Centrepoint Alliance
Annual Report 2024

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More annual reports from Centrepoint Alliance:

2024 Report
2023 Report
2022 Report
2021 Report
2020 Report

Peers and competitors of Centrepoint Alliance:

AGF Management Limited
Australian United Investment Company Limited
The Law Debenture Corporation p.l.c.
Central Securities Corp.
Pengana International Equities Limited

Plain-text annual report

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2024 ABN 72 052 507 507 Contents Directors’ Report ............................................................................................................................................................................... 3 Remuneration Report ...................................................................................................................................................................... 14 Auditor’s Independence Declaration ............................................................................................................................................... 24 Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................................ 25 Consolidated Statement of Financial Position ................................................................................................................................. 26 Consolidated Statement of Cash Flows .......................................................................................................................................... 27 Consolidated Statement of Changes in Equity ................................................................................................................................ 28 Notes to the Consolidated Financial Statements ............................................................................................................................ 29 Directors’ Declaration ...................................................................................................................................................................... 75 Consolidated entity disclosure statement ........................................................................................................................................ 76 Independent Auditor’s Report ......................................................................................................................................................... 77 ASX Additional Information ............................................................................................................................................................. 82 Corporate Directory ......................................................................................................................................................................... 84 PAGE 3 ANNUAL REPORT 2024 | Directors’ Report Directors’ Report For the Year Ended 30 June 2024 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 2024. Directors Georg Chmiel Diplom-Informatiker (Masters equivalent in Computer Science), MBA, CPA (USA), FAICD, FICDM Appointed as independent Non-executive Director on 7 October 2016. Appointed as Chair on 11 January 2024. Experience and expertise Georg Chmiel has three decades of experience in rapidly growing, disruptive online businesses and has led more than 40 acquisitions and seven takeovers across a range of industries. Georg is Co-Founder and Chair of Juwai-IQI Holdings, the largest proptech platform in Asia with a network of more than 40,000 real estate professionals globally. Georg was previously Executive Chair of iCar Asia, Managing Director and CEO of the iProperty Group, Non-executive Director of Mitula Group and Proptech Group, and Managing Director and CEO of LJ Hooker Group, a network of 700 real estate professionals and mortgage broker offices across 10 countries. Georg also held the position of Group CFO and Acting CEO at REA Group. Georg also worked for KPMG, Deutsche Bank and McKinsey. Georg is the recipient of the 2024 Outstanding Corporate Excellence and Sustainability Leadership Award, the 2023 Master Entrepreneur Award (APEA), the 2023 Unicorn Award – Scaleup Tech Icon, the 2022 Excellence Award for Digital Transformation (Malaysia Australia Business Council), the 2022 ASEAN Distinguished Business Leader Lifetime Achievement Award and others. Georg is a CPA (USA), Member of the American Institute of Certified Public Accountants, Fellow of the Australian Institute of Company Directors (AICD) and the Institute of Corporate Directors Malaysia (ICDM), Board Member of the World Digital Chamber, Executive Council Member of the Economic Club Kuala Lumpur (ECKL) and others. Georg holds a Master of Business Administration (MBA) of INSEAD and a Computer Science degree of Technische Universität München (TUM). Martin Pretty Graduate Diploma of Applied Finance, BA, CFA, GAICD Non-executive Director Appointed on 27 June 2014. Experience and expertise Martin brings to the Board over 20 years’ experience in the finance sector. Martin’s experience with ASX-listed financial services businesses included roles with Hub24 Limited, Bell Financial Group Limited and IWL Limited. Martin currently works in the investment management industry and has done so for over a decade since March 2013. He 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 the Financial Services Institute of Australasia (FINSIA). Martin is a CFA charterholder and a graduate of the Australian Institute of Company Directors. PAGE 4 ANNUAL REPORT 2024 | Directors’ Report Other Current Directorships Non-executive Chair of Spacetalk Limited, (ASX:SPA) Non-executive Director of Xamble Group Limited (ASX:XGL) Non-executive Director of Kinatico Limited (ASX:KYP) Former Directorships Non-executive Director of BUTN Limited (ASX:BTN) Executive Chair of iCar Asia Limited (ASX:ICQ) Non-executive Director of PropTech Group Limited (ASX:PTG) Special responsibilities Chair of the Board and member of the Nomination and Remuneration Committee Interests in shares and options 969,191 shares indirectly held Other Current Directorships Non-executive Director and Chair of Scout Security Limited (ASX:SCT) and Non-executive Director and Chair of the Audit and Risk Committee of Spacetalk Limited (ASX:SPA) Special responsibilities Chair of the Nomination and Remuneration Committee and member of the Group, Audit, Risk & Compliance Committee Interests in shares and options 180,000 shares indirectly held PAGE 5 ANNUAL REPORT 2024 | Directors’ Report Linda Fox GAICD, CA ANZ, MBA, Graduate Diploma (Information Systems), B.Comm (Accounting) Non-executive Director Appointed on 1 December 2023 Experience and expertise Linda is a Non-executive director with a background in wealth management, banking and professional services in organisations that include start-ups, global and multi-billion- dollar enterprises. Linda has 25 years of executive experience as a Chief Financial Officer and Chief Operating Officer overseeing businesses in Australia, New Zealand and the Asia Pacific region. She was formerly the CFO for Colonial First State, a large Australian superannuation and investment provider, CFO for the International Division of the Commonwealth Bank of Australia, CFO/COO in organisations such as Merrill Lynch, Schroder Investment Management and SFG Australia – an ASX-listed start-up. Linda is a Chartered Accountant, and a member and graduate of the Institute of Company Directors. She holds an Executive MBA, a Graduate Diploma in Information Systems, and a Bachelor of Commerce. Linda is a passionate supporter of the performing arts. Other Current Directorships Non-executive Director of the Australian Youth Orchestra, and a member of the Compliance Committee of Investors Mutual Limited’s listed and unlisted managed investment schemes. Former Directorships Non-executive Director of QV Equities Limited (ASX:QVE). Special responsibilities Chairperson of the Group Audit, Risk and Compliance Committee. Interests in shares and options Nil Anthony Vogel BEc, MFin Non-executive Director Appointed on 6 December 2023 Experience and expertise Anthony has 20 years’ experience in the finance and investment sectors. He commenced his career at Trowbridge Deloitte before moving into institutional investment roles and funds management. Anthony is currently an investment manager at Thorney Investment Group where he commenced in 2017. Special responsibilities Member of the Group Audit, Risk and Compliance Committee. Interests in shares and options 31,189 shares directly held PAGE 6 ANNUAL REPORT 2024 | Directors’ Report Peter Rollason BSC (Hons), ACA, MAICD Non-executive Director Appointed on 12 December 2023. Experience and expertise Peter brings to the Board more than 35 years of experience in the financial services industry in the UK, Asia and Australia including senior operational roles in banking, finance broking and strategy. Peter’s roles have included responsibility for finance, operations, funding, marketing and business development. His experience includes executive roles with Midland Bank International Division (now HSBC), Kleinwort Benson and NatWest Markets (now Citigroup) in Australia and the Asian region. Peter was also a Corporate Finance partner at Deloitte and executive director of Liberty Financial. Peter qualified as a Chartered Accountant in the UK, is a Fellow and former member of the National Committee of the Australian Securitisation Forum, and a member of the Australian Institute of Company Directors. Other Current Directorships Non-executive Director and Chair of the Audit and Risk Committee of COG Financial Services (ASX: COG), and Chair and Non-executive Director of Sydney Stock Exchange. Special Responsibilities Member of the Group Audit, Risk and Compliance Committee. Interests in shares and options Nil Alan Fisher BCom, FCA, MAICD Chair of the Board, Independent Non-executive Director Appointed on 12 November 2015 and resigned as Chair on 23 August 2023 and Non-executive Director on 30 September 2023. 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 spent 24 years at 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. Other Current Directorships Non-executive Director and Chair of Bionomics Limited (ASX:BNO) and Non-executive Director and Chair of Audit and Risk Committee of Thorney Technologies Limited (ASX:TEK) Former Directorships Non-executive Director of Simavita Limited (ASX:SVA) Non-executive Director and Chair of IDT Australia Limited (ASX:IDT) Special responsibilities Chair of the Board and member of the Nomination and Remuneration Committee. Interests in shares and options Nil PAGE 7 ANNUAL REPORT 2024 | Directors’ Report Alexander Beard BCom, FCA, MAICD Non-executive Director Appointed on 1 January 2020 and resigned 30 September 2023. Experience and expertise Alexander has a long and distinguished career as a director of numerous public companies over the past 26 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 Executive Chairman of Hancock and Gore Limited (ASX: HNG). Non-executive Chairman of Anagenics Limited (ASX:AN1) and FOS Capital Limited (ASX:FOS) Special Responsibilities Member of the Group Audit, Risk and Compliance Committee. Interests in shares and options 575,000 shares directly held 2,457,426 shares indirectly held Simon Swanson BEc, BBus, FCPA, CIP FANZIIF Non-executive Director Appointed on 1 November 2021. Appointed as Chair on 23 August 2023 and resigned as Chair on 11 January 2024 and resigned as Non- executive Director on 31 January 2024. Experience and expertise Simon Swanson is an internationally experienced financial services executive having worked for over 36 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 8 ANNUAL REPORT 2024 | Directors’ Report Company Secretary Kim Larkin 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 23 years of 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. Meetings of Directors The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year, and the number of meetings attended by each Director (while they were a Director or committee member). Members Board of Directors Nomination and Remuneration Committee Group Audit, Risk and Compliance Committee Held Attended Held Attended Held Attended G. J. Chmiel 11 11 1 1 5 5 M. P. Pretty 11 11 3 3 4 4 L.W.Y. Fox1 8 8 N/A N/A 3 3 A. D. Vogel1 8 8 N/A N/A N/A N/A P. Rollason1 8 8 N/A N/A N/A N/A A. D. Fisher2 2 2 1 1 N/A N/A A.D.H. Beard2 2 2 N/A N/A 1 1 S.D. Swanson2 5 5 1 1 N/A N/A 1 Appointed in current financial year 2 Resigned in current financial year 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. PAGE 9 ANNUAL REPORT 2024 | Directors’ Report Operating and Financial Review Operating Review Key Messages Centrepoint has maintained business momentum, delivering another strong year of financial performance. Centrepoint continues to grow the core licensee service business whilst also driving growth in higher margin salaried advice with the acquisition and successful integration of Financial Advice Matters (FAM). FAM is a Queensland financial advice practice. With the acquisition, the salaried advice business has increased from four to 19 in the Centrepoint Group. In addition, Centrepoint has launched of a range of managed accounts, the IQ Portfolios by Ventura, continued to grow its lending business, and is on track to launch the new IconiQ investment and superannuation platform in the first half of 2025. Financial Strong financial performance for the financial year ended 30 June 2024 (FY24) saw Group earnings before interest, tax and depreciation (EBITDA) (before long term incentives (LTI) and one-off) of $9.1m, up $1.5m (+20%) on the prior financial year, mainly due to FAM acquisition, organic licenced fee growth and disciplined expense management. Licensee Services Centrepoint’s Licensee Services division has continued the momentum established over the last three years, and is now a preferred destination of advisers, recording the highest net adviser growth in the market. The financial year ended with 549 authorised representatives, which was an increase of 38 on the prior year – double our nearest competitor. Of the top ten licensees, only three firms recorded net growth, with seven of the top 10 firms collectively losing 327 advisers. Centrepoint’s self-licensed business finished the year with 203 firms, with 825 advisers onboarding 22 new firms, and 16 completed Australian Financial Services Licence (AFSL) applications over the year. This represented 17% of the total number of new financial planning AFSLs issued by the Australian Securities and Investments Commission (ASIC) over the period. Centrepoint is delivering licensee services at scale. Over the year there were 49,130 email service requests and 16,924 service calls, representing a 22% increase on the prior year. All cases are tracked using Salesforce, and 82% of requests are resolved within two days. Salaried Financial Advice Growing the salaried advice division is a key strategic priority due to the high margin contribution and opportunity for further growth. In December 2023 the acquisition of FAM was completed. FAM is one of the largest corporatised financial planning