Momentum
Under Way
ContentS
1
Momentum Underway
2
3
4
6
2012 Financial Highlights
2012 operational Highlights
Chairman’s Letter
Managing Director’s Report
10 Directors’ Report
32
Auditor’s Independence Declaration
33 Corporate Governance
41
Financial Report
114 Directors’ Declaration
115 Independent Auditor’s Report
117 Shareholders’ Information
Directory
FInAnCIAL CALenDAR
Annual General Meeting
26 november 2012
Half Year End
31 December 2012
Half Year Result Announcement
February 2013
Year End
30 June 2013
Annual Report
August 2013
Dates are subject to change.
ClearView has undergone a significant
transformation over the last two
years. It has laid the foundation
for growth with modern systems,
experienced people and distribution
partners, and the successful launch
of LifeSolutions and WealthSolutions.
Foundation laid and sales
Foundation laid and sales
momentum underway
momentum underway
Distribution
• Recruiting experienced
and successful advisers
to ClearView’s dealer group
• Establishing distribution
agreements with IFAs
• Developing alliances with
new strategic partners
Products
• Launch of LifeSolutions,
our new suite of life advice
products and services
• Launch of super and IDPS wrap
platform, WealthSolutions
Systems
• Successful integration of
acquired BUPA business and
achievement of cost savings
• Achieved early upgrade
of life administration platform
for direct products
• Development of systems
and processes for life
advice market
ClearView annual report 2012
1
2012 Financial Highlights
$19.2m
Underlying
NPAT1
CentS
per SHare4
4.53
Underlying
NPAT1
$66m
Surplus
Capital2
$0
Debt
$22.3m
Reported
NPAT
Profit & loss
Year ended 30 June, $ million
Life insurance
Wealth management
Financial advice
Listed / other
Underlying NPAT
Amortisation
Other adjustments
Reported NPAT
Key statistics
$44.1m6
in ForCe liFe
inSuranCe preMiuMS
CentS
per SHare
1.8
Fully
Franked
Dividend
CentS
per SHare3
63.7
Net
assets
CentS
per SHare3, 5
64.2
Embedded
value
2012
11.1
7.5
(0.6)
1.2
19.2
(6.8)
9.9
22.3
2011
9.0
11.0
(1.2)
0.5
19.3
(7.4)
(3.2)
8.7
% CHange
24
(32)
52
148
0
(9)
403
158
$2.9bn6
867
FunDS unDer ManaGeMent
anD aDViCe (FuMa)
FinanCial aDViSerS
aCroSS auStralia
1 Underlying net profit is the Board’s key measure of profitability and the basis on which dividend payments are determined. It consists of profit after tax adjusted for amortisation, the effect
of changing discount rates on insurance policy liabilities, and in the prior year it reflects restructure, transition and system upgrade costs considered unusual to the Group’s ordinary activities.
2 Surplus capital reported is surplus capital above internal benchmarks as at 30 June 2012. Internal benchmarks exceed regulatory requirements. Surplus capital reduced by $19m post
balance date on adoption of the Board approved three year business plan. The reduction is due to the need for ClearView’s life insurance subsidiary to cater for the anticipated growth
in LifeSolutions new business volumes. Surplus capital prior to FY12 final dividend.
3 Adjusted for Executive Share Plan (ESP) loan of $17.4m (2011:$12.0m) and 31.1m (2011: 20.7m) ESP shares.
4 Underlying net profit after tax is adjusted for after tax interest on the Executive Share Plan (ESP) loan of $17.4m (2011:$12.0m) and the weighted average ESP shares on issue.
5 Embedded Value represents the discounted present value of the future cash-flows (after tax) anticipated to arise from the in-force life policies and investment client balances
as at 30 June 2012. The Embedded Value excludes any value for future growth, potential value of franking credits, costs associated with being listed on ASX and short term growth
and development costs. Consistent discount rate assumptions have been maintained with the prior period despite a reduction in long term market discount rates during FY2012.
6 As at 30 June 2012.
7 As at 8 August 2012.
2
ClearView wealtH liMiteD
2012 operational Highlights
ClearView has expanded into the advised
insurance segment and sophisticated
wealth product segment with the following
growth initiatives:
December 2011 –
launch of LifeSolutions
ClearView’s life advice products
December 2011 –
launch of WealthSolutions
ClearView’s wrap platform
• Full suite of competitively priced life insurance products
• High end offering for Superannuation, Retirement Income
sold by financial advisers
• “Best of” features
• Includes life cover, total and permanent disability (TPD),
trauma, income protection and business expenses cover
• Cover can also be purchased via a ClearView “risk super”
and Investor Directed Portfolio Service (IDPS) accounts
• Includes 250 managed funds, ASX (Top 300) listed
securities, term deposits, 7 new ClearView managed funds
and 8 ClearView run model portfolios
• ClearView has full ownership of product
version called LifeSolutions Super
• Ability to capture revenue on existing, externally
managed FUA
Recruiting experienced and successful
advisers to ClearView Financial Advice
(CFA) – our dedicated dealer group
13 advice practices have joined CFA including leading life
insurance advisers. This increased the number of ClearView
advisers in CFA to 86 at 8 August 2012.
Establishing distribution
agreements with independent
financial advisers
LifeSolutions has been added to 27 dealer group Approved
Product Lists (APLs), increasing ClearView’s access to over
2,000 independent financial advisers across Australia.
Access to relationship driven service with products that
are innovative, flexible and deliver great value.
nuMber oF CFa aDViSerS*
nuMber oF aplS
100
80
60
40
20
0
30
25
20
15
10
5
0
Jun 11
Dec 11
Jun 12
Aug 12
Jun 11
Dec 11
Jun 12
* These are net figures and take into account changes as a result of the restructuring of
CFA in 2012
3
ClearView annual report 2012 Chairman’s letter
dear Shareholders
introduction
“Much has been achieved since
the acquisition of the businesses
in June 2010. In 2012 we
continued to build on these
achievements with the creation
of new successful products
and commenced establishing
the distribution networks that
position the Company very well
for the future. We are delivering
on our strategy and are now
seeing the benefits with sales
in the second half increasing
by 540% over the first half.”
ClearView is a well established Australian financial services
company with integrated businesses that specialise in
life insurance, wealth management and financial advice
solutions. The Company has established a multi-channel
distribution footprint through its own expanding adviser
network and its penetration of the independent financial
adviser industry.
ClearView advises on approximately $2.9 billion of client
assets and has in force life insurance premiums of $44.1
million. In 2012, ClearView has significantly increased
its distribution footprint and entered the broader advice
market, as evidenced by our second half sales results -
this has positioned Clearview extremely well for the future.
Financial overview
For the year ended 30 June 2012, we reported an
underlying net profit after tax of $19.2 million. This is
a sound result in what should be considered a transition
year for ClearView, as much time and investment during
the period went into developing Clearview’s new, industry
leading suite of life insurance and wealth management
products. Additionally, the current result should also
be viewed in the context of prevailing weak investment
markets and economic conditions. Fully diluted underlying
earnings per share were 4.53 cents per share.
Further details on the financial result are in the Managing
Director’s Report.
dividend
The Directors have declared a fully franked dividend of
1.8 cents per share which will be paid on 27 September
2012. This maintains our dividend level and represents
a payout ratio of approximately 40% of underlying profit
in line with the stated dividend policy.
As evidenced by our second half sales, Clearview is
experiencing strong growth in life insurance sales. As
previously outlined to the market, life insurance new
business growth is capital intensive. The Board will continue
to evaluate the Group’s capital position and dividend policy
on a regular basis, especially in light of the capital intensity
and growth trajectory of its life insurance business.
4
ClearView wealtH liMiteD
delivering to Plan
Take over Bid Subsequent to Balance date
On 12 July 2012, a conditional, unsolicited takeover
offer was received by ClearView from CCP BidCo Pty
Ltd, an entity owned and controlled by Crescent Capital
Management Pty Ltd. The Board considers that the offer
price of $0.50 cents per share is inadequate and materially
undervalues ClearView. The Board (other than John
Murphy who has absented himself due to his association
with a member of the CCP consortium) has unanimously
recommended that shareholders reject the offer.
The reasons for rejecting the offer are outlined in the
Target’s Statement which has been lodged with the ASX.
We will keep shareholders informed of developments
as and when they occur.
Conclusion
ClearView today has the foundations in place to execute
on its growth strategy. Much hard work has been done and
excellent results are now becoming evident demonstrating
the potential of the Company. From our staff to our
strategic partners and suppliers there has been a great
commitment to ClearView. On behalf of the Board I would
like to express our thanks to everyone who has contributed
to the many achievements this year. We will continue to
work with the senior management team to realise the
significant potential of our Company.
ray Kellerman
Chairman
17 August 2012
It has been two years since the ClearView business was
acquired and relaunched as ClearView Wealth and I am
pleased to report that we continue to be well on track to
achieve our strategic objectives. We have established the
platform for our future growth and achieved the following
results since acquisition:
• Cost savings of $6.5 million per annum identified prior
to acquisition;
• Successfully acquired and integrated the Bupa businesses
into our stand alone listed entity;
• Upgraded our systems and created new products
for our direct life distribution channel;
• Established the life advice business with upgraded
and expanded systems and product development;
• Created a single corporate brand that differentiates
ClearView from our institutional competitors; and
• Expanded our distribution with the recruitment
of experienced and successful advisers.
