rate at which such acquired tax losses may be offset against the Group’s taxable
income. Given that the available fraction of the transferred losses is based on the relative market value of the
Group, the determination of the available fraction is subject to some uncertainty.
The above losses are available indefinitely for offset against future taxable income and capital gains subject
to continuing to meet relevant statutory tests. Unrecognised tax losses decreased by $1.0m (30 June 2020:
decrease of $1.0m).
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 37
5. Income tax continued
(e) Tax consolidation
Tax effect accounting by members of the tax
consolidated group
(a) Measurement method adopted under AASB
interpretation 1052 Tax Consolidation Accounting
The parent 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’s
approach, whereby the Group 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
Centrepoint Alliance Limited and its wholly owned
Australian controlled entities implemented tax grouping
under the tax consolidation legislation as of 1 July 2007.
The parent 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 Group allocation approach in
determining the appropriate amount of current taxes
and deferred taxes to allocate to members of the tax
consolidated group.
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 parent 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.
(f) Key accounting policies
Taxation
(a) Income tax
The income tax expense for the year 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 or Loss and Other
Comprehensive Income.
(b) Current tax
Current tax assets and liabilities for the year 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.
(c) 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.
PAGE 38
Annual Report 2021 |
Notes to the Consolidated Financial Statements
5. Income tax continued
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:
(d) 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 a deferred tax asset relating to the deductible
• 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.
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 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.
The deferred tax balance will be written down if
there are changes in circumstances and forecasts are
not met.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 39
6. Notes to Statement of Cash Flows
(a) Reconciliation of net profit after tax to net cash provided by operating activities
Net profit/(loss) after income tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortisation
Fair value loss on financial instrument
Expected credit losses
Loss on disposal of non-current assets
Interest received
Finance costs
Proceeds from convertible loan
Share-based compensation expense
Dividend received from investments
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 benefits
Provision for client claims
Provision for property make good
Net cash from operating activities
2021
$’000
1,847
1,581
-
(41)
38
(131)
26
(140)
260
(285)
1,007
127
(303)
(153)
(147)
(1,144)
78
2,620
2020
$’000
(2,000)
1,368
530
271
35
(386)
-
-
308
-
1,137
370
(170)
517
432
1,758
(75)
4,095
2021
$’000
11,130
6,664
1,207
116
2020
$’000
12,187
7,835
3,647
116
19,117
23,785
9,814
490
9,960
988
10,304
10,948
PAGE 40
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management
7.1 Categories of financial instruments
Financial assets
Note Classification
Cash and cash equivalents
Trade and other receivables
Loans
Investments in unlisted shares
Total financial assets
7.1.1
7.1.2
7.1.3
7.1.4
Amortised Cost
Amortised Cost
Amortised Cost
FVTOCI – equity (designated)
Financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
Key accounting policies
Financial instruments
7.1.5
7.1.6
Amortised Cost
Amortised Cost
Financial assets and financial liabilities are recognised
in the Group’s statement of financial position when the
Group becomes a party to the contractual provisions
of the instrument.
Recognised financial assets and financial liabilities
are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or
issue of financial assets and financial liabilities other
than financial assets and financial liabilities at fair
value through profit or loss (FVTPL) are added to,
or deducted from, the fair value on recognition.
Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at
FVTPL are recognised immediately in profit or loss.
If the transaction price differs from fair value at initial
recognition, the Group will account for such difference
as follows:
• If fair value is evidenced by a quoted price in an
active market for an identical asset or liability or
based on a valuation technique that uses only data
from observable markets, then the difference is
recognised in profit or loss on initial recognition
(that is, day one profit or loss);
• In all other cases, the fair value will be adjusted to
bring it in line with the transaction price (that is, day
one profit or loss will be deferred by including it in
the initial carrying amount of the asset or liability).
After initial recognition, the deferred gain or loss will
be released to profit or loss on a rational basis, only
to the extent that it arises from a change in a factor
(including time) that market participants would take
into account when pricing the asset or liability.
Financial assets
Financial assets are recognised on the trade date when
the purchase is under a contract whose terms require
delivery of the financial asset within the timeframe
established by the market concerned. Financial assets
are initially measured at fair value, plus transaction
costs, except for those financial assets classified as at
FVTPL. Transaction costs directly attributable to the
acquisition of financial assets classified as at FVTPL
are recognised immediately in profit or loss.
All recognised financial assets that are within the scope
of AASB 9 are required to be subsequently measured
at amortised cost or fair value on the basis of the
entity’s business model for managing the financial
assets and the contractual cash flow characteristics of
the financial assets.
Specifically:
• Debt instruments that are held within a business
model whose objective is to collect the contractual
cash flows, and that have contractual cash flows
that are solely payments of principal and interest
on the principal amount outstanding (SPPI), are
subsequently measured at amortised cost;
• Debt instruments that are held within a business
model whose objective is both to collect the
contractual cash flows and to sell the debt
instruments, and that have contractual cash flows
that are SPPI, are subsequently measured at
fair value through other comprehensive income
(FVTOCI);
• All other debt instruments (for example, debt
instruments managed on a fair value basis or held
for sale) and equity investments are subsequently
measured at FVTPL.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 41
7. Financial assets, liabilities and related financial risk management continued
However, the Group may make the following irrevocable election/designation at initial recognition of a financial
asset on an asset-by-asset basis:
• The Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is
neither held for trading nor contingent consideration recognised by an acquirer in a business combination to
which AASB 3 Business Combinations applies, in other comprehensive income (OCI); and
• The Group may irrevocably designate a debt instrument that meets the amortised cost or FVTOCI criteria as
measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (referred to as the
fair value option).
Financial liabilities
A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial
assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Group,
or a contract that will or may be settled in the Group’s own equity instruments and is a non-derivative contract
for which the Group is or may be obliged to deliver a variable number of its own equity instruments, or a
derivative contract over own equity that will or may be settled other than by the exchange of a fixed amount of
cash (or another financial asset) for a fixed number of the Group’s own equity instruments.
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. The Group does
not have any financial liabilities which are classified at FVTPL.
Other financial liabilities, including trade and other payables, are initially measured at fair value, net of transaction
costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method.
7.1.1 Cash and cash equivalents
Cash and cash equivalents
Total cash and cash equivalents
7.1.2 Trade and other receivables
Commissions receivable
Trade receivables
Total trade and other receivables
Refer to Note 7.2.3.2 for ageing analysis.
2021
$’000
11,130
11,130
2021
$’000
4,547
2,117
6,664
2020
$’000
12,187
12,187
2020
$’000
4,373
3,462
7,835
The Group applies the general approach for assessing impairment, which requires the recognition of lifetime
expected credit losses. Under this approach, the Group considers forward-looking assumptions and information
regarding expected future conditions affecting historical customer default rates. The trade receivables were
grouped into various customer segments with similar loss patterns.
Trade receivables generally have 30–90 day terms and no interest is charged on outstanding debts. The
Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible
are written off when identified. A loss allowance for trade receivables is raised using a provision matrix to
analyse past default activity and a review of each debtor’s current financial position adjusted for factors that are
specific to the debtor, and an assessment of both the current as well as the forecast direction of conditions at the
reporting date.
The Group has recognised a loss allowance of 100% against all receivables over 90 days past due with the
exception of legal agreements for recoverability.
PAGE 42
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
The amount of the expected credit loss is recognised in the profit or loss within other expenses. When a trade
receivable for which an expected credit loss 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.
7.1.3 Loans
Current
Loan receivables
Loan receivables – financial advisers
Total current loans
Non-current
Loan receivables
Loan receivables – financial advisers
Expected credit losses
Total non-current loans
Total loans
Loans – Australian Life Development
2021
$’000
1,090
18
1,108
-
904
(805)
99
1,207
2020
$’000
2,419
29
2,448
1,132
915
(848)
1,199
3,647
The Group has $1.1m loan receivable from ALD (30 June 2020: $3.6m) due for repayment no later than December
2021. The loan represents an interest-bearing loan of $1.0m to Astle Capital Limited (Astle), a related company of
ALD with the residual $0.1m representing interest accrued on the loan.
