ANNUAL
FINANCIAL
REPORT
FOR THE YEAR ENDED 30 JUNE 2022
ABN 72 052 507 507
Contents
Directors’ Report ............................................................................................................................................................................... 3
Remuneration Report ...................................................................................................................................................................... 11
Auditor’s Independence Declaration ............................................................................................................................................... 21
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................................ 22
Consolidated Statement of Financial Position ................................................................................................................................. 23
Consolidated Statement of Cash Flows .......................................................................................................................................... 24
Consolidated Statement of Changes in Equity ................................................................................................................................ 25
Notes to the Consolidated Financial Statements ............................................................................................................................ 26
Directors’ Declaration ...................................................................................................................................................................... 77
Independent Auditor’s Report ......................................................................................................................................................... 78
ASX Additional Information ............................................................................................................................................................. 82
Corporate Directory ......................................................................................................................................................................... 84
PAGE 3
ANNUAL REPORT 2022 | Directors’ Report
Directors’ Report
For the Year Ended 30 June 2022
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 2022.
Directors
Alan Fisher
BCom, FCA, MAICD
Chairman of the Board,
Independent Non-Executive
Director
Appointed on 12 November 2015.
Georg Chmiel
Diplom-Informatiker (Masters
equivalent in Computer
Science), MBA, CPA (USA),
FAICD,
Independent Non-Executive
Director
Appointed on 7 October 2016.
Experience and expertise
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.
He spend 24 years at world-leading accounting firm
Coopers & Lybrand, where he headed and grew the
Melbourne Corporate Finance Division. Following this
tenure, Alan developed his own corporate advisory
business. 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 brings over 30 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 leading network of property
portal sites and related real estate services before its
takeover by REA Group, which was Southeast Asia’s
largest ever internet buyout at that time. 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) from Technische Universität München and
is a member of the American Institute of Certified Public
Accountants and a Fellow of the Australian Institute of
Company Directors (AICD) and the Institute of Corporate
Directors Malaysia (ICDM).
Other Current Directorships
Other Current Directorships
Non-Executive Director and Chairman of IDT Australia
Limited (ASX:IDT)
Non-Executive Director of PropTech Group Limited
(ASX:PTG)
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 BUTN Limited (ASX:BTN)
Non-Executive Chairman of Spacetalk Limited, (ASX:SPA)
Former Directorships
Former Directorships
Non-Executive Director of Simavita Limited (ASX:SVA)
Non-Executive Director of Mitula Group Limited (ASX:
MUA) (from 18 January 2017 to 8 January 2019)
Executive Chair of iCarAsia Limited (ASX:ICQ) (from 1
November 2016 to 11 February 2022)
Special responsibilities
Special responsibilities
Chairman of the Board and member of the Nomination,
Remuneration and Governance Committee
Chairman of the Group Audit, Risk and Compliance
Committee
Interests in shares and options
Nil
Interests in shares and options
800,000 shares indirectly held
PAGE 4
ANNUAL REPORT 2022 | Directors’ Report
Martin Pretty
Graduate Diploma of Applied
Finance, BA, CFA, GAICD
Non-Executive Director
Appointed on 27 June 2014.
Alexander Beard
BCom, FCA, MAICD
Non-Executive Director
Appointed on 1 January 2020.
Experience and expertise
Experience and expertise
Martin brings to the Board over 20 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.
Alexander has a long and distinguished career as a director
of numerous public companies over the past 25 years. He
is former chief executive of ASX-listed CVC Limited, where
he oversaw annual shareholder returns in excess of 15%
per annum for over 15 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
Other Current Directorships
Non-Executive Director and Chairman of Scout Security
Limited (ASX:SCT) and Non-Executive Director and Chair
of the Audit and Risk Committee of Spacetalk Limited
(ASX:SPA)
Executive Chairman of Hancock and Gore Limited (ASX:
HNG) and Non-Executive Chairman of Anagenics Limited
(ASX:AN1) and FOS Capital Limited (ASX:FOS)
Special responsibilities
Special Responsibilities
Chairman of the Nomination, Remuneration and
Governance Committee
Member of the Group Audit, Risk and Compliance
Committee
Interests in shares and options
105,000 shares indirectly held
Interests in shares and options
555,000 shares directly held
7,182,426 shares indirectly held
PAGE 5
ANNUAL REPORT 2022 | Directors’ Report
Simon Swanson
BEc, BBus, FCPA, CIP FANZIIF
Non-Executive Director
Appointed on 1 November 2021.
Experience and expertise
Simon Swanson is an internationally experienced financial
services executive having worked for over 35 years across
life insurance, funds management, general insurance and
health insurance. He successfully led the largest life insurer
(CommInsure, Sovereign and Colonial) in three countries
and spent half his career in the Asia Pacific region. Simon
was previously a director of the Australian Literacy and
Numeracy Foundation and former Chairman of ANZIIF's
Life, Health and Retirement Income Faculty Advisory
Board. Simon was effectively the founder of ClearView in
its current form and was appointed as Managing Director of
ClearView Wealth Limited on 26 March 2010. Simon holds
a Bachelor of Economics and Bachelor of Business and is
a Fellow of CPA.
Other Current Directorships
Managing Director of ClearView Wealth Limited
(ASX:CVW)
Interests in shares and options
Nil
PAGE 6
ANNUAL REPORT 2022 | Directors’ Report
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
Kim is the Head of Corporate Services for Boardroom Pty
Limited’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
22 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.
Dr Marty Carne
BM, BBus, LLB, LLM,
DBA,GDLP, GCAIF
Chief Legal Officer and
Company Secretary
Appointed on 27 April 2017.
Resigned on 8 October
2021.
Experience and expertise
Marty joined the Company in April 2016 and held 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 and resigned on 8 October 2021.
Marty holds qualifications in law and business and is a
member of the Queensland Law Society.
PAGE 7
ANNUAL REPORT 2022 | Directors’ Report
Meetings of Directors
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the
financial year, and the number of meetings attended by each Director (while they were a Director or committee member).
Members
A. D. Fisher
M. P. Pretty
G. Chmiel
A.D.H. Beard
S.D. Swanson
Board of Directors
Nomination, Remuneration and
Governance Committee
Group Audit, Risk and
Compliance Committee
Held
Attended
Held
Attended
Held
Attended
8
8
8
8
4
8
8
7
8
4
3
3
N/A
N/A
N/A
3
3
N/A
N/A
N/A
N/A
N/A
3
3
N/A
N/A
N/A
3
3
N/A
Principal Activities
Centrepoint Alliance Limited and its controlled entities operate in the financial services industry within Australia and provide 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
FY22 has been a transformational year for Centrepoint Alliance. The Company completed its acquisition of ClearView Group’s
(ASX:CVW) advice business, delivering strong earnings and profit growth while successfully growing adviser numbers. The
second half performance showed strong momentum. Centrepoint Alliance is now operating as a sustainably profitable business
with robust capability to invest to expand its service offering while delivering consistent returns to shareholders.
The growth in adviser numbers was particularly pleasing. Centrepoint Alliance finished the financial year with 517 licensed
advisers, 175 of whom were acquired through the ClearView Advice acquisition, with additional net growth of 27 advisers. This
strong result demonstrates the Company’s status as a destination of choice for advisers, and leaves Centrepoint Alliance as one
of the few licensees in the Australian market to have achieved net growth at a time when advisers continued to exit the industry.
The self-licensed business continued to perform well, closing the year having grown to 192 self-licensed practices representing
approximately 788 self-licensed advisers. The Company’s self-licensed proposition has now been consolidated under the LaVista
brand, which was acquired as part of the ClearView Advice acquisition. This segment remains a strategic priority and will see
ongoing investment to build out and enhance the offer.
The smooth integration of the ClearView Advice business was a highlight. The new organisational structure and operating model
were both implemented at completion of the acquisition on 1 November 2021. In designing the operating model, emphasis was
placed on ensuring the Company brought together the key strengths of both organisations. The leadership team was enhanced, a
dedicated technology role created, and an efficient structure implemented. Pleasingly, the synergies from the transaction have
resulted in a lower cost to income ratio (excluding one-off costs, long-term incentives (LTI) and depreciation), of 77%, down from
88% the prior year.
The Company’s investment in technology continues, leveraging the capability of its key partners Microsoft, Salesforce and
IRESS. FY22 saw a significant focus placed on harmonising the functionality of the core adviser software, Xplan, to ensure the
best features and functionality are available for advisers. As part of this process, the Company will continue to build and leverage
its technology-enabled regulatory monitoring and compliance oversight.
During the year the Company made upgrades to the technology support provided to advisers, increasing resources in this
important area. The Enzumo business, which provides professional services to advice licensees and adviser practices deploying
customised Xplan site builds, has been expanding its depth of services. During the year, the Company launched Enzumo Xpress,
a hosted Xplan site specifically designed to support advisers who don’t want the complexity or burden of managing their own site.
Technology remains a key strategic focus for Centrepoint Alliance to assist advisers to increase their practice efficiency.
PAGE 8
ANNUAL REPORT 2022 | Directors’ Report
The investment solutions business is well-progressed in implementing the new strategy focusing on managed accounts. After the
end of the 2022 financial year, the Company completed its sale of the Ventura Funds business to Russell Investment
Management, the underlying manager for the funds. The Ventura Managed Accounts portfolios have been relaunched with
improved investment options and pricing. The business is now focused on launching a range of separately managed accounts
(SMAs) leveraging the investment capability of the research team and partnering with the Company’s platform partners for
distribution.
Centrepoint Lending Solutions has shown strong growth over the last 12 months, with settlements growing by 36% to $900m and
a loan book expanding to $3.2 billion. As communicated to shareholders during the year, lending presents a significant
opportunity for future growth, particularly as interest rates rise and many homeowners look to refinance. The Company is well
advanced with the launch of Lending as a Service, which will enable advisers to build a compliant lending business by partnering
with Centrepoint Alliance and leveraging its core infrastructure and capability.
Over the 12 months of FY22, Centrepoint Alliance has created a much stronger business, with financial stability, scale,
strengthened leadership and improved capabilities. Centrepoint Alliance remains well-positioned in a rapidly evolving advice
industry, and the Company will continue to pursue growth through opportunities to drive industry consolidation and other strategic
organic and inorganic initiatives.
Financial Performance and Position
For the financial year ended 30 June 2022, the Group reported a net profit after tax of $6.5m compared to a net profit after tax of
$1.8m for the financial year ended 30 June 2021. This is primarily due to a gross profit increase of $3.1m offset by an expense
increase of $2.1m.