As a result of these achievements ClearView for the first
time has:
• The capability to operate across the key segments of the
life insurance and wealth management value chain;
• A scalable distribution capability in both the advice
and non-advice (direct) life and wealth markets;
• The combination of an outbound call centre capability
and participation in full advice making ClearView well
positioned to pursue scaled advice opportunities;
• A strong financial position with no debt and $66 million1
of assets in excess of internal capital management
benchmarks at 30 June 2012; and
• A dedicated and experienced management team that has
both depth and breadth of experience in life insurance and
wealth management which has been gained both locally
and internationally.
The Company now has the underlying business
infrastructure upon which to successfully pursue sales
growth. Sales in the second half of FY12 demonstrated
the early success of the plan we have been following –
our life insurance sales increased significantly with sales
in the second half increasing by 540% over the first half
and importantly with sales accelerating in the last quarter
of the financial year.
1 Surplus capital reported is surplus capital above internal benchmarks as at 30 June 2012. Internal benchmarks exceed regulatory requirements. Surplus capital reduced by $19m post
Balance date on adoption of the Board approved 3 year business plan. The reduction is due to the need for ClearView’s life insurance subsidiary to cater for the anticipated growth in
LifeSolutions new business volumes. Surplus capital prior to FY12 final dividend.
ClearView annual report 2012
5
managing director’s report
“The successful launch this year
of our new life insurance and
wealth management products
and services has significantly
broadened ClearView’s market
opportunity in the life insurance
and wealth management markets.
These products and services have
enabled us to extend our reach
into the broader financial advice
market. We are already seeing the
impact, with sales of our advised
life insurance products materially
increasing in the June quarter
and momentum continuing
into the new financial year.”
Financial results
At the end of the last financial year, we had integrated the
businesses we had acquired and had a platform from which
to grow. We set about creating an innovative and expanded
range of products and services that would appeal to financial
advisers and thus extend our market reach.
Having focused intensively on new product development in
the first part of the year, the latter half of the year provided
tangible evidence of the attractiveness of the newly
launched products and services.
As previously outlined we have delivered an underlying net
profit after tax of $19.24 million, marginally below the prior
year, notwithstanding very challenging market conditions.
In many respects ClearView’s performance in FY12 is a
story of two halves illustrating the expansion of our market
opportunity and entry into the broader advice market. Fully
diluted underlying earnings per share were 4.53 cents,
down 1.3% on the previous year.
Reported net profit after tax was $22.3 million, an increase
of 158% on the prior year, largely attributable to a
significant positive impact on the life insurance contract
liabilities from the reduction in long term discount rates
over the reporting period.
The strength of our Balance Sheet is evident with the
following key metrics as at 30 June 2012:
• Net assets of $263.3 million representing an increase
of 6.2% over the prior year;
• Net tangible assets of $209.2 million representing
an increase of 9.4% over the prior year;
• Net asset value per share of 63.7 cents per share
representing an increase of 5.4% over the prior year;
• Net tangible asset value per share of 51.5 cents per share
representing an increase of 8.9% over the prior year; and
• No debt and $66 million1 of assets in excess of internal
capital management benchmarks as at 30 June 2012.
1 Surplus capital reported is surplus capital above internal benchmarks as at 30 June 2012. Internal benchmarks exceed regulatory requirements. Surplus capital reduced by $19m post
Balance date on adoption of the Board approved 3 year business plan. The reduction is due to the need for ClearView’s life insurance subsidiary to cater for the anticipated growth in
LifeSolutions new business volumes. Surplus capital prior to FY12 final dividend.
6
ClearView wealtH liMiteD
I am pleased to report that the Embedded Value of
ClearView (excluding the potential value of franking credits)
increased to $265 million at year end. This represents an
embedded value per share of 64.2 cents representing an
increase of 6% over the prior comparable period excluding
the $7.7m dividend payment related to the FY2011.
While the Embedded Value is determined in the context of
the Group’s business as a going concern, it does not include
any additional value in respect of future new business that
may be written after the valuation date. It also ignores
the Group’s listed overhead costs incurred by ClearView
(primarily costs associated with being listed on the ASX
and the remuneration of Directors) as well as short term
anticipated growth and development costs.
Surplus Capital
At 30 June 2012, surplus capital above internal benchmarks
was $66 million, an increase of $13 million on the prior year.
Under the APRA capital requirements, and our internal capital
management plan, our life insurance business is required to
reserve capital to fund our anticipated new business growth
in accordance with the Company’s three year plan. Since
year end, a three year business plan has been adopted which
reflects the recent strong life insurance sales momentum.
As a result, subsequent to year end, the Company has
set aside $19 million of the $66 million to satisfy this
requirement. New business growth above the anticipated
level would likely absorb increased capital reserving.
operational Highlights
Operational highlights during the financial year include:
• Expanding the market opportunity for ClearView with the
creation and launch in December 2011 of our new product
range of:
• ClearView LifeSolutions; and
• ClearView WealthSolutions
• Extending distribution of our products and services
into the broader financial adviser market with:
•
•
Recruitment of experienced and successful financial
advisers to the ClearView dealer group; and
Establishment of distribution agreements with
third party dealer groups including independent
financial advisers;
• Achieving investment returns in the top or second quartile
for all ClearView investment products.
During the year we put together the products and structure
that sets us up to realise our long term ambitions.
LifeSolutions includes a suite of competitively priced
products and services with attractive features, and
includes life cover, total and permanent disability, trauma,
income protection and business expenses cover. Already,
LifeSolutions has received high ratings by industry research
houses. These products have enabled us to expand our
distribution from the non-advice life segment to the advised
life segment, more than quadrupling our potential market.
WealthSolutions is our modern, competitive, investment
wrap platform – a suite of high end products for financial
advisers for superannuation, retirement income and
investor portfolio accounts. It includes a number of new
ClearView managed funds and model portfolios on the
platform. Our Funds Under Management (FUM), declined
by 8.9% in FY2012 to $1.38 billion. Net outflow of the
historical book was impacted by the expected run-off, weak
capital market conditions and a lack of inflows given the
WealthSolutions product was not available until the second
half of the year.
The ability to offer products across both life and wealth
is attractive to financial advisers, with customers often
purchasing life and wealth products at the same time.
Today ClearView has a full set of retail life and wealth
products. We have the capability to engage in both the
advised and non-advised sub-segments of our markets,
markets with excellent long term fundamentals.
ClearView annual report 2012
7
managing director’s report
CONTINUED
outlook
The recruitment of experienced and successful financial
advisers represent a significant growth opportunity for
ClearView in both the life insurance and wealth management
segments. In addition to being one of the few non bank
owned participants in the market, ClearView is able to offer
these financial advisers the opportunity to join the ClearView
dealer group and participate in the overall performance
of ClearView through share ownership in the company.
These advantages were reflected in the growth in the
number of ClearView advisers in the ClearView dealer
group to 86. Since its launch, LifeSolutions has been added
to 27 dealer group approved product lists which provides
access to more than 2,000 independent financial advisers,
significantly increasing our market reach across Australia.
It has been immensely gratifying to see sales building
throughout the second half of the year, with new life
insurance business premiums of $5.2 million. This is more than
triple the new business written in the whole of FY 2011. Nearly
two thirds of these sales were completed in the June quarter,
providing strong momentum into the new financial year.
MontHly new preMiuM written
1,600
1,400
1,200
1,000
0
0
0
$
’
800
600
400
200
0
Advice
Non-Advice
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
The establishment of WealthSolutions was another critical
milestone for the business. The current equity market
environment and negative investor sentiment has not
been favourable to investment product inflows. As a result,
WealthSolutions has been slower to gain traction but is
starting to attract clients and related inflows.
wealtHSolutionS FunD inFlowS
n
o
i
l
l
i
m
$
15
12
9
6
3
0
8
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
ClearView wealth limited
Our focus in the near term is to maintain our momentum
and capitalise on the work that has been done in the past
two years. We will do this by building on the initial success
of LifeSolutions, recruiting more advisers to our financial
advice business, establishing more distribution agreements
with independent financial advisers, and rolling out our
WealthSolutions platform.
With products and distribution in place and sales
momentum building, we are entering the growth phase
of our long term strategy.
ClearView can continue to grow by providing a fresh,
innovative and compelling offer to our customers and
advisers using our strategic advantages.
Both the life insurance and wealth management
industries remain robust, with strong long term growth
potential as a result of underinsurance and the proposed
increase in mandated superannuation contributions.
ClearView is a great company; vertically integrated, in a
strong financial position, well placed to adapt to economic
uncertainty and to respond to the regulatory reforms that
have been announced for the financial services industry.
I am optimistic about the future for ClearView. We have
a strong team of whom I am very proud. We are all looking
forward to reaping the benefits, adding to shareholder value
and realising the potential of the business we have built.