businesses in Queensland, with 15 advisers and 1,550 household clients. The business has performed well, generating revenue of $3.57 million and EBITDA of $1m over seven months from the date of acquisition. Following the acquisition of FAM and the integration with existing salaried advisers, the business now has 19 advisers, servicing over 2,100 household clients. Lending Solutions The core lending aggregation business providing services to 80 brokers and has a loan book of $3.5 billion. A new offer, Lending as a Service, was launched 18 months ago and has continued to grow, with 44 advice firms using the service and over 200 loans settled. The combined lending business generated revenue of $1.7m and EBITDA of $770k in FY2024. Investment Solutions The investment solutions business has progressed two key strategic initiatives, which will deliver revenue diversification and growth over the medium term. In the second half of 2024, a new range of professionally managed portfolios, the IQ Portfolios, were launched on the Macquarie Group Platform and Hub 24. The portfolios are constructed by the Ventura Investment Management Limited team in partnership with Morningstar, which consists of four growth and three income investment options across different risk profiles. PAGE 10 ANNUAL REPORT 2024 | Directors’ Report The development of the new IconiQ investment and superannuation platform in partnership with FNZ, a global leader in platform administration services, has progressed and is on track for launch in the first half of 2025. The investment platform will be launched first, followed by the superannuation platform (The trustee being, Equity Trustees Superannuation Limited). IconiQ will provide customers with a superannuation and investment platform comprised of a broad range of investments at a competitive price point. Risk and Compliance Reinforcing a culture of compliance across the network is an ongoing focus. The Company’s supervision and monitoring framework ensured that throughout the financial year the authorised representatives’ services to customers were monitored which included the compliance audit of 2,336 customer files. A new compliance monitoring system, Hub Connect, has been launched, which provides real time monitoring of key risks across the adviser network. Cybersecurity and resilience Cybersecurity remains a top priority to ensure the protection of both company and customer data. Over the last 12 months, significant efforts have been made to strengthen cybersecurity and resilience. This includes the implementation of a Third Party Cyber and Data Privacy Review Program to enhance oversight of external partners that store customer data. Furthermore, a secure portal has been implemented for all customer communications, enhancing the security of sensitive information exchanges. These proactive measures underscore the Company’s commitment to safeguarding against potential risks and breaches. Regulatory reform The Federal Government has pushed forward with regulatory changes aimed at reducing the regulatory burden for advisers and reducing the cost of advice for consumers. The first tranche of the Delivering Better Financial Outcomes Bill passed in early July 2024, and includes the removal of cumbersome Fee Disclosure Statements, flexibility for delivery of Financial Services Guides and the retention of insurance commissions amongst others. Tranche 2 is due later in calendar year (2024) and will include legislation to replace the lengthy Statement of Advice and modernise the Best Interests Duty, including removing the prescriptive safe harbour steps. Financial Performance and Position For the financial year ended 30 June 2024, the Group reported a net profit after tax of $7.8m compared to a net profit after tax of $6.3m for the financial year ended 30 June 2023. This reflects an increase in gross profit of $1.9m and income tax benefit of $2.4m offset by an expense increase of $2.9m. 30 June 2024 $'000 30 June 2023 $'000 Gross profit from contracts with customers 35,512 31,960 Gross profit 36,637 34,754 Expenses (31,032) (28,140) Profit before tax 5,605 6,614 Income tax benefit/(expense) 2,162 (275) Net profit after tax 7,767 6,339 Gross profit from customer contracts increased by $3.6m from the prior year. This increase is primarily attributed to the FAM acquisition that occurred on 1 December 2023, which has contributed an additional $3.6m to Group revenue. Gross profit increased by $1.9m from prior year. Normalised gross profit increase is $3.6m excluding FY23 one-off revenue of $1.7m (relating to the sale of Ventura Funds business to Russell Investment Management Limited). The drivers of gross profit movement are as follows: PAGE 11 ANNUAL REPORT 2024 | Directors’ Report Gross Profit Movement $’m FY23 Gross profit 34.7 Revenue from FAM 3.6 Increase in revenue from authorised representative fees 1.6 Investment margin revenue reduction (1.0) Partner program and consulting revenue reduction (0.6) Normalisation for one-off revenue in FY23 from the sale of business to Russell Investment Management Limited (1.7) FY24 Gross profit 36.6 Expenses increased by $2.9m, driven by employee-related expenses of $2.3m primarily due to $1.9m in additional employment costs from the FAM acquisition ($1.6m from additional headcount and $0.3m one-off redundancy costs), and an increase in depreciation and amortisation of $0.5m (contributed by the FAM client relationships acquired of $0.2m, AASB 16 amortisation on Right-of-use assets for FAM office premises of $0.2m, and renewal of Melbourne lease during the year of $0.1m). The Group recognised an income tax benefit of $2.2m (30 June 2023: expense of $0.3m). The movement in the current year is predominantly a result of an increase in net deferred tax asset recognised from historical tax losses of $2.0m with the remaining $0.2m being movement in deferred tax balances from temporary differences. The Group continues to assess future taxable income, which is part of the assessment of tax losses to be recognised increasing the income tax benefit in profit and loss. At 30 June 2024 the Group held net assets of $33.3m (30 June 2023: $31.2m), and net tangible assets of $2.8m (30 June 2023: $10.1m) representing net tangible assets per share of 1.42 cents (30 June 2023: 5.13 cents). This reduction is primarily due to the acquisition of FAM. The Group’s net assets increased by $2.2m during the year primarily due to $7.8m net profit after tax, and $0.3m share-based payment expense offset by $5.9m in dividends paid. The dividends paid include a fully franked ordinary dividend totalling $4.0m paid in September 2023 pertaining to the FY23 results, and an interim fully franked ordinary dividend of $1.9m paid in March 2024 pertaining to the 1H24 results. The Group held $12.2m in cash and cash equivalents as at 30 June 2024 (30 June 2023: $15.6m). Cash movement during the year is summarised below: Cash Flow Movement $’000 Cash receipts Gross cash from operations 7,556 Loan borrowings received for FAM acquisition (net of repayments) 3,200 Interest received 436 Convertible loan proceeds 140 Proceeds from sale of investment management rights to Russell Investment Management Limited 207 Cash payments Payment for acquisition of FAM (6,255) Dividend paid to shareholders (net of received) (5,938) Payment for intangible assets and property, plant and equipment (1,301) Repayment of lease liabilities (822) Gross claims paid1 Finance costs (323) (302) Total Movement (3,402) 1Gross claims paid excludes recovery from ClearView Wealth Limited (ClearView) for $0.2m in respect of a ClearView claim indemnified by ClearView pursuant to the Share Sale Agreement between the Company and ClearView. PAGE 12 ANNUAL REPORT 2024 | Directors’ Report Dividends On 22 August 2023, the Company declared a fully franked ordinary dividend of 2.0 cents per share in respect of the results for the year ended 30 June 2023. Total dividend declared was $3,957,637.78 with 15 September 2023 as the record date and 29 September 2023 as the payment date. On 23 February 2024, the Company declared an interim fully franked ordinary dividend of 1.0 cents per share in respect of the results for the half-year ended 31 December 2023. Total dividend declared was $1,988,818.89 with 4 March 2024 as the record date and 18 March 2024 as the payment date. On 21 August 2024, the Company declared a fully franked ordinary dividend of 1.75 cents per share in respect of the results for the year ended 30 June 2024. Total dividend declared was $3,480,433.06 with 20 September 2024 as the record date and 3 October 2024 as the payment date. Shares and Performance Rights A total of 16,697,881 performance rights exist as at 30 June 2024. Total performance rights are comprised of: • 1,000,000 performance rights from FY20 Long-Term Incentive (LTI) offer issued in previous financial years that met vesting conditions but which remain unexercised • 8,000,000 performance rights from FY22 LTI offer issued to CEO on 2 November 2021 • 3,000,000 performance rights from FY22 LTI offer issued to CFO on 24 December 2021, and • 4,697,881 performance rights from FY23 LTI offer issued to CEO, CFO and key senior leaders on 16 December 2022. 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 Other than 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 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. Corporate Governance Statement and Practices The Group’s Corporate Governance Statement for the financial year ended 30 June 2024 was approved by the Board of Directors on 21 August 2024. 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 Secretary 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. PAGE 13 ANNUAL REPORT 2024 | Directors’ Report 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 by such officers. Indemnification of auditor To the extent permitted by law, the Company has agreed to indemnify its auditor – 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 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 14 ANNUAL REPORT 2024 | Remuneration Report Remuneration Report The Remuneration Report for the year ended 30 June 2024 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 and Remuneration Committee (NRC) • 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 this Remuneration 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: G. J. Chmiel Director (non-executive), appointed as Chair on 11 January 2024 M. P. Pretty Director (non-executive) L.W.Y. Fox Director (non-executive), appointed 1 December 2023 A. D. Vogel Director (non-executive), appointed 6 December 2023 P. Rollason Director (non-executive), appointed 12 December 2023 A. D. Fisher Chair and Director (non-executive), resigned as Chair on 23 August 2023 and non-executive Director on 30 September 2023 A. D. H. Beard Director (non-executive), resigned 30 September 2023 S.D. Swanson Director (non-executive), appointed as Chair on 23 August 2023, resigned as Chair on 11 January 2024 and resigned as non-executive Director on 31 January 2024 B. M. Glass Chief Financial Officer J. G. Shuttleworth Chief Executive Officer There were no further changes of KMP after the reporting date and before the signing of this Remuneration Report. PAGE 15 ANNUAL REPORT 2024 | 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 for 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: 2024 2023 2022 2021 2020 GROUP Net profit/(loss) after tax – ($’000) 7,767 6,339 6,492 1,847 (2,000) Earnings per share (EPS)(basic) – (cents per share) 3.92 3.23 3.63 1.28 (1.35) Earnings per share (EPS) (diluted) – (cents per share) 3.51 2.92 3.35 1.18 (1.35) Share price ($) 0.29 0.23 0.29 0.22 0.09 Dividends paid – (cents per share) 3.00 2.00 2.50 4.00 – Nomination and Remuneration Committee (NRC) The role of the NRC includes the setting of policy and strategy for the appointment, compensation and performance review of Directors and executives, approving senior executive service agreements and severance arrangements, overseeing the use of equity-based compensation and ensuring appropriate communication and disclosure practices are in place. Non-executive Directors are not employed under specific employment contracts but are subject to provisions of the Corporations Act in terms of appointment and termination. The Company applies the Australian Securities Exchange (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 2024, 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 performance-based component. 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. PAGE 16 ANNUAL REPORT 2024 | Remuneration Report Employment Contracts Details of the terms of employment of the named Executive KMP are set out below. Those executives that do not meet the KMP definition are not included here. John Shuttleworth Chief Executive Officer Brendon Glass Chief Financial Officer Employment commencement date: 4 August 2021 Employment commencement date: 4 June 2020 Term: No term specified 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). On 16 December 2022, the Board approved the CEO issuance of 865,385 performance rights under the Company’s approved Long-Term Incentive Plan (LTIP). Required notice by Executive KMP 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. 