Gross profit from contracts with customers
Gross profit
Expenses
Profit before tax
Income tax benefit
Net profit after tax
30 June 2022
30 June 2021
$'000
30,301
31,164
(28,594)
2,570
3,922
6,492
$'000
27,057
28,063
(26,518)
1,545
302
1,847
Gross profit from customer contracts increased by $3.2m from the prior year. This is primarily due to the increase in authorised
representative fee revenue generated from the ClearView Advice acquisition on 1 November 2021. This has been partially offset
by cessation of platform rebates on 31 December 2020 and reduced investment margin revenue.
Expenses have increased by $2.1m. However on a normalised basis there is a $0.3m decrease from the prior year after stripping
out one-off transaction fees from the ClearView Advice acquisition of $1.1m and long-term incentive employments costs of $1.6m.
This decrease is in line with the Group’s strategy to continue its focus on cost management. Employment costs were a significant
contributor to the decline, with restructuring initiatives at the end of H1 2022 during the ClearView Advice acquisition. Scalability
and efficiency was achieved with an increase in full-time equivalent headcount from 99.3 employees pre-acquisition to 105.2 post
acquisition. The Group also reduced professional fees, and cut travel expenditure as a result of the impact of COVID-19. The
COVID-19 pandemic continued to be prevalent during the financial year. The pandemic had no material impact on business
performance.
The Group recognised an income tax benefit of $3.9m (30 June 2021: $0.3m). The significant increase in the current year is a
result of recognising a deferred tax asset on prior year Group tax losses. The Group has assessed that future taxable profits will
be available, allowing tax losses to be utilised.
The Group held net assets at 30 June 2022 of $28.3m (30 June 2021: $11.2m) and net tangible assets of $6.6m (30 June 2021:
$5.2m) representing net tangible assets per share of 3.71 cents (30 June 2021: 3.62 cents).
The Group’s net assets increased by $17.1m during the year primarily due to the issue of 48,000,000 shares upon acquisition of
ClearView Advice on 1 November 2021, equating to $13.0m (based on the 30-day volume weighted average price [VWAP] prior
to acquisition at $0.27 per share), $6.5m net profit after tax, offset by $3.9m in dividends paid. An ordinary dividend of $1.4m was
paid in October 2021 pertaining to the FY21 results, $1.5m in special dividend was paid in November 2021 pertaining to the
Group’s acquisition of ClearView Advice and $1.0m ordinary dividend was paid in March 2022 pertaining to the HY 2022 results.
The Group held $14.7m in cash and cash equivalents as at 30 June 2022. Cash movement during the year included $6.4m net
PAGE 9
ANNUAL REPORT 2022 | Directors’ Report
receipts from operations, $1.5m from other working capital movements and $1.1m from final repayment of the Astle loan and
interest accrued (related party of Australian Life Development Pty Ltd). Cash payments during the year included $3.9m in
dividends paid to shareholders, $1.0m payment in lease liabilities, finance costs and property, plant and equipment and $0.5m in
claims paid.
Dividends
On 23 August 2022, 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 2022. Total dividend declared was $1,958,818.89 with 15 September 2022 as
the record date and 29 September 2022 as the payment date.
On 23 February 2022, the Directors of Centrepoint Alliance Limited declared an interim fully franked ordinary dividend totalling 0.5
cents per share in respect of the half-year ended 31 December 2021. The total dividend paid was $979,412.27, with 3 March
2022 as the record date and 18 March 2022 as the payment date.
Ahead of Centrepoint Alliance’s acquisition of ClearView Advice on 16 September 2021, a fully franked special dividend of 1.0
cent per share was declared. Total dividend paid was $1,478,818.89, with 29 October 2021 as the record date and 10 November
2021 as the payment date.
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. Total dividend paid was $1,442,829.69 with 24 September 2021 as the
record date and 8 October 2021 as the payment date.
Shares and Performance Rights
In relation to CESP211, 1,551,080 performance rights did not meet market conditions and lapsed unvested on the vesting date of
1 September 2021. The remaining 3,598,920 performance rights vested on 1 September 2021 due to the performance criteria
under the offer being satisfied.
On 1 November 2021, the Board of Directors approved 8,000,000 performance rights to be issued to the CEO and on 24
December 2021 the Board of Directors approved 3,000,000 performance rights to be issued to the CFO under CESP 23.
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 the state of affairs of the Group during the year and up to the date of this report.
Events Subsequent to the Balance Sheet Date
An agreement was executed between Ventura Investment Management Limited (a subsidiary of the Group which holds an AFS
License), and Russell Investment Management Limited (Russell) on 9 February 2022. This resulted in the investment
management rights in relation to five Ventura funds being transferred to Russell following the satisfaction of several condition
precedents (including Unitholder approval). This transfer took place in July 2022. The remaining four Ventura funds have been
closed to investors and were wound up in June 2022.
Other than the events above and the dividend declaration in Note 8, 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 22. 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.
1 Centrepoint Alliance Employee Share Plan (CESP)
PAGE 10
ANNUAL REPORT 2022 | Directors’ Report
Corporate Governance Statement and Practices
The Group’s Corporate Governance Statement for the financial year ended 30 June 2022 was approved by the Board on 23
August 2022. The Corporate Governance Statement is available on the Group’s website:
www.centrepointalliance.com.au/investor-centre/corporate-governance/.
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.
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 Investments Commission’s (ASIC’s)
Corporations (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 to the nearest thousand
dollars, unless otherwise stated.
PAGE 11
ANNUAL REPORT 2022 | Remuneration Report
Remuneration Report
The Remuneration Report for the year ended 30 June 2022 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
Chair and Director (non-executive)
M. P. Pretty
Director (non-executive)
G. J. Chmiel
Director (non-executive)
A. D. H. Beard
Director (non-executive)
B. M. Glass
Chief Financial Officer
J. G. Shuttleworth Chief Executive Officer (appointed 4 August 2021)
S.D. Swanson
Director (non-executive, appointed 1 November 2021)
There were no further changes of KMP after the reporting date and before the signing of this Report.
PAGE 12
ANNUAL REPORT 2022 | Remuneration 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.
Group Performance
Shareholder returns for the last five years have been as follows:
2022
2021
2020
2019
2018
restated
GROUP
Net profit/(loss) after tax – ($’000)
6,492
1,847
(2,000)
(1,576)
(6,884)
EPS (basic) – (cents per share)
EPS (diluted) – (cents per share)
Share price ($)
Dividends paid – (cents per share)
3.63
3.35
0.29
2.50
1.28
1.18
0.22
4.00
(1.35)
(1.35)
0.09
–
(1.06)
(1.06)
0.10
–
(4.62)
(4.62)
0.38
9.40
PAGE 13
ANNUAL REPORT 2022 | Remuneration Report
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 2022, 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.
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ANNUAL REPORT 2022 | Remuneration Report
Employment Contracts
Details of the terms of employment of the named KMP Executives are set out below. Those Executives that do not meet the
KMP definition are not included here.
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 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.
Long-term incentive
On 11 November 2021, the Board approved the CFO
issuance of 3,000,000 performance rights (in three
tranches) issued on 24 December 2021 under the
Company’s approved Long-Term Incentive Plan (LTIP).
Required notice by Executive and Company:
Six months.
John Shuttleworth
Chief Executive Officer
Employment period:
4 August 2021
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.
Long-term incentive
As approved in the 2021 Annual General Meeting, the
CEO was issued with 8,000,000 performance rights on 2
November 2021 under the Company’s approved Long-
Term Incentive Plan (LTIP).
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 15
ANNUAL REPORT 2022 | Remuneration Report
Details of remuneration
Details of the nature and amount of each element of the remuneration of each KMP of the Group are shown in the table below:
Short-term benefits Post-Employment
Long-term benefits
Share-based payments
Salary &
Cash
Cash
service
Performance
Long
Termination
/Resignation
No. of days
Fees
Bonus
Superannuation
incentives
leave
rights3
Shares
payments
Year
remuneration
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
293,595
–
1,074,600
–
–
–
1,368,195
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
135,617
135,000
85,000
85,000
85,389
85,000
–
325,000
1,507,783
–
40,000
–
2,777,725
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance
Share
related
related
%
–
–
–
–
–
–
–
%
–
–
–
–
–
–
–
–
–
–
–
–
– 71.27%
–
–
–
–
–
–
–
–
–
–
453,306
1,205,326
25.62%
85,389
85,000
–
–
838,547
23.85% 35.01%
1,134,539
200,000
1,088,422
308,750
74,991
69,848
453,306
1,920,326
A. D. Fisher
M. P. Pretty
G. J. Chmiel
A.G.R.
Benbow1
A.D.H. Beard
B. M. Glass
J.G.
Shuttleworth2
S.D. Swanson
Total
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
365
365
365
365
365
365
–
332
365
365
365
365
331
–
242
–
123,288
123,288
85,000
85,000
77,626
77,626
–
$
–
–
–
–
–
–
–
421,576
308,750
77,626
77,626
–
–
321,384
200,000
303,306
409,615
–
40,000
–
–
–
–
–
–
$
12,329
11,712
–
–
7,763
7,374
–
21,694
7,763
7,374
23,568
21,694
23,568
–
–
–
1 Resigned during the previous financial year.
2 Appointed in the current financial year
3 Accounting expense in accordance with AASB 2, not yet vested
PAGE 16
ANNUAL REPORT 2022 | Remuneration Report
Performance rights, shares and options awarded, vested, lapsed and forfeited
Name
Year
Grant
date
Fair value at grant date
Target share price hurdle
Vested
in year
Lapsed
in year
Forfeited
in year
$
Vesting Date
$
Expiry date
No.
No.
No.
$0.2275 for 2,000,000 shares on 30
November 2022
$0.2028 for 2,000,000 shares on 30
November 2022
$0.1780 for 2,000,000 shares on 30
September 2023
$0.1432 for 2,000,000 shares on 30
September 2024
$0.1668 for 900,000 shares on 30
September 2022
$0.1495 for 600,000 shares on 30
September 2022
$0.1495 for 100,000 shares on 30
September 2023
$0.1188 for 650,000 shares on 30
September 2023
$0.1188 for 50,000 shares on 30
September 2024
$0.0802 for 700,000 shares on 30
September 2024
Tranche 1 – Up to
4,000,000 on 30
November 2022
Tranche 2 – Up to
6,000,000 on 30
September 2023
Tranche 3 – Up to
8,000,000 on 30
September 2024
Tranche 1 – Up to
1,5000,000 on 30-
September-2022
Tranche 2 – Up to
2,250,000 on 30
September 2023
Tranche 3 – Up to
3,000,000 on 30
September 2024.