Simon Swanson
Managing Director
17 August 2012
ClearView annual report 2012
9
anne Keating
Independent Non-executive Director
Anne has 18 years’ experience as a director including 7 on
the NRMA Insurance Board along with significant marketing
and governance experience. Anne is currently a director of
Ardent Leisure Group Limited, GI Dynamics Inc, Goodman
Group, the Garvan Institute of Medical Research and REVA
Medical Inc. Anne is also a member of the Advisory Council
of the Royal Bank of Scotland Australia, and a Governor of
Cerebral Palsy Alliance Research Foundation. Her former
directorships include Insurance Australia Group (formerly
NRMA Insurance), STW Communications Group, WorkCover
Authority of NSW, Spencer Street Station Redevelopment
Holdings, Radio 2CH, Easy FM China and Victor Chang
Cardiac Research Institute. Anne has previously served
as a Trustee of Centennial Park and Moore Park Trust. From
1993 to 2001, Anne was the General Manager of Australia
for United Airlines.
Anne is a member of the Nomination and Remuneration
Committee. She was appointed to the Board on 29
November 2010. Age 58.
anthony eisen B.Com, Ca
Non-executive Director
Anthony has 18 years’ experience in finance and
investment. He is currently an executive director of
Guinness Peat Group (Australia) Pty Limited (GPG) and is
Chief Investment Officer of the GPG group. As GPG is a
substantial shareholder of ClearView shares, Anthony is not
considered independent by the Board. Prior to joining GPG,
Anthony was involved in the investment banking industry
in Australia and the United States. Anthony commenced
his professional career as an accountant and is a member
of the Institute of Chartered Accountants in Australia.
Anthony currently represents the interests of GPG on the
board of Capral Limited. Anthony was previously a GPG
representative director on the boards of Tower Australia
Group Limited, eServGlobal Limited, Tower Limited and
Turners & Growers Limited.
Anthony is a member of the Audit, Risk and Compliance
Committee. He was appointed a Director on 12 November
2007. Age 40.
directors’ report
The Directors of ClearView Wealth Limited (ClearView
or the Company) submit their report, together with the
financial report of the consolidated entity (the Group)
for the year ended 30 June 2012 (the financial year).
Directors
The following persons were Directors of ClearView during
the whole of the financial year and since the end of the
financial year unless otherwise noted:
• Ray Kellerman (Chairman)
• Anne Keating
• Anthony Eisen
• David Goodsall
• John Murphy
• Michael Jefferies (resigned and appointed Alternate
Director to Anthony Eisen on 27 July 2011)
• Simon Swanson
• Susan Thomas
• Peter Wade (resigned 27 July 2011)
The biographies for both the current and former
Directors of ClearView are detailed below.
Current Directors
ray Kellerman B.eC, llB, mBa, aCia
Independent Non-executive Chairman
Ray has a legal background, significant experience in
corporate and structured finance and was head of
compliance services at the Corporate Trust division of
Perpetual Trustees Australia where he spent 10 years before
establishing his own compliance consulting and advisery
business in 2001. Ray currently acts as a director and Audit,
Risk and Compliance Committee member for a number of
major fund managers and financial institutions including
Goodman Funds Management Australia, Certitude Global
Investments, Macquarie Bank, Deutsche Asset Management,
Aberdeen Asset Management, Fidelity Australia, FKP Funds
Management, Invesco Australia and Alliance Bernstein
Investment Management Australia. He is an owner and
director of Quentin Ayers Pty Limited, an independent asset
consultant firm in the alternative assets sector.
Ray is the Chairman of the Nomination and Remuneration
Committee and a member of the Audit, Risk and
Compliance Committee. He was appointed a Director on
5 April 2007 and Chairman on 4 November 2008. Age 48.
10
ClearView wealth limited david goodsall B.a, Fiaa, aSa, Cera, maiCd
Independent Non-executive Director
Susan Thomas B.Com, llB
Independent Non-executive Director
David has in-depth knowledge and experience in life
insurance and funds management. He has held a number
of Appointed Actuary positions and led the actuarial
practice of Ernst & Young where he was also a partner
until he retired from the firm in 2009. In 2009, David
established a consulting firm, Synge & Noble, where he
is a director. He is also the President of the Institute of
Actuaries of Australia.
David is Chairman of the Audit, Risk and Compliance
Committee. He was appointed a Director on 9 June 2010.
Age 57.
John murphy B.Com, m.Com, Ca, FCPa
Non-executive Director
John was the founder and until October 2011 the
Managing Director of Investec Wentworth Private Equity
(Investec). As Investec is a substantial shareholder of
ClearView shares, John is not considered independent by
the Board. John has over 30 years’ experience in private
equity, turnarounds, corporate finance and accounting.
Prior to entering private equity in 1998, John spent over
25 years, including 14 as a senior partner, in the corporate
finance and recovery division of a global accounting firm.
John is a director of Investec Bank (Australia) Limited
and a member of the bank’s Investment and Audit
Committees. He sits on the boards of many of Investec’s
portfolio companies and has extensive public company
board experience.
John is a member of the Audit, Risk and Compliance
Committee. He was appointed to the Board on 9 June
2010. Age 59.
Simon Swanson B.eC, B.Bus, anZiiF (Fellow) CiP, CPa
Managing Director
Simon is an internationally experienced financial services
executive who has worked for over 30 years across life,
general and health insurance as well as funds management.
He has successfully led the largest life insurer (CommInsure,
Sovereign and Colonial) in three countries and has spent half
of his career in the Asia Pacific region. Apart from running
large insurance companies, he has successfully started a
broad range of businesses covering life insurance, health
insurance and funds management.
Simon is a director of the Australian Literacy and
Numeracy Foundation.
Simon was appointed as Managing Director on 26 March
2010. Age 54.
Susan has expertise in technology and law in the financial
services industry. Susan is currently a director of National
E-Conveyancing Development Limited and Grant Thornton
Australia Limited and a former director of IWL Limited and
Landgate. Susan founded and was the Managing Director
at FlexiPlan Australia, an investment administration
platform sold to MLC and now operating under the MLC/
NAB banner as MasterKey Custom.
Susan is a member of the Nomination and Remuneration
Committee and the Audit, Risk and Compliance Committee.
She was appointed to the Board on 29 November 2010.
Age 54.
michael Jefferies B.Com, Ca
Alternate Director
Mike has been an executive of GPG for the past 19 years.
As GPG is a substantial shareholder of ClearView shares,
Mike is not considered independent by the Board. He
currently represents the interests of GPG as Chairman of
Touch Holdings Limited and a non-executive director of
Tower Limited and Capral Limited. He is also a director of
Ozgrowth Limited. Mike was previously a director of Tower
Australia Group Limited, Australian Wealth Management
Limited, Metals X Limited and an alternate director of
eServGlobal Limited.
Mike was appointed a Director on 4 November 2008. On
27 July 2011 he resigned and was appointed an alternate
Director to Anthony Eisen on the same day. Age 56.
Former Directors
Peter Wade B.eC, aSia, mSdia
Independent Non-executive Director
Peter has worked in the Australian and international
equity markets for 30 years. His most recent role was as
a consultant to the Commonwealth Bank. Prior to that
he worked for Goldman Sachs JBWere (GSJBW, previously
known as JBWere) in Melbourne, London, New York
and Sydney and at JP Morgan. He sat on the Board and
Management Committee of both JBWere and GSJBW and
was on the management committee at JP Morgan.
Peter has served on the boards and committees of a
number of security industry related organisations. Peter
was a member of the Board from 31 October 2007 until
his resignation on 27 July 2011. Age 55.
11
ClearView annual report 2012 directors’ report
CONTINUED
Directorships of other Listed Companies
Directorships of other listed companies held by Directors in the three years preceding the end of the financial year are as follows:
name
Anne Keating
Anthony Eisen
John Murphy
Michael Jefferies2
ComPanY
Period oF direCTorSHiP
Ardent Leisure Group Limited
30 March 1998 – Ongoing
Goodman Group
REVA Medical Inc.
23 January 2004 – Ongoing
1 October 2010 – Ongoing
STW Communications Group
17 May 1995 – 10 February 2011
GI Dynamics
Capral Limited1
eServGlobal Limited
Tower Limited2
1 June 2011 - Ongoing
29 August 2008 – Ongoing
20 March 2009 - 24 October 2011
12 December 2006 –
11 November 2011
Turners & Growers Limited
24 February 2011 – 1 August 2011
Ariadne Australia Limited
Gale Pacific Limited
6 December 2006 – Ongoing
24 August 2007 – Ongoing
Specialty Fashion Group Limited
20 February 2005 – 28 October 2010
Staging Connections Group Limited
7 March 2003 – Ongoing
Vocus Communications Limited
7 March 2003 – Ongoing
Capral Limited
eServGlobal Limited2
Metals X Limited
OzGrowth Limited
Tower Limited
6 November 2008 – Ongoing
13 March 2009 – 24 October 2011
14 June 2004 – 10 May 2012
31 October 2007 – Ongoing
19 December 2006 – Ongoing
1 Alternate Director from 19 October 2006 to 29 August 2008.
2 Alternate Director.
12
ClearView wealth limited Company Secretaries
Chris robson B.a, llB (Hons), llm was appointed
Company Secretary on 4 April 2011. He is also General
Counsel at ClearView. Chris has over 20 years’ experience
in the financial services industry. Prior to joining ClearView,
Chris was General Counsel and Group Company Secretary
for Challenger Limited. Chris previously held legal roles
in the financial services industry, as well as in the public
sector and private practice. He is a member of the Law
Society of NSW and the Society of Notaries of NSW.
athol Chiert, B.Com, B.acc, Ca was appointed Company
Secretary on 4 November 2008. He is also the Chief Financial
Officer at ClearView. Athol has a life insurance and private
equity background. Athol was previously the CFO of PrefSure
Holdings Limited and PrefSure Life Limited (formerly Lumley
Life Limited). Athol also served as part of the Global Capital
Group both in Australia and South Africa and has over 15 years’
experience in the finance industry. Athol commenced his
professional career as an accountant with Arthur Andersen.