Loans – Financial Advisers
Loans due from financial advisers have terms ranging from one to five years, and varying interest terms at or
above commercial rates. The majority of these loans are secured through charges over assets, by guarantees, or
by retention of financial advice fees.
Expected Credit Losses
Allowance for expected credit losses
Opening balance
Movement in the allowance for expected credit losses
Closing balance
Expected credit loss expense
Expected credit loss (reversal)/expense
Bad debts written off directly
Total expense
For details on expected credit losses against loans see section 7.2.3.1.
2021
$’000
2020
$’000
848
(43)
805
(43)
186
143
846
2
848
2
269
271
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 43
7. Financial assets, liabilities and related financial risk management continued
7.1.4 Investments in unlisted shares
FVTOCI comprise of equity securities which are not held for trading, and which the Group has irrevocably elected
at initial recognition to recognise in this category. These are strategic investments and the Group considers this
classification to be more relevant.
Investments
Total investments
2021
$’000
116
116
2020
$’000
116
116
In September 2016 $0.1m was invested in Ginger Group, which increased the Group’s equity interest from 37.5%
to 50%. Ginger Group has a 37.5% shareholding in Kepa. The Group has assessed that it does not have control
over the investment. During the year, the Board approved the liquidation of Kepa Financial Services Limited to be
completed in the next quarter. As a result of the sale, $0.2m in dividends from Ginger has been recognised during
the year.
7.1.5 Trade and other payables
Amounts payable to financial advisers
Trade payables
Other creditors and accrued expenses
Total trade and other payables
7.1.6 Lease liabilities
Current
Lease liabilities
Non-Current
Lease liabilities
Total lease liabilities
2021
$’000
5,442
1,979
2,393
9,814
2021
$’000
2020
$’000
5,326
1,674
2,960
9,960
2020
$’000
438
708
52
490
280
988
PAGE 44
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
7.2 Financial risk management
7.2.1 Risk exposures and responses
The Group’s principal financial instruments comprise cash and cash equivalents, trade receivables and payables,
loans and investments in unlisted shares.
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 the different types of risks to which it is exposed.
These include monitoring levels of exposure to interest rates, and assessments of market forecasts for interest
rates. Ageing analyses and monitoring of expected credit loss 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 (GARCC) under the authority of the Board. The Board reviews and agrees policies for
managing each of the risks identified below.
7.2.2 Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, loans 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 loans 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 (credit rating: [Aa3]) and Westpac Banking Corporation (credit
rating: [Aa3]).
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 kept to a minimum.
7.2.3 Sources of credit risk
Key sources of credit risk for the Group predominantly emanate from its business activities including loans and
trade and other receivables. The Group monitors and manages credit risk by class of financial instrument. The
table below outlines such classes of financial instruments identified, their relevant financial statement line item,
maximum exposure to credit risk at the reporting date and expected credit loss (ECL) recognised:
Class of financial instrument Note
Financial statement line
Cash and cash equivalents
7.1.1
Cash and cash equivalents
Trade and other receivables
7.1.2
Trade and other receivables
Loans
Total
7.1.3
Loans
Maximum exposure
to credit risk
$’000
11,130
9,170
2,012
22,312
Expected
credit loss
$’000
–
2,506
805
3,311
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 45
7. Financial assets, liabilities and related financial risk management continued
Key accounting policies
Impairment of financial assets
The Group recognises loss allowances for expected credit losses on loans and trade and other receivables that
are not measured at FVTPL.
ECLs are required to be measured through a loss allowance at an amount equal to:
• 12-month ECL, that is, lifetime ECL that result from those default events on the financial instrument that are
possible within 12 months after the reporting date, (referred to as stage 1); or
• Full lifetime ECL, that is, lifetime ECL that result from all possible default events over the life of the financial
instrument (referred to as stage 2 and stage 3).
A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition. For all other financial instruments, ECLs are
measured at an amount equal to the 12-month ECL.
For trade receivables, the Group has applied the general approach in AASB 9 to measure the loss allowance
at lifetime ECL. The Group determines the expected credit losses on these items by using a provision matrix,
estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as
appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk
profile of these assets is presented based on their past due status in terms of the provision matrix.
Definition of default
The Group considers the following as constituting an event of default:
• the borrower is past due more than 90 days on any material credit obligation to the Group; or
• the borrower is unlikely to pay its credit obligations to the Group in full.
The definition of default is appropriately tailored to reflect different characteristics of different types of assets.
When assessing if the borrower is unlikely to pay its credit obligation, the Group takes into account both
qualitative and quantitative indicators. The information assessed depends on the type of the asset, for example in
corporate lending a qualitative indicator used is the breach of covenants, which is not relevant for retail lending.
Quantitative indicators, such as overdue status and non-payment on another obligation of the same counterparty
are key inputs in this analysis.
Write off
Loans, receivables and debt securities are written off when the Group has no reasonable expectations of
recovering the financial asset (either in its entirety or a portion of it). This is the case when the Group determines
that the borrower does not have assets or sources of income that could generate sufficient cash flows to
repay the amounts subject to the write off. A write off constitutes a derecognition event. The Group may apply
enforcement activities to financial assets written off. Recoveries resulting from the Group’s enforcement activities
will result in impairment gains.
Key estimates and judgements
Significant increase in credit risk
ECL are measured as an allowance equal to 12-month ECL for stage 1 assets, or lifetime ECL assets for stage 2 or
stage 3 assets. An asset moves to stage 2 when its credit risk has increased significantly since initial recognition.
AASB 9 does not define what constitutes a significant increase in credit risk. In assessing whether the credit risk
of an asset has significantly increased, the Group takes into account qualitative and quantitative reasonable and
supportable forward-looking information.
PAGE 46
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
Models and assumptions used
The Group uses models and assumptions in measuring fair value of financial assets as well as in estimating ECL.
Judgement is applied in identifying the most appropriate model for each type of asset, as well as for determining
the assumptions used in these models, including assumptions that relate to key drivers of credit risk.
The Group measures ECL considering the risk of default over the maximum contractual period (including
extension options) over which the entity is exposed to credit risk and not a longer period. The risk of default is
assessed by considering historical data as well as forward-looking information through a macroeconomic overlay
and management judgement.
The Group’s risk function constantly monitors the ongoing appropriateness of the ECL model and related criteria,
where any proposed amendments will be reviewed and approved by the Group’s management committees.
Incorporation of forward-looking information
The Group uses forward-looking information that is available without undue cost or effort in its assessment
of significant increase of credit risk as well as in its measurement of ECL. The Group uses this information to
generate a ‘base case’ scenario of future forecast of relevant economic variables along with a representative
range of other possible forecast scenarios.
The Group applies probabilities to the forecast scenarios identified. The base case scenario is the single most likely
outcome and consists of information used by the Group for strategic planning and budgeting.
The Group has identified and documented key drivers of credit risk and credit losses for each loan historical data
and has estimated relationships between macroeconomic variables, credit risk and credit losses.
The principal macroeconomic indicators included in the economic scenarios used at 1 July 2020 and 30
June 2021 are GDP, GDP index, GDP index change and unemployment. Management have derived that GDP
has economic correlations to inflation and unemployment, which generally have a corresponding impact on
loan performance.
The base case scenario is derived from forecasted changes to GDP, CPI and unemployment rates, using
management’s judgement. Adjustments to these forecasts are made to develop a further two scenarios
for less likely but plausible economic expectations. A weighting is applied to each scenario, based on
management’s judgement as to the probability of each scenario occurring. These economic forecasts are then
applied to a statistical model to determine the macroeconomic effects on the expected loss allowance on the
lending portfolios.
The incorporation of forward-looking information on the assessment of ECL on other assets required to be
assessed for impairment is a qualitative approach. A range of economic outlooks, from an economist, the
RBA and OECD, have been considered in making an assessment of whether there are economic forecasts that
would indicate a potential impairment on the assets being assessed.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 47
7. Financial assets, liabilities and related financial risk management continued
Significant increase in credit risk
The Group monitors all financial assets that are subject to impairment requirements to assess whether there has
been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk
the Group will measure the expected loss allowance based on lifetime rather than 12-month ECL.