Share price equalling or
exceeding:
$0.30 for 2,000,000 shares
$0.35 for 2,000,000 shares
$0.42 for 2,000,000 shares
$0.55 for 2,000,000 shares
3 years from the
date of vesting
noting that
vesting may roll
into subsequent
periods
–
–
–
Share price equalling or
exceeding:
$0.30 for 900,000 shares
$0.35 for 700,000 shares
$0.42 for 700,000 shares
$0.55 for 700,000 shares
3 years from the
date of vesting
noting that
vesting may roll
into subsequent
periods
–
–
–
0.0199
01-Sep-2021
0.41
24-Sep-2020
0.51
09-Dec-2019
–
–
–
01-Sep-2024
–
– 2,700,000
24-Sep-2023
– 250,000
09-Dec-2022
–
–
–
–
J. G.
Shuttleworth*
2021
2-Nov-
2021
B. M. Glass
2021
24-Dec-
2021
A. G. R.
Benbow1
2019
J. S. Cowan2 2018
2017
28-Feb-
2019
02-Oct-
2017
19-Dec-
2016
1 Previous Chief Executive Officer, resigned last financial year
2 Previous Chief Financial Officer, resigned in 2019 financial year
*Share rights for the Chief Executive Officer were approved at the 2021 AGM. A change in vesting dates is subject to approval of shareholders.
PAGE 17
ANNUAL REPORT 2022 | Remuneration Report
Reconciliation of the number and fair value of options, shares and performance rights held by KMP
Balance at
the start of
the period
Granted as
compensation
during the
period
Exercised
during the
period
Name
Year
No.
No.
Value ($)
No.
Lapsed
during the
period
No.
Value
($)
Forfeited
during the
period
No.
Value
($)
Value
($)
Balance at the
end of the
period
Vested
Unvested
No.
No.
No.
Performance rights
J. G. Shuttleworth
B. M. Glass
2021
2021
–
–
8,000,000 1,074,600
3,000,000
293,595
A. G. R. Benbow
2019
2,700,000
J. S. Cowan
2018
250,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,700,000
250,000 102,500
–
–
–
–
–
8,000,000
3,000,000
–
–
–
–
–
–
–
–
–
–
The following assumptions were used for the valuation of the 2021 Performance Rights with a grant date of 24 December 2021 for the CFO and 2 November 2021 for the CEO:
The share price of $0.245 was the closing price of the Group’s shares as at the grant date for the CFO and $0.280 for the CEO.
•
• Performance Rights vest on the vesting date, there is no exercise period therefore the life of the Performance Rights is from the grant date to the vesting date.
•
The risk-free interest rate is nil. This is the yield on zero-coupon Australian Government bonds issued in Australian Dollars with a remaining term equal to the expected life of Performance
Rights being valued. The yield is converted into a continuously compounded rate in the valuation model.
The dividend yield on the Group’s shares is assumed to be between 9.52% and 12.24% for the purposes of this valuation. The yield is converted into a continuously compounded rate in
the valuation model.
The expected volatility of 64% was determined based on historic share price volatility of the Group, implied volatility of publicly traded options over the Group’s shares and the tendency of
volatility to revert to its mean. The Group’s volatility on annualised historical daily volatility over the 3-year period to the valuation date was considered.
•
•
PAGE 18
ANNUAL REPORT 2022 | Remuneration Report
Shareholdings of Key Management Personnel
Shares held in Centrepoint Alliance Limited (number)
Balance
1 July 2021
Granted as
remuneration
On exercise of
options
Net change of
other1
Balance
30 June 2022
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
J. G. Shuttleworth3
S.D. Swanson
–
105,000
800,000
1,198,434
10,998,296
–
–
–
Objective
Short-term incentives
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,198,434)
(3,260,870)
–
90,000
–
–
105,000
800,000
–
7,737,426
–
90,000
–
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 LTI’s are 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 hurdles.
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 last financial year.
3 Appointed this financial year
PAGE 19
ANNUAL REPORT 2022 | Remuneration Report
Awards
Long-term incentives
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 were legally held by the CESPT1 and not converted into fully paid ordinary CAF shares until satisfaction
of the vesting conditions determined on 1 September 2022 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 VWAP2 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 the resignation of senior executives and senior leaders including the CEO,
5,150,000 performance rights existed at 31 June 2021.
In September 2021, 1,551,080 of the CESP21 performance rights had lapsed and did not meet market
conditions. This was reclassified to retained earnings in the period, with no change to total equity. The
remaining 3,598,920 vested performance rights were converted to fully paid ordinary CAF shares.
Awards
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.
CESP23
On 1 November 2021, the Board of Directors approved 8,000,000 performance rights to be issued to the CEO
and on 11 November 2021 the Board of Directors approved 3,000,000 performance rights to be issued to the
CFO under the CESP. The fair value of the performance rights issued were calculated as at the date of grant
using the Monte Carlo Model. This model took into account the terms and conditions upon which the
performance rights were granted and market-based inputs as at the grant date.
CEO Transitional Terms (short-term and long-term incentives)
The CEO will be eligible for discretionary annual incentive plans, the terms of which are at the absolute
discretion of the Board. Refer to page 14, Employment Contracts for further details.
1 Centrepoint Alliance Employee Share Plan Trust (CESPT).
2 Volume Weighted Average Price of Centrepoint Alliance Ltd 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.
PAGE 20
ANNUAL REPORT 2022 | Remuneration Report
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, has provided a written independence declaration to the Directors in relation to its audit of the
financial report for the year ended 30 June 2022. The Independence Declaration, which forms part of this report is on page 21.
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 (predominantly taxation)
Signed in accordance with a resolution of the Directors.
2022
$’000
446
69
515
2021
$’000
359
90
449
A. D. Fisher
Chair
23 August 2022
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 2022, 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
23 August 2022
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.
PAGE 22
ANNUAL REPORT 2022 | Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Low value and variable costs related to property and equipment
14(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 reversal/(expense)
Finance costs
Client claims
Property costs
Other general and administrative expenses
Profit before tax
Income tax (benefit)
Net profit for the year
TOTAL COMPREHENSIVE PROFIT FOR THE YEAR
Net profit attributable to:
Owners of the parent
Non-controlling interests
Net profit for the year
Total comprehensive profit attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive profit for the year
Earnings per share for profit attributable to the
ordinary equity holders of the parent
Basic profit cents per share
Diluted profit cents per share
Note
4(a)
4(a)
4(b)
4(c)
2022
$'000
2021
$'000
227,665
(197,364)
30,301
53
810
138,176
(111,119)
27,057
175
831
31,164
28,063
4(d)
(18,470)
(17,030)
4(e)
14(a)
5(a)
(1,681)
(1,837)
(1,744)
(1,066)
(370)
(257)
(76)
96
(120)
(4)
(44)
(2,072)
(1,581)
(1,325)
(765)
(526)
(366)
(227)
(143)
(99)
(36)
(5)
(3,021)
(28,594)
(2,343)
(26,518)
2,570
(3,922)
6,492
6,492
6,492
-
6,492
6,492
-
6,492
1,545
(302)
1,847
1,847
1,847
-
1,847
1,847
-
1,847
9
9
Cents
Cents
3.63
3.35
1.28
1.18
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached Notes.
PAGE 23
ANNUAL REPORT 2022 | Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
ASSETS
Current
Cash and cash equivalents
Trade and other receivables
Loan receivables
Contract assets
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
Deferred tax liabilities
Total current liabilities
Non-current
Lease liabilities
Provisions
Deferred tax liabilities
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
7.1.4
7.1.3
7.1.5
13
14(b)
15
5(c)
7.1.6
7.1.7
16
7.1.7
16
10(a)
11
2022
$'000
14,742
5,113
293
87
1,211
21,446
115
116
483
2,501
17,842
6,558
280
27,895
49,341
10,045
507
5,284
280
16,116
2,013
468
2,426
4,907
21,023
28,318
2021
$'000
11,130
6,664
1,108
-
1,024
19,926
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
47,594
3,551
(22,945)
28,200
118
28,318
34,301
6,227
(29,459)
11,069
118
11,187
The Consolidated Statement of Financial Position is to be read in conjunction with the attached Notes.
PAGE 24
ANNUAL REPORT 2022 | Consolidated Statement of Cash Flows
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 (paid)/received
Proceeds from interest-bearing loan
Acquisition of intangible assets
Acquisition of property, plant and equipment
Payment for acquisition of subsidiaries, net of cash acquired
Dividends received from investments
Net cash flows provided by investing activities
Cash Flows from Financing Activities
Repayment of lease liabilities
Finance costs
Dividends paid
Net cash flows used in financing activities
Note
2022
$'000
2021
$'000
228,678
139,732
(220,835)
(135,820)
15(a)
6(a)
15.1.1
13
12.8
4(e)
8(a)
7,843
(547)
7,296
(25)
1,103
-
(368)
68
101
879
(613)
(48)
(3,902)
(4,563)
3,912
(1,152)
2,760
131
2,434
(12)
(58)
-
285
2,780
(800)
(26)
(5,771)
(6,597)
Net increase/(decrease) in cash and cash equivalents
3,612
(1,057)
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11,130
14,742
12,187
11,130
The Consolidated Statement of Cash Flows is to be read in conjunction with the attached Notes.
PAGE 25
ANNUAL REPORT 2022 | Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Dividend
reserve
Other
reserves
Accumulated
losses
Balance at 1 July 2021
Profit for the year
Total comprehensive income for the year
Transfer of non-vested performance rights from reserves
to retained earnings
Transfer of vested performance rights to share capital
Share-based payment
Issue of shares
Dividends paid
Balance at 30 June 2022
Balance at 1 July 2020
Profit for the year
Total comprehensive income for the year
Transfer of non-vested performance rights from reserves
to retained earnings
Share-based payment
Dividends paid
Balance at 30 June 2021
Notes
11(a)
11(a)
11(a)
12.3
11(b)
11(a)
11(a)
11(b)
Ordinary
shares
$'000
34,301
-
-
-
312
-
12,981
-
47,594
34,301
–
–
–
–
$'000
5,888
-
-
-
-
-
-
(3,902)
1,986
11,659
–
–
–
–
34,301
(5,771)
5,888
$'000
339
-
-
(22)
(312)
1,560
-
-
1,565
1,259
–
–
(1,180)
260
–
339
The consolidated Statement of Changes in Equity is to be read in conjunction with the attached notes.