Appointed actuary of Clearview Life
Assurance Limited
greg martin B.a, Fiaa, FFin, FaiCd was retained as the
Appointed Actuary of ClearView Life Assurance Limited
on 5 July 2010, and became an employee of ClearView
on 1 March 2011 in the role of Chief Actuary and Risk
Officer. Greg has over 25 years’ experience specialising
in life insurance and funds management and has held a
number of other Appointed Actuary roles during his career.
Greg has been a member of the Life Insurance Actuarial
Standards Board, a member of two advisery panels to the
Australian Accounting Standards Board and a member
of multiple committees of the Institute of Actuaries of
Australia. Greg has a wealth of experience in the areas
of risk and capital management, financial management
and reporting, and product pricing and management.
Principal activities
ClearView is an Australian financial services company
with businesses that specialise in life insurance, wealth
management and financial advice solutions. The Group
advises on and/or manages approximately $2.9 billion1
of client assets, has in force premiums of $44.1 million1
and 86 financial planners across Australia2.
1 As at 30 June 2012
2 As at the date of this report
3 Excludes Group broken bone policy of $0.6 million that terminated on 1 July 2011
ClearView generates its revenue through the provision
and distribution of life insurance, superannuation,
investment products and financial advice.
Review of operations and activities
The key focus of the Group during the financial year was the
successful launch in December 2011 of its expanded product
range, namely, ClearView LifeSolutions (LifeSolutions)
and ClearView WealthSolutions (WealthSolutions) and
expansion of its distribution footprint. LifeSolutions is a full
suite of life advice products and services. WealthSolutions
is a wrap platform for superannuation, retirement income
and Investor Directed Portfolio Service (IDPS) accounts, and
includes a number of new ClearView managed funds and
model portfolios.
ClearView’s range of new life insurance and wealth
management products and services enables the Group
to penetrate the broader financial adviser market, improve
the product and service offering for ClearView financial
advisers, grow its financial advice and dealer group
business, and significantly broaden the Group’s exposure
to the wealth management and life insurance markets.
As part of the Group’s strategy to increase distribution
of its products and services, the Group has recruited a
number of experienced and successful financial advisers
to join the ClearView Financial Advice Pty Limited (CFA)
dealer group. As part of this initiative, 13 financial advice
practices, representing 38 advisers have joined CFA,
significantly increasing ClearView’s distribution capability.
The number of advisers in CFA has increased from 55 at 30
June 2011 to 86 today, reflecting 56% growth in adviser
numbers over the period.
The Group is further developing its presence in the broader
financial adviser market through establishing distribution
agreements with third party dealer groups, including
independent financial advisers. LifeSolutions has been
added to 27 dealer group Approved Product Lists (APLs)
since the launch of the product in December 2011. This
significantly increases the Group’s access to independent
advisers across Australia.
The successful launch of LifeSolutions and execution of
its distribution strategy has enabled the Group to grow in force
life insurance premiums by 9.2%3 during the year to $44.1
million by issuing life insurance new business premiums of
$5.2 million representing a significant increase of 206% over
2011. Nearly two thirds of these sales were completed in
the June quarter, providing strong momentum for ClearView
leading into the new financial year. The majority of the sales
momentum, being $3.6 million of life insurance new written
annual premiums has come from the LifeSolutions suite
of products which reflects the early success of ClearView’s
strategy in the retail life advice market.
13
ClearView annual report 2012 Review of operations
and activities continued
operating results for the year ended 30 June 2012
The Group has achieved the following results for the year
ended 30 June 2012:
• The factors impacting underlying net profit after tax
as reported below.
• Statutory profit attributable to shareholders of ClearView
for the year ended 30 June 2012 was $22.34 million
(2011: $8.67 million) representing an increase of 158%
over the prior comparable period;
• Basic earnings per share for the full year on a statutory
basis of 5.46 cents per share (2011: 2.12 cents per
share) representing an increase of 158% over the prior
comparable period;
• Fully diluted earnings per share on a statutory basis
of 5.24 cents per share (2011: 2.10 cents per share)
representing an increase of 149% over the prior
comparable period;
• Underlying net profit after tax of $19.2 million
(2011:$19.3 million) representing a decrease of 0.4%
over the prior comparable period;
• Basic underlying earnings per share for the full year
of 4.70 cents per share (2011: 4.72 cents per share)
representing a decrease of 0.4% over the prior
comparable period; and
• Fully diluted underlying earnings per share of 4.53 cents
per share (2011: 4.59 cents per share) representing
a decrease of 1.2% over the prior comparable period.
The increase in statutory profit after tax of 158% reflects
the following:
• A significant positive impact of $13.9 million pre tax from
the impact on the life insurance contract liability (based
on AIFRS1) of the reduction in long term discount rates
over the reporting period;
• No restructure, transition and acquisition type related
costs (considered unusual to the Groups ordinary
activities) being incurred during the current reporting
period; and
Underlying net profit after tax (underlying NPAT) is the
Board’s key measure of profitability and the basis on
which dividends are determined. It consists of net profit
after tax adjusted for amortisation, the effect of changing
discount rates on the insurance policy liability and in the
prior comparable period, restructure, transition and system
upgrade costs considered unusual to the Groups ordinary
activities. Underlying NPAT is in line with the prior year and
is reflective of the following:
• Favourable claims experience for the financial year
(including an incremental reinsurance profit share);
• The negative impact of investment markets on fee
income and net investment flows. Fee income continues
to be impacted by global developments and sentiment
in the short term. In addition, a general deferral of
retirement plans of clients (and related investment into
retirement products) has disproportionately impacted
ClearView owing to its historic participation in the retiree
market. Fee income is likely to remain under pressure in
the short term until such time as sentiment and market
conditions improve;
• The negative impact of life insurance lapses exceeding
the rates assumed in the life insurance policy liability
(determined at 30 June 2011), albeit with a significant
improvement in the second half of the financial year;
• The cost of recent investment in the business (and
related increase in the cost base) to develop the Group’s
range of new products and infrastructure to expand the
business; and
• A higher effective tax rate in the current financial year.
1 Australian IFRS (International Financial Reporting Standards)
14
Directors’ Report CONTiNuedClearView wealth limited reConCiliaTion oF rePorTed neT ProFiT aFTer Tax To underlYing nPaT
reported profit
adjusted for:
AIFRS policy liability adjustment
Amortisation of intangibles
Transition and restructure costs
Systems upgrade
Income tax effect
underlying net profit after tax
• The policy liability discount rates effect is the result
of the changes in long term discount rates used to
determine the insurance policy liabilities. The life
insurance policy liability (based on AIFRS) is discounted
using market discount rates that typically vary at each
reporting date and create volatility in the policy liabilities
and consequently earnings. ClearView separately reports
this volatility which represents a timing difference in the
release of profit and has no impact on underlying
cash earnings;
• The amortisation of the intangibles is associated with
the acquisition of ClearView Group Holdings Pty Limited
(CVGH) and CFA (formerly ComCorp Financial Advice Pty
Limited) and is separately reported to remove the non
cash effect of the write-off of these acquired intangibles.
However, amortisation associated with capitalised
intangible software is reported as part of underlying net
profit after tax;
• Transition and restructure costs in the prior comparable
period predominantly related to the transition off the
Bupa Australia Pty Limited (Bupa) IT Infrastructure
and the termination and related salary costs associated
with the organisational restructure and termination
of employees; and
• System upgrade costs in the prior comparable period
related to the upgrade to the latest version of the
life administration platform acquired as part of the
acquisition of CVGH. The extent of the upgrade (catchup)
was such that it was considered as unusual to the
ordinary activities of the Group. All subsequent costs
incurred on system upgrades are either reported as part
of underlying profit or capitalised in accordance with the
ClearView capitalisation policy. As outlined above any
amortisation associated with the capitalised software
is reported as part of underlying net profit after tax.
30 June 2012
$’000
30 June 2011
$’000
CHange From
PreViouS
Year
22,336
8,665
158%
(13,895)
6,749
-
-
4,051
19,241
568
7,401
3,705
660
(1,682)
19,317
(2,546%)
(9%)
(100%)
(100%)
341%
(0.4%)
Balance Sheet
The Balance Sheet of the Group as set out on page 43
reflects the following key metrics as at 30 June 2012:
• Net assets of $263.3 million (2011: $247.9 million)
representing an increase of 6.2% over the prior
comparable period;
• Net tangible assets of $209.2 million (2011: $191.2
million) representing an increase of 9.4% over the prior
comparable period;
• Net asset value per share of 63.7 cents per share
(2011: 60.5 cents per share) representing an increase
of 5.4% over the prior comparable period; and
• Net tangible asset value per share of 51.5 cents per share
(2011: 47.3 cents per share) representing an increase of
8.9% over the prior comparable period.