The Group has used the assumption that 30 days past due represents significant increase in credit risk.
The Group considers 90 days past due as representative of a default having occurred and a loan being
credit impaired.
The Group has identified the following three stages in which financial instruments have been classified in regard
to credit risk;
• Stage 1 – Performing exposure on which loss allowance is recognised as 12-month expected credit loss;
• Stage 2 – Where credit risk has increased significantly and impairment loss is recognised as lifetime expected
credit loss; and
• Stage 3 – Assets are credit impaired and impairment loss is recognised as lifetime expected credit loss. Interest is
accrued on a net basis, on the amortised cost of the loans after the ECL is deducted.
The table below shows analysis of each class of financial asset subject to impairment requirements by stage at
the reporting date:
Class of financial
instrument
Cash and cash
equivalents
Trade and other
receivables1
Loans
Total
Class of financial
instrument
Cash and cash
equivalents
Trade and other
receivables1
Loans
Total
2021
Maximum exposure to credit risk
Expected credit loss
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
11,130
-
-
-
9,170
-
11,130
9,170
-
-
2,012
2,012
11,130
9,170
2,012
22,312
-
-
-
-
-
2,506
-
2,506
-
-
805
805
-
2,506
805
3,311
2020
Maximum exposure to credit risk
Expected credit loss
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
12,187
–
10,163
–
–
–
4,495
–
–
12,187
10,163
4,495
12,187
10,163
4,495
26,845
–
–
–
–
–
2,328
–
2,328
–
–
848
848
–
2,328
848
3,176
1. There are no trade receivables at Stage 1 because the Group’s accounting policy is to apply the general approach to measure lifetime credit
losses on trade receivables
PAGE 48
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
Movement in gross carrying amounts and expected credit losses
There has been no significant movement in the gross carrying amount and expected credit losses of financial
assets of the Group, therefore the movement has not been disclosed.
Summary of movements in expected credit loss by financial instrument
The following table summarises the movement in expected credit loss by financial instruments for the
financial year:
Expected credit loss
Loss allowance as at 1 July 2020
Loss allowance recognised during the year
Loss allowance at 30 June 2021
Expected credit loss
Loss allowance as at 1 July 2019
Loss allowance recognised during the year
Loss allowance at 30 June 2020
2021
2020
Loans
$’000
848
(43)
805
Loans
$’000
846
2
848
Trade and other
receivables
$’000
2,328
178
2,506
Trade and other
receivables
$’000
2,082
246
2,328
Total
$’000
3,176
135
3,311
Total
$’000
2,928
248
3,176
Credit risk concentrations are diversified across a large number of advisers and are geographically based within
Australia. They are mainly derived from the financial services industry and the main business segments providing
support to financial advisers.
Equity instruments classified at FVTOCI
The maximum exposure to credit risk of the equity instrument designated at FVTOCI is their carrying amount.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 49
7. Financial assets, liabilities and related financial risk management continued
7.2.3.1 Analysis of financial instrument by days past due status
Ageing Analysis
Trade receivables
Loan receivables – advisers
Ageing Analysis
Total
$’000
6,664
922
2021
0–30
Days
$’000
4,046
2
2020
31–60
Days
61–90
Days
PDNI
61–90
Days +91 Days +91 Days
CI
PDNI
CI
$’000
$’000
$’000
$’000
$’000
54
2
45
1
–
–
2,519
112
–
805
Total
0–30
Days
31–60
Days
61–90
Days
PDNI
61–90
Days +91 Days
+91 Days
CI
PDNI
CI
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Trade receivables
Loan receivables – advisers
7,835
944
5,524
5
87
5
11
5
–
–
2,213
81
–
848
* Past due not impaired (PDNI)
* Currently impaired (CI)
PAGE 50
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
7.2.4 Market risk
7.2.4.1 Interest rate risk
Interest rate risk is the potential for loss of earnings to the Group due to adverse movements in interest rates. 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.
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 exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities,
both recognised and unrecognised at the balance date, are as follows:
2021
Weighted
average
effective
interest rate
Fixed
Fixed
≤ 6 Months
> 6 Months
Variable
Non-interest
bearing
Total carrying
amount per
balance sheet
%
$’000
$’000
$’000
$’000
$’000
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Loans
Investments in unlisted
shares
Total financial assets
Financial Liabilities
Trade and other payables
Lease liabilities
3.51%
Total financial liabilities
Net Exposure
0.05%
4,792
2.27%
–
10
–
4,802
–
–
–
4,802
–
–
913
–
913
–
490
490
423
6,338
–
11,130
–
284
–
6,664
–
116
6,622
6,780
–
–
–
9,814
–
9,814
6,622
(3,034)
6,664
1,207
116
19,117
9,814
490
10,304
8,813
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 51
7. Financial assets, liabilities and related financial risk management continued
2020
Weighted
average
effective
interest rate
Fixed
Fixed
≤ 6 Months
> 6 Months
Variable
Total
carrying
amount per
balance
sheet
Non-
interest
bearing
%
$’000
$’000
$’000
$’000
$’000
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Loans
Investments in unlisted
shares
Total financial assets
3.27%
Financial Liabilities
Trade and other payables
Lease liabilities
3.51%
Total financial liabilities
Net Exposure
7.2.4.2 Price risk
0.68%
280
11,907
–
12,187
–
–
–
988
988
(59)
929
2,703
–
929
–
14,610
–
–
–
–
7,835
–
116
7,951
9,960
–
9,960
14,610
(2,009)
7,835
3,647
116
23,785
9,960
988
10,948
12,837
–
15
–
295
–
–
–
295
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.
7.2.4.3 Liquidity risk
The Group’s policy is to match debt with the nature and term of the underlying assets. At reporting date, over
83% (30 June 2020: 85%) 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.
Maturity analysis of financial assets and liabilities are based on management’s expectations.
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, for example,
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.
PAGE 52
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
The tables below are based on the carrying values at reporting date and include future interest receivable
or payable.
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans
Investments in unlisted shares
Total financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
Net maturity
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans
Investments in unlisted shares
Total financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
Net maturity
7.2.4.4 Foreign currency risk
2021
≤ 6 Months
6–12 Months
1–5 Years
$’000
$’000
–
153
9
–
162
–
438
438
–
2,178
904
116
3,198
–
52
52
(276)
3,146
$’000
11,130
4,333
9
–
15,472
9,814
–
9,814
5,658
2020
≤ 6 Months
6–12 Months
1–5 Years
$’000
12,187
5,660
15
–
17,862
9,960
–
9,960
7,902
$’000
–
9
15
–
24
–
305
305
(281)
$’000
–
2,166
914
116
3,196
–
683
683
2,513
Total
$’000
11,130
6,664
922
116
18,832
9,814
490
10,304
8,528
Total
$’000
12,187
7,835
944
116
21,082
9,960
988
10,948
10,134
The Group undertakes seasonal transactions denominated in foreign currencies (USD), and consequently,
exposures to exchange rate fluctuations arise. The transactions include the IT subscriptions and consulting fees.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 53
7. Financial assets, liabilities and related financial risk management continued
7.3 Fair value measurements
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each
financial year.
The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped by fair value hierarchy level.
7.3.1 Financial instruments measured at fair value on recurring basis
30 June 2021
Equity instruments designated at FVTOCI
Unlisted shares
Total assets
30 June 2020
Equity instruments designated at FVTOCI
Unlisted shares
Total assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
–
–
116
116
Level 1
$’000
Level 2
$’000
Level 3
$’000
116
116
Total
$’000
–
–
–
–
116
116
116
116
There are no financial liabilities that are measured at fair value.
There have been no transfers between Level 1 and Level 2 categories of financial instruments.