$'000
Total
$'000
(29,459)
11,069
6,492
6,492
22
-
-
-
-
(22,945)
(32,486)
1,847
1,847
1,180
–
–
(29,459)
6,492
6,492
-
-
1,560
12,981
(3,902)
28,200
14,733
1,847
1,847
–
260
(5,771)
11,069
Non-
controlling
interests
$'000
118
-
-
-
-
-
-
-
118
118
–
–
–
–
–
118
Total equity
$'000
11,187
6,492
6,492
-
-
1,560
12,981
(3,902)
28,318
14,851
1,847
1,847
–
260
(5,771)
11,187
PAGE 26
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial
Statements
Basis of Preparation
1. Corporate information ................................................................................................................................................................. 27
2. Summary of significant accounting policies ................................................................................................................................. 27
Financial performance
3. Segment information ................................................................................................................................................................. 299
4. Revenue and expenses .............................................................................................................................................................. 32
5. Income tax .................................................................................................................................................................................. 34
6. Notes to Statement of Cash Flows .............................................................................................................................................. 38
Working capital
7. Financial assets, liabilities and related financial risk management ............................................................................................. 39
Shareholder returns
8. Dividends .................................................................................................................................................................................... 53
9. Earnings per share ...................................................................................................................................................................... 54
Capital and funding structure
10. Contributed Equity .................................................................................................................................................................... 55
11. Reserves ................................................................................................................................................................................... 56
Capital investment
12. Acquisition of subsidiaries ......................................................................................................................................................... 57
13. Property, plant and equipment .................................................................................................................................................. 59
14. Leases (Group as a lessee) ...................................................................................................................................................... 61
15. Intangible assets ....................................................................................................................................................................... 63
Risk management
16. Provisions ................................................................................................................................................................................. 68
17. Contingent liabilities .................................................................................................................................................................. 70
Other information
18. Remuneration of auditors .......................................................................................................................................................... 70
19. Information relating to Centrepoint Alliance Limited .................................................................................................................. 71
20. Related party disclosures .......................................................................................................................................................... 72
21. Share-based payment plans ..................................................................................................................................................... 74
22. Events subsequent to the balance sheet date .......................................................................................................................... 76
PAGE 27
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Basis of Prepar ation
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 2022 were authorised for issue in accordance with a resolution of the Directors on 23 August 2022.
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 20.
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 a 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 (whichever is later), 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.
Sufficient cash reserves are projected over the next 14 months. Apart from the outflows relating to general operational spend and
potential future dividends to shareholders, inflows are projected to increase, factoring in organic business growth, the FinChoice
wholesale deal with the addition of 28 wholesale advisers added in FY22, and the acquisition of the ClearView Advice business
on 1 November 2021, which will further increase adviser fees and subscriptions.
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.
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 2022.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2022.
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 20.
Business combinations
The Group applies the acquisition method in accounting for business combinations in accordance with AASB 3 Business
Combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition
date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value
of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
PAGE 28
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
•
•
•
deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in
accordance with AASB 2 at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 are measured in accordance
with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition
date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any),
the excess is recognised immediately in profit or loss as a bargain purchase gain.
With the exception of deferred tax assets and liabilities related to employee benefits, the Group recognised the assets acquired
and the liabilities assumed of ClearView Advice at fair value on acquisition date of 1 November 2021. The Group has recorded
goodwill on acquisition as the consideration transferred is in excess of the net identifiable assets acquired. The Group does not
have any previously held equity interest in ClearView Advice nor has it acquired any assets held for sale.
Deferred tax liability is recognised on intangible assets, except goodwill, arising on a business combination based on the
difference of the carrying value of the asset on initial recognition in the consolidated accounts and the tax base. As the intangible
asset is amortised or impaired, the temporary difference will decrease. The reduction in the deferred tax liability is recognised in
profit or loss as a deferred tax credit.
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 15
•
• Provision for client claims – Note 16
• Recognition of deferred tax assets – Note 5
• Adviser service fees – Note 17
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 changed.
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.
PAGE 29
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Financi al performance
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.
PAGE 30
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Licensee &
Advice
Services
Funds
Management &
Administration
Consulting
Services
Corporate &
Unallocated
$'000
$'000
$'000
$'000
Total
$'000
Year ended 30 June 2022
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
15,742
198,316
768
2,840
1,337
-
Advice revenue paid to advisers
Fees paid to advisers/fund managers
(193,876)
-
Gross profit from contracts with customers
25,127
Interest income
Other income
Total segment gross profit
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 expense/(benefit)
Segment profit/(loss) after tax
Total comprehensive income for the year
Statement of Financial Position at 30 June 2022
Total assets
Total liabilities
Net assets
10
218
25,355
(27)
(4)
(491)
85
(14,976)
(15,413)
6,219
129
6,090
6,090
34,849
(12,476)
22,373
-
-
8,107
-
-
-
-
(3,403)
4,704
29
-
4,733
-
-
-
6
(1,147)
(1,141)
3,087
-
3,087
3,087
25,726
(48)
25,678
-
-
-
99
-
412
-
(85)
426
-
-
426
(4)
-
-
-
15,742
198,316
325
-
(271)
(10)
9,200
2,939
1,066
402
-
-
44
14
592
650
(193,876)
(3,488)
30,301
53
810
31,164
(89)
-
(120)
(4)
(217)
(1,129)
(1,837)
5
-
(216)
10
(85)
95
95
1,841
(305)
1,536
-
16,123
14,905
(6,746)
96
-
(1,865)
2,570
(3,966)
(3,922)
(2,780)
(2,780)
6,492
6,492
(13,075)
49,341
(8,194)
(21,023)
(21,269)
28,318
1 Inter-segment expenses represent employee related costs and other expenses paid centrally, which are allocated to the segments in which they
are incurred.
PAGE 31
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Licensee
& Advice
Services
Funds
Management &
Administration
Consulting
Services
Corporate &
Unallocated
$'000
$'000
$'000
$'000
Total
$'000
Year ended 30 June 2021
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
11,083
110,628
2,792
1,633
1,541
-
Advice revenue paid to advisers
(107,591)
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
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
(262)
19,824
9
653
20,486
(33)
(36)
(103)
(130)
(13,260)
(13,562)
3,644
(226)
3,870
3,870
16,203
(9,218)
6,985
-
-
9,617
-
-
-
-
(3,064)
6,553
120
-
6,673
-
-
-
-
(1,464)
(1,464)
4,638
-
4,638
-
-
-
248
-
893
-
(202)
939
-
37
976
(6)
-
(227)
(13)
-
(246)
409
-
409
-
-
-
-
(256)
(3)
-
-
(259)
46
141
(72)
11,083
110,628
12,409
1,881
1,285
890
(107,591)
(3,528)
27,057
175
831
28,063
(60)
-
(99)
(36)
(1,251)
(1,581)
-
14,724
13,413
(7,146)
(76)
(7,070)
(143)
-
(1,859)
1,545
(302)
1,847
4,638
409
(7,070)
1,847
22,697
(105)
22,592
1,910
(119)
1,791
(13,779)
27,031
(6,402)
(15,844)
(20,181)
11,187
1 Inter-segment expenses represent employee related costs and other expenses paid centrally, which are allocated to the segments in which they
are incurred.
PAGE 32
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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 these contracts 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.
During the year, $0.8m in new adviser contracts with rebate arrangements offered, resulted in the recognition of $87k revenue.
Accordingly, a corresponding contract asset has been recognised in the Statement of Financial Position and disclosed in note 7.1.4.
Advice revenue: Commission is received from product providers earned either at inception or on 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 the Group has 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 Group earns revenue from the provision of XPLAN consulting, XPLAN tailoring and configuration and
a comprehensive suite of advice delivery services, to meet specific business needs. 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 33
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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
2022
$'000
2021
$'000
15,742
198,316
9,200
2,939
1,066
402
11,083
110,628
12,409
1,881
1,285
890
Total revenue from contracts with customers
227,665
138,176
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
Other
Total other income
Gross profit
d. Employee-related expenses
Employee related expenses represent employee costs payable by the Group.
Employee related expenses
Wages and salaries
Employee transaction costs1
Share-based compensation expense
Termination costs
Total employee related expenses
1 Employee transactions costs are in relation to the ClearView Advice acquisition.
4(b)
(193,876)
(107,591)
(3,488)
(3,528)
(197,364)
(111,119)
30,301
53
192
618
810
27,057
175
305
526
831
31,164
28,063
2022
$'000
16,173
525
1,560
212
18,470
2021
$'000
16,072
-
260
698
17,030
PAGE 34
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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)
2022
$'000
42
48
30
120
The major components of income tax (benefit) for the years ended 30 June 2022 and 30 June 2021 are:
Current income tax charge
Deferred income tax charges
Utilisation and recognition of tax losses
Acquisitions
Adjustment to deferred tax of prior period
Total Deferred income tax charge
Total Income tax (benefit)
2022
$'000
1,183
(5,083)
(246)
224
(5,105)
(3,922)
2021
$'000
55
26
18
99
2021
$'000
198
(198)
-
(302)
(500)
(302)
b. Reconciliation between aggregate tax (benefit) recognised in the income statement and tax expense
calculated per the statutory income tax rate
The difference between income tax (benefit) provided in the financial statements and the prima facie income tax expense is
reconciled as follows:
Profit before tax
At the Company's statutory income tax rate of 30% (2021: 30%)
Non-deductible expenses
Non-assessable income
Derecognition of deferred tax on increase of provision for claims
Utilisation of tax losses
Other movements in deferred tax assets/liabilities
Adjustment in respect of current tax of prior years
Aggregate income tax (benefit)
2022
$'000
2,570
771
664
(28)
-
(1,183)
(4,146)
-
(3,922)
2021
$'000
1,545
464
125
(88)
(526)
(198)
-
(79)
(302)
PAGE 35
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
c. Recognised deferred tax assets and liabilities
Deferred income tax relates to the following:
Deferred tax liabilities
Prepayments
Intangibles
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
Recognition from prior year losses
Gross deferred tax assets
Net deferred tax asset offset
Deferred tax liability not offset
Statement of Financial Position
2022
$'000
(28)
(2,706)
(2,734)
398
524
389
60
95
1,220
3,900
6,586
6,558
(2,706)
2021
$'000
(7)
-
(7)
564
752
389
66
84
1,033
-
2,888
2,881
-
Following a significant improvement in trading conditions and profits of the Group over the last two years and expected in the
foreseeable future, the Group reviewed previously unrecognised tax losses and determined that it was now probable that taxable
profits will be available against which the tax losses can be utilised. As a consequence, a deferred tax asset of $3.9m was
recognised for these losses at 30 June 2022 bringing total deferred tax assets to $6.6m (30 June 2021: $2.9m).
The Group has deferred tax liabilities of $2.7m as at 30 June 2022 (30 June 2021: Nil). The recognised deferred tax liabilities on
intangible assets arose from the Group’s acquisitions. These are not offset against the deferred tax asset as there is no legally
enforceable right to offset this with the other deferred tax balances.
d. Unrecognised tax losses
The Group has the following Australian tax losses for which no deferred tax assets are recognised at reporting date.