The net asset value per share and net tangible asset value
per share are reflected above on a fully diluted basis as
ClearView ESP Shares have been issued to employees and
contractor participants as at 30 June 2012 (in accordance
with the ClearView ESP Rules). The ClearView ESP Shares
on issue have a corresponding non-recourse loan from
ClearView to facilitate the purchase of ClearView ESP
Shares by the participants. The shares and loans are not
reflected in the statutory accounts as they are accounted
for as an option in accordance with Australian Accounting
Standards. If the loan is not repaid, the relevant ClearView
ESP Shares are cancelled or reallocated in accordance with
the ClearView ESP Rules.
ClearView is in a strong capital position with no debt
and $66 million of net assets in excess of its internal
benchmarks as at 30 June 2012. Internal benchmarks
exceed regulatory requirements. This is prior to the
reduction of $19 million post the three year business plan
adopted by the Board subsequent to year end and prior
to declared dividend of $8.011 million. Refer to capital
management section for further detail.
15
ClearView annual report 2012 Review of operations
and activities continued
embedded Value
Life insurance and wealth management businesses are
long term businesses that involve long term contracts
with customers and complex accounting treatments.
An Embedded Value calculation is used as one of a number
of measures to assess the performance of the business
from period to period.
The Embedded Value represents the discounted value
of the future net of tax cash-flows anticipated to arise from
the in force life policies and investment client balances as
at the valuation date. It is determined as the sum of:
• The present value of future after tax profits and capital1
releases expected to emerge from the in force business
of the Group, valued at appropriate risk-adjusted discount
rates (the “value of the in force”); plus
• The balance sheet value of the net tangible assets
of the Group not included (not required) to support
the regulatory and economic capital requirements1
of the in force business (the “net worth”).
The Embedded Value of the Group reflects the following
as at 30 June 2012:
• Embedded Value excluding the potential value of imputation
credits of $265 million (2011: $259 million) representing
an increase of 6% over the prior comparable period (after
excluding the FY11 dividend);
• Embedded Value per share excluding the potential
value of franking credits of 64.2 cents per share
(2011: 63.0 cents per share) representing an increase
of 6% over the prior comparable period (after excluding
the FY11 dividend); and
• A potential value of franking credits of $35.5 million
or 8.1 cents per share as at 30 June 2012, representing
additional potential value for shareholders.
While the Embedded Value is determined in the context
of the Group’s business as a going concern, it does not
include any additional value in respect of future new
business that may be written after the valuation date. It
also ignores the Group’s listed overhead costs (primarily
costs associated with being listed on the ASX and the
remuneration of Directors) and excludes any short term
development and growth related costs. The Embedded
Value uses assumptions related to the future experience.
The movement in the Embedded Value between 30 June
2011 to 30 June 2012 is as a result of:
• The emergence of the net cash flows over the year;
• Payment of the final dividend for the financial year ended
30 June 2011;
• The claims, client discontinuance and expense rate
experience relative to expectations;
• The material costs incurred in developing the business,
its infrastructure and new products over the year;
• The value added by new business written over the year;
• The investment returns (net interest) earned on the net
tangible assets over the year in the current environment;
• The utilisation of the carried forward revenue tax losses
(positive impact);
• The net investment performance on the funds under
management and advice over the year that resulted in
lower fee income relative to expectations over the year
and lower fee income outlook as at 30 June 2012; and
• Changes made to the assumptions about the future
cash-flows assessed.
Rather than use a current discount rate, no change has
been made in the risk-adjusted discount rates applied to
the cash flows which remain consistent with prior reporting
periods, notwithstanding a reduction in long term market
discount rates over the year.
1 The capital includes the capital specifically held in respect of the in force business. It does not include overhead capital amounts or capital held in respect of new business
production (current or prospective)
16
Directors’ Report CONTiNuedClearView wealth limited executive Share Plan (eSP or the Plan)
extension of the eSP rules
Experienced and successful financial advisers represent a
significant growth opportunity for ClearView in both the life
insurance and wealth management segments. In addition
to being one of the few non bank-aligned participants
in the market, the Group is able to offer such financial
advisers the opportunity to join the CFA dealer group and
participate in the overall performance of ClearView through
share ownership in the Company. In November 2011, the
ESP rules were extended to allow financial advisers that
joined the CFA dealer group to participate in the Plan
(as contractor participants). ClearView has approved
up to 4% of total issued shares that may be issued
to such contractor participants. As at the date of this
report, ClearView has issued a total of 11.725 million ESP
shares (4.6 million were issued subsequent to year end in
accordance with an ASX waiver) to select financial advisers
that have joined CFA and has at the date of this report an
intention to issue further shares representing up to 4%
of the total issued share capital. For details of the Plan see
note 28 of the notes to the financial statements.
issue of shares under the revised eSP rules
In accordance with the provisions of the ESP, during the year shares were issued with the following grant dates:
SerieS
Senior managemenT
Series 151
Series 162
Series 173
Total (Senior Management)
Series 18
Series 19
Series 20
Series 21
Series 224
Series 235
Total (Contractor Participants)
Total
granT daTe
no oF SHareS
iSSued
realloCaTed
1 July 2011
-
3,000,000
1 September 2011
1 March 2012
3,200,000
1,150,000
4,350,000
750,000
1,000,000
4,750,000
10 February 2012
2,500,000
15 March 2012
3 April 2012
600,000
700,000
7 May 2012
2,325,000
-
-
-
-
29 June 2012
-
1,000,000
6 August 2012
4,600,000
-
ToTal
granTed
3,000,000
3,950,000
2,150,000
9,100,000
2,500,000
600,000
700,000
2,325,000
1,000,000
4,600,000
10,725,000
1,000,000
11,725,000
15,075,000
5,750,000
20,825,000
1 On 18 August 2011, 3 million shares were reallocated from Series 5 and 8 to Series 15 (Senior Management) due to the departure of the CEO Wealth Management and Advice.
Series 15 has a grant date of 1 July 2011.
2 On 12 September 2011, 500,000 shares were reallocated from Series 7 to Series 16 (Senior Management) and 250,000 shares were reallocated from Series 9 (Chairman) to Series 16
(Senior Management). The Chairman’s shares were reallocated due to a change in the rules of the ESP which precludes non executive directors from participating in the Plan.
3 On the 1 March 2012, 1,000,000 shares were reallocated from Series 14 to form part of Series 17 due to the departure of a member of Senior Management.
4 On the 29 June 2012, 1,000,000 shares were reallocated from Series 14 to form part of Series 22 due to the departure of a member of Senior Management.
5 On the 6 August 2012, 4,600,000 shares were issued to Contractor Participants that joined the CFA dealer group subsequent to year end in accordance with the ASX waiver relating
to the issue of shares during a takeover offer.
17
ClearView annual report 2012 Review of operations
and activities continued
dividends
The Directors have declared a fully franked dividend in
2012 of $8.011 million (2011: $7.727 million). This
maintains the 1.8 cent per share dividend rate from 2011
and represents approximately 40% of the 2012 underlying
net profit after tax and is in line with the Company’s
dividend policy (see below). No interim dividend was paid
during the year (2011: nil).
dividend Policy
Subject to available profits and financial position,
the Board’s expectation is to pay an annual dividend
representing 20% to 40% of underlying profit, subject to
regulatory requirements and available capital. ClearView’s
ability to pay a dividend will depend upon factors including
its profitability, the availability of franking credits and its
funding requirements which in turn may be affected by
trading, general economic conditions, business growth
and regulation. Accordingly, no assurance can be given
as to the timing, extent and payment of dividends.
As evidenced by our second half sales, ClearView is
experiencing strong growth in life insurance sales. As
previously outlined to the market, life insurance new
business growth is capital intensive. The Board will continue
to evaluate the Group’s capital position and dividend policy
on a regular basis, especially in light of the capital intensity
and growth trajectory of its life insurance business.
Capital management
As previously announced to the market, ClearView will
not be materially impacted by the new regulatory capital
regime APRA is introducing for life insurers from 1 January
2013. Equally, based on our understanding of the draft
APRA prudential standards we anticipate meeting the
proposed Strong Super capital regime for registered
superannuation entities from 1 July 2013 without a
material impact on our regulatory capital position
(or excess assets above requirements).
Nonetheless, under the APRA requirements for life insurers,
we are obliged to earmark any net capital usage anticipated
under our three year business projections. As a consequence
of the current business growth now emerging for ClearView
and the three year plan adopted by the Board for the Group,
we anticipate that our capital requirements in respect of new
business growth will exceed the cash-flow released from the
in force business over the next three years.
We are required to set aside the implied net capital
usage, estimated as circa $19 million, as capital to fund
that growth. Our capital requirements have increased
subsequent to year end (after the adoption of the three
year business plan) and our excess assets over internal
benchmarks has reduced correspondingly.
New business growth above the anticipated level would
likely absorb increased capital and require increased
capital reserving, and possibly require additional capital.
ClearView however remains soundly capitalised and
well placed to fund the anticipated new business growth
over the short to medium term.
Events subsequent to balance date
Take over Bid subsequent to balance date
On 12 July 2012, a conditional, unsolicited takeover offer
was received by ClearView from CCP BidCo Pty Ltd, an entity
owned and controlled by Crescent Capital Management
Pty Ltd. The Board (other than John Murphy who has
absented himself due to his association with members
of the CCP consortium) considers the offer price of $0.50
cents per share is inadequate and materially undervalues
ClearView. The Board has unanimously recommended that
shareholders reject the offer. The reasons for rejecting the
offer is outlined in the Target’s Statement which has been
lodged with the ASX. We will keep shareholders informed
of developments as and when they occur.