7.3.2 Reconciliation of Level 3 fair value measurements of financial assets
30 June 2021
Balance at beginning of year
Total gains or losses:
in profit or loss
Balance at end of year
30 June 2020
Balance at beginning of year
Total gains or losses:
in profit or loss
Balance at end of year
FVTOCI Unlisted shares
$’000
116
–
116
FVTOCI Unlisted shares
FVTPL Convertible
notes
$’000
$’000
116
–
116
530
(530)
–
PAGE 54
Annual Report 2021 |
Notes to the Consolidated Financial Statements
7. Financial assets, liabilities and related financial risk management continued
Fair value measurements
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable Accounting Standard.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
(this is, unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to characteristics of the specific
asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined
using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability
(that is, the market with greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the financial year (that is, the market
that maximises the receipts from the sale of the asset, or minimises the payments made to transfer the liability,
after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to
use the asset in its highest and best use or to sell it to another market participant that would use the asset in
its highest and best use. In measuring fair value, the Group uses valuation techniques that maximise the use of
observable inputs and minimise the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are received at each reporting
date, and transfers between levels are determined based on a reassessment of the lowest level input that is
significant to the fair value measurement. The categories are as follows:
• Level 1 – measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date;
• Level 2 – measurements based on inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly or indirectly; and
• Level 3 – measurement based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more
valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market
data. If all significant inputs required to measure fair value are observable, the asset or liability is included in
Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included
in Level 3.
The Group financial assets and liabilities are measured at fair value that approximates the carrying amount.
7.3.3 Summary of valuation methodologies applied in determining fair value of
financial instruments
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use
when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique,
the Group gives priorities to those techniques that maximise the use of observable inputs and minimise
the use of unobservable inputs. Inputs that are developed using market data (such as publicly available
information on actual transactions) and which reflect the assumptions that buyers and sellers would generally
use when pricing the asset or liability are considered observable, whereas inputs for which market data is
not available and therefore are developed using the best information available about such assumptions are
considered unobservable.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 55
7. Financial assets, liabilities and related financial risk management continued
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based
payment arrangements) may be valued, where there is no observable market price in relation to the transfer of
such financial instrument, by reference to observable market information where such instruments are held in
assets. Where this information is not available, other valuation techniques are adopted and where significant, are
detailed in the respective note to the financial statements.
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is
available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific
characteristics of the asset or liability being measured. The valuation techniques selected by the economic entity
are consistent with one or more of the following valuation approaches:
• Market approach – valuation techniques that use prices and other relevant information generated by market
transactions for identical or similar assets or liabilities.
• Income approach – valuation techniques that convert estimated future cash flows or income and expenses
into a single discounted present value.
• Cost approach – valuation techniques that reflect the current replacement cost of an asset at its current
service capacity.
Financial Asset/Liability
Fair value assumptions
Cash and cash equivalents
Fair value approximates the carrying amount as these assets are receivable on
demand or short-term in nature.
Loans
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 2021.
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 $9,215 (30 June 2020: $9,440).
For variable rate loans, excluding impaired loans, fair value approximates the
carrying amount as they are repriced frequently.
Trade and other receivables
The carrying values of variable rate trade and other receivables approximate
their fair value as they are short-term in nature and reprice frequently.
Trade and other payables
For variable rate loans, excluding impaired loans, fair value approximates the
carrying amount as they are repriced frequently.
Lease liabilities
The lease liability fair value is initially recognised and measured at the present
value of the lease payments. After the initial recognition, the lease liability
is measured with consideration to accrued interest, lease payments and
remeasurements reflecting any reassessment or lease modifications.
The fair value measurement of assets reflects the market data at the measurement date under current market
conditions. The valuations are subject to substantial measurement uncertainty due to COVID-19. There will
be a growth in the amount of subjectivity involved in fair value measurements specifically those founded
on unobservable inputs. Circumstances may result in the Group selecting more unobservable inputs since
appropriate observable inputs are no longer obtainable.
Factors considered when assessing fair value of assets:
• decline in fair value of financial assets particularly equity securities; and
• ability for debtors to comply with the terms of loans and similar instruments affected.
PAGE 56
Annual Report 2021 |
Notes to the Consolidated Financial Statements
8. Dividends
On 2 February 2021, the Directors declared a fully franked interim dividend of 1.0 cent per share and special
dividend of 3.0 cents per share to the holders of fully paid ordinary shares in respect of the half year ended 31
December 2020, which was paid to shareholders on 26 February 2021. The total dividend paid was $5,771,319.
On 24 August 2021, the directors declared a fully franked ordinary dividend of 1.0 cent per share to the holders
of fully paid ordinary shares in respect of the results for the year ended 30 June 2021, to be paid to shareholders
on 8 October 2021. This dividend has not been included as a liability in these financial statements. The total
estimated dividend to be paid is $1,442,830.
(a) Dividends paid or payable
The following fully franked dividends were provided for or paid during the year:
Dividends paid on ordinary shares
Special dividends paid on ordinary shares
Total dividends
2021
$’000
2020
$’000
1,443
4,328
5,771
2021
$’000
–
–
–
2020
$’000
(b) Franking credit balance
Franking account balance as at the end of the financial year
15,019
17,563
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 2021
PAGE 57
9. Earnings per share
Key accounting policies
Earnings per share
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 year that would result from the dilution of
potential dividends by ordinary shares.
The following reflects the income used in the basic and diluted earnings per share (EPS) computations:
2021
$’000
2020
$’000
(a) Profit used in calculating profit per share
Net profit/(loss) attributable to ordinary equity holders of the Company
1,847
(2,000)
(b) Weighted average number of shares
Weighted average number of ordinary shares
Effect of dilution:
Performance rights and LTI shares
No. of shares No. of shares
144,282,969
147,739,253
11,763,425
13,650,273
Weighted average number of ordinary shares (excluding reserved shares)
adjusted for the effect of dilution
156,046,394
161,389,526
Basic profit/(loss) cents per share
Diluted profit/(loss) cents per share
1.28
1.18
(1.35)
(1.35)
There have been no other transactions involving ordinary shares or potential ordinary shares that would
significantly change the number of ordinary shares or potential ordinary shares outstanding between the
reporting date and the date of completion of these financial statements.
PAGE 58
Annual Report 2021 |
Notes to the Consolidated Financial Statements
10. Contributed Equity
Key accounting policies
Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the
Group. 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.
(a) Paid up capital
Ordinary shares
Ordinary shares (issued and fully paid)
Balance at start of year
Movements during the year:
cancellation of shares
share buy-back
On issue at end of year
Total contributed equity
(b) Capital management
2021
$’000
2020
$’000
2021
2021
34,301
34,301
2020
Number of shares
$’000 Number of shares
34,301
34,301
2020
$’000
144,282,969
34,301
148,882,969
34,673
–
–
–
–
144,282,969
144,282,969
34,301
34,301
–
(4,600,000)
144,282,969
144,282,969
–
(372)
34,301
34,301
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 resolved to declare an ordinary dividend having referred to the
dividend policy and strategic direction of the business.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 59
11. Reserves
Employee equity benefits reserve
Dividend reserve
Total reserves
(i) Employee equity benefits reserve
Balance at start of year
Value of share-based payments provided or which vested during the year
Transfer of non-vested performance rights from reserves to retained earnings
Balance at end of year
2021
$’000
339
5,888
6,227
2021
$’000
1,259
260
(1,180)
339
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.
(ii) Dividend reserve
Balance at start of year
Dividends paid
Balance at end of year
2021
$’000
11,659
(5,771)
5,888
2020
$’000
1,259
11,659
12,918
2020
$’000
951
308
–
1,259
2020
$’000
11,659
–
11,659
PAGE 60
Annual Report 2021 |
Notes to the Consolidated Financial Statements
12. Property, plant and equipment
Key accounting policies
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Plant
and equipment are 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 straight-line basis over the estimated useful lives of the assets as follows:
Asset
Plant and equipment
Leasehold improvements
Useful Life
2–7 years
Lease term
Derecognition: 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 derecognition 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 Other 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.