Revenue losses1
Capital losses
Total unrecognised losses
2022
$'000
32,687
35,953
68,640
2021
$'000
49,650
35,953
85,603
1Prior year revenue losses have been updated to reflect the 30 June 2021 statutory tax filings.
Of the revenue losses, transferred in losses amounting to $33m (30 June 2021: $36m) are 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. This will be assessed in future reporting periods for potential
utilisation.
The above losses are available indefinitely for offset against future taxable income and capital gains subject to meeting relevant
statutory tests. Unrecognised tax losses decreased by $17.0m (30 June 2021: decrease of $1.0m) due to the utilisation of $13m
in Group tax losses as mentioned in note 5(c) and $4m in current year taxable income.
PAGE 36
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
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 37
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Deferred tax assets are recognised for deductible temporary differences, carry forward tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible
temporary differences, unused tax credits and unused tax losses can be utilised, except:
• When a deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
•
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow a deferred tax asset to be recovered.
Deferred tax assets and 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.
Deferred tax liabilities from business combinations is recognised from the temporary difference equal to the carrying value of the
asset on initial recognition in the consolidated accounts. As the intangible asset and the related deferred tax arise on a business
combination, the goodwill value is increased in accordance with AASB 12.
As the intangible asset is amortised, the temporary difference will decrease. The reduction in the deferred tax liability is
recognised in profit or loss. The recognition of this deferred tax credit to profit or loss reduces the impact of the amortisation of the
intangible asset on profits for the year.
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 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.
PAGE 38
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
6. Notes to Statement of Cash Flows
a. Reconciliation of net profit after tax to net cash provided by operating activities
Net profit after income tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortisation
Expected credit loss reversal
Loss on disposal of non-current assets
Interest paid/(received)
Finance costs
Share-based compensation expense
Dividend received from investments
Working capital adjustments:
(Increase)/decrease in assets:
Trade and other receivables
Contract assets
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
2022
$'000
6,492
1,837
(96)
14
25
48
1,560
(101)
1,184
(87)
(353)
(3,677)
235
618
(272)
(131)
7,296
2021
$'000
1,847
1,581
(41)
38
(131)
26
260
(285)
1,007
-
127
(303)
(153)
(147)
(1,144)
78
2,760
PAGE 39
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Working c apital
7. Financial assets, liabilities and related financial risk management
7.1 Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans
Contract asset
Note Classification
7.1.1 Amortised Cost
7.1.2 Amortised Cost
7.1.3 Amortised Cost
7.1.4
Amortised Cost
Investments in unlisted shares
7.1.5 FVTOCI – equity (designated)
Total financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
Key accounting policies
Financial instruments
7.1.6 Amortised Cost
7.1.7
Amortised Cost
2022
$'000
2021
$'000
14,742
11,130
5,113
408
87
116
6,664
1,207
-
116
20,466
19,117
10,045
2,520
9,814
490
12,565
10,304
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); and
PAGE 40
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
• 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.
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.
Cash and cash equivalents
Cash and cash equivalents
Total cash and cash equivalents
Trade and other receivables
Commissions receivable
Trade receivables
Total trade and other receivables
Refer to Note 7.2.3.1 for ageing analysis.
2022
$'000
14,742
14,742
2022
$'000
3,879
1,234
5,113
2021
$'000
11,130
11,130
2021
$'000
4,547
2,117
6,664
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.
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.
PAGE 41
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Loans
Current
Loan receivables
Loan receivables – financial advisers
Total current loans
Non-current
Loan receivables – financial advisers
Expected credit losses
Total non-current loans
Total loans
2022
$'000
-
293
293
901
(786)
115
408
2021
$'000
1,090
18
1,108
904
(805)
99
1,207
Loans – Australian Life Development (ALD)
The Group’s loan receivable in ALD was fully repaid on 31 December 2021 (30 June 2021: $1.1m).
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.
As a result of the ClearView acquisition, additional loan receivables from financial advisers with a book value of $0.3m has been
recognised on the Statement of Financial Position.
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
Bad debts (reversed)/written off directly
Total expense
For details on expected credit losses against loans see section 7.2.3.1.
2022
$'000
805
(19)
786
(19)
(77)
(96)
2021
$'000
848
(43)
805
(43)
186
143
PAGE 42
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Contract assets
Contract assets
Expected credit losses
Total contract assets
2022
$'000
87
-
87
2021
$'000
-
-
-
Contract assets are recognised for revenue earned from expected benefits that advisers are able to provide to the Group over the
term of the adviser contract.
Contract assets are subject to expected credit loss impairment assessment based on expected term of the adviser contract.
Investments in unlisted shares
FVTOCI comprise 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
2022
$'000
116
116
2021
$'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 Financial Services Limited (Kepa). The Group has assessed that it does not have
control over the investment. During the 2021 financial year, the Board of Ginger Group approved the liquidation of Kepa. This is
in progress, with a liquidator appointed. A cash distribution to shareholders of $0.1m in dividends from Ginger has been
recognised during the year (30 June 2021: $0.2m).
Trade and other payables
Amounts payable to financial advisers
Trade payables
Other creditors and accrued expenses
Total trade and other payables
Lease liabilities
Current
Lease liabilities
Non-Current
Lease liabilities
Total lease liabilities
2022
$'000
6,300
1,636
2,109
10,045
2022
$'000
507
2,013
2,520
2021
$'000
5,442
1,979
2,393
9,814
2021
$'000
438
52
490
PAGE 43
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
7.2 Financial risk management
Risk exposures and responses
The Group’s principal financial instruments comprise cash and cash equivalents, trade receivables and payables, loans, contract
assets, investments in unlisted shares and lease liabilities.
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.
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, loans, trade and other
receivables and contract assets. 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: [AA-]) and Westpac Banking Corporation (credit rating: [AA-]).
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.
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
Contract assets
Total
7.1.3
Loans
7.1.4
Contract assets
Key accounting policies
Impairment of financial assets
Maximum exposure
to credit risk
Expected
credit loss
$'000
$'000
14,742
6,859
1,194
87
22,882
-
1,746
786
-
2,532
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).
PAGE 44
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
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 2021 and 30 June 2022 are GDP,
GDP index, GDP index change and unemployment. Management have derived that GDP has economic correlations to inflation
PAGE 45
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
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:
2022
Class of financial
instrument
Cash and cash
equivalents
Trade and other
receivables1
Loans
Contract assets
Total
Maximum exposure to credit risk
Expected credit loss
Stage 1
$'000
Stage 2
$'000
Stage 3
$'000
Total
$'000
Stage 1
$'000
Stage 2
$'000
Stage 3
$'000
Total
$'000
14,742
-
-
-
-
6,859
-
87
-
-
1,194
-
14,742
6,859
1,194
87
14,742
6,946
1,194
22,882
-
-
-
-
-
-
1,746
-
-
-
-
-
1,746
786
786
-
-
1,746
786
2,532
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 46
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Class of financial
instrument
Cash and cash
equivalents
Trade and other
receivables
Loans
Contract assets
Total
2021
Maximum exposure to credit risk
Expected credit loss
Stage 1
$'000
Stage 2
$'000
Stage 3
$'000
Total
$'000
Stage 1
$'000
Stage 2
$'000
Stage 3
$'000
Total
$'000
11,130
-
-
-
-
9,170
-
-
2,012
-
-
-
11,130
9,170
2,012
-
11,130
9,170
2,012
22,312
-
-
-
-
-
-
2,506
-
-
-
-
-
2,506
805
805
-
-
2,506
805
3,311
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 2021
Loss allowance recognised/(reversed) during the
year
Loss allowance at 30 June 2022
Expected credit loss
Loss allowance as at 1 July 2020
Loss allowance recognised/(reversed) during the
year
Loss allowance at 30 June 2021
2022
Trade and other
receivables
$'000
2,506
(760)1
1,746
2021
Trade and other
receivables
$'000
2,328
178
2,506
Loans
$'000
805
(19)
786
Loans
$'000
848
(43)
805
Contract
Assets
$’000
-
-
-
Contract
Assets
$’000
-
-
-
Total
$'000
3,311
(779)
2,532
Total
$'000
3,176
135
3,311
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.
1$0.7m included in other income
PAGE 47
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
7.2.3.1 Analysis of financial instrument by days past due status
Ageing Analysis
Total
$'000
Trade receivables and contract assets
5,200
Loan receivables – advisers
1,194
2022
0–30
31–60
61–90
Days
61–90
Days
+91
Days
+91
Days
Not
due
87
-
Days
$'000
4,947
26
Days
$'000
57
26
PDNI
$'000
46
25
CI
$'000
-
-
PDNI
$'000
63
331
CI
$'000
-
786
2021
0–30
Days
$'000
4,046
2
Total
$'000
6,664
922
31–60
Days
$'000
54
2
61–90
Days
PDNI
$'000
45
1
61–90
Days
CI
$'000
-
-
+91
Days
PDNI
$'000
2,519
112
+91
Days
CI
$'000
-
805
Trade receivables and contract assets
Loan receivables – advisers
* Past due not impaired (PDNI) and Currently impaired (CI)
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:
PAGE 48
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
2022
Weighted
average
effective
interest rate
Fixed
Fixed
≤ 6
Months
> 6
Months
Non-
interest-
bearing
Total carrying
amount per
balance sheet
Variable
%
$'000
$'000
$'000
$'000
$'000
Financial Assets
Cash and cash equivalents
0.08
4,081
10,661
-
14,742
Trade and other
receivables
Loans
Contract assets
Investments in unlisted
shares
Total financial assets
Financial Liabilities
Trade and other payables
Lease liabilities
3.51
Total financial liabilities
Net Exposure
-
-
1.81
-
150
-
-
1,044
(786)
-
-
-
-
-
5,113
4,231
1,044
9,875
-
-
-
-
2,520
2,520
-
-
-
4,231
(1,476)
9,875
(4,729)
-
87
116
5,316
10,045
-
10,045
2021
Weighted
average
effective
interest rate
Fixed
Fixed
≤ 6
Months
> 6
Months
Non-
interest-
bearing
Total carrying
amount per
balance sheet
Variable
%
$'000
$'000
$'000
$'000
$'000
Financial Assets
Cash and cash equivalents
0.05
4,792
Trade and other receivables
Loans
Contract assets
Investments in unlisted
shares
Total financial assets
Financial Liabilities
Trade and other payables
2.27
-
-
10
-
-
-
-
913
-
-
6,338
-
284
-
-
4,802
913
6,622
Lease liabilities
3.51
Total financial liabilities
Net Exposure
-
-
-
4,802
-
490
490
423
-
-
-
6,622
(3,034)
-
6,664
-
-
116
6,780
9,814
-
9,814
5,113
408
87
116
20,466
10,045
2,520
12,565
7,901
11,130
6,664
1,207
-
116
19,117
9,814
490
10,304
8,813
PAGE 49
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
7.2.4.2 Price risk
The Group’s exposure to commodity and equity securities price risk is significant because a portion of the Group’s net advice and
investment products revenue is governed by the amount of funds under management or under advice, which is impacted by the
market price of equities and other investment assets.