Further to the conditional, unsolicited take over offer,
the Board has engaged financial and legal advisers on
commercial terms normal to a transaction of this nature.
Furthermore, the Board intends to implement retention
arrangements with the senior executive team in order
to assist in providing continuity of management, and to
align the amount of the benefits that might be paid to
executives with those received by shareholders under
a successful transaction. The retention arrangements
will be payable in the event of a change of control of
ClearView, and will be payable only if the individual does
not voluntarily resign within six months from the date of
announcement of the CCP BidCo Offer. Further details on
the retention arrangements have been provided in the
Target’s Statement released to the ASX.
dividend
On 17 August 2012, the Group proposed a final dividend
of $8.011 million representing 1.8 cents per share fully
franked. The record date for determining entitlement to
the dividend is 14 September 2012 and the dividend will
be paid on 27 September 2012. Since the dividend has not
been declared at year end it has not been recognised as
payable in these accounts.
18
Directors’ Report CONTiNuedClearView wealth limited Other than the above, or elsewhere in this report, there
has not been any matter or circumstance occurring
subsequent to the end of the financial year that has
significantly affected, or may significantly affect, the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated
entity in future financial years.
with those that arise when assets are acquired outside
the consolidation regime. Consequently, the deductions
(including losses in the prior year and future deductions)
in respect of the ‘rights’ are unlikely to be available to the
Company and its tax consolidated group and accordingly
no Deferred Tax Asset has been recognised in the Financial
Statements for the year ended 30 June 2012.
Rights to future income (RTFI)
As previously outlined in the half year report, ClearView
had lodged a request of amendment to the Australian
Taxation Office (ATO) in respect of the 2010 consolidated
income tax return to include an additional deduction of
$5.8 million (being the write off over 10 years of a $58
million deductible amount for ‘rights to future income’).
Tax Laws Amendment (2012 Measures No. 2) Act 2012
received Royal Assent on 29 June 2012 which includes the
amendments to modify consolidation tax cost setting and
rights to future income (RTFI) rules. The measures reverse
certain amendments enacted by Tax Laws Amendment
(2010 Measures No. 1) Act 2010 (the 2010 amendments)
relating to the residual cost setting and RTFI rules that make
the tax outcomes for consolidated groups more consistent
Significant changes in
the state of affairs
Other than enclosed elsewhere in this report, there were no
other significant changes in the state of affairs of the Group
during the year ended 30 June 2012.
Future developments
Disclosure of information regarding likely developments in
the operations of the consolidated entity in future financial
years and the expected results of those operations is likely
to result in unreasonable prejudice to the consolidated
entity. Accordingly, this information has not been disclosed
in this report.
Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended
30 June 2012, and the numbers of meetings attended by each Director were as follows:
Ray Kellerman
Anne Keating
Anthony Eisen*
David Goodsall
John Murphy
Simon Swanson
Susan Thomas
Peter Wade
Total number of meetings
Board
audiT, riSK and
ComPlianCe CommiTTee
nominaTion and
remuneraTion
CommiTTee
eligiBle
To aTTend
aTTended
eligiBle
To aTTend
aTTended
eligiBle
To aTTend
aTTended
12
12
12
12
12
12
12
-
12
11
12
12
11
12
12
12
-
-
7
-
7
7
7
-
7
-
7
6
-
7
7
7
-
7
-
-
5
5
-
-
-
-
5
-
5
5
5
-
-
-
-
5
-
-
* Anthony Eisen appointed Michael Jefferies as his alternate Director. Mr Jefferies attended two Board and two Audit, Risk and Compliance meetings on behalf of Mr Eisen during the year.
19
ClearView annual report 2012 directors’ report
CONTINUED
Directors’ shareholdings
The following table sets out each Director’s relevant interest in shares and rights or options in shares of the Company
or a related body corporate as at the date of this report.
direCTorS
Ray Kellerman
Anne Keating
Anthony Eisen1
David Goodsall
John Murphy2
Michael Jefferies1
Simon Swanson
Susan Thomas
FullY Paid ordinarY SHareS
inCluding exeCuTiVe SHare Plan
numBer
300,000
-
-
100,000
5,606,766
-
12,000,000
1,527,035
exeCuTiVe SHare Plan
numBer
-
-
-
-
-
-
10,000,000
-
1 Anthony Eisen and Mike Jefferies represent the interests of GPG that holds 210,699,272 shares.
2 John Murphy was a director of Investec Wentworth Private Equity until 20 September 2011. Investec Wentworth Private Eauity and Investec Bank (Australia) Limited collectively holds
39,688,239 shares. John Murphy has an interest in Investec Wentworth Private Equity Fund 3A (relevant interest by virtue of section 608(3) of the Corporations Act 2001). John Murphy
further holds 315,000 shares in his superannuation fund, through Tuwele Pty Limited.
Indemnification of
Directors and Officers
During the period, the Company purchased directors’ and
officers’ Liability Insurance to provide cover in respect of
claims made against the Directors and Officers in office
during the financial period and as at the date of this report,
as far as is allowable by the Corporations Act 2001.
The total amount of insurance premium paid and
the nature of the liability are not disclosed due to a
confidentiality clause within the contract.
As at the date of this report, no amounts have been
claimed or paid in respect of this indemnity and insurance,
other than the premium referred to above. Directors’ and
officers’ liability insurance contributed a proportion of the
total insurance premium.
The Company has not during or since the financial period,
indemnified or agreed to indemnify the auditor of the
Company against a liability incurred as an auditor.
Rounding of amounts
The Company is of a kind referred to in ASIC Class Order
98/0100 dated 10 July 1998 and in accordance with that
Class Order amounts in this report, and the financial report,
have been rounded off to the nearest thousand dollars.
Auditor independence and non
audit services
The Directors have received an independence declaration
from the auditors, a copy of which is on page 32.
20
Non-audit services
Details of amounts paid or payable to the auditor for
non-audit services provided during the year by the auditor
are outlined in note 10 to the financial statements.
The Directors are satisfied that the provision of non-audit
services, during the year, by the auditor (or by another
person or firm on the auditor’s behalf) is compatible with
the general standard of independence for auditors imposed
by the Corporations Act 2001.
The Directors are of the opinion that the services as
disclosed in note 10 to the financial statements do not
compromise the external auditor’s independence, based
on advice received from the Audit, Risk and Compliance
Committee, for the following reasons:
• All non-audit services comply with the ClearView audit
independence policy and have been reviewed and
approved to ensure that they do not impact the integrity
and objectivity of the auditor; and
• None of the services undermine the general principles
relating to auditor independence as set out in Code
of Conduct APES 110 ‘Code of Ethics for Professional
Accountants’ issued by the Accounting Professional &
Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or
decision-making capacity for the company, acting as
advocate for the company or jointly sharing economic
risks and rewards.
ClearView wealth limited Remuneration Report
This report sets out information about the remuneration
of ClearView’s Directors and its Key Management Personnel
(KMP) for the financial year ended 30 June 2012
and includes the following:
• Details of the Directors and KMP
• A discussion of ClearView’s Remuneration Policy
Barry odes
Chief Operating Officer (commenced on 23 January 2012)
Chris robson
General Counsel and Company Secretary
Clive levinthal
Head of Product and Underwriting
• Relationship between the Remuneration Policy
and company performance
greg martin
Chief Actuary and Risk Officer
• Non-executive Directors’ remuneration
• KMP remuneration
• Key terms of employment contracts
Details of Directors and KMP
The Directors of the Group and Company during or since
the end of the financial year were:
ray Kellerman
Chairman, Independent Non-executive Director
anne Keating
Independent Non-executive Director
anthony eisen
Non-executive Director
david goodsall
Independent Non-executive Director
John murphy
Non-executive Director
michael Jefferies
Alternate Director
(resigned and appointed Alternate Director to
Anthony Eisen on 27 July 2011)
Peter Wade
Former Independent Non-executive Director
(Resigned 27 July 2011)
Simon Swanson
Managing Director
Susan Thomas
Independent Non-executive Director
The KMP of the Group and the Company in addition to the
Directors during or since the end of the financial year were:
Simon Swanson
Managing Director
athol Chiert
Chief Financial Officer
Justin mclaughlin
Chief Investment Officer
Remuneration policy
ClearView’s current remuneration policy was updated in
June 2011. The Board has approved this policy and retains
overall responsibility for all remuneration decisions in
respect to persons relevant to each entity. The policy is
reviewed at least once every three years. Any changes to
this policy must also be approved by the Board.
ClearView has established a Group Nomination and
Remuneration Committee which, among other things,
is responsible for overseeing the remuneration and human
resources and practices for the ClearView group.
ClearView’s remuneration policy is in place to:
• outline employee obligations and ClearView’s obligations;
• set out roles, responsibilities and accountabilities of the KMP;
• set out clear reporting requirements and controls; and
• define various terms to ensure a common understanding.