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). On 16 December 2022, the Board approved the CFO issuance of 625,000 performance rights under the Company’s approved Long-Term Incentive Plan (LTIP). Required notice by Executive KMP 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 17 ANNUAL REPORT 2024 | Remuneration Report Details of Remuneration Details of the nature and amount of each element of remuneration for each KMP of the Group are shown in the table below: Short-term benefits Post-employment Long-term benefits Share-based payments Year No. of days remuneration Salary & Fees $ Cash Bonus $ Superannuation $ Cash incentives $ Long service leave $ Performance rights2 $ Shares $ Termination /Resignation payments $ Total $ Performance related % Share related % G. J. Chmiel 2024 366 105,833 - - - - - - - 105,833 - - 2023 365 85,000 - - - - - - - 85,000 - - M. P. Pretty 2024 366 105,000 - - - - - - - 105,000 - - 2023 365 93,333 - - - - - - - 93,333 - - L.W.Y. Fox1 2024 213 44,670 - 4,913 - - - - - 49,583 - - 2023 - - - - - - - - - - - - A. D. Vogel1 2024 208 48,441 - - - - - - - 48,441 - - 2023 - - - - - - - - - - - - P. Rollason1 2024 202 42,706 - 4,698 - - - - - 47,404 2023 - - - - - - - - - - - - A. D. Fisher3 2024 92 25,439 - 2,798 - - - - - 28,237 - - 2023 365 122,172 - 12,828 - - - - - 135,000 - - A.D.H. Beard3 2024 92 19,144 - 2,106 - - - - - 21,250 - - 2023 365 76,923 - 8,077 - - - - - 85,000 - - S.D. Swanson3 2024 162 66,250 - - - - - - - 66,250 - - 2023 365 60,000 - - - - - - - 60,000 - - B. M. Glass 2024 366 325,000 93,000 27,399 - - 65,842 - - 511,241 18.19% 12.88% 2023 365 325,000 132,000 25,292 - - 78,545 - - 560,837 23.54% 14.01% J.G. Shuttleworth 2024 366 450,000 125,000 27,399 - - 184,763 - - 787,162 15.88% 23.47% 2023 365 450,000 100,000 25,292 - - 275,527 - - 850,819 11.75% 32.38% Total 2024 1,232,483 218,000 69,313 - - 250,605 - - 1,770,401 - - Total 2023 1,212,428 232,000 71,489 - - 354,072 - - 1,869,990 - - 1 Appointed in current financial year 2 Accounting expense in accordance with AASB 2, not yet vested 3 Resigned in current financial year PAGE 18 ANNUAL REPORT 2024 | Remuneration Report Performance rights, shares and options awarded, vested, lapsed and forfeited Name Year Grant date Fair value at grant date $ Vesting Date Target share price hurdle $ Expiry date Vested in year No. Lapsed in year No. Forfeited in year No. J. G. Shuttleworth 2022 2-Nov-2021 $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 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 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 Three years from the date of vesting noting that vesting may roll into subsequent years. - - - 2023 16-Dec-2022 $0.10 1-Nov-2025 50% to vest if threshold absolute TSR CAGR1 ≥ TDSP2: - 10% per year3 during performance period4; or - 33% over entire performance period4 100% to vest if threshold absolute TSR CAGR1 ≥ TDSP2: - 15% per year3 during performance period4; or - 52% over entire performance period4 Three months from the date of vesting. - - - 1 Threshold Total Shareholder Return Compounded Annual Growth Rate (TSR CAGR) measured with the use of the Test Date Share Price Start of $0.27 (90-day volume weighted average price of Centrepoint shares on the ASX prior to and including 31 October 2022) 2 Test Date Share Price (TDSP) determined each period using the 90-day volume weighted average price of Centrepoint shares traded on the ASX period prior to and including 31 October annually 3 31 October annually within the performance period 4 31 October 2022 to 31 October 2025 (inclusive) PAGE 19 ANNUAL REPORT 2024 | Remuneration Report Name Year Grant date Fair value at grant date $ Vesting Date Target share price hurdle $ Expiry date Vested in year No. Lapsed in year No. Forfeited in year No. B. M. Glass 2022 24-Dec-2021 $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 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 900,000 shares $0.35 for 700,000 shares $0.42 for 700,000 shares $0.55 for 700,000 shares Three years from the date of vesting noting that vesting may roll into subsequent years. - - - 2023 16-Dec-2022 $0.10 1-Nov-2025 50% to vest if threshold absolute TSR CAGR1 ≥ TDSP2: - 10% per year3 during performance period4; or - 33% over entire performance period4 100% to vest if threshold absolute TSR CAGR1 ≥ TDSP2: - 15% per year3 during performance period4; or - 52% over entire performance period4 Three months from the date of vesting. - - - 1 Threshold Total Shareholder Return Compounded Annual Growth Rate measured with the use of the Test Date Share Price Start of $0.27 (90-day volume weighted average price of Centrepoint shares on the ASX prior to and including 31 October 2022) 2 Test Date Share Price determined each period using the 90-day volume weighted average price of Centrepoint shares traded on the ASX period prior to and including 31 October annually 3 31 October annually within the performance period 4 31 October 2022 to 31 October 2025 (inclusive) PAGE 20 ANNUAL REPORT 2024 | Remuneration Report Reconciliation of the number and fair value of options, shares and performance rights held by KMP Name Balance at the start of the year No. Granted during the year1 No. Value ($) Exercised during the year No. Value ($) Lapsed during the year No. Value ($) Forfeited during the year No. Value ($) Balance at the end of the year No. Vested No. Unvested No. Performance rights J. G. Shuttleworth 8,865,385 - - - - - - - - 8,865,385 - - B. M. Glass 3,625,000 - - - - - - - - 3,625,000 - - 1 Subject to vesting conditions detailed in Performance rights, shares and options awarded, vested, lapsed and forfeited table PAGE 21 ANNUAL REPORT 2024 | Remuneration Report Shareholdings of Key Management Personnel Shares held in Centrepoint Alliance Limited (number) Balance 1 July 2023 Granted as remuneration On exercise of options Net change of other1 Balance 30 June 2024 Ordinary Ordinary Ordinary Ordinary Ordinary G.J. Chmiel 800,000 - - 169,191 969,191 M.P. Pretty 105,000 - - 75,000 180,000 L.W.Y. Fox2 - - - - - A. D. Vogel2 - - - 31,189 31,189 P. Rollason2 - - - - - A.D. Fisher3 - - - - - A.D.H. Beard3 7,812,426 - - (4,780,000) 3,032,426 S.D. Swanson3 - - - - - B.M. Glass - - - - - J. G. Shuttleworth 210,000 - - 6,000 216,000 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 dealings at arm’s length. Shares include indirect interests. 2 Appointed in current financial year 3 Resigned in current financial year Objective Short-term incentives The objective of short-term incentives (STI) is to link the achievement of the Group's operational targets with the remuneration received by the executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and the cost to the Group is reasonable. The purpose of STI is to focus the Group’s efforts on those performance measures and outcomes that are priorities for the Group for the relevant financial year and to motivate the employees to strive to achieve stretch performance objectives. Long-term incentives The objective of long-term incentives (LTI) is to reward executives and certain senior managers in a manner that aligns remuneration with the creation of shareholder wealth. As such, LTI grants are only made to executives and certain senior managers, who are able to significantly influence the generation of shareholder wealth and thus have an impact on the Group's performance against the relevant long-term performance hurdles. Structure Short-term incentives In August 2017, the Directors approved a new executive STI scheme based on EBITDA and the achievement of underlying organisational and team goals. The target EBITDA is approved by the Board for each financial year. STI payable to executives is up to 50% of Total Fixed Remuneration. On an annual basis, after consideration of performance against key performance indicators (KPIs), the NRC 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 qualified employees are made under the 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 NRC. 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. PAGE 22 ANNUAL REPORT 2024 | Remuneration Report Awards Centrepoint Alliance Employee Share Plan (CESP) 2022 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 Centrepoint Employee Share Plan Trust (CESPT) and not converted into fully paid ordinary CAF shares until satisfaction of the vesting conditions which were 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. On 1 December 2022, these performance rights met vesting conditions. The exercise of these rights remains at the discretion of the rights holders until the expiry date of 1 December 2025. During FY24, 2,000,000 performance rights were exercised and converted to shares. 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 was 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. CESP24 On 1 December 2022, the Board of Directors approved 4,697,881 performance rights to be issued to senior leaders 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 16 Employment Contracts for further details. 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. PAGE 23 ANNUAL REPORT 2024 | Remuneration Report 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 2024. The Independence Declaration, which forms part of this report is on page 24. 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. 2024 $’000 2023 $’000 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 418 405 Fees for other services (predominantly taxation) 18 29 436 434 Signed in accordance with a resolution of the Directors. G. J. Chmiel Chair 21 August 2024 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia 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. 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 2024, 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 Partner BDO Audit Pty Ltd Sydney 21 August 2024 PAGE 25 ANNUAL REPORT 2024 | Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Profit or Loss and Other Comprehensive Income Note 2024 $'000 2023 $'000 Revenue Revenue from contracts with customers 4(a) 287,437 271,053 Contractual payments to advisers 4(a) (251,925) (239,093) Gross profit from contracts with customers 35,512 31,960 Interest income 4(b) 548 400 Other income 4(c) 577 2,394 Gross Profit 4(d) 36,637 34,754 Expenses Employee-related expenses 4(e) (19,930) (17,640) Professional services (1,413) (1,390) Depreciation and amortisation (2,549) (2,091) Subscriptions and licences (1,795) (1,846) IT and communication expenses (992) (879) Low value and variable costs related to property and equipment 14(a) (405) (311) Marketing and promotion (506) (475) Travel and accommodation (247) (287) Expected credit loss reversal 7.1.3 52 22 Finance costs 4(f) (414) (136) Client claims (8) (15) Property costs 14(a) (140) (105) Other general and administrative expenses (2,685) (2,987) (31,032) (28,140) Profit before tax 5,605 6,614 Income tax (benefit)/expense 5(a) (2,162) 275 Net profit for the year 7,767 6,339 TOTAL COMPREHENSIVE PROFIT FOR THE YEAR 7,767 6,339 Net profit attributable to: Owners of the parent 7,767 6,339 Non-controlling interests 7.1.6 - - Net profit for the year 7,767 6,339 Total comprehensive profit attributable to: Owners of the parent 7,767 6,339 Non-controlling interests - - Total comprehensive profit for the year 7,767 6,339 Earnings per share for profit attributable to the ordinary equity holders of the parent Cents Cents Basic earnings per share (cents) 9 3.92 3.23 Diluted earnings cents per share (cents) 9 3.51 3.35 The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached Notes. PAGE 26 ANNUAL REPORT 2024 | Consolidated Statement of Financial Position Consolidated Statement of Financial Position Note 2024 $'000 2023 $'000 ASSETS Current Cash and cash equivalents 7.1.1 12,206 15,608 Trade and other receivables 7.1.2 7,736 6,205 Loan receivables 7.1.3 29 17 Contract assets 7.1.4 956 370 Other assets 758 1,168 Total current assets 21,685 23,368 Non-current Loan receivables 7.1.3 85 79 Investments 7.1.5 116 116 Property, plant and equipment 13 413 238 Right-of-use assets 14(b) 2,173 775 Intangible assets and goodwill 15 26,190 17,535 Deferred tax assets 5(c) 7,825 6,002 Other assets 524 - Total non-current assets 37,326 24,745 TOTAL ASSETS 59,011 48,113 LIABILITIES Current Trade and other payables1 7.1.7 10,500 9,271 Unearned income 526 86 Lease liabilities 7.1.8 806 488 Provisions 16 5,244 3,939 Loan payable 7.1.9 1,600 - Total current liabilities 18,676 13,784 Non-current Lease liabilities 7.1.8 1,357 315 Provisions 16 546 417 Loan payable 7.1.9 1,600 - Deferred tax liabilities 5(c) 3,496 2,426 Total non-current liabilities 6,999 3,158 TOTAL LIABILITIES 25,675 16,942 NET ASSETS 33,336 31,171 EQUITY Contributed equity 10(a) 47,768 47,652 Reserves 11 2,225 2,007 Accumulated losses (16,657) (18,606) Equity attributable to shareholders 33,336 31,053 Non-controlling interests 7.1.6 - 118 TOTAL EQUITY 33,336 31,171 1 The 2023 Trade and other payables has been updated in the current financial year to separately categorise the unearned income in the Statement of Financial Position. The Consolidated Statement of Financial Position is to be read in conjunction with the attached Notes. PAGE 27 ANNUAL REPORT 2024 | Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows Note 2024 $'000 2023 $'000 Cash Flows from Operating Activities Cash receipts from customers 289,592 270,717 Cash paid to suppliers and employees (282,036) (266,391) Cash provided by operations 7,556 4,326 Claims and litigation settlements 16(a) (323) (197) Net cash flows provided by operating activities 6(a) 7,233 4,129 Cash Flows from Investing Activities Interest received 436 293 Proceeds from sale of investment management rights 207 1,500 Proceeds from convertible loan 140 160 Payment for intangible assets (898) (526) Payment for property, plant and equipment (403) (53) Payment for acquisition, net of cash acquired 12 (6,255) (115) Dividends received from investments 8 5 Net cash flows (used in)/provided by investing activities (6,765) 1,264 Cash Flows from Financing Activities Repayment of lease liabilities (822) (570) Proceeds from borrowings (net of repayments) 7.1.9 3,200 - Finance costs (302) (29) Dividends paid 8(a) (5,946) (3,928) Net cash flows used in financing activities (3,870) (4,527) Net increase in cash and cash equivalents (3,402) 866 Cash and cash equivalents at the beginning of the year 15,608 14,742 Cash and cash equivalents at the end of the year 7.1.1 12,206 15,608 The Consolidated Statement of Cash Flows is to be read in conjunction with the attached Notes. PAGE 28 ANNUAL REPORT 2024 | Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity Notes Ordinary shares $'000 Dividend reserve $'000 Other reserves $'000 Accumulated losses $'000 Total $'000 Non-controlling interests $'000 Total equity $'000 Balance at 1 July 2023 47,652 58 1,949 (18,606) 31,053 118 31,171 Profit for the year - - - 7,767 7,767 - 7,767 Total comprehensive income for the year - - - 7,767 7,767 - 7,767 Transfer of vested performance rights to share capital 10(a) & 11(a) 116 - (116) - - - - Share-based payment 11(a) & 21(b) - - 344 - 344 - 344 Dividends paid 11(b) - (5,946) - - (5,946) - (5,946) Distribution of profits from dividend reserve 11(b) - 5,936 - (5,936) - - - Acquisition of Non-controlling interest 7.1.6 - - - 118 118 (118) - Balance at 30 June 2024 47,768 48 2,177 (16,657) 33,336 - 33,336 Balance at 1 July 2022 47,594 1,986 1,565 (22,945) 28,200 118 28,318 Profit for the year - - - 6,339 6,339 - 6,339 Total comprehensive income for the year - - - 6,339 6,339 - 6,339 Transfer of vested performance rights to share capital 10(a) & 11(a) 58 - (58) - - - - Share-based payment 11(a) & 21(b) - - 442 - 442 - 442 Dividends paid 11(b) - (3,928) - - (3,928) - (3,928) Distribution of profits from dividend reserve 11(b) - 2,000 - (2,000) - - - Balance at 30 June 2023 47,652 58 1,949 (18,606) 31,053 118 31,171 The consolidated Statement of Changes in Equity is to be read in conjunction with the attached Notes. PAGE 29 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Basis of Preparation 1. Corporate information ................................................................................................................................................................. 30 2. Summary of material accounting policy information .................................................................................................................... 30 Financial performance 3. Segment information ................................................................................................................................................................... 32 4. Revenue and expenses .............................................................................................................................................................. 35 5. Income tax ................................................................................................................................................................................. 