This risk is effectively a feature of the financial advice industry and cannot easily be managed. However, the increasing proportion
of fee for service revenue and the ability of the Group to adjust resource inputs in relation to market movements decreases the level
of risk.
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 88% (30 June 2021:
83%) 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.
The tables below are based on the carrying values at reporting date and include future expected cash flows.
2022
≤ 6 Months
6–12 Months
1–5 Years
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans
Contract assets
Investments in unlisted shares
Total financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
Net Maturity
$'000
14,742
3,390
150
87
-
18,369
10,045
-
10,045
8,324
Total
$'000
$'000
$'000
-
99
142
-
-
-
14,742
1,624
902
-
116
5,113
1,194
87
116
241
2,642
21,252
-
507
507
(266)
-
2,013
2,013
629
10,045
2,520
12,565
8,687
PAGE 50
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
2021
≤ 6 Months
6-12 Months
1-5 Years
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans
Contract assets
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
$'000
11,130
4,333
9
-
-
15,472
9,814
-
9,814
5,658
$'000
-
153
9
-
-
162
-
438
438
$'000
-
2,178
904
-
116
-
52
52
Total
$'000
11,130
6,664
922
-
116
9,814
490
10,304
8,528
3,198
18,832
(276)
3,146
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.
PAGE 51
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
Financial instruments measured at fair value on recurring basis
30 June 2022
Equity instruments designated at FVTOCI
Unlisted shares
Total assets
30 June 2021
Equity instruments designated at FVTOCI
Unlisted shares
Total assets
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
116
116
Level 1
$'000
Level 2
$'000
Level 3
$'000
–
–
–
–
116
116
Total
$'000
116
116
Total
$'000
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.
Reconciliation of Level 3 fair value measurements of financial assets
30 June 2022
Balance at beginning of year
Total gains or losses:
in profit or loss
Balance at end of year
30 June 2021
Balance at beginning of year
Total gains or losses:
in profit or loss
Balance at end of year
Fair value measurements
FVTOCI Unlisted shares
$'000
116
-
116
FVTOCI Unlisted shares
$'000
116
–
116
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
PAGE 52
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
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.
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.
The investment in unlisted shares are classified within level 3 and have significant unobservable inputs as they are infrequently
traded. The fair value is measured based on the discounted expected cash flow from the investment as this investment is due for
liquidation, as described in 7.1.5.
PAGE 53
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Shareholder returns
8. Dividends
On 23 August 2022, 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 2022. Total dividend declared was $1,958,818.89 with 15 September 2022 as
the record date and 29 September 2022 as the payment date.
On 23 February 2022, the Directors of Centrepoint Alliance Limited declared an interim fully franked ordinary dividend totalling 0.5
cents per share in respect of the half-year ended 31 December 2021. The total dividend paid was $979,412.27, with 3 March
2022 as the record date and 18 March 2022 as the payment date.
Ahead of Centrepoint Alliance’s acquisition of ClearView Advice on 16 September 2021, a fully franked special dividend of 1.0
cent per share was declared. Total dividend paid was $1,478,818.89, with 29 October 2021 as the record date and 10 November
2021 as the payment date.
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. Total dividend paid was $1,442,829.69 with 24 September 2021 as the
record date and 8 October 2021 as the payment date.
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
2022
$'000
2021
$'000
2,423
1,479
3,902
2022
$'000
1,443
4,328
5,771
2021
$'000
b. Franking credit balance
Franking account balance as at the end of the financial year
13,363
15,019
The tax rate at which paid dividends were franked is 30%. Franking credits are reported on a tax paid basis.
PAGE 54
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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:
2022
$'000
2021
$'000
a. Profit used in calculating profit per share
Net profit attributable to ordinary equity holders of the Company
6,492
1,847
b. Weighted average number of shares
Weighted average number of ordinary shares
Effect of dilution:
Performance rights and LTI shares
Weighted average number of ordinary shares (excluding reserved shares)
adjusted for the effect of dilution
Basic profit cents per share
Diluted profit cents per share
No. of shares
No. of shares
178,759,981
144,282,969
14,787,249
11,763,425
193,547,230
156,046,394
3.63
3.35
1.28
1.18
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 55
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Capital and funding s truc tur e
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:
issue of shares
On issue at end of year
Total contributed equity
b. Capital management
2022
$'000
47,594
47,594
2022
2022
2021
Number of shares
$'000
Number of shares
2021
$'000
34,301
34,301
2021
$'000
144,282,969
34,301
144,282,969
34,301
51,598,920
195,881,889
195,881,889
13,293
47,594
47,594
-
144,282,969
144,282,969
-
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.
PAGE 56
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
11. Reserves
Employee equity benefits reserve
Dividend reserve
Total reserves
a. 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
Transfer of vested performance rights to share capital
Balance at end of year
2022
$'000
1,565
1,986
3,551
2022
$'000
339
1,560
(22)
(312)
1,565
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.
b. Dividend reserve
Balance at start of year
Dividends paid
Balance at end of year
2022
$'000
2021
$'000
5,888
(3,902)
1,986
11,659
(5,771)
5,888
PAGE 57
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
12. Acquisition of subsidiaries
On 1 November 2021, the Group paid $3.17m in cash for the net working capital of the ClearView Advice business and $12.98m
in escrowed Centrepoint Alliance Limited (CAF) shares to acquire 100% of the ClearView Advice business comprising LaVista,
Matrix and CFA, from ClearView Wealth Limited (ASX: CVW). In accordance with the Share Purchase Agreement, 48 million
ordinary, fully paid shares in CAF were issued at $0.25 per share. For the purposes of the accounting valuation, the shares were
valued at $0.27 per share being the 30-day VWAP prior to the acquisition date of 1 November 2021.
CFA and Matrix are mid-sized AFS Licensed dealer groups, both providing traditional dealer group licensing support to a network
of 161 advisers at 30 June 2022. LaVista, with a network of 128 advisers across 41 adviser practices, provides outsourced B2B
licensee services to self-licensed financial advisers and support services to third party dealer groups.
ClearView Advice benefits from best in class technology, having fully integrated Lumen software, which allows for automated
compliance monitoring and supervision across all clients under the licensee. With strong management and compliance
processes, the existing infrastructure can be scaled to support a larger number of AFSLs and financial advisers, thereby creating
significant profit uplift due to material labour synergies.
The transaction provides the combined entity with immediate scale, a strong and effective management team, best of breed
technology and processes, and the capability to take a market-leading position in the financial advice industry to build a
strategically successful and profitable financial advice business. Centrepoint Alliance and ClearView benefit from a close cultural
alignment, focusing on high quality, affordable and technology-driven advice services, and the combined are complementary.
12.1 Impact of acquisition on the results of the Group
From the acquisition date to 30 June 2022, ClearView Advice contributed gross profit of $6.8m to the Group’s results.
The Group did not disclose the ClearView Advice profit for the eight month period to 30 June 2022 as the presentation of the
standalone profit in isolation from the Group profit does not provide an accurate reflection of the transformational profit impact the
acquisition has had on the combined business. In addition, the Group did not estimate the consolidated profit and revenue if the
acquisition occurred at the start of the period 1 July 2021. It is not practical to calculate this due to the different bases of charging
management expenses prior to the acquisition versus post-acquisition.
12.2 Acquisition-related costs
The Group has incurred acquisition-related professional fees of $529,653 representing legal fees and due diligence costs. These
costs have been expensed as they were not directly attributable to the issue of shares.
Legal and advisory services
Employment contract
Exit Tax Review
Valuation
Share registration
Total acquisition cost
12.3 Consideration transferred
The below table outlines the purchase consideration resulting from the acquisition.
Cash
Equity instruments issued
Less receivable from ClearView Wealth Ltd
Total consideration
Cost ($)
475,826
7,670
3,200
18,752
24,205
529,653
$’000
3,170
12,981
(30)
16,121
PAGE 58
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
12.4 Assets acquired and liabilities assumed at the date of acquisition
The following table summarises the recognised amount of assets acquired and liabilities assumed at the date of acquisition.
ClearView
Financial
Advice Pty
Ltd
LaVista
Licensee
Solutions
Pty Ltd
Matrix
Planning
Solutions
Ltd
Group Total
$'000
$'000
$'000
$'000
Current Assets
Cash and cash equivalents
Trade receivables
Prepayments
Non-Current Assets
Other assets
Current Liabilities
Trade and other payables
Provisions
2,682
207
27
28
537
21
489
-
-
-
-
-
349
109
41
-
85
-
Net identifiable assets acquired
2,764
207
414
Net identifiable intangible asset acquired
Goodwill arising on acquisition
Deferred tax liability
Net assets acquired
2,764
207
414
3,238
136
69
537
106
489
3,385
8,691
6,652
(2,607)
16,121
The fair value of the trade and other receivables and liabilities acquired as part of the business combination amounted to
$3.385m.
The value of net assets acquired is lower than the target net assets of $3.415m and hence a $30k working capital adjustment is
recorded as a receivable from ClearView Wealth Ltd.
The following account balances have been measured on a provisional basis: Trade receivables, Other assets, Trade and other
payables and Provisions for client claims.
These provisional balances will be adjusted within one year of the date of acquisition as facts and circumstances subsequent to
the date of acquisition may change the amounts reported. Accordingly the accounting for the acquisition will be revised. There is
not expected to be a material adjustment from the completion accounts process.
12.5 Equity instruments issued
The fair value of the 48 million ordinary shares issued as part of the consideration paid for ClearView Advice, $12.98m was based
on the 30-day VWAP prior to the acquisition, equating to $0.27 per share.
12.6 Goodwill arising on acquisition
Goodwill of $6.7m arising from the acquisition is principally associated with projected future profitability, growth prospects and the
significant skill and proficiency of ClearView Advice personnel. None of the goodwill arising on this acquisition is expected to be
deductible for tax purposes.
12.7 Identifiable intangible assets arising on acquisition
Identifiable intangible assets of $8.7m arose in the acquisition of ClearView Advice because the acquisition included the customer
lists and trade name of ClearView Advice. These assets were identified and separately recognised from goodwill.