Cost
At 1 July 2019
Additions
Disposals
At 30 June 2020
Additions
Disposals
At 30 June 2021
Depreciation and impairment
At 1 July 2019
Depreciation charge for the year
Disposals
At 30 June 2020
Depreciation charge for the year
Disposals
At 30 June 2021
Net carrying value
At 30 June 2021
At 30 June 2020
Leasehold
Improvements
Plant and
Equipment
$’000
$’000
1,986
–
(451)
1,535
–
(317)
1,218
1,776
54
(420)
1,410
29
(290)
1,149
69
125
2,865
117
(23)
2,959
58
(38)
2,979
2,544
134
(18)
2,660
119
(26)
2,753
226
299
Total
$’000
4,851
117
(474)
4,494
58
(355)
4,197
4,320
188
(438)
4,070
148
(316)
3,902
295
424
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 61
13. Leases (Group as a lessee)
(a) Amounts recognised in Statement of Profit or Loss and Other Comprehensive Income
The Group has elected not to recognise lease liabilities for short-term leases (leases with a term of 12 months or
less) and leases of low value assets. Payments made for such leases are expensed on a straight-line basis. The
variable payments associated with the Group’s building and equipment leases are recognised as expense as they
are incurred.
The table below summarises the amounts recognised in profit or loss and other comprehensive income for
the year:
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases
Expenses relating to low value assets
Expenses relating to variable lease payments not included in the
measurement of the lease liabilities
2021
$’000
799
26
5
307
219
1,356
2020
$’000
666
30
19
433
279
1,427
(b) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
The table below summarises the carrying amount of the right-of-use assets for the Group’s building and
equipment leases:
Cost
1 July 2020
Additions
At 30 June 2021
Accumulated depreciation
At 1 July 2020
Depreciation charge for the year
At 30 June 2021
Carrying amount
At 30 June 2021
Building
Equipment
$’000
$’000
1,584
361
1,945
654
787
1,441
504
36
–
36
12
12
24
12
Total
$’000
1,620
361
1,981
666
799
1,465
516
PAGE 62
Annual Report 2021 |
Notes to the Consolidated Financial Statements
13. Leases (Group as a lessee) continued
The Group leases include buildings and equipment, and the average lease term is three years (30 June 2020:
three years). Approximately 25% of the leases expired in the current financial year (30 June 2020: 75%). The
Group recognised right-of-use assets of $0.4m (30 June 2020: $1.62m).
(c) Maturity analysis of lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease
payments comprise fixed payments less any lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
The table below summarises maturity analysis of undiscounted lease liabilities for the Group:
Year 1
Year 2
Year 3
Total
2021
$’000
447
53
–
500
2020
$’000
729
232
53
1,014
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 63
14. Intangible assets
Key accounting policies
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 recognised at the date of the
acquisition. Goodwill is subsequently measured at cost
less any accumulated impairment losses.
Impairment of assets
For the purpose of impairment testing, goodwill is
allocated to each of the Group’s cash-generating
units (or groups of cash-generating units) that are
expected to benefit from the synergies of the business
combination.
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are
tested annually for impairment, or more frequently
if events or changes in circumstances indicate that
they might be impaired. Other assets are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs
of disposal and value in use. If the recoverable amount
of the cash-generating unit is less than its carrying
amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated
to the unit, and then to the other assets of the unit
pro rata based on the carrying amount of each asset
in the unit. Any impairment loss on goodwill or other
identifiable intangibles is recognised directly in profit
or loss. An impairment loss recognised for goodwill is
not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill or other identifiable
intangible is included in the determination of the profit
or loss on disposal.
Intangible assets acquired in a business
combination
Intangible assets acquired in a business combination
and recognised separately from goodwill are
recognised initially at their fair value at the acquisition
date (which is regarded as their cost). Subsequent
to initial recognition, intangible assets acquired
in a business combination are reported at cost
less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible
assets that are acquired separately.
Key judgements
The cash-generating units determined by
management are:
• Licensee Services
• Ventura Investment Management Limited (Ventura)
• xseedwealth Pty Ltd (xseedwealth)
• Centrepoint Alliance Lending Services Pty Ltd
(Centrepoint Lending Services)
• Investment Diversity Pty Ltd (Investment Diversity)
• Enzumo Corporation & Consulting Pty Ltd
Key estimates
Impairment testing of goodwill was carried out by
comparing the net present value of cash flows from
the cash-generating unit (CGU) to the carrying value
of the CGU. The cash flows were based on projections
of future earnings after adjusting for taxation,
depreciation and amortisation and working capital
changes.
The cash flows have been projected over a period of
five years. The terminal value of the Group beyond year
five has been determined using a constant growth
perpetuity.
The key assumptions used in carrying out the
impairment testing were as follows:
• Budgeted operating cashflows for the financial
years ending 30 June 2021–2025 represents the
Group’s estimate of future cash flows based on
the forecast approved by the Board of Directors.
The business has moved to a fee-based model,
which primarily impacts the Licensee Services CGU
and given some uncertainty around this, change
sensitivities have been disclosed below.
• Terminal growth rate 1.0% (30 June 2020: 1.0%)
represents the terminal growth rate (beyond five
years).
• Discount rate 13.10% (30 June 2020: 13.10%) is the
discount rate used in impairment testing for all
CGUs at 30 June 2021. The business contends the
discount rate applied is appropriate based upon the
risks inherent in the business.
The goodwill and other identifiable intangibles
disclosed in the Statement of Financial Position at
30 June 2021 were supported by the impairment
testing and no impairment adjustment was required.
PAGE 64
Annual Report 2021 |
Notes to the Consolidated Financial Statements
14. Intangible assets continued
The CGUs where a ‘reasonably possible’ change
in estimates could lead to the carrying amount
exceeding the value in use, are Centrepoint Lending
Services and Licensee Services. The reasonably
possible trigger points at which the carrying value of
the CGU would exceed its recoverable amount, while
holding all other variables constant, are as follows:
• Licensee Services – the primary sensitivity for
Licensee Services relates to fee income earned
under the new fee structure. Forecast fees would
need to decrease by 15% in financial year 2022 and
remain flat from financial year 2023 to 2025 with
a 10% reduction in the employment cost base
from financial year 2022 to 2025, before the
carrying amount would exceed recoverable amount.
The Group believes the likelihood of this scenario
occurring is unlikely; and
• Centrepoint Lending Services – the primary
sensitivity for Centrepoint Lending Services is the
discount rate used in the calculation of value in use.
The discount rate would need to increase to 45%
before carrying amount would exceed recoverable
amount. The Group believes the risks associated
with the cashflows in this CGU are lower than
average in the Group and the discount rate used is
appropriate.
In determining the recoverable value of non-financial
assets, the Group considered the following factors:
• Property, plant and equipment and intangible assets
– decrease in market interest rates causes a
decrease in the asset’s value in use;
– significant changes in the extent or way in which
the asset is used or is expected to be used;
– a decline or termination of the need for the
services provided by the asset; and
– significant changes in the legal aspects or
business climate that could affect the worth of
the asset.
• Goodwill
– tested for impairment annually;
– the testing for write-down or impairment of a
substantial asset group;
– a loss of key personnel that is other than
temporary (such as death);
– a significant decline in the entity’s share price,
which could result in the carrying amount of
the entity’s net assets exceeding its market
capitalisation; and
– a significant adverse modification in legal aspects
or in the business climate.
The impairment assessment performed by the Group
concluded that the underlying future cash flows will
not be impacted by any business risk. As a result, no
impairment was taken up for the year end.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 65
14. Intangible assets continued
Intangible
asset
Goodwill
Description of the
Group’s intangible
assets
Goodwill was
created during 2012
on the acquisitions
of the externally
owned interests in
Ventura Investment
Management
Limited of $93k
and in Centrepoint
Alliance Lending
Pty Ltd (previously
Centrepoint Lending
Solutions Pty Ltd) of
$863k.
Goodwill was created
on the acquisition of
Enzumo on 17 June
2020 of $0.13m.
The current carrying
value of goodwill is
$1.09m.
Impairment Test
Key Accounting Policies
Goodwill is tested annually for
impairment by calculation of value
in use at the CGU level.
Management is of the view that
core assumptions such as cost of
capital and terminal growth rate
are the same across all 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 1.0% (30 June
2020: 1.0%).