37 6. Notes to Statement of Cash Flows .............................................................................................................................................. 41 Working capital 7. Financial assets, liabilities and related financial risk management ............................................................................................. 42 Shareholder return 8. Dividends .................................................................................................................................................................................... 56 9. Earnings per share ...................................................................................................................................................................... 57 Capital and funding structure 10. Contributed Equity .................................................................................................................................................................... 58 11. Reserves ................................................................................................................................................................................... 58 12. Acquisition of subsidiaries ......................................................................................................................................................... 59 13. Property, plant and equipment .................................................................................................................................................. 61 14. Leases (Group as a lessee) ...................................................................................................................................................... 62 15. Intangible assets ....................................................................................................................................................................... 64 Risk management 16. Provisions ................................................................................................................................................................................. 69 17. Contingent liabilities .................................................................................................................................................................. 71 18. Remuneration of auditors .......................................................................................................................................................... 71 Other information 19. Information relating to Centrepoint Alliance Limited .................................................................................................................. 71 20. Related party disclosures .......................................................................................................................................................... 72 21. Share-based payment plans ..................................................................................................................................................... 73 22. Events subsequent to the balance sheet date .......................................................................................................................... 74 PAGE 30 ANNUAL REPORT 2024 | 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 2024 were authorised for issue in accordance with a resolution of the Directors on 21 August 2024. 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 material accounting policy information Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, 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 year. 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 year 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 and inorganic transactions. 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 year. 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 2024. Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at, and for the year ended, 30 June 2024. 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 31 ANNUAL REPORT 2024 | 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 Share-based Payments at the acquisition date; and • assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations 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 Financial Advice Matters Group Pty Ltd (‘FAM’) at fair value on acquisition date of 1 December 2023. 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 FAM. 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 cost 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. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively in accordance with AASB 9 Financial Instruments, with corresponding adjustments against assets and liabilities. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. During the year, a business combination has been completed resulting in a retrospective adjustment to the 31 December 2023 provisional goodwill balance and recognition of net identifiable intangible assets acquired. Refer to Note 12.3. 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. The Directors and management have assessed the impact in the current reporting period of the volatility from current economic events including labour shortages, commodity prices, rising interest rates and general inflation. The Group does not have inflation- linked financial instruments such as external borrowings, and therefore this did not have any financial impact on finance costs. Further, the inflationary impact of increased costs has been largely recovered from the adviser network, and thereby has not affected gross profits. The Group has considered the changes in inflation in its calculation of employee long service provisions and impairment tests of non-current assets, and has determined minimal impact on employee provisions and that none of the non- current assets are impaired. Accounting estimates with significant areas of uncertainty and critical judgements have been applied to the following: • Intangible assets and goodwill – Note 15 • Provision for client claims – Note 16 • Recognition of deferred tax assets – Note 5 • Adviser service fees – Note 17 • Leases – Note 14 • Acquisition of subsidiaries – Note 12 PAGE 32 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 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. 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 This segment represents the business that provides Australian Financial Services Licensee services to financial advisers, mortgage broking services and financial planning and advice services to end clients. Fund management and administration This segment provides investor directed portfolio services and investment management services to financial advisers, accountants and their clients. Consulting services This segment represents the business that provides consulting to both self- licensed 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. The accounting policies of the reportable segments are the same as the Group’s accounting policies. PAGE 33 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Year ended 30 June 2024 Licensee & Advice Services $'000 Funds Management & Administration $'000 Consulting Services $'000 Corporate & Unallocated $'000 Total $'000 Segment revenue Revenue from contracts with customers Authorised representative fees 21,357 - - - 21,357 Advice revenue 259,268 - - - 259,268 Product revenue 1,266 1,816 - - 3,082 Virtual services 2,555 - - 29 2,584 Licensing and managed services1 - - 1,188 (100) 1,088 Consulting services - - 58 - 58 Contractual payments to advisers Advice revenue paid to advisers (251,354) - - - (251,354) Fees paid to advisers/fund managers - (463) (102) (6) (571) Gross profit from contracts with customers 33,092 1,353 1,144 (77) 35,512 Interest income 392 102 2 52 548 Other income 553 67 - (43) 577 Total segment gross profit 34,037 1,522 1,146 (68) 36,637 Other material expenses Interest charges and interest on lease liabilities (94) (8) - (312) (414) Client claims (8) - - - (8) Depreciation and amortisation (375) - (132) (2,042) (2,549) Expected credit reversal/(loss) expenses 73 - (21) - 52 Inter-segment expenses2 (16,393) (622) (908) 17,923 - Total other material expenses (16,797) (630) (1,061) 15,569 (2,919) Segment profit/(loss) before tax 13,207 572 (108) (8,066) 5,605 Income tax expense/(benefit) 65 - (43) (2,184) (2,162) Segment profit/(loss) after tax 13,142 572 (65) (5,882) 7,767 Total comprehensive income/(loss) for the year 13,142 572 (65) (5,882) 7,767 Statement of Financial Position at 30 June 2024 Total assets 44,180 29,742 1,626 (16,537) 59,011 Total liabilities (12,761) (186) (191) (12,537) (25,675) Net assets 31,419 29,556 1,435 (29,074) 33,336 1 Licensing and managed services include an inter-segment allocation whereby revenue is recognised in consulting services and cost is incurred in corporate & unallocated of $100,000. 2 Inter-segment expenses represent employee-related costs and other expenses paid centrally, which are allocated to the segments in which they are incurred. PAGE 34 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Year ended 30 June 2023 Licensee & Advice Services $'000 Funds Management & Administration $'000 Consulting Services $'000 Corporate & Unallocated $'000 Total $'000 Segment revenue Revenue from contracts with customers Authorised representative fees 19,692 - - - 19,692 Advice revenue 242,917 4 - 6 242,927 Product revenue 1,571 2,859 - - 4,430 Virtual services 2,598 - - - 2,598 Licensing and managed services1 2 - - 1,184 (100) 1,084 Consulting services - - 322 - 322 Contractual payments to advisers Advice revenue paid to advisers (238,372) - - - (238,372) Fees paid to advisers/fund managers - (610) (111) - (721) Gross profit from contracts with customers 28,406 2,253 1,395 (94) 31,960 Interest income 315 63 - 22 400 Other income 459 1,715 - 220 2,394 Total segment gross profit 29,180 4,031 1,395 148 34,754 Other material expenses Interest charges and interest on lease liabilities (50) (15) (6) (66) (137) Client claims (15) - - - (15) Depreciation and amortisation (789) - (168) (1,134) (2,091) Expected credit reversal/(loss) expenses 26 - (4) - 22 Inter-segment expenses3 (14,788) (433) (193) 15,414 - Total other material expenses (15,616) (448) (371) 14,214 (2,221) Segment profit/(loss) before tax 8,024 3,314 1,109 (5,833) 6,614 Income tax (benefit)/expense (219) - (43) 537 275 Segment profit/(loss) after tax 8,243 3,314 1,152 (6,370) 6,339 Total comprehensive income/(loss) for the year 8,243 3,314 1,152 (6,370) 6,339 Statement of Financial Position at 30 June 2023 Total assets 37,823 29,195 1,736 (20,641) 48,113 Total liabilities (10,938) (203) (234) (5,567) (16,942) Net assets 26,885 28,992 1,502 (26,208) 31,171 1 During the current financial year, the Group has reclassified the total Licensing and managed services revenue from ‘Licensee & Advice Services’ segment to ‘Consulting Services’ to accurately reflect the segment allocation of revenue. 2 Licensing and managed services include an inter-segment allocation whereby revenue is recognised in consulting services and cost is incurred in corporate & unallocated of $100,000. 3 Inter-segment expenses represent employee-related costs and other expenses paid centrally, which are allocated to the segments in which they are incurred. PAGE 35 ANNUAL REPORT 2024 | 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 Australian Financial Services Licence (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, an additional $2.7m in new adviser contracts (with rebate arrangements offered), resulted in the recognition of $1.3m in revenue ($2.9m since commencement of the rebate arrangement). Advice revenue: Advice revenue can be in the form of a fee received from the product provider, or advice fees deducted from a financial product or received directly from the customers. The Group receives the full amount of advice revenue from either the product provider or the customers and then pays this in full to the adviser unless there is a specific arrangement with the adviser to retain a proportion of the fee to satisfy their authorised representative fee or other debts to the Group. Based on the agreement between the Group and the advisers, the advisers act as an 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, advice revenue earned is retained within the Group. Product revenue: The Group earns revenue through the provision of fund management and portfolio administration services to its customers. Under these arrangements fees charged are calculated 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. Also included in product revenue is partner program revenue, received from the Group’s partners for their participation in the Group's education programs including masterclasses, webinars and an annual conference. 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 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 by negotiating competitive wholesale fees and sharing these benefits with its adviser 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 customer (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. This 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. c. Other revenue Other revenue represents other sundry income received or receivable by the Group. PAGE 36 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements d. Gross profit 2024 $'000 2023 $'000 Revenue Revenue from contracts with customers 4(a) Authorised representative fees 21,357 19,692 Advice revenue 259,268 242,927 Product revenue 3,082 4,430 Virtual services 2,584 2,598 Licensing and managed services 1,088 1,084 Consulting services 58 322 Total revenue from contracts with customers 287,437 271,053 Contractual payments to advisers Advice revenue paid to advisers (251,354) (238,372) Fees paid to advisers/fund managers (571) (721) Total contractual payments to advisers (251,925) (239,093) Gross profit from contracts with customers 35,512 31,960 Interest income 4(b) 548 400 Other income Cost recoveries from advisers 150 308 Income from sale of investment management rights - 1,715 Other 427 371 Total other income 4(c) 577 2,394 Gross profit 4(d) 36,637 34,754 e. Employee-related expenses Employee-related expenses represent employee costs payable by the Group. 