PAGE 59
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
12.8 Net cash inflow/(outflow) arising on the acquisition of businesses
Consideration paid in cash
Plus: Cash and cash equivalent balances acquired
Net inflow of cash – investing activities
Capital i nv estm ent
13. Property, plant and equipment
Key accounting policies
$’000
(3,170)
3,238
68
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.
PAGE 60
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
Disposals
At 30 June 2022
Depreciation and impairment
At 1 July 2020
Depreciation charge for the year
Disposals
At 30 June 2021
Depreciation charge for the year
Disposals
At 30 June 2022
Net carrying value
At 30 June 2022
At 30 June 2021
Leasehold
Improvements
$'000
1,535
-
(317)
1,218
172
-
1,390
1,410
29
(290)
1,149
47
-
1,196
194
69
Plant and
Equipment
$'000
2,959
58
(38)
2,979
231
(106)
3,104
2,660
119
(26)
2,753
145
(83)
2,815
289
226
Total
$'000
4,494
58
(355)
4,197
403
(106)
4,494
4,070
148
(316)
3,902
192
(83)
4,011
483
295
PAGE 61
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
14. 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
2022
$'000
711
48
44
179
191
1,173
2021
$'000
799
26
5
307
219
1,356
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.
PAGE 62
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
The table below summarises the carrying amount of the right-of-use assets for the Group’s building and equipment leases:
Cost
1 July 2021
Additions
Terminations
At 30 June 2022
Accumulated depreciation
At 1 July 2021
Depreciation charge for the year
Terminations
At 30 June 2022
Carrying amount
At 30 June 2022
At 30 June 2021
Building
Equipment
$'000
$'000
1,945
2,696
(1,570)
3,071
1,441
699
(1,570)
570
2,501
504
36
-
-
36
24
12
-
36
-
12
Total
$'000
1,981
2,696
(1,570)
3,107
1,465
711
(1,570)
606
2,501
516
The Group leases include buildings and equipment, and the average lease term is three years (30 June 2021: three years).
Approximately 33% of the leases expired in the current financial year (30 June 2021: 25%). The Group recognised right-of-use
assets of $2.7m (30 June 2021: $0.4m).
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
More than 3 years
Total
2022
$'000
606
499
533
1,162
2,800
2021
$'000
447
53
-
-
500
PAGE 63
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
15. 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
xseedwealth Pty Ltd (xseedwealth)
•
• Ventura Investment Management Limited (Ventura)
•
• Centrepoint Alliance Lending Services Pty Ltd (Centrepoint Lending Services)
•
• Enzumo Corporation & Consulting Pty Ltd
Investment Diversity Pty Ltd (Investment Diversity)
PAGE 64
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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 cash flows for the financial years ending 30 June 2022-2026 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 2021: 1.0%) represents the terminal growth rate (beyond five years).
•
• Discount rate used is 13.10% – 16.40% (30 June 2021: 13.10% – 16.40%) in the impairment testing for the CGU’s as at 30
June 2022.
The goodwill and other identifiable intangibles disclosed in the Statement of Financial Position at 30 June 2022 were supported
by the impairment testing and no impairment adjustment was required.
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 10% in financial year 2023 and remain flat from financial year 2024 to 2027 with a
5% increase in the employment cost base from financial year 2023 to 2027, 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 46% before carrying amount would exceed
recoverable amount. The Group believes the risks associated with the cash flows 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.
PAGE 65
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Intangible
asset
Goodwill
Networks and
client lists
(excluding
Enzumo and
ClearView
Advice client
contracts)
Software
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 $0.5m
(adjusted for DTL
impact in current
financial year) and
from the acquisition of
ClearView Advice on 1
November 2021 of
$6.7m.
The current carrying
value of goodwill is
$8.1m.
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 2022 is nil
(30 June 2021: nil)
The Group has
developed or acquired
software, which is
being amortised over
their expected useful
lives.
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 2021:
1.0%).
Cost of capital: 13.10% (30 June 2021:
13.10%).
The testing resulted in no impairment being
required.
Adviser network businesses and client lists
are fully amortised in previous years and
hence no impairment testing is required.
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.
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.
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.
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.
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.
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
PAGE 66
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Intangible
asset
Description of the
Group’s intangible
assets
Impairment Test
Key Accounting Policies
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 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 for Enzumo and 11years for
ClearView Advice.
There were no events or changes in
circumstances that indicate that the
carrying amount of the client contracts may
not be recoverable and therefore is not
impaired.
The value of the acquired Enzumo and
ClearView Advice 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 and ClearView Advice
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
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 and
ClearView Advice
acquisition at fair
value on acquisition
date as determined by
an independent
valuer.
The current carrying
value of customer
relationships is $8.3m
(30 June 2021:
$0.9m).
The Group has
acquired the Enzumo
and ClearView Advice
Brand and trademarks
as part of the
respective acquisitions
at fair value on
acquisition date as
determined by an
independent valuer.
The current carrying
value of trade name is
$0.7m (30 June 2021:
$0.1m).
The estimated useful lives in the current and comparative periods are as follows:
Software
Network and Client Lists/Relationships
5 years
5-11 years
PAGE 67
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Reconciliation of carrying amounts at the beginning and end of the financial year
Financial year ending 30 June 2022
At 1 July 2021 net accumulated amortisation and
impairment
Additions
Amortisation
At 30 June 2022 net accumulated
amortisation
At 30 June 2022
Cost
Accumulated amortisation and impairment
Net carrying value
Goodwill
Software
Client Contracts
$'000
$'000
$'000
Trade
Name
$'000
Total
$'000
1,095
6,997
971
-
-
(313)
917
8,051
(619)
101
642
-
3,084
15,690
(932)
8,092
658
8,349
743
17,842
8,345
(253)
8,092
5,295
(4,637)
658
19,618
(11,269)
743
34,001
-
(16,159)
8,349
743
17,842
Goodwill
Software
$'000
$'000
Client
Contracts
$'000
Trade
Name
$'000
Total
$'000
Financial year ending 30 June 2021
At 1 July 2020 net accumulated amortisation and
impairment
Additions
Amortisation
1,095
-
-
At 30 June 2021 net accumulated amortisation
1,095
At 30 June 2021
Cost
Accumulated amortisation and impairment
Net carrying value
1,348
(253)
1,095
1,275
12
(316)
971
5,295
(4,324)
971
1,151
101
3,622
-
(234)
917
-
-
101
12
(550)
3,084
11,568
101
18,312
(10,651)
-
(15,228)
917
101
3,084
PAGE 68
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Risk manag ement
16. 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.
Reported open legacy claims at 30 June 2022 has reduced to 1 claim (30 June 2021: 2). There are 10 Non-Legacy claims at 30
June 2022 (30 June 2021: 14), 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
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.
Make good costs for
leased property
A provision for make good costs for leased property is recognised when a make good obligation
exists in the lease contracts. The provision is the best estimate of the present value of the
expenditure required to settle the make good obligation at the reporting date.
PAGE 69
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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 provision acquired on ClearView Advice acquisition
Claims settlements and fees paid
Closing balance
b. Movement in provision for employee benefits
Opening balance
Movement in the provision is as follows:
Provision expense for the year
Provision for employee benefits acquired on ClearView Advice acquisition1
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 paid/released for the year
Closing balance
1 Funded by ClearView Advice
2022
$'000
1,603
3,656
25
5,284
414
54
468
2022
$'000
1,875
-
275
(547)
1,603
2022
$'000
2021
$'000
1,875
3,089
206
5,170
365
5
370
2021
$'000
3,019
8
-
(1,152)
1,875
2021
$'000
3,454
3,601
2,722
1,011
(3,117)
4,070
2022
$'000
211
(132)
79
3,061
-
(3,208)
3,454
2021
$'000
216
(5)
211
PAGE 70
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
17. 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 generates client compensation claims.
On 18 June 2019, ASIC announced that it had approved a change to Australian Financial Complaints Authority (AFCA) rules to
allow it to investigate certain complaints dating back to 1 January 2008. The AFCA extension period ended in June 2020. Open
legacy claims during the year remain minimal. Non-Legacy claims continue, and given the variability of settlement amounts, a
general provision at 30 June 2022 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 2022.
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 2022
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 255* PIS and AW practices, 237 (93%) have been reviewed with
16% identified with a Fee for No Service (FFNS) issue. Refunds of $0.61m are being paid or are expected to be paid by the
practices.
As part of acquiring the ClearView Advice business, a further $0.2m provision was assumed for the remediation costs payable to
advisers’ clients.
18. Remuneration of auditors
The primary auditor of the Group is BDO Audit Pty Ltd.
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
Fees for statutory assurance services that are required by legislation to be provided by
the auditor
Fees for other services (predominantly taxation)
2022
$
2021
$
374,700
285,000
71,300
69,430
74,500
89,730
515,430
449,230
* Note: Includes out of scope practices
PAGE 71
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
Other i nformati on
19. 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 loss
Total Shareholder Equity
Net loss after tax of the parent entity
Total comprehensive loss of the parent entity
At reporting date, the Parent has given nil guarantees to external parties (30 June 2021: nil).
2022
$'000
34,225
17,674
(41,959)
(5)
9,935
46,107
832
(37,004)
9,935
(7,312)
(7,312)
2021
$'000
6,598
1,681
(107)
(4)
8,168
33,126
4,733
(29,691)
8,168
(7,061)
(7,061)
PAGE 72
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
20. Related party disclosures
a. Information relating to investments
Name
Licensee and Advice Services
Country of
Incorporation
Ownership
Interest
Principal Activity
2022
2021
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
ClearView Financial Advice Pty Ltd
Matrix Planning Solutions Ltd
Lavista Licensee Solutions Pty Ltd
Funds Management and Administration
Australia
Australia
Australia
100%
100%
100%
0% Financial advice
0% Financial advice
0% Financial advice
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
Australia
100%
100% Service company
Centrepoint Wealth Pty Ltd
Australia
100%
100% Holding company
De Run Securities Pty Ltd
Australia
56%
56% Financial services
Presidium Research and Investment Management
Pty Ltd (formerly Imagine Your Lifestyle Pty Ltd)
Australia
100%
100% Dormant
Professional Accountants Pty Ltd
Australia
100%
100% Loans to advisers
Ginger Group Financial Services Limited
New Zealand
50%
50% Financial advice
Enzumo Corporation Pty Ltd
Australia
100%
100% Service company
Enzumo Consulting Pty Ltd
Australia
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
As part of the acquisition of the ClearView advice business, ClearView Wealth Ltd was issued 48,000,000 shares equating to
24.5% interest in the Group. As such the Group is an associate of ClearView Wealth Ltd. A number of agreements were entered
into with ClearView Wealth Ltd on arm’s length terms and conditions which include:
• Traditional products services agreement in which the dealer group under Centrepoint Alliance Ltd continued to provide services
for ClearView’s traditional products until 30 April 2022, totalling $150k;
• Transition services agreement in which ClearView provided transition services to the dealer group for up to four months after the
sale totalling $64k;
• Trademark license agreement in which ClearView grants to ClearView Financial Advice Pty Ltd a non-exclusive, royalty-free,
transferrable and sublicensable license to use the ‘ClearView Financial Advice’ trademark until 31 December 2022;
• Agreement for Centrepoint to provide to ClearView educational services for the period to 30 June 2022 totalling $86k GST
exclusive;
• Agreement for Centrepoint to pay ClearView Director fees to Mr Simon Swanson for the period from 1 November 2021 to 30
PAGE 73
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
June 2022 totalling $40k.