Cost of capital: 13.10% (30 June
2020: 13.10%).
The testing resulted in no
impairment being required.
Goodwill acquired in a business
combination is initially measured
at cost, being the excess of the
cost of the business combination
over the Group’s interest in the net
fair value of the identifiable assets,
liabilities and contingent liabilities.
Following initial recognition,
goodwill is measured at cost less
any accumulated impairment
losses.
As at acquisition date, any
goodwill acquired is allocated
to each of the CGUs, which are
expected to benefit from the
acquisition.
Where the recoverable amount of
the CGU is less than the carrying
amount, an impairment loss is
recognised.
Where goodwill forms part of a
CGU 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 CGU
retained.
PAGE 66
Annual Report 2021 |
Notes to the Consolidated Financial Statements
14. Intangible assets continued
Intangible
asset
Networks and
client lists
(excluding
Enzumo client
contracts)
Description of the
Group’s intangible
assets
Intangible assets in
the form of adviser
network businesses
and adviser client
lists acquired to
expand the adviser
network. The total
book value at 30
June 2021 is nil (30
June 2020: $0.1m)
Impairment Test
Key Accounting Policies
Adviser network businesses and
client lists are regularly tested for
impairment by calculation of value
in use when indicators of potential
impairment arise.
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 four years and one year
respectively.
Cash flows associated with
remaining advisers and clients are
inflated only at CPI with no growth
assumed.
Cost of capital: 13.10% (30 June
2020: 13.10%).
The testing resulted in no
impairment losses.
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 financial
year. 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
Other Comprehensive Income.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 67
14. Intangible assets continued
Intangible
asset
Software
Description of the
Group’s intangible
assets
Impairment Test
Key Accounting Policies
The Group has
developed or
acquired software,
which is being
amortised over their
expected useful lives.
The value of the developed or
acquired software of the Group is
amortised on a straight-line basis
over a 5-year period, which the
Directors assess as the intangible
asset’s useful life.
As per Accounting Standards,
software was capitalised as an
asset on the basis that the costs
result in a future economic benefit
to the entity and they can be
measured reliably.
There were no events or changes
in circumstances that indicate
that the carrying amount of the
software may not be recoverable
and therefore is not impaired.
The value of the acquired client
contracts is amortised on a
straight-line basis over the period
in which future economic benefits
are expected to be derived, being
a period of eight years.
There were no events or changes
in circumstances that indicate
that the carrying amount of the
software may not be recoverable
and therefore is not impaired.
Value of software assets recorded
by the entity in their financial
statement continues to reflect
the expected benefits to be
obtained from their use. The
Group determines the useful life
of software assets and amortises
the cost over the useful life of the
assets.
At each reporting date, the entity
will assess whether there is any
indication that an asset is recorded
at greater than its recoverable
amount. If applicable, recognise an
impairment loss.
The client contracts are acquired in
a business combination as its fair
value as at the date of acquisition.
Following initial recognition, the
intangible asset – client contracts,
are carried at cost less any
accumulated amortisation and any
accumulated impairment losses.
The value of the acquired Enzumo
brand is not amortised as it is
seen to have an indefinite useful
life which has been impairment
tested on an annual basis. To date,
the brand and trademark is not
considered to be impaired.
The Enzumo brand and trademark
is acquired in a business
combination at fair value as at the
date of acquisition. They have an
indefinite useful life and following
initial recognition, the Enzumo
brand is carried at cost less any
impairment losses.
Client
contracts
(Customer
relationships)
Brands and
trademarks
The Group has
acquired client
contracts as part
of the Enzumo
acquisition at fair
value on acquisition
date as determined
by an independent
valuer.
The current carrying
value of customer
relationships is
$0.9m (30 June
2020: $1m).
The Group has
acquired the Enzumo
Brand and trademark
as part of the
Enzumo acquisition
at fair value on
acquisition date as
determined by an
independent valuer.
The current carrying
value of trade name
is $0.1m.
The estimated useful lives in the current and comparative periods are as follows:
Software
Network and Client Lists/Relationships
5 years
5–10 years
PAGE 68
Annual Report 2021 |
Notes to the Consolidated Financial Statements
14. Intangible assets continued
14.3.1 Reconciliation of carrying amounts at the beginning and end of the financial year
Goodwill Software
Network and Client
Lists/Relationships
Trade
Name
Total
$’000
$’000
$’000
$’000
$’000
Financial year ending 30 June 2021
At 1 July 2020 net carrying value
1,095
1,275
Additions
Amortisation
At 30 June 2021 net carrying value
At 30 June 2021
Cost
Accumulated amortisation and impairment
Net carrying value
–
–
1,095
1,348
(253)
1,095
12
(316)
971
5,295
(4,324)
971
1,151
–
(234)
101
3,622
–
–
12
(550)
917
101
3,084
11,568
101
18,312
(10,651)
– (15,228)
917
101
3,084
Financial year ending 30 June 2020
At 1 July 2019 net carrying value
Additions
Amortisation
At 30 June 2020 net carrying value
At 30 June 2020
Cost
Goodwill Software
Network and Client
Lists/Relationships
Trade
Name
Total
$’000
$’000
$’000
$’000
$’000
956
139
–
1,095
1,371
173
(269)
1,275
348
1,048
(245)
1,151
–
101
–
101
2,675
1,461
(514)
3,622
1,348
5,283
11,568
101
18,300
Accumulated amortisation and impairment
(253)
(4,008)
(10,417)
–
(14,678)
Net carrying value
1,095
1,275
1,151
101
3,622
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 69
15. Provisions
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 (Legacy Claims) or post 1 July 2010 (Non-Legacy Claims) by authorised
representatives of the Group.
As the AFCA extension period ended in June 2020, reported open legacy claims at 30 June 2021 has reduced to
two claims as a result of closure and settlement (30 June 2020: 26). There are 14 Non-Legacy claims at 30 June
2021, which are currently under review. Resolution of these remaining claims is dependent on the circumstances
of each claim and the level of complexity involved. Any costs are offset against the general provision as incurred.
Claims and other
provisions
Employee benefits
Make good costs for
leased property
Key accounting policies
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 reporting 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.
A provision for claims is recognised when client claims received by advisers are
notified to the Group, or the Group expects to incur liabilities in the future as a result
of past advice given. The liability is measured at the present value of the future costs
that the Group expects to incur to settle the claims.
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.
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.
PAGE 70
Annual Report 2021 |
Notes to the Consolidated Financial Statements
15. Provisions continued
Current
Provision for claims
Provision for employee benefits
Property make good
Total
Non-current
Provision for employee benefits
Property make good
Total provisions
(a) Movement in provision for claims
Opening balance
Movement in the provision is as follows:
Claims provisioning expense for the year
Claims settlements and fees paid
Closing balance
(b) Movement in provision for employee benefits
Opening balance
Movement in the provision is as follows:
Provision for year
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
Closing balance
2021
$’000
1,875
3,089
206
5,170
365
5
370
2021
$’000
2020
$’000
3,019
3,169
121
6,309
432
95
527
2020
$’000
3,019
1,261
8
(1,152)
1,875
2021
$’000
3,463
(1,705)
3,019
2020
$’000
3,601
3,171
3,061
(3,208)
3,454
2021
$’000
216
(5)
211
3,499
(3,069)
3,601
2020
$’000
291
(75)
216
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 71
16. Contingent liabilities
Client claims
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.
On 18 June 2019, ASIC announced that it had approved a change to AFCA rules to allow it to investigate certain
complaints dating back to 1 January 2008. The AFCA extension period ended on 30 June 2020. Open legacy
claims during the year have decreased as a result of closure or settlement. Non-Legacy claims continue and given
the variability of settlement amounts, a general provision at 30 June 2021 has been recorded for foreseeable Non-
Legacy claims based on historical information. The Group also continues to fully provide for known obligations at
30 June 2021.
Adviser service fees
Under the service arrangements with authorised representatives, customers generally pay an adviser service fee
to receive an annual review, together with other services. The Group is assessing whether customers who have
paid for these services have been provided with the agreed services.