2024 $'000 2023 $'000 Employee-related expenses Wages and salaries 19,098 16,996 Employee transaction costs - 112 Share-based compensation expense 344 442 Termination costs 488 90 Total employee-related expenses 19,930 17,640 PAGE 37 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements f. Finance costs The table below summarises the finance costs for the Group: 2024 $'000 2023 $'000 Finance costs Bank charges 112 74 Interest on lease liabilities 73 29 Interest on loans 229 33 Total finance costs 414 136 5. Income tax a. Income tax (benefit)/expense The major components of income tax (benefit)/expense for the years ended 30 June 2024 and 30 June 2023 are: 2024 $'000 2023 $'000 Current income tax expense Current year 244 1,871 Adjustments in respect of current tax of prior period 409 (331) Deferred income tax expense Movements in deferred tax balances (2,815) (1,264) Total Income tax (benefit)/expense (2,162) 275 b. Reconciliation between aggregate tax (benefit)/expense recognised in the income statement and tax expense calculated per the statutory income tax rate The difference between income tax (benefit)/expense provided in the financial statements and the prima facie income tax expense is reconciled as follows: 2024 $'000 2023 $'000 Profit before tax 5,605 6,614 At the Company's statutory income tax rate of 30% (2023: 30%) 1,682 1,984 Non-deductible expenses 479 402 Non-assessable income (377) (516) Utilisation of tax losses (1,540) - Other movements in deferred tax assets/liabilities (2,815) (1,264) Adjustment in respect of current tax for prior period 409 (331) Aggregate income tax (benefit)/expense (2,162) 275 PAGE 38 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements c. Recognised deferred tax assets and liabilities Deferred income tax relates to the following: Statement of Financial Position 2024 $'000 2023 $'000 Deferred tax liabilities Prepayments (2) (30) Intangibles (3,496) (2,426) Gross deferred tax liabilities (3,498) (2,456) Deferred tax assets Provisions for claims 148 291 Provisions for doubtful debts 506 545 Provision for impairment of loan receivables 535 741 Lease liabilities 54 27 General accruals and other costs 69 64 Employee benefits 1,168 980 Recognition from prior year losses 7,540 4,924 Applied revenue tax losses (2,192) (1,540) Gross deferred tax assets 7,828 6,032 Net deferred tax asset offset 7,826 6,002 Deferred tax liability not offset (3,496) (2,426) Following a significant improvement in trading conditions and Group profits over the last three years, and in combination with expectations of Group profits for the foreseeable future, the Group’s previously unrecognised tax losses were reviewed. The Group determined that it is now probable that taxable profits will be available against which historic tax losses can be utilised. As a consequence, an additional deferred tax asset of $2.6m was recognised for these losses at 30 June 2024 bringing total deferred tax assets to $7.8m (30 June 2023: $6.0m). The Group has deferred tax liabilities of $3.5m as at 30 June 2024 (30 June 2023: $2.5m). The recognised deferred tax liabilities on intangible assets arose from the Group’s acquisitions. These are not offset against the deferred tax assets 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: 2024 $'000 2023 $'000 Revenue losses 14,548 28,100 Capital losses 38,252 37,192 Total unrecognised losses 52,800 65,292 The unrecognised revenue losses relate to losses transferred in, which are subject to fractioning under Australian taxation legislation, effectively prescribing 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 continue to 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 $13.6m (30 June 2023: decrease of $3.4m). A net deferred tax asset of $5.3m has been recognised on tax losses that could be utilised during the year (2023: $3.4m) per Note 5(c). PAGE 39 ANNUAL REPORT 2024 | 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’ 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 Group level. The current and deferred tax amounts are measured with 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 formed a consolidated tax group which commenced on 1 July 2007 under the Tax Act (1997). 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 differences 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 40 ANNUAL REPORT 2024 | 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 are 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 Disclosure of Interests in other Entities. 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 41 ANNUAL REPORT 2024 | 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 2024 $'000 2023 $'000 Net profit after income tax 7,767 6,339 Adjustments to reconcile profit before tax to net cash flows: Depreciation and amortisation 2,549 2,091 Expected credit loss reversal (52) (22) (Gain)/loss on disposal of non-current assets (8) 53 Interest received (436) (293) Finance costs 302 29 Share-based compensation expense 344 442 Dividend received from investments (8) (5) Proceeds from convertible loan (140) (160) Proceeds from sale of investment management rights (207) (1,500) Lease modification - (54) Working capital adjustments: (Increase)/decrease in assets: Trade and other receivables (869) (775) Contract assets (742) (317) Other assets 260 323 Deferred tax assets (2,163) 275 (Decrease)/increase in liabilities: Trade and other payables and unearned income 939 (1,154) Provisions for employee benefits 77 (649) Provision for client claims (477) (494) Provision for property make good 78 - Provision for income tax 19 - Net cash from operating activities 7,233 4,129 PAGE 42 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Working capital 7. Financial assets, liabilities and related financial risk management 7.1 Categories of financial instruments 2024 $'000 2023 $'000 Financial assets Note Classification Cash and cash equivalents 7.1.1 Amortised Cost 12,206 15,608 Trade and other receivables 7.1.2 Amortised Cost 7,736 6,205 Loans 7.1.3 Amortised Cost 114 96 Contract asset 7.1.4 Amortised Cost 956 370 Investments in unlisted shares 7.1.5 FVTOCI – equity (designated) 116 116 Non-controlling interests 7.1.6 FVTOCI – equity (designated) - 118 Total financial assets 21,128 22,513 Financial liabilities Trade and other payables 7.1.7 Amortised Cost 10,500 9,357 Lease liabilities 7.1.8 Amortised Cost 2,163 803 Loan payable 7.1.9 Amortised Cost 3,200 - Total financial liabilities 15,863 10,160 Key accounting policies Financial instruments 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); and • 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 PAGE 43 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements other comprehensive income (FVTOCI); and • 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 elections/designations at initial recognition of a financial asset on an asset- by-asset basis: • The Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which AASB 3 Business Combinations applies, in Other Comprehensive Income (OCI); and • The Group may irrevocably designate a debt instrument that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (referred to as the fair value option). Financial liabilities A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Group, or a contract that will or may be settled in the Group’s own equity instruments and is a non-derivative contract for which the Group is, or may be, obliged to deliver a variable number of its own equity instruments, or a derivative contract over own equity that will or may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for a fixed number of the Group’s own equity instruments. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. The Group does not have any financial liabilities which are classified at FVTPL. Other financial liabilities, including trade and other payables, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. 7.1.1 Cash and cash equivalents 2024 $'000 2023 $'000 Cash and cash equivalents 12,206 15,608 Total cash and cash equivalents 12,206 15,608 7.1.2 Trade and other receivables 2024 $'000 2023 $'000 Advice fees receivable 4,752 4,781 Trade receivables 2,984 1,424 Total trade and other receivables 7,736 6,205 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 have been 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 year, 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 44 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.1.3 Loans 2024 $'000 2023 $'000 Current Loan receivables – financial advisers 29 17 Total current loans 29 17 Non-current Loan receivables – financial advisers 872 883 Expected credit losses (787) (804) Total non-current loans 85 79 Total loans 114 96 Loans due from financial advisers have terms ranging from one to five years, and varying interest terms at or above commercial rates. The majority of these loans are secured through charges over assets, by guarantees, or by retention of financial advice fees. Expected Credit Losses 2024 $'000 2023 $'000 Allowance for expected credit losses Opening balance 804 786 Movement in the allowance for expected credit losses (17) 18 Closing balance 787 804 Expected credit loss expense Expected credit loss (reversal)/expense (17) 18 Bad debts reversed (35) (40) Total expected credit loss reversal (52) (22) For details of expected credit losses against loans see Note 7.2.3.1. PAGE 45 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.1.4 Contract assets 2024 $'000 2023 $'000 Contract assets 977 385 Expected credit losses (21) (15) Total contract assets 956 370 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 tenure. Contract assets are subject to expected credit loss impairment assessment based on the expected term of the adviser contract. 7.1.5 Investments in unlisted shares FVTOCI comprise equity securities that 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. 2024 $'000 2023 $'000 Investments 116 116 Total investments 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. Liquidation occurred on 31 July 2022. Final proceeds and accounting for wind-up is in progress with no material appropriation expected to the Group from the liquidation process. 7.1.6 Acquisition of non-controlling interest (NCI) In January 2024, the Group acquired an additional 44% interest in De Run Securities Pty Ltd, increasing its ownership from 56% to 100%. The minority shareholder was a deregistered company, and accordingly the shares were vested in ASIC. In accordance with Rule 35 of the Constitution of the Company the Board effected a compulsory transfer of the shares for nil consideration. The carrying amount of De Run Securities Pty Ltd’s net assets in the Group’s consolidated financial statements on the date of the acquisition was $276k. 2024 $'000 Carrying amount of NCI acquired 118 Consideration paid to NCI - An increase in equity attributable to owners of the Group 118 The equity attributable to owners of the Group has increased due to retained earnings of $118k. On 19 June 2024, De Run Securities Pty Ltd was formally deregistered and the balance sheet subsequently cleared. 7.1.7 Trade and other payables 2024 $'000 2023 $'000 Amounts payable to financial advisers 6,704 6,670 Trade payables 1,286 765 Other creditors and accrued expenses1 2,510 1,836 Total trade and other payables 10,500 9,271 1 Trade and other payables has been updated in the current financial year to exclude unearned income, which has been separately disclosed in the Statement of Financial Position. PAGE 46 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.1.8 Lease liabilities 2024 $'000 2023 $'000 Current Lease liabilities 806 488 Non-Current Lease liabilities 1,357 315 Total lease liabilities 2,163 803 7.1.9 Loan Payable 2024 $'000 2023 $'000 Current Loan payable 1,600 - Non-Current Loan payable 1,600 - Total loans 3,200 - Financing agreement: Unrestricted access was available at reporting date to the following lines of credit: 2024 $'000 2023 $'000 Total facilities Bank loan 8,000 - Total facilities 8,000 - Used at the reporting date Bank loan 4,000 - Total used at the reporting date 4,000 - Unused at the reporting date - Bank loan 4,000 Total unused at the reporting date 4,000 - The Group obtained a $10.0m facility from National Bank of Australia (‘NAB’) with $8.0m approved for the FAM acquisition for a term of three years. On 1 December 2023, $4.0m was drawn down for the FAM acquisition. Interest and principal repayments are made on a quarterly basis and commenced in March 2024 ($0.8m of the $4.0m loan facility has been repaid up to reporting date). The Group continues to be compliant with the debt covenants (Operating Leverage Ratio being 0.35x (max: 2.0x) and Debt Service Coverage Ratio, 8.69x (Min: 2.0x). PAGE 47 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.2 Financial risk management 7.2.1 Risk exposures and responses The Group’s principal financial instruments comprise cash and cash equivalents, trade receivables and payables, loans, 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. 7.2.2 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 counterparties, 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 immaterial. 7.2.3 Sources of credit risk Key sources of credit risk for the Group predominantly emanate from its business activities including loans and trade and other receivables. The Group monitors and manages credit risk by class of financial instrument. The table below outlines such classes of financial instruments identified, their relevant financial statement line item, maximum exposure to credit risk at the reporting date and expected credit loss (ECL) recognised: Maximum exposure to credit risk $'000 Expected credit loss $'000 Class of financial instrument Note Financial statement line Cash and cash equivalents 7.1.1 Cash and cash equivalents 12,206 - Trade and other receivables 7.1.2 Trade and other receivables 9,423 1,687 Loans 7.1.3 Loans 901 787 Contract assets 7.1.4 Contract assets 977 21 Total 23,507 2,495 Key accounting policies Impairment of financial assets The Group recognises loss allowances for ECL 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 results 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 results from all possible default events over the life of the financial instrument (referred to as stage 2 and stage 3). A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial instrument has increased significantly since initial recognition. For all other financial instruments, ECLs are measured at an amount equal to the 12-month ECL. PAGE 48 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 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 economic 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 expectation 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’s 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 2023 and 30 June 2024 are GDP, GDP index, GDP index change and unemployment. Management have derived that GDP has economic correlations to inflation and unemployment, which generally have a corresponding impact on loan performance. PAGE 49 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 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: 2024 Class of financial instrument 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 Cash and cash equivalents 12,206 - - 12,206 - - - - Trade and other receivables1 - 9,423 - 9,423 - 1,687 - 1,687 Loans - - 901 901 - - 787 787 Contract assets - 977 - 977 - 21 - 21 Total 12,206 10,400 901 23,507 - 1,708 787 2,495 1There 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. 