The relationship between remuneration policy
and Company performance
The primary objectives of the remuneration policy are to
ensure that remuneration is competitive, aligned with the
Company’s business objectives in both the short term and
the long term, and appropriate for the results delivered
by the individual. In accordance with this objective, the
Company has structured remuneration packages to provide
an appropriate mix of fixed and performance based pay
components which are based on both the individual’s
performance and Company performance. By adopting a
robust approach to remuneration, the Company aims to
attract and retain top talent.
The remuneration framework is also designed to reward
prudent risk-taking, support effective risk management and
prioritise the long term financial soundness of the business
and its shareholders.
21
ClearView annual report 2012 directors’ report
CONTINUED
Remuneration policy continued
Total KMP remuneration is made up of three components:
• Fixed Remuneration;
• Short Term Incentive (STI); and
• Long Term Incentive (LTI).
Fixed remuneration
The Fixed Remuneration is based on each employee’s
experience, qualifications, capability and responsibility and
not to specific performance conditions. An employee’s
responsibility includes accountabilities, delegations, KPIs and
risk profiles. To ensure an employee’s Fixed Remuneration is
competitive, it is benchmarked against median salary survey
results from a group of comparable Australian financial service
companies. Benchmarking of Fixed Remuneration for KMP for
the 2012 financial year was performed utilising data provided
by an independent external research house.
Short term incentive (STi) plan
The STI plan aims to motivate the employee to reach
or exceed individual as well as company goals for the
financial year. It is based on rewarding an employee with
a bonus calculated as a percentage of fixed remuneration.
Individual performance targets are set for each KMP
by the Nomination and Remuneration Committee.
The STI component is dependent on the respective overall
contribution to, or responsibility for, both set company
targets and specific key individual responsibilities.
Accordingly the maximum STI potential for each member
of the KMP will also differ. The resultant potential maximum
STI awards for KMP range from 66% to 92% of fixed
remuneration and include both individual and company
performance targets, however these were heavily weighted
towards company performance targets in the current
year given the nature and development of the business.
The individual performance targets are linked to an
employee’s position and/or team objectives and reflect the
level of risk that ClearView is exposed to by the individual’s
actions. The company performance targets are based on
sales results, deliverables related to the implementation
of projects, and achieving budgeted underlying net profit
after tax for the financial year. The underlying net profit for
2012 represents ClearView’s consolidated net profit after
tax adjusted for amortisation, and the life insurance policy
liability (based on AIFRS). This is the Board’s key measure
of profitability and the basis on which the Board determines
the dividend.
The Managing Director is responsible for assessing the
performance of KMP and for recommending the total STI
to be paid. The Managing Director may also recommend
STI payments over and above target bonus amounts
for exceptional performance. The Managing Director’s
recommendations are presented to the Nomination
and Remuneration Committee for consideration and
recommendations are made to the Board for approval.
It is only when Board approval has been obtained
that STI bonuses are payable. In 2012, KMP received
an STI bonus of 33% of their fixed remuneration
representing 22% of their total remuneration.
long term incentive (lTi) plan
ClearView has an ownership-based compensation
scheme for executives and senior employees of the
Group to assist in the recruitment, rewarding, retention
and motivation of employees of the Company. The ESP
is designed to encourage a focus on the long term results
of the Company. Shares issued under the ESP will only
vest provided the performance and vesting conditions are
achieved. Further details of the ESP are on page 89.
The LTI performance and vesting criteria include a service
component as well as an in-built performance hurdle
through an interest rate that has been set at the RBA rate
plus a margin of 0.25%.
Consequences of ClearView’s performance on shareholder wealth
The following tables set out the summary information about the consolidated entity’s earnings and movements
in shareholder wealth for five years to June 2012.
Revenue ($’000)
Net profit / (loss) before tax ($’000)
Net profit / (loss) after tax ($’000)
Dividend (interim) (cents)
Dividend (final) (cents)
22
30 June
2012
30 June
2011
143,182
136,019
36,946
22,336
-
1.8
14,658
8,665
-
1.8
30 June
2010
45,3681
7,1022
2,4082
-
-
30 June
2009
30 June
2008
3,8651
(3,092)2
(2,269)2
17,662
(48,639)
(42,767)
-
-
4.0
-
ClearView wealth limited Basic Statutory EPS (cents)2
Fully diluted Statutory EPS (cents)
Fully diluted Underlying EPS (cents)
Share Price at the beginning of the year
Share Price at the end of the year
30 June
2012
30 June
2011
30 June
2010
30 June
2009
30 June
2008
5.46
5.24
4.53
$0.50
$0.46
2.12
2.10
4.59
$0.52
$0.50
1.33
1.33
-
$0.42
$0.52
(2.70)
(2.68)
-
$0.58
$0.42
(17.24)
(17.24)
-
$0.92
$0.58
1 Revenue from continuing operations excludes net fair value gains / losses in financial assets in the current and prior year.
2 From continuing operations.
Non-executive
Directors remuneration
Non-executive Directors are remunerated by fees within the
aggregate limit approved by shareholders. The present limit
on aggregate remuneration for non-executive directors
is $750,000 including superannuation (2011: $750,000).
Directors’ fees can be paid as superannuation contributions.
During the year, the Board amended the rules of the
Company’s ESP so as to make Non-executive Directors
ineligible to participate in the plan. This had been
implemented for new directorship appointments since the
acquisition of the Clearview businesses. As a consequence
of the change in the rules of the Plan, the shares allocated
to the Chairman under the ESP were reallocated to Senior
Management. This leaves the fee pool as the only source
of remuneration for Non-executive Directors.
The remuneration of each Non-executive Director for the
year ended 30 June 2012 is set out below:
SHorT Term emPloYee BeneFiTS
PoST emPloYmenT
SHare
BaSed
PaYmenTS
ToTal
TerminaTion
SuPer-
exeCuTiVe SHare
non-
PaYmenT
annuaTion
Plan oF ToTal
PerFormanCe
2012
SalarY & FeeS $
BonuS $
moneTarY
non-executive directors
R Kellerman
A Eisen1
D Goodsall
J Murphy2
M Jefferies3
P Wade4
S Thomas5
A Keating5
Total
128,440
-
82,568
51,512
-
5,753
47,934
77,004
393,211
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
remuneraTion $
BaSed %
$
11,560
-
7,432
4,637
-
518
36,000
6,930
67,077
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
140,000
-
90,000
56,149
-
6,271
83,934
83,934
460,288
1 A Eisen has agreed that he will receive no fee for his services as a director and GPG Limited have agreed to receive no directors fees in respect of A Eisen’s directorship.
2 J Murphy agreed that he would receive director’s fees for his service as a director of $75,000 effective from 1 October 2011.
3 M Jefferies has agreed that he will receive no fee for his services as a director and GPG Limited have agreed to receive no directors fees in respect of M Jefferie’s directorship.
M Jefferies resigned as a director on 27 July 2011 and was appointed an alternate director to A Eisen on the same date.
4 P Wade resigned as a director on 27 July 2011.
5 S Thomas and A Keating’s director’s fees increased from $70,000 to $85,000 on 27 July 2011.
23
ClearView annual report 2012 directors’ report
CONTINUED
Non-executive Directors remuneration continued
The remuneration of each Non-executive Director for the year ended 30 June 2011 is set out below:
SHorT Term emPloYee BeneFiTS
PoST emPloYmenT
SHare
BaSed
PaYmenTS
ToTal
TerminaTion
SuPer-
exeCuTiVe SHare
non-
PaYmenT
annuaTion
Plan9 oF ToTal
PerFormanCe
2011
SalarY & FeeS $
BonuS $
moneTarY
non-executive directors
R Kellerman1
A Eisen2
D Goodsall3
J Murphy4
M Jefferies5
P Wade6
S Thomas7
A Keating8
113,150
73,750
73,012
70,833
76,667
74,159
-
37,916
Total
519,487
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
remuneraTion $
BaSed %
$
10,183
5,807
4.5
129,140
-
6,571
-
-
6,674
41,328
3,412
69,168
-
-
-
-
-
-
-
5,807
-
-
-
-
-
-
-
-
73,750
79,583
70,833
76,667
80,833
41,328
41,328
593,462
1 R Kellerman’s directors’ fees increased from $100,000 to $140,000 from 1 December 2010.
2 A Eisen has agreed that he will receive no fee for his services as a director although fees are paid to GPG Limited of which he is an employee. Directors’ fees increased from $65,000
to $80,000 from 1 December 2010.
3 D Goodsall’s directors’ fees increased from $65,000 to $90,000 from 1 December 2010.
4 J Murphy has agreed that he will receive no fee for his service as a director although fees are paid to Investec Wentworth Private Equity Limited of which he is a director. Directors’ fees
increased from $65,000 to $75,000 from 1 December 2010.
5 M Jefferies has agreed that he will receive no fee for his services as a director although fees are paid to GPG Limited of which he is an employee. Directors’ fees increased from $65,000
to $85,000 from 1 December 2010. M Jefferies resigned as a director on 27 July 2011 and was appointed an alternate director to A Eisen on the same date.
6 P Wade’s directors’ fees increased from $75,000 to $85,000 from 1 December 2010. P Wade resigned as a director on 27 July 2011.