An assessment of financial advisers employed by the Group (xseedwealth salaried advisers) has been completed,
and where customer compensation is probable and can be reliably estimated, a provision was made at 30 June
2018. As at 30 June 2021 the provision balance is $80k.
The assessment process of identifying customers associated with authorised representatives licensed by
the Group’s wholly owned subsidiaries, Professional Investment Services (PIS) and Alliance Wealth (AW),
commenced in February 2019.
The assessment process is well progressed. To date, out of 2321 PIS and AW practices, 167 (72%) have been
reviewed with 15% identified with a Fee for No Service (FFNS) issue. Refunds of $0.47m are being paid or are
expected to be paid by the practices. As no current potential obligation for the Group exists and review is on-
going, it is not practicable to provide an estimate of final remediation costs. Refund amounts identified up to
24 August 2021 are not material and accordingly, no provision has been recognised in relation to this matter
at 30 June 2021.
1. There have been 123 practices that have joined post the commencement of the FFNS program that are not required to take part in the full
FFNS program and hence have been excluded from the total population.
PAGE 72
Annual Report 2021 |
Notes to the Consolidated Financial Statements
17. Remuneration of auditors
The primary auditor of the Group is BDO Audit Pty Ltd (2020: Deloitte Touche Tohmatsu).
Amounts received or due and receivable by BDO Audit Pty Ltd
Fees to the group auditor for the audit or review of the statutory financial reports
of the Group, subsidiaries and joint operations
285,000
395,733
Fees for statutory assurance services that are required by legislation to be
provided by the auditor
Fees for other services
74,500
89,730
100,958
59,886
449,230
556,577
2021
$’000
2020
$’000
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 73
18. Information relating to Centrepoint Alliance Limited
The Financial Statements of the Parent are:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net Assets
Issued capital
Dividend reserve
Accumulated profit
Total Shareholder Equity
Net loss after tax of the parent entity
Total comprehensive loss of the parent entity
2021
$’000
6,598
1,681
(107)
(4)
8,168
33,126
4,733
(29,691)
8,168
(7,061)
(7,061)
2020
$’000
18,260
2,906
(157)
(16)
20,993
33,126
10,504
(22,637)
20,993
(7,852)
(7,852)
At reporting date, the Parent has given nil guarantees to external parties (30 June 2020: nil).
PAGE 74
Annual Report 2021 |
Notes to the Consolidated Financial Statements
19. Related party disclosures
(a) Information relating to investments
Name
Licensee and Advice Services
Country of
Incorporation
Ownership
Interest
2021
2020
Principal Activity
Centrepoint Alliance Lending Pty Ltd
Australia
100%
100% Mortgage broker/aggregator
Alliance Wealth Pty Ltd
Australia
100%
100% Financial advice
Professional Investment Services Pty Ltd
Australia
100%
100% Financial advice
Associated Advisory Practices Pty Ltd
Australia
100%
100% Support services AFSL licensee
xseedwealth Pty Ltd
Australia
100%
100% Salaried advice
Funds Management and Administration
Investment Diversity Pty Ltd
Australia
100%
100% Packages investment platforms
Ventura Investment Management Limited
Australia
100%
100% Packages managed funds
Corporate
Centrepoint Alliance Services Pty Ltd
Australia
100%
100% Trustee – employee share plan
Centrepoint Services Pty Ltd
Centrepoint Wealth Pty Ltd
De Run Securities Pty Ltd
Presidium Research and Investment
Management Pty Ltd (formerly Imagine
Your Lifestyle Pty Ltd)
Professional Accountants Pty Ltd
Australia
Australia
Australia
Australia
Australia
100%
100% Service company
100%
100% Holding company
56%
56% Financial services
100%
100% Dormant
100%
100% Loans to advisers
Ginger Group Financial Services Limited
New Zealand
50%
50% Financial advice
Enzumo Corporation Pty Ltd
Enzumo Consulting Pty Ltd
Australia
Australia
100%
100% Service company
100%
100% Consulting services
(b) Ultimate parent
The ultimate holding company is Centrepoint Alliance Limited, a company incorporated and domiciled in Australia.
(c) Terms and conditions of transactions with related parties other than KMP
Sales to and purchases from related parties within the Group are made on terms equivalent to those that prevail
in arm’s length transactions. Outstanding balances at financial 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 2021, the Group has not recorded any impairment of receivables relating
to amounts owed by related parties (30 June 2020: 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. There are no related party transactions outside the Group other than remuneration to KMPs.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 75
19. Related party disclosures continued
(d) Transactions with Key Management Personnel
The aggregate compensation paid to Directors and other members of KMP of the Company and the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Termination/resignation benefits
Total compensation
2021
$
1,397,172
69,848
453,306
2020
$
1,287,481
51,520
–
1,920,326
1,339,001
PAGE 76
Annual Report 2021 |
Notes to the Consolidated Financial Statements
20. Share-based payment plans
(a) Share-based payment plans
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.
(b) Recognised share-based payment expenses
2021
$
259,928
259,928
2020
$
307,721
307,721
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 Company 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 Company’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 profit or loss on the purchase, sale, issue, or
cancellation of the Company’s own equity instruments.
Expense arising from performance rights
Total
Key accounting policies
i) Equity-settled transactions:
The Group provides benefits to its employees, including
KMP, in the form of share-based payments, whereby
employees render services in exchange for rights over
shares (equity-settled transactions).
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 Other Comprehensive Income is the product of:
• the grant date fair value of the award;
• the current best estimate of the number of awards
that will vest, taking into account such factors
as the likelihood of non-market performance
conditions being met; and
• the expired portion of the vesting period.
The charge to the profit or loss for the financial year
is the cumulative amount as calculated above, less the
amounts already charged in previous years. 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.
Notes to the Consolidated Financial Statements
| Annual Report 2021
PAGE 77
Movements during the year
The 9,150,000 performance rights at 30 June 2021 issued in previous financial years have not yet vested.
On 6 April 2021, the CESP 21 share-based payments were modified. The Board approved a change in the target
share price hurdle from 28.0 cents to 22.0 cents for vesting of 50% of the performance rights and a change in
the target share price hurdle from 32.0 cents to 25.0 cents for vesting of 100% of the performance rights. The
number of CESP 21 performance rights held at 30 June 2021 is 5,150,000. The fair value prior to modification was
$0.0693 and the fair value on modification was $0.1416. As a result of the modification, an additional accounting
expense of $156,168 measured as at the date of modification, is recognised for any modification that increases the
total fair value of the share-based payment transaction or is otherwise beneficial to the employee.
Performance rights pricing model
The fair value of the performance rights issued are calculated as at the date of grant using the Monte Carlo
Model. This model takes into account the terms and conditions upon which they were granted and market-based
inputs as at the grant date.
2021
No
WAEP1
2020
No
WAEP1
(ii) Performance rights under the CESP
Outstanding at beginning of period
12,550,000
Granted during the financial year
Vested during the financial year
Expired during the financial year
Outstanding at end of financial year
–
–
(3,400,000)
9,150,000
–
–
–
–
–
12,000,000
4,000,000
–
(3,450,000)
12,550,000
–
–
–
–
–
1.
WAEP is weighted average exercise price
PAGE 78
Annual Report 2021 |
Notes to the Consolidated Financial Statements
21. Events subsequent to the balance sheet date
The Board continued with its strategic review to seek out and pursue inorganic opportunities. Consistent with this
review, on 24 August, the Group has entered into a Share Purchase Agreement for ClearView’s financial advice
businesses (ASX Code: CVW) in exchange for $15.2m, made up of $3.2m in cash and a strategic 25% equity stake
in the Group (issue price 25c). ClearView financial advice provides market leading licensing and financial advice
support services. The acquisition will enable the Group to realise strategic value and synergies between the
two businesses.
John Shuttleworth was appointed Centrepoint Alliance’s new Chief Executive Officer on 4 August 2021. He
is based in the Sydney Head Office. John has in-depth experience in financial services and has demonstrated
leadership in established and new businesses and will assist the Group in its next phase of growth.