2023 Class of financial instrument 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 Cash and cash equivalents 15,608 - - 15,608 - - - - Trade and other receivables - 8,021 - 8,021 - 1,816 - 1,816 Loans - - 900 900 - - 804 804 Contract assets - 385 - 385 - 15 - 15 Total 15,608 8,406 900 24,914 - 1,831 804 2,635 PAGE 50 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 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: 2024 Loans Trade and other receivables Contract Assets Total $'000 $'000 $’000 $'000 Expected credit loss Loss allowance as at 1 July 2023 804 1,816 15 2,635 Loss allowance (reversed)/recognised during the year (17) (129) 6 (140) Loss allowance at 30 June 2024 787 1,687 21 2,495 2023 Loans Trade and other receivables Contract Assets Total $'000 $'000 $’000 $'000 Expected credit loss Loss allowance as at 1 July 2022 786 1,746 - 2,532 Loss allowance recognised during the year 18 70 15 103 Loss allowance at 30 June 2023 804 1,816 15 2,635 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. The majority (89%) of expected credit loss arising from trade and other receivables is due to historical legacy adviser contributions from departed advisers (2023: 80%). Equity instruments classified at FVTOCI The maximum exposure to credit risk of the equity instrument designated at FVTOCI is their carrying amount. PAGE 51 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.2.3.1 Analysis of financial instrument by days past due status Ageing Analysis 2024 Total Not Due 0-30 Days 31-60 Days 61-90 Days PDN 61-90 Days CI +91 Days PDNI +91 Days CI $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Total receivables and contract assets 8,692 1,026 7,380 41 25 - 220 - Loans receivable 901 - 16 1 1 - 96 787 2023 Total Not Due 0-30 Days 31-60 Days 61-90 Days PDN 61-90 Days CI +91 Days PDNI +91 Days CI $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Total receivables and contract assets 6,575 585 5,516 72 70 - 332 - Loans receivable – advisers 900 - 2 1 1 - 91 804 * Past due not impaired (PDNI) and currently impaired (CI) 7.2.4 Market risk 7.2.4.1 Interest rate risk Interest rate risk is the potential for loss of earnings to the Group due to adverse movements in interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations as disclosed below. The Group adopts a policy to minimise exposure to interest rate risk by depositing excess funds in interest-bearing accounts at a variable rate or with short date maturities. A sensitivity analysis has been performed and the Group has determined that a 2% increase/(decrease) in Bank Bill Swap Bid Rate (BBSY) on the Group’s borrowings would (decrease)/increase profit and loss by $52k. 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. PAGE 52 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 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: 2024 Weighted average effective interest rate Fixed ≤ 6 Months Fixed > 6 Months Variable Non- interest- bearing Total carrying amount per balance sheet % $'000 $'000 $'000 $'000 $'000 Financial Assets Cash and cash equivalents 3.55 - - 12,206 - 12,206 Trade and other receivables - - - 7,736 7,736 Loans 13 888 (787) - 114 Contract assets - - (21) 977 956 Investments in unlisted shares - - - 116 116 Total financial assets 13 888 11,398 8,829 21,128 Financial Liabilities Trade and other payables - - - 10,500 10,500 Lease liabilities 4.43 475 1,688 - - 2,163 Loans payable 4.46 800 2,400 - - 3,200 Total financial liabilities 1,275 4,088 - 10,500 15,863 Net Exposure (1,262) (3,200) 11,398 (1,671) 5,265 2023 Weighted average effective interest rate Fixed ≤ 6 Months Fixed > 6 Months Variable Non- interest- bearing Total carrying amount per balance sheet % $'000 $'000 $'000 $'000 $'000 Financial Assets Cash and cash equivalents 1.55 - - 15,608 - 15,608 Trade and other receivables - - - 6,205 6,205 Loans 10 890 (804) - 96 Contract assets - - (15) 385 370 Investments in unlisted shares - - - 116 116 Total financial assets 10 890 14,789 6,706 22,395 Financial Liabilities Trade and other payables - - - 9,271 9,271 Lease liabilities 3.51 81 722 - - 803 Total financial liabilities 81 722 - 9,271 10,074 Net Exposure (71) 168 14,789 (2,565) 12,321 1 Trade and other payables has been updated in the current financial year to exclude unearned income which has been separately disclosed in the Statement of Financial Position. PAGE 53 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.2.4.2 Price risk The Group has a negligible exposure to commodity and equity securities price risk due to the high proportion of the Group’s revenue relating to fee for service revenue in comparison to net advice and investment product revenue. The latter is impacted by the market price of funds under management or under advice. With approximately $272 million in funds under management, a negative market movement of 5-20% would reduce the net advice and investment product revenue by between $64,000 and $258,000. 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 99% (30 June 2023: 92%) 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 is 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 that 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 expected future cash flows. ≤ 6 Months 6-12 Months 1-5 Years Total $'000 $'000 $'000 $'000 Financial assets Cash and cash equivalents 12,206 - - 12,206 Trade and other receivables 7,640 96 - 7,736 Loans 13 16 85 114 Contract assets 956 - - 956 Investments in unlisted shares - - 116 116 Total financial assets 20,815 112 201 21,128 Financial liabilities Trade and other payables 10,500 - - 10,500 Lease liabilities 475 339 1,349 2,163 Loan payable 800 800 1,600 3,200 Total financial liabilities 11,775 1,139 2,949 15,863 Net Maturity 9,040 (1,027) (2,748) 5,265 PAGE 54 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 2023 ≤ 6 Months 6-12 Months 1-5 Years Total Financial assets $'000 $'000 $'000 $'000 Cash and cash equivalents 15,608 - - 15,608 Trade and other receivables 4,421 217 1,567 6,205 Loans 10 8 78 96 Contract assets 370 - - 370 Investments in unlisted shares - - 116 116 Total financial assets 20,409 225 1,761 22,395 Financial liabilities Trade and other payables1 9,271 - - 9,271 Lease liabilities 266 222 315 803 Total financial liabilities 9,537 222 315 10,074 Net Maturity 10,872 3 1,446 12,321 1 Trade and other payables has been updated in the current financial year to exclude unearned income, which is separately disclosed in the Statement of Financial Position. 7.2.4.4 Foreign currency risk The Group pays some costs denominated in foreign currencies (USD), mainly IT subscriptions. Consequently, there is exposure to exchange rate fluctuations – albeit limited. The total cost in FY2024 was $US 57K, therefore exchange risk is low. 7.3 Fair value measurements Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each financial year. The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped by fair value hierarchy level. 7.3.1 Financial instruments measured at fair value on recurring basis Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 30 June 2024 Equity instruments designated at FVTOCI Unlisted shares - - 116 116 Total assets - - 116 116 Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 30 June 2023 Equity instruments designated at FVTOCI Unlisted shares - - 116 116 Total assets - - 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 during the current financial year. PAGE 55 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.3.2 Reconciliation of Level 3 fair value measurements of financial assets FVTOCI Unlisted shares $'000 30 June 2024 Balance at beginning of year 116 Total gains or losses: In profit or loss - Balance at end of year 116 FVTOCI Unlisted shares $'000 30 June 2023 Balance at beginning of year 116 Total gains or losses: In profit or loss - Balance at end of year 116 Fair value measurements The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the relevant Accounting Standard. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly (this is, unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the 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. PAGE 56 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 7.3.3 Summary of valuation methodologies applied in determining fair value of financial instruments Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priorities to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions), and which reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable. Inputs for which market data is not available, and that are developed using the best information available about such assumptions that market participants would use when pricing the asset or liability, are considered unobservable. The fair value of liabilities and the entity's own equity instruments (excluding those relating to share-based payment arrangements) may be valued with reference to observable market information if there is no observable market price in relation to the transfer of such financial instruments. 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; and/or • Income approach – valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value; and/or • Cost approach – valuation techniques that reflect the current replacement cost of an asset at its current service capacity. The investment in unlisted shares is classified within Level 3. The shares are infrequently traded, and therefore have significant unobservable inputs. 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 Note 7.1.5. Shareholder return 8. Dividends On 22 August 2023, the Directors of Centrepoint Alliance Limited declared a fully franked ordinary dividend of 2.0 cents per share in respect of the results for the year ended 30 June 2023. Total dividend declared was $3,957,637.78 with 15 September 2023 as the record date and 29 September 2023 as the payment date. On 23 February 2024, the Directors of Centrepoint Alliance Limited declared an interim fully franked ordinary dividend of 1.0 cent per share in respect of the results for the half-year ended 31 December 2023. The total dividend declared was $1,988,818.89 with 4 March 2024 as the record date and 18 March 2024 as the payment date. On 21 August 2024, the Company declared a fully franked ordinary dividend of 1.75 cents per share in respect of the results for the year ended 30 June 2024. Total dividend declared was $3,480,433.06 with 20 September 2024 as the record date and 3 October 2024 as the payment date. 2024 $'000 2023 $'000 a. Dividends paid or payable The following fully franked dividends were provided for or paid during the year: Dividends paid on ordinary shares 5,946 2,943 Special dividends paid on ordinary shares - 985 Total dividends 5,946 3,928 2024 $'000 2023 $'000 b. Franking credit balance Franking account balance as at the end of the financial year 9,115 11,664 Dividends paid were fully franked at a tax rate of 30%. Franking credits are reported on a tax paid basis. PAGE 57 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 9. Earnings per share Key accounting policies Earnings per share (EPS) Basic EPS is calculated as net profit attributable to shareholders of the Company, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net profit attributable to shareholders of the Company, adjusted for: • Costs of servicing equity (other than 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 computations: 2024 $'000 2023 $'000 a. Profit used in calculating profit per share Net profit attributable to ordinary equity holders of the Company 7,767 6,339 b. Weighted average number of shares No. of shares No. of shares Weighted average number of ordinary shares 198,105,933 196,232,574 Effect of dilution: Performance rights and LTI shares 23,296,801 21,121,618 Weighted average number of ordinary shares (excluding reserved shares) adjusted for the effect of dilution 221,402,734 217,354,192 Basic earnings per share (cents) 3.92 3.23 Diluted earnings per share (cents) 3.51 2.92 There have been no other transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements. PAGE 58 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Capital and funding structur 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 costs arising on the issue of ordinary shares are recognised, net of tax, directly in equity as a reduction of the share proceeds. 2024 $'000 2023 $'000 a. Paid up capital Ordinary shares 47,768 47,652 47,768 47,652 2024 2024 2023 2023 Number of shares $'000 Number of shares $'000 Ordinary shares (issued and fully paid) Balance at start of year 196,881,889 47,652 195,881,889 47,594 Movements during the year: Issue of shares 2,000,0001 116 1,000,000 58 On issue at end of year 198,881,889 47,768 196,881,889 47,652 Total contributed equity 198,881,889 47,768 196,881,889 47,652 1 During the year, 2m performance rights were exercised and converted to ordinary shares. b. Capital management The Company’s capital is currently comprised only 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. 11. Reserves 2024 $'000 2023 $'000 Employee equity benefits reserve 2,177 1,949 Dividend reserve 48 58 Total reserves 2,225 2,007 2024 $'000 2023 $'000 a. Employee equity benefits reserve Balance at start of year 1,949 1,565 Value of share-based payments provided or which vested during the year 344 442 Transfer of vested performance rights to share capital (116) (58) Balance at end of year 2,177 1,949 The employee equity benefits reserve is used to record the value of share-based payments provided to employees, including Executive KMP, as part of their remuneration. PAGE 59 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 2024 $'000 2023 $'000 b. Dividend reserve Balance at start of year 58 1,986 Dividends paid (5,946) (3,928) Distribution of profits to dividend reserve 5,936 2,000 Balance at end of year 48 58 12. Acquisition of subsidiaries On 1 December 2023, the Group paid $8.0m ($7.6m in cash and $6.3m net of cash acquired), with a deferred cash payment obligation of up to $2m payable to the seller by 31 December 2024, to acquire 100% of Financial Advice Matters Group Pty Ltd (‘FAM’). The contingent consideration payment on a sliding scale is subject to achieving Earnings before interest and tax (‘EBIT’) hurdles ranging from $1.265m to $1.5m for the first 12 months following completion of the acquisition. The contingent consideration recognised on date of acquisition oft 1 December 2023 was calculated to be the net present value of $1.64m following the finalisation of the independent purchase price accounting advice completed in May 2024. At the half-year, an amount of $757k was recognised based on the Group’s provisional accounting assessment for the acquisition. This has been probability-weighted based on the likelihood of achievement and calculated based on the 12-month post-acquisition EBIT. EBIT forecasts have been revised based on inclusion of realisable synergies and revision of customer attrition rate reflective of business operations based on new information obtained about facts and circumstances that existed as of the acquisition date. The first 12 months of EBIT following completion of the acquisition (based on seven months of actual results) is estimated to be approximately $1.3m. As a result, the probability weighting of 12 month post-acquisition EBIT forecasts is closer to $1.3m than the previously assessed $0.9m. This is a more realistic representation of the expected EBIT than the original assessment in December 2023 (which only had one month of actual earnings over the holiday shut-down period). FAM was established in 2015 and is now one of the largest corporatised financial planning groups in Queensland. The business was acquired to improve scale and grow the salaried financial planning channel. FAM offers a full range of financial planning and advice services to approximately 1,550 client households and has Funds Under Advice (FUA) in excess of $1 billion. FAM operates eight offices throughout Queensland, and in FY23 generated revenue of $6.1m. With the acquisition, the Group’s salaried financial advisers have increased from four to 19. The scale of the financial advice group provides opportunities to further expand in other locations, and partner with industry and superannuation funds to provide advice. 