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 2022,
the Group has not recorded any impairment of receivables relating to amounts owed by related parties (30 June 2021: 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 other transactions with related parties other than those disclosed in this
note.
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
Share based payment expense
Termination/resignation benefits
Total compensation
2022
$
1,334,539
74,991
1,368,195
-
2,777,725
2021
$
1,397,172
69,848
-
453,306
1,920,326
PAGE 74
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
21. 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
Expense arising from performance rights
Total
Key accounting policies
i) Equity-settled transactions:
2022
$
1,560,181
1,560,181
2021
$
259,928
259,928
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.
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.
PAGE 75
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
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.
Movements during the year
There are 15,000,000 performance rights existing at 30 June 2022 issued in the current and previous financial years that 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. In September 2021, 1,551,080 ($22.4k) of the total
performance rights of 5,150,000 had lapsed and did not meet market conditions. This was reclassified to retained earnings in the
period, with no change to total equity. The remaining 3,598,920 vested performance rights were converted to ordinary CAF
shares.
On 1 November 2021, the Board of Directors approved 8,000,000 performance rights to be issued to the CEO and on 11
November 2021 the Board of Directors approved 3,000,000 performance rights to be issued to the CFO. The total accounting
expense recognised in the year is $1,560,181. Of this, $1,368,195 pertains to the performance rights issued during the year.
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.
(ii) Performance rights under the CESP
Outstanding at beginning of period
Granted during the financial year
Vested during the financial year
Lapsed during the financial year
Outstanding at end of the financial year
2022
No
WAEP1
No
WAEP1
2021
9,150,000
11,000,000
(3,598,920)
(1,551,080)
15,000,000
-
12,550,000
0.403
-
-
-
-
(3,400,000)
0.403
9,150,000
–
–
–
–
–
1 WAEP is weighted average exercise price
PAGE 76
ANNUAL REPORT 2022 | Notes to the Consolidated Financial Statements
22. Events subsequent to the balance sheet date
An agreement was executed between Ventura Investment Management Limited (a subsidiary of the Group which holds an AFS
License), and Russell Investment Management Limited (Russell) on 9 February 2022. This resulted in the investment
management rights in relation to five Ventura funds being transferred to Russell following the satisfaction of several condition
precedents (including Unitholder approval). This transfer took place in June 2022. The remaining four Ventura funds have been
closed to investors and were wound up in July 2022.
Other than the events above and the dividend declaration in Note 8, 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.
PAGE 77
ANNUAL REPORT 2022 | Directors’ Declaration
Directors’ Declaration
30 June 2022
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
2022 are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of its financial position as at 30 June 2022 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 2022.
On behalf of the Directors:
A. D. Fisher
Chair
23 August 2022
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
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
(collectively known as the ‘Group’), which comprises the consolidated statement of financial position as
at 30 June 2022, 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 2022 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.
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.
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.
Impairment assessment of intangible assets and goodwill
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures in respect
Our procedures included, among others:
to goodwill and intangible assets,
including their impairment
assessment, are included in Note 15
of the consolidated financial
report. Impairment assessment of
- Obtained an understanding of the key controls associated with the
preparation of the value in use models and critically evaluated
management's methodologies and their documented basis for key
assumptions which are described in Note 15 of the financial report;
intangible assets requires a
-
Challenged key assumptions including forecast growth rates by
significant amount of judgement
and estimation by management in
the determination of cash generat-
ing units (CGU), projected cash
flows, discount rates and growth
rates. The critical assumptions used
by Management are disclosed in
Note 15.
comparing them to historical results, business trends, economic and
industry forecasts and comparable organisations; and discount rates by
analysing against the cost of capital for the Group and comparable
organisations through market data and industry research;
- Working with our valuation specialists, obtained revenue multiples for
comparable companies to establish an independent range to compare
against those used in the discounted cash flow calculation;
The assumptions and complexity of
-
Assessed whether the division of the Group into CGUs at a segment
the calculations have made the
impairment assessment of
intangible assets and goodwill a
Key Audit Matter.
level was consistent with our knowledge of the Group's operations and
internal Group reporting;
-
Evaluated the methodology applied by the Group in allocating
corporate assets and costs across CGUs;
-
Performed tests over the mathematical accuracy of the model and
underlying calculations;
-
-
Applied sensitivity analyses to management’s key assumptions;
Evaluated the useful life of definite-life intangible assets and checked
the amortisation expense for to ensure that the amortisation expense is
calculated consistently with the Group's stated amortisation rates.
Provision for claims
Key audit matter
How the matter was addressed in our audit
The Group has recognised a
Our procedures included, among others:
Reviewed claims and risk committee minutes and inquired management
directly to assess the basis for claims provision recognised;
Inspected evidence claimant and Australian Financial Complaints
Authority (AFCA) correspondences to support the accuracy and
completeness of the provision recognised;
provision in respect to claims for a
total of $1.6 million as disclosed in
Note 16 of the consolidated
financial report.
-
-
The claims provision is for financial
advice provided by authorised
representatives of the Group, along
with claims from external parties
that the Group has become aware
of and assess that payment is
probable.
Provision for claims (continued)
Key audit matter
How the matter was addressed in our audit
The complexity of the estimation of
- Obtained solicitor representations and assessed these against open
the claims require management to
claims provided for;
apply significant judgement to
determine the value of the liable
position.
Business combination
- Obtained and assessed the impact to claims provision of any new
information up to date of signing of the financial report in relation to
developments in claims existing claims and any new claims; and
-
Assessed the appropriateness of the disclosure note in relation to the
claims provision.
Key audit matter
How the matter was addressed in our audit
As disclosed in note 12 of the
Our procedures included, among others:
consolidated financial report, the
Group acquired a 100% equity
interest in three Clearview Advice
businesses.
The audit of the accounting for this
acquisition is a key audit matter due
to the significant judgment and
complexity involved in assessing the
determination of the fair value of
net asset acquired, including the
identifiable intangible assets.
-
-
-
Inspected the sale and purchase agreement to verify the costs of
acquisition and assess the accounting impact of any conditions
relating to the acquisition;
Reviewed the appropriateness of the accounting treatment for
acquisitions made in the period to ensure compliance with the
Australian Accounting Standards;
Compared the assets and liabilities recognised on acquisition against
the executed agreements and the historical financial information of
the acquired businesses;
- Working with our valuation specialists, critically assessed the
Purchase Price Allocation computation, including assessing the inputs
and methodologies used in identifying and valuing any identifiable
intangible asset; and
-
Assessed the adequacy of the Group's disclosures of the acquisition.
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 2022, 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.
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 11 to 20 of the Directors’ Report of the for
the year ended 30 June 2022.
In our opinion, the Remuneration Report of Centrepoint Alliance Limited, for the year ended
30 June 2022, 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, 23 August 2022
PAGE 82
ANNUAL REPORT 2022 | ASX Additional Information
ASX Additional Information
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 4 August 2022.
1. Class of securities and voting rights
a. Ordinary shares
Ordinary shares of the Company are listed (quoted) on the ASX. There are 1,554 holders of ordinary shares, holding 195,881,889
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
294
434
216
486
124
-
-
-
-
6
The number of shareholders with less than a marketable parcel is 439.
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 Ltd1
ClearView Wealth Limited
Fully paid
No. of Shares
51,987,171
48,000,000
1 Diverger Limited (DVR) has lodged a substantial holder notice with the Company in respect of its relevant interest (under s601(c) and s608(8) of
the Corporations Act) in 39,156,789 shares as a result of the Call Option entered into with Tiga Trading Pty Ltd and Thorney Holdings Pty Limited
dated 23 June 2022. DVR has no right to vote on any securities prior to exercise of the Call Option.
HUB24 Limited (HUB) has lodged a substantial holder notice with the Company in respect of its relevant interest under s608(3)(a) of the
Corporations Act in the same 39,156,789 shares as a result of HUB’s holding of greater than 20% interest in DVR.
PAGE 83
ANNUAL REPORT 2022 | ASX Additional Information
4. Twenty largest holders of quoted equity securities
Ordinary Shareholders
1
2
3
4
5
6
7
8
9
10
11
UBS NOMINEES PTY LTD
CLEARVIEW WEALTH LIMITED
NATIONAL NOMINEES LIMITED
MR ALEXANDER BEARD + MRS PASCALE MARIE BEARD
H&G HIGH CONVICTION LIMITED
BONDIA INVESTMENTS PTY LTD
SUPERTCO PTY LTD
BNP PARIBAS NOMINEES PTY LTD
RICHARD JOHN NELSON + KAYE MARIE NELSON
MS FIONA ROWEENA WILLIAMS
MR JASON MAXWELL YU
12 WAYLEX PTY LTD
13
14
15
16
17
18
19
20
CATHAYS PTY LTD
FETTERPARK PTY LTD
MR DANIEL BARON DROGA + MRS LYNDELL DROGA
MR MARTY CARNE
MR PAUL CULLEN
MRS CHRISTINE ANN MOSSMAN
CHMIEL SUPER PTY LTD
LAYUTI PTY LTD
Fully paid
No. of shares
% Held
54,544,207
48,000,000
7,686,334
7,008,019
5,982,092
5,665,500
3,000,000
27.85
24.50
3.92
3.58
3.05
2.89
1.53
2,808,749
1.43
2,729,660
2,127,140
1,450,000
1,418,051
1,100,000
1,017,603
1,000,000
999,700
999,700
829,600
800,000
688,888
1.39
1.09
0.74
0.72
0.56
0.52
0.51
0.51
0.51
0.42
0.41
0.35
149,855,243
76.48
PAGE 84
ANNUAL REPORT 2022 | 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 8, 309 George 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