The impact of COVID-19 is ongoing and while the Group has not suffered any material adverse impacts up to 30
June 2021, it is not practicable to estimate the potential impact (positive or negative), after the reporting date.
The situation continues to develop and is dependent on measures imposed by Federal and State Governments
and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
Other than the dividend declared as mentioned in Note 8 and the matters as disclosed above, there are no
further matters or events which have arisen since the end of the financial year 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.
Directors’ Declaration
| Annual Report 2021
PAGE 79
Directors’ Declaration
30 June 2021
In accordance with a resolution of the Directors of Centrepoint Alliance Limited, I state that:
1.
In the opinion of the Directors:
(a) The consolidated financial statements and notes of Centrepoint Alliance Limited for the financial year
ended 30 June 2021 are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of its financial position as at 30 June 2021 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 2021.
On behalf of the Directors:
A. D. Fisher
Chair
24 August 2021
PAGE 80
Annual Report 2021 |
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s report to the Directors of Centrepoint Alliance
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
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 2021, the
consolidated statement of profit or loss and other 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 report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
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 further described 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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.
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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
| Annual Report 2021
PAGE 81
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 of 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.
Impairment of Intangibles and Goodwill
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures in respect
In order to evaluate and challenge key assumptions used by
to goodwill and intangible assets
management in their impairment analysis, our procedures included but
including their impairment
were not limited to:
assessment are included note 14
of the consolidated financial
report. Annual impairment testing
requires a significant amount of
judgment and estimation by
management, in the
determination of cash generating
units, projected cash flows,
discount rates, growth rates.
The critical assumptions used by
Management are disclosed in note
14.
The assumptions and complexity
of the calculations have made the
impairment assessment of
intangible assets and goodwill a
Key Audit Matter.
-
Obtaining an understanding of the key controls associated with
the preparation of the ‘Value in Use’ models and critically
evaluating management's methodologies and their documented
basis for key assumptions which are described in Note 14 of the
financial report;
-
Challenging key assumptions, including forecast growth rates
by comparing them to historical results, business trends,
economic and industry forecasts and comparable organisations
evaluated discount rates used by assessing the cost of capital
for the company and comparable organisations by comparison
to market data and industry research;
-
Using our valuation specialists, to obtain revenue multiples
from comparable companies to establish an independent range
to compare against those used in the terminal value cash flow
calculation;
-
-
-
-
-
-
Assessing whether the division of the Group into CGUs at a
segment level was consistent with our knowledge of the
Group's operations and internal Group reporting;
Evaluating the methodology applied by the Group in allocating
corporate assets and costs across CGUs;
Performing tests over the mathematical accuracy of the model
and underlying calculations;
Applying a sensitivity analysis to Management’s key
assumptions.
Assessing the Group's intentions to continue to use the Enzumo
brand name; and
Reviewing and checking the amortisation expense for definite
life intangible assets to ensure the expense is calculated
consistently with the Group's stated amortisation rates.
PAGE 82
Annual Report 2021 |
Independent Auditor’s Report
Provision for client claims
Key audit matter
How the matter was addressed in our audit
The Group has recognised a provision in
In assessing significant judgement applied by management,
respect to adviser client claims for a total of
the following procedures were performed:
$1.9 million as disclosed in note 15 of the
consolidated financial report.
These provided claims are for financial
advice provided by authorised
representatives of the Group prior to 1 July
2010, along with claims from external
parties that the Group has become aware of.
The complexity of the estimation of the
claims require management to apply
significant judgement to determine the
value of the liable position.
-
-
-
-
-
-
-
-
Assessed the design and implementation of the controls
in place in evaluating client claims;
Reviewed claims and risk committee minutes to assess
the accuracy and completeness of the provision
recognised;
Reviewed documentation issued by AFCA to support the
accuracy and completeness of the provision recognised;
Obtained and read adviser client claims information and
evaluating the impact of any new information regarding
the claim on the provision;
Obtained solicitor representation and assessed the
completeness of the provision recognised to open
claims as disclosed by solicitor’s;
Inquired with management if there was any change to
the approach and methodology for calculation of the
provision for claims since 30 June 2020;
Obtained information up to date of signing of the
financial report in relation to the development of
claims and assessing the impact on the provision ; and
Assessed the appropriateness of the disclosure note in
relation to the client claims provision.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the 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.
Independent Auditor’s Report
| Annual Report 2021
PAGE 83
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 has 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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 19 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Centrepoint Alliance Limited, for the year ended 30 June
2021, 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.
BDO Audit Pty Ltd
Tim Aman
Director
Sydney, 24 August 2021
PAGE 84
Annual Report 2021 |
ASX Additional Information
ASX Additional Information
30 June 2021
Additional information required by the Australian Securities Exchange (ASX) and not shown elsewhere in this
report is as follows. The information is current as at 6 August 2021.
1. Class of securities and voting rights
(a) Ordinary shares
Ordinary shares of the Company are listed (quoted) on the ASX. There are 1,584 holders of ordinary shares,
holding 144,282,969 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
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
No. of ordinary
shareholders
No. of performance
right holders
287
436
219
522
120
12
The number of shareholders with less than a marketable parcel is 480.
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
Mr Alexander Beard and Mr Alexander Beard and Mrs Pascale Marie Beard ATF AD & MP
Beard Superannuation Fund A/C
Fully paid
No. of Shares
51,987,171
10,998,296
ASX Additional Information
| Annual Report 2021
PAGE 85
BNP PARIBAS NOMINEES PTY LTD
2,875,590
1
2
3
4
5
6
7
8
9
10
11
12
4. Twenty largest holders of quoted equity securities
Ordinary Shareholders
UBS NOMINEES PTY LTD
MR ALEXANDER BEARD + MRS PASCALE MARIE BEARD
BONDIA INVESTMENTS PTY LTD
SUPERTCO PTY LTD
RICHARD JOHN NELSON + KAYE MARIE NELSON
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MILA INVESTMENT CO PTY LTD
NATIONAL NOMINEES LIMITED
MS FIONA ROWEENA WILLIAMS
M CONWAY INVESTMENTS PTY LTD
MR JASON MAXWELL YU
13 WAYLEX PTY LTD
14
15
16
17
18
19
20
AGRB PTY LTD
CATHAYS PTY LTD
MS KYLIE LYNETTE NUSKE + MR MATTHEW JAMES COOK
FETTERPARK PTY LTD
MR DANIEL BARON DROGA + MRS LYNDELL DROGA
MRS CHRISTINE ANN MOSSMAN
CHMIEL SUPER PTY LTD
Fully paid
No. of shares
53,692,171
% Held
37.21
10,268,889
4,834,000
3,000,000
2,729,660
2,722,653
2,640,000
2,134,141
2,127,140
1,600,000
1,450,000
1,418,051
1,198,434
1,090,914
1,085,800
1,017,603
1,000,000
829,600
800,000
7.12
3.35
2.08
1.99
1.89
1.89
1.83
1.48
1.47
1.11
1.00
0.98
0.83
0.76
0.75
0.71
0.69
0.57
0.55
98,514,646
68.26
PAGE 86
Annual Report 2021 |
Corporate Directory
Corporate Directory
Securities Exchange Listing
Centrepoint Alliance Limited’s shares are listed on the
Australian Securities Exchange (ASX) and are traded
under the ASX ticker code CAF.
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St George’s Terrace
Perth WA 6000 Australia
GPO Box 2975
Melbourne VIC 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
Auditor
BDO Audit Pty Ltd
ABN 33 134 022 870
Level 11, 1 Margaret St
Sydney NSW 2000
Registered Address
Centrepoint Alliance Limited
Registered Address and Head Office:
Level 2, 28 O’Connell St
Sydney NSW 2000
Australia
Telephone:
(within Australia) 1300 557 598
(outside Australia) +61 2 8987 3000
Facsimile:
+61 2 8987 3075
Website:
www.centrepointalliance.com.au
Corporate Directory
Annual Report 2021
PAGE 87
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Annual Report 2021
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1300 557 598centrepointalliance.com.auCentrepoint Alliance Limited and its Controlled EntitiesABN 72 052 507 507