12.1 Impact of acquisition on the results of the Group From the acquisition date to 30 June 2024, FAM contributed revenue of $3.6m and net profit before tax of $443k (including $0.3m in one-off redundancy payments) to the Group’s results. If the acquisition date of the business combination had been at the beginning of the annual reporting period, the estimated gross profit would be of $39.2m. 12.2 Acquisition related costs The Group has incurred legal and due diligence costs relating to the FAM acquisition. These costs have been expensed. Cost ($) Legal and advisory costs 13,050 Valuation 16,500 Total acquisition cost 29,550 PAGE 60 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 12.3 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; FAM $'000 Group Total $'000 Current Assets Cash and cash equivalents 1,389 1,389 Trade receivables 511 511 Other assets 86 86 Non-Current Assets Property, plant and equipment 76 76 Right-of-use-assets 1,417 1,417 Other assets 288 288 Current Liabilities Trade and other payables 427 427 Lease liabilities 263 263 Provisions 339 339 Non-Current Liabilities Lease liabilities 1,154 1,154 Provisions 80 80 Net identifiable assets acquired 1,504 1,504 Net identifiable intangible asset acquired - 4,697 Goodwill arising on acquisition1 - 4,848 Deferred tax liability - (1,409) Net assets acquired 1,504 9,640 1 For year-end, the Group has obtained independent purchase price accounting advice, which calculates a probability analysis of EBIT targets being achieved resulting in a $1.6m net present value of the contingent consideration (31 December 2023: $0.9m). This is included in the goodwill arising on acquisition. The fair value of the trade and other receivables and liabilities acquired as part of the business combination amounted to $1.5m. The right-of-use assets and lease liabilities were included in the balance sheet upon acquisition, whereby the net carrying value remains at nil. The Goodwill recognised in the 31 December 2023 financial statements of the Group was a provisionally determined value of $7.3m in respect of the net assets acquired of $8.8m. As at 30 June 2024, the Group finalised its purchase price accounting and has determined the value of Goodwill to be $4.8m. Identified intangibles acquired are $4.7m, with deferred tax liability of $1.4m. 12.4 Goodwill arising on acquisition Goodwill of $4.8m arising from the acquisition is principally associated with projected future profitability, growth prospects and the competencies of the FAM business operations. None of the goodwill arising on this acquisition is expected to be deductible for tax purposes. PAGE 61 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 13. Property, plant and equipment Key accounting policies At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Plant and equipment are carried at cost, net of accumulated depreciation and any accumulated impairment losses. The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Where an indicator of impairment exists, the Group makes a formal estimate of the 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 Useful Life Plant and equipment 2-7 years Leasehold improvements 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. Leasehold Improvements $'000 Plant and Equipment $'000 Total $'000 Cost At 1 July 2022 1,390 3,104 4,494 Additions 12 41 53 Write-offs (1,014) (2,170) (3,184) At 30 June 2023 388 975 1,363 Additions 122 178 300 Additions through acquisition - 76 76 Write-offs - (14) (14) At 30 June 2024 510 1,215 1,725 Depreciation and impairment At 1 July 2022 1,196 2,815 4,011 Depreciation charge for the year 90 155 245 Disposals and write-offs (1,014) (2,117) (3,131) At 30 June 2023 272 853 1,125 Depreciation charge for the year 74 113 187 Disposals and write-offs - - - At 30 June 2024 346 966 1,312 Net carrying value At 30 June 2024 164 249 413 At 30 June 2023 116 122 238 PAGE 62 ANNUAL REPORT 2024 | 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 an expense as they are incurred. The table below summarises the amounts recognised in the Statement of Profit or Loss and Other Comprehensive Income for the year: 2024 $'000 2023 $'000 Depreciation expense on right-of-use assets 788 597 Interest expense on lease liabilities 58 26 Lease term modification adjustment 3 (54) Expenses relating to short-term leases 140 105 Expenses relating to low value assets 143 135 Expenses relating to variable lease payments not included in the measurement of the lease liabilities 262 176 1,394 985 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, depreciation is calculated 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 63 ANNUAL REPORT 2024 | 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: Building $'000 Equipment $'000 Total $'000 Cost 1 July 2023 1,534 33 1,567 Additions 2,215 - 2,215 Additions through acquisition - - - Terminations - (8) (8) At 30 June 2024 3,749 25 3,774 Accumulated depreciation At 1 July 2023 783 9 792 Depreciation charge for the year 803 11 814 Terminations - (5) (5) At 30 June 2024 1,586 15 1,601 Carrying amount At 30 June 2024 2,163 10 2,173 At 30 June 2023 751 24 775 The Group’s leases include buildings and equipment, and the average lease term is three years (30 June 2023: three years). No lease contract expired in the current financial year (30 June 2023: 40%) and the Group acquired 10 new leases (mainly due to the FAM acquisition), in the current financial year. The Group recognised right-of-use assets carrying amount of $2.2m (30 June 2023: $775k). 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 year 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 discount 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: 2024 $'000 2023 $'000 Year 1 887 512 Year 2 576 318 Year 3 376 2 More than 3 years 493 - Total 2,332 832 PAGE 64 ANNUAL REPORT 2024 | 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 years. On disposal of the relevant cash-generating unit, the attributable amount of goodwill or other identifiable intangible is included in the determination of the profit or loss on disposal. Intangible assets acquired in a business combination Intangible assets acquired in a business combination and recognised separately from goodwill are recognised initially at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Key judgements The cash-generating units determined by management are: • Licensee Services • Ventura Investment Management Limited (Ventura) • xseedwealth Pty Ltd • Financial Advice Matters Group Pty Ltd • Centrepoint Alliance Lending Services Pty Ltd (Centrepoint Lending Services) • Investment Diversity Pty Ltd (Investment Diversity) • Enzumo Corporation Pty Ltd PAGE 65 ANNUAL REPORT 2024 | 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 2024-2028 represent 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%-2.0% (30 June 2023: 1.0%) represents the terminal growth rate (beyond five years). • Discount rate used is 13.1%-17.0% (30 June 2023: 13.10%-16.4%) in the impairment testing for the CGU’s as at 30 June 2024. The goodwill and other identifiable intangibles disclosed in the Statement of Financial Position at 30 June 2024 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 30% in financial year 2025 and remain flat from financial year 2026 through to 2029 with a 20% increase in the employment cost base from financial year 2025 to 2029, before the carrying amount would exceed recoverable amount. The Group believes this is an unlikely scenario. • 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 64% 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 – a significant adverse modification in legal aspects or in the business climate – a decline in earnings and cash flow; and – a decline in market value. The impairment assessment performed by the Group concluded that the underlying future cash flows continue to be at a level not to be impaired. PAGE 66 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Intangible asset Description of the Group’s intangible assets Impairment Test Key Accounting Policies Goodwill 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 $0.9m. Goodwill was created on the acquisition of: (a) Enzumo on 17 June 2020 of $0.5m; (b) ClearView Advice on 1 November 2021 of $6.7m; (c) Financial Advice Matters Group Pty Ltd on 1 December 2023 of $4.8m. The 30 June 2024 carrying value of goodwill is $12.9m 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% - 2.0% (30 June 2023: 1.0%). Cost of capital: 13.1% - 17.0% (30 June 2023: 13.1% - 16.4%). The testing resulted in no impairment being required. Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. As at acquisition date, any goodwill acquired is allocated to each of the CGUs, which are expected to benefit from the acquisition. Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU retained. Software The Group has developed or acquired software, which is being amortised over expected useful lives. The 30 June 2024 carrying value of software is $1.4m 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. 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 the financial statements continue to reflect the expected benefits to be obtained from their use. The Group determines the useful life of software assets and amortises the cost over the useful life of the assets. At each reporting date, the entity assesses whether there is any indication that an asset PAGE 67 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Intangible asset Description of the Group’s intangible assets Impairment Test Key Accounting Policies is recorded at greater than its recoverable amount, and if applicable, an impairment loss is recognised. Client contracts (Customer relationships) The Group has acquired client contracts as part of the Enzumo, ClearView Advice and Financial Advice Matters Group Pty Ltd acquisitions at fair value on acquisition date as determined by an independent valuer. The 30 June 2024 carrying value of customer relationships is $11.1m (30 June 2023: $7.5m). The value of the acquired client contracts is amortised on a straight- line basis over the years in which future economic benefits are expected to be derived, being a period of eight years for Enzumo, 11 years for ClearView Advice and 14 years for Financial Advice Matters Group Pty Ltd. There were no events or changes in circumstances that indicate that the carrying amount of the client contracts may not be recoverable, and therefore it is not impaired. The client contracts are acquired in a business combination as fair value as at the date of acquisition. Following initial recognition, the intangible asset – client contracts, is carried at cost less any accumulated amortisation and any accumulated impairment losses. Brands and trademarks The Group has acquired the Enzumo, Matrix Planning Solutions Pty Ltd and Lavista Licensee Solutions Pty Ltd brands and trademarks as part of the respective acquisitions at fair value on acquisition date as determined by an independent valuer. The 30 June 2024 carrying value of trade names is $0.7m (30 June 2023: $0.7m), split between ClearView Advice $0.6m and Enzumo $0.1m. The value of the acquired Enzumo, Matrix Planning Solutions Pty Ltd and Lavista Licensee Solutions Pty Ltd brands is not amortised as they are seen to have indefinite useful lives, which have been impairment tested on an annual basis. To date, the brands and trademarks are not considered to be impaired. The Enzumo, Matrix Planning Solutions Pty Ltd and Lavista Licensee Solutions Pty Ltd brands and trademarks are acquired in a business combination at fair value as at the dates of acquisition. They have indefinite useful lives and following initial recognition, the brands are carried at cost less any impairment losses. The estimated useful lives in the current and comparative years are as follows: Software 5 years Client contracts 8-14 years PAGE 68 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 15.1.1 Reconciliation of carrying amounts at the beginning and end of the financial year Goodwill $'000 Software $'000 Client Contracts $'000 Brand & Trademarks $'000 Total $'000 Financial year ending 30 June 2024 At 1 July 2023 net accumulated amortisation and impairment 8,092 1,209 7,491 743 17,535 Additions - 519 - - 519 Additions through acquisition 4,848 - 4,697 - 9,545 Amortisation - (346) (1,063) - (1,409) At 30 June 2024 net accumulated amortisation 12,940 1,382 11,125 743 26,190 At 30 June 2024 Cost 12,940 4,895 19,940 743 38,518 Accumulated amortisation and impairment - (3,513) (8,815) - (12,328) Net carrying value 12,940 1,382 11,125 743 26,190 Goodwill $'000 Software $'000 Client Contracts $'000 Brand & Trademarks $'000 Total $'000 Financial year ending 30 June 2023 At 1 July 2022 net accumulated amortisation and impairment 8,092 658 8,349 743 17,842 Additions - 879 - - 879 Amortisation - (328) (858) - (1,186) At 30 June 2023 net accumulated amortisation 8,092 1,209 7,491 743 17,535 At 30 June 2023 Cost 8,345 6,174 19,619 743 34,881 Accumulated amortisation and impairment (253) (4,965) (12,128) - (17,346) Net carrying value 8,092 1,209 7,491 743 17,535 PAGE 69 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements Risk manag ement 16. Provisions Key accounting policies Claims and other provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the 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 the Group is notified of client claims received by advisers, or if 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. Employee benefits Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities for wages and salaries, including non-monetary benefits, annual leave, and other benefits, expected to be settled wholly within 12 months of the reporting date are measured at the amounts due to be paid when the liability is settled. The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures, and years 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 70 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 2024 $'000 2023 $'000 Current Provision for claims 494 971 Provision for employee benefits 3,393 2,909 Property make good 20 59 Provision for contingent consideration 1,337 - Total 5,244 3,939 Non-current Provision for employee benefits 409 397 Property make good 137 20 Total provisions 546 417 2024 $'000 2023 $'000 a. Movement in provision for claims Opening balance 971 1,465 Movement in the provision is as follows: Claims provision acquired on FAM acquisition 59 Claims provision reclassification (213) (297) Claims settlements and fees paid (323) (197) Closing balance 494 971 2024 $'000 2023 $'000 b. Movement in provision for employee benefits Opening balance 3,306 4,070 Movement in the provision is as follows: Provision expense for the year 2,918 2,658 Provision for employee benefits acquired on FAM acquisition 421 - Leave and other employee benefits paid (2,843) (3,422) Closing balance 3,802 3,306 2024 $'000 2023 $'000 c. Movement in provision for property make good Opening balance 79 79 Movement in the provision is as follows: Provision expense for the year 103 Provision released for the year (25) - Closing balance 157 79 PAGE 71 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 2024 $'000 2023 $'000 d. Movement in provision for contingent consideration Opening balance - - Movement in the provision is as follows: Provision for contingent consideration on FAM acquisition 1,337 - Closing balance 1,337 - 17. Contingent liabilities Client claims The nature of the financial advice business is such that advice given by the Group or its authorised representatives may generate client compensation claims. As a result contingent liabilities may arise from time to time. As at 30 June 2024 there were no contingent liabilities (30 June 2023: nil) 18. Remuneration of auditors The auditor of the Group is BDO Audit Pty Ltd. 2024 $ 2023 $ 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 343,750 338,900 Fees for statutory assurance services that are required by legislation to be provided by the auditor 73,650 65,800 Amounts received or due and receivable by BDO Services Pty Ltd Fees for other services (predominantly taxation) 18,180 28,880 435,580 433,580 Other i nformati on 19. Information relating to Centrepoint Alliance Limited The Financial Statements of the Parent are: 2024 $'000 2023 $'000 Current assets 40,141 36,384 Non-current assets 34,591 21,713 Current liabilities (76,721) (54,947) Non-current liabilities (3,325) (5) Net Assets (5,314) 3,145 Issued capital 46,280 46,107 Dividend reserve (1,106) (1,096) Accumulated loss (50,488) (41,866) Total Shareholder Equity (5,314) 3,145 Net loss after tax of the parent entity (6,904) (9,067) Total comprehensive loss of the parent entity (6,904) (9,067) At reporting date, the Parent has given nil guarantees to external parties (30 June 2023: nil). PAGE 72 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements 20. Related party disclosures a. Information relating to investments Name Country of Incorporation Ownership Interest Principal Activity 2024 2023 Licensee and Advice Services 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 A.C.N. 133 593 012 Pty Ltd Australia 100% 100% Financial advice Matrix Planning Solutions Ltd Australia 100% 100% Financial advice LaVista Licensee Solutions Pty Ltd Australia 100% 100% Financial advice Enzumo Corporation Pty Ltd Australia 100% 100% Service company Enzumo Consulting Pty Ltd Australia 100% 100% Consulting services Financial Advice Matters Group Pty Ltd Australia 100% 100% Salaried advice Financial Wellness Matters Group Pty Ltd1 Australia 100% 100% Salaried advice Funds Management and Administration Investment Diversity Pty Ltd Australia 100% 100% Packages investment platforms Ventura Investment Management Limited Australia 100% 100% Packages managed funds Corporate Centrepoint Alliance Services Pty Ltd Australia 100% 100% Trustee – employee share plan Centrepoint Services Pty Ltd Australia 100% 100% Service company Centrepoint Wealth Pty Ltd Australia 100% 100% Holding company De Run Securities Pty Ltd1 Australia 100% 56% Financial services Professional Accountants Pty Ltd Australia 100% 100% Loans to advisers Ginger Group Financial Services Limited2 New Zealand 50% 50% Financial advice R Financial Educators Pty Ltd Australia 15% 15% Financial advice 1 Financial Wellness Matters Group Pty Ltd and De Run Securities Pty Ltd has been deregistered in current financial year 2 Ginger Group Financial Services Limited is intended to be liquidated. Refer to Note 7.1.5 Investment in unlisted shares b. Ultimate parent The ultimate holding company is Centrepoint Alliance Limited, a company incorporated and domiciled in Australia. c. Terms and conditions of transactions with related parties other than KMP Sales to, and purchases from, related parties within the Group are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at financial year end are unsecured and interest-free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 30 June 2024, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (30 June 2023: 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. PAGE 73 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements d. Transactions with Key Management Personnel The aggregate compensation paid to Directors and Executive KMP of the Company and the Group is set out below: 2024 $ 2023 $ Short-term employee benefits 1,450,483 1,444,428 Post-employment benefits 69,313 71,490 Share-based payment expense 250,605 354,072 Total compensation 1,770,401 1,869,990 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 2024 $ 2023 $ Expense arising from performance rights 343,775 441,750 Total 343,775 441,750 Key accounting policies i) Equity-settled transactions: The Group provides benefits to its employees, including KMP, in the form of share-based payments, whereby employees render services in exchange for rights over shares (equity-settled transactions). In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of Centrepoint Alliance Limited (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions become fully entitled to the award (vesting date). At each subsequent reporting date until vesting, the cumulative charge to the Statement of Profit or Loss and Other Comprehensive Income is the product of: • the grant date fair value of the award; • the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of non-market performance conditions being met; and • the expired portion of the vesting period. The charge to the profit or loss for the financial year is the cumulative amount as calculated above, less the amounts already charged in previous years. There is a corresponding entry to equity. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied. 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. PAGE 74 ANNUAL REPORT 2024 | Notes to the Consolidated Financial Statements The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Shares in the Company reacquired on market and held by the Employee Share Plan Trust are classified and disclosed as reserved shares and deducted from equity. ii) Reserved shares: The Company’s own equity instruments, which are reacquired for later use in employee share-based payment arrangements (reserved shares), are deducted from equity. No gain or loss is recognised in the profit or loss on the purchase, sale, issue, or cancellation of the Company’s own equity instruments. Movements during the year There are 16,697,881 performance rights existing at 30 June 2024 issued in previous financial years. During the year, 2,000,000 FY20 performance rights were subsequently exercised and converted to ordinary shares. 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. 2024 2023 No WAEP No WAEP1 Performance rights under the CESP Outstanding at beginning of year 18,697,881 0.270 15,000,000 - Granted during the financial year - - 4,697,881 0.270 Vested during the financial year (2,000,000) - (1,000,000) - Lapsed during the financial year - - - - Outstanding at end of the financial year 16,697,881 0.270 18,697,881 0.270 1WAEP is weighted average exercise price 22. Events subsequent to the balance sheet date Other than 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 75 ANNUAL REPORT 2024 | Directors’ Declaration Directors’ Declaration 30 June 2024 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 2024 are in accordance with the Corporations Act 2001, including: i) giving a true and fair view of its financial position as at 30 June 2024 and of its performance for the year ended on that date; ii) the Consolidated entity disclosure statement as at 30 June 2024 set out on page 76 is true and correct; and iii) 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 2024. On behalf of the Directors: G. J. Chmiel Chair 21 August 2024 PAGE 76 ANNUAL REPORT 2024 | Consolidated Entity Disclosure Statement Consolidated Entity Disclosure Statement Entity name Entity type Place of incorporation % Issued share capital held by CAF Tax residency Centrepoint Alliance Lending Pty Ltd Body corporate Australia 100% Australian resident Alliance Wealth Pty Ltd Body corporate Australia 100% Australian resident Professional Investment Services Pty Ltd Body corporate Australia 100% Australian resident Associated Advisory Practices Pty Ltd Body corporate Australia 100% Australian resident xseedwealth Pty Ltd Body corporate Australia 100% Australian resident A.C.N. 133 593 012 Pty Ltd Body corporate Australia 100% Australian resident Matrix Planning Solutions Ltd Body corporate Australia 100% Australian resident LaVista Licensee Solutions Pty Ltd Body corporate Australia 100% Australian resident Enzumo Corporation Pty Ltd Body corporate Australia 100% Australian resident Enzumo Consulting Pty Ltd Body corporate Australia 100% Australian resident Financial Advice Matters Group Pty Ltd Body corporate Australia 100% Australian resident Investment Diversity Pty Ltd Body corporate Australia 100% Australian resident Ventura Investment Management Limited Body corporate Australia 100% Australian resident Centrepoint Alliance Services Pty Ltd Body corporate Australia 100% Australian resident Centrepoint Services Pty Ltd Body corporate Australia 100% Australian resident Centrepoint Wealth Pty Ltd Body corporate Australia 100% Australian resident Professional Accountants Pty Ltd Body corporate Australia 100% Australian resident Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. INDEPENDENT AUDITOR'S REPORT To the members of Centrepoint Alliance Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Centrepoint Alliance Limited (the ‘Company’) and its subsidiaries (the ‘Group’), which comprises the consolidated statement of financial position as at 30 June 2024, 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 material accounting policy information and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2024 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. Impairment assessment of intangible assets and goodwill Key audit matter How the matter was addressed in our audit The Group’s disclosures in respect to goodwill and intangible assets, including their impairment assessment, are included Note 15 of the consolidated financial report. Impairment assessment of intangible assets requires a significant amount of judgment and estimation by management in the determination of cash generating units (CGU), projected cash flows, discount rates and growth rates. The critical assumptions used by Management are disclosed in Note 15. The assumptions and complexity of the calculations have made the impairment assessment of intangible assets and goodwill a Key Audit Matter. Our procedures included, among others: - 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; - Challenged key assumptions including forecast growth rates by 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; - Assessed whether the division of the Group into CGUs at a segment level was consistent with our knowledge of the Group’s operations and internal Group reporting; - 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; and - 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 provision in respect to claims for a total of $494k as disclosed in Note 16 of the consolidated financial report. 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 for claims (continued) Key audit matter How the matter was addressed in our audit 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. The complexity of the estimation of the claims require management to apply significant judgement to determine the value of the liable position. - Obtained solicitor representations and assessed these against open claims provided for; - 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. Business combination Key audit matter How the matter was addressed in our audit As disclosed in Note 12 of the consolidated financial report, the Group acquired a 100% equity interest in Financial Advice Matters Group Pty Ltd. 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. Our procedures included, among others: - 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 2024, 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: a) the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and b) the consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of: i) the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ii) the consolidated entity disclosure statement that is true and correct and is free of 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 14 to 23 of the directors’ report for the year ended 30 June 2024. In our opinion, the Remuneration Report of Centrepoint Alliance Limited, for the year ended 30 June 2024, 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 Partner Sydney, 21 August 2024 PAGE 82 ANNUAL REPORT 2024 | 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 2 August 2024. 1. Class of securities and voting rights a. Ordinary shares Ordinary shares of the Company are listed (quoted) on the ASX. There are 1,607 holders of ordinary shares, holding 198,881,889 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 No. of ordinary shareholders No. of performance right holders 1–1,000 292 - 1,001–5,000 438 - 5,001–10,000 215 - 10,001–100,000 516 - 100,001 and over 146 10 The number of shareholders with less than a marketable parcel is 425. 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 Fully paid No. of Shares Thorney Investment Group 51,987,171 COG Financial Services Limited 39,556,590 Sage Capital Group Pty Ltd 12,000,080 PAGE 83 ANNUAL REPORT 2024 | ASX Additional Information 4. 20 Largest holders of quoted equity securities Ordinary Shareholders Fully paid No. of shares % Held 1 UBS NOMINEES PTY LTD 54,418,564 27.36 2 COG FINANCIAL SERVICES LIMITED 39,556,590 19.89 3 SAGE CAPITAL GROUP PTY LTD 10,000,000 5.03 4 BONDIA INVESTMENTS PTY LTD 5,150,000 2.59 5 BNP PARIBAS NOMINEES PTY LTD 4,393,445 2.21 6 NATIONAL NOMINEES LIMITED 3,300,002 1.66 7 SUPERTCO PTY LTD 3,000,000 1.51 8 BNP PARIBAS NOMINEES PTY LTD 2,844,506 1.43 9 RICHARD JOHN NELSON + KAYE MARIE NELSON 2,729,660 1.37 10 H&G HIGH CONVICTION LIMITED 2,259,039 1.14 11 MR ALEXANDER BEARD + MRS PASCALE MARIE BEARD 2,008,019 1.01 12 BNP PARIBAS NOMS PTY LTD 1,519,386 0.76 13 WAYLEX PTY LTD 1,418,051 0.71 14 MS FIONA ROWENA WILLIAMS 1,327,140 0.67 15 H&H HIGH CONVICTION LIMITED 1,327,072 0.67 16 PROF ALAN JONATHAN BERRICK 1,290,100 0.65 17 MR JASON MAXWELL YU 1,200,000 0.60 18 HYGROVEST LIMITED 1,108,004 0.56 19 CATHAYS PTY LTD 1,100,000 0.55 20 FETTERPARK PTY LTD 1,017,603 0.51 140,967,181 70.88 PAGE 84 ANNUAL REPORT 2024 | 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 3, 60 Carrington Street Sydney NSW 2000 Australia GPO Box 2975 Melbourne VIC 3001 Australia Telephone: (within Australia) 1300 763 925 (outside Australia) +61 3 9415 4870 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 Website: www.centrepointalliance.com.au

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