7 S Thomas was appointed as a director on 29 November 2010.
8 A Keating was appointed as a director on 29 November 2010.
9 Benefit calculated under the Binomial model in respect of the future value of the ESP shares issued.
24
ClearView wealth limited KMP remuneration
The compensation of each member of the KMP of the Group for the year ended 30 June 2012 is set out below:
SHorT Term emPloYee BeneFiTS
PoST emPloYmenT
SHare
BaSed
PaYmenTS
ToTal
TerminaTion
SuPer-
non-
PaYmenT
annuaTion
exeCuTiVe
PerFormanCe
2012
SalarY & FeeS $
BonuS $
moneTarY $
S Swanson
A Chiert
B Odes2
C Robson
C Levinthal
G Martin
J McLaughlin
Total
551,321
233,690
11,399
293,225
174,672
284,225
284,225
301,424
286,424
94,565
56,753
91,663
89,531
100,370
107,760
-
3,250
-
9,439
11,399
-
2,175,516
774,332
35,487
$
-
-
-
-
-
-
-
-
$
SHare Plan1
BaSed %
$
48,679
237,227
15,775
15,721
15,775
15,775
25,576
22,576
-
20,278
32,712
22,531
65,424
-
43.5
23.4
28.5
29.3
26.6
32.9
25.9
1,082,316
403,565
270,674
424,375
421,501
504,193
416,760
159,877
378,172
32.7
3,523,384
1 Benefit calculated under the Binomial model in respect of the future value of the ESP shares issued.
2 Commenced on 23 January 2012.
The compensation of each member of the KMP of the Group for the year ended 30 June 2011 is set out below:
SHorT Term emPloYee BeneFiTS
PoST emPloYmenT
SHare
BaSed
PaYmenTS
ToTal
TerminaTion
SuPer-
non-
PaYmenT
annuaTion
exeCuTiVe
PerFormanCe
2011
SalarY & FeeS $
BonuS $
moneTarY $
S Swanson
A Hutchison2
A Chiert
C Robson
C Levinthal
G Martin3
557,063
390,514
402,642
138,975
285,470
113,196
69,010
264,367
102,654
27,923
97,519
40,035
J McLaughlin
285,470
108,521
11,628
109,8614
-
-
11,144
3,876
-
$
-
396,881
-
-
-
-
-
$
SHare Plan1
BaSed %
$
42,937
466,364
37,943
23,530
3,507
-
-
-
21,787
14,836
6,765
23,530
-
-
58.4
12.8
26.8
27.8
27.4
26.1
26.0
1,468,506
1,086,302
422,196
100,440
409,653
153,330
417,521
Total
1,966,676
916,683
136,509
396,881
159,999
481,200
34.4
4,057,948
1 Benefit calculated under the Binomial model in respect of the future value of the ESP shares issued.
2 Resigned as an employee on 1 July 2011.
3 Prior to Greg Martin being employed by ClearView as Chief Actuary, Greg was a partner of KPMG. During the period until Greg was employed by ClearView, ClearView paid KPMG fees
totalling $818,046.
4 Non-monetary fee for Alex Hutchison includes $98,211 of annual leave entitlements paid out on resignation.
25
ClearView annual report 2012 directors’ report
CONTINUED
Share-based payments
granted as compensation
executive Share Plan (eSP or Plan)
ClearView operates an ESP for executives and senior
employees of the consolidated entity. In accordance with
the provisions of the Plan, as approved by shareholders
at the Annual General Meeting held on 7 October 2009,
executives and senior employees may be issued parcels of
ordinary shares at an issue price as defined under the plan,
which will generally be at or around the market price of
ClearView shares (‘Shares’) at the time of issue. Since the
capital raising was completed in June 2010, no shares have
been issued below 50 cents per share (the share price at
which the capital was raised).
limited recourse loan
The Company may provide financial assistance to an
employee for the purposes of subscribing for Shares under
the ESP. The financial assistance will be a limited recourse
loan equal to the purchase value of the Shares, repayable
within 5 years. The financial assistance will become
immediately repayable in the event of “disqualifying
circumstances” including failure to meet performance or
vesting conditions, or upon cessation of the employee’s
employment in circumstances defined in the ESP Rules.
The employee will only be entitled to repay the loan and
obtain the benefit of the shares if the applicable vesting
conditions and performance conditions are met.
The following tables outline the ESP loans above $100,000
made to Directors and KMP or to their related entities as at
30 June 2012 and 2011.
2012
R Kellerman
S Swanson
A Hutchinson1
A Chiert
B Odes
C Levinthal
G Martin
C Robson
J McLaughlin
Total
2011
R Kellerman
S Swanson
A Hutchison
A Chiert
C Levinthal
G Martin
C Robson
J McLaughlin
Total
BalanCe aT
Beginning
loanS
granTed
inTereST
CHarged
rePaYmenTS
loan
CanCelled
BalanCe
aT end
HigHeST in
Period
137,619
6,222,897
1,679,829
811,279
-
-
-
-
1,000,000
516,507
-
-
-
1,000,000
500,000
835,353
-
-
-
137,619
-
137,619
296,786
96,300
-
6,423,383
6,423,383
-
38,726
14,877
24,576
40,629
20,315
25,750
-
1,679,829
-
1,679,829
14,445
-
9,630
19,260
9,630
9,630
-
-
-
-
-
-
835,560
835,560
1,014,877
1,014,877
531,453
531,453
1,021,369
1,021,369
510,685
851,473
510,685
851,473
8,523,655
2,500,000
461,659
158,895
137,619
11,188,800
BalanCe aT
Beginning
loanS
granTed
inTereST
CHarged
rePaYmenTS
loan
CanCelled
BalanCe
aT end
HigHeST in
Period
131,066
5,926,569
1,628,735
772,647
-
-
-
809,598
-
-
-
-
500,000
-
-
-
6,553
296,328
51,094
38,632
16,507
-
-
25,755
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
137,619
137,619
6,222,897
6,222,897
1,679,829
1,679,829
811,279
516,507
811,279
516,507
-
-
-
-
835,353
835,353
9,268,615
500,000
434,869
10,203,484
1 A Hutchison’s loan was cancelled on the termination of his employment on 1 July 2011 and his ESP shares were reallocated.
26
ClearView wealth limited For Shares issued, it is a term of the loan that interest
accrues at the Reserve Bank of Australia official cash rate
(RBA Rate) plus a margin of 0.25% (reset each year in
December and June). This is intended to act as an in-built
performance hurdle. For this reason, additional performance
hurdles are not imposed. The interest rate (excluding
series 6) was revised and approved by shareholders at the
Extraordinary General Meeting (EGM) on 30 April 2010. Prior
to this approval interest was charged on the loans at 8% per
annum (as approved at the 2009 AGM). The Board considers
that a market based interest rate is more appropriate for the
circumstances of the Company.
Any after tax equivalent of dividends paid on the ESP Shares
will be applied to repayment of any outstanding loan.
The ESP provides for Shares to be bought back by the
Company in full satisfaction of outstanding loans (including
accrued interest) in circumstances where an employee
does not wish to, or is not entitled to, repay the loan and
obtain unencumbered title to the Shares.
restrictions and holding lock
The Shares granted under the ESP are subject to a holding
lock restricting the holder from dealing with the Shares
without the consent of the Board until the earlier of:
• The 5th anniversary of the issue date;
• The date the employee ceases employment; or
• Termination of the ESP.
Executives may make a disposal request to the Board that
their Shares be sold on their behalf, and that the excess sale
proceeds (if any) over the amount of the loan be paid to them.
However, an executive can only make a disposal request for
their Shares when the performance and vesting conditions are
satisfied for those Shares, and approval of the disposal request
is always subject to the approval of the Board.
Change in Control provisions
The ESP Rules include an accelerated vesting provision
for employees on a change in control. Unless the terms
of a particular grant provide otherwise, all performance
conditions and vesting conditions in relation to particular
ESP Shares will be deemed to have been satisfied if:
• A person who did not control ClearView at the date of
issue of the Shares gains control of the Company (but only
if the person is not itself controlled by another person who
controlled the Company at the date of issue); or
• Other circumstances occur which the Board determines
in its absolute discretion are analogous to a control
transaction and justify removal of performance conditions
and/or vesting conditions.
“Control” is defined as where a person and its related bodies
corporate (as defined in the Corporations Act) together hold
more than 50% of the ClearView Shares then on issue.
restrictions on offer
Shares may not be offered under the ESP to an employee
if that employee would hold, after issue of the shares, an
interest in more than 5% of the issued shares or be able to
control the right to vote of more than 5% of the votes that
may be cast at a general meeting of the Company.
Shares issued under the ESP will only vest provided
the performance and vesting conditions are achieved
(unless there is a change in control provision event as
previously outlined).
No Invitation can be made to an Eligible Employee (as
defined under the Plan Rules) if the total number of Shares
issued under this Plan, and Shares issued during the past
five (5) years under any executive share scheme of the
Company, exceeds six per cent (6%) of the total number
of issued Shares of the Company, at the time the Invitation
is made, provided that an Invitation can be made where
that limit is exceeded if the Invitation:
• Is made only to an Eligible Employee who will become
a Contractor Participant if the Invitation is accepted; and
• Will not, if accepted, result in the total number of Shares
on issue under this Plan, exceeding ten percent (10%) of
the total number of issued Shares of the Company, at the
time the Invitation is made.
27
ClearView annual report 2012 Share-based payments granted as compensation continued
The following table summarises the performance and vesting conditions for shares issued to Eligible Employees under
the ESP as at the date of this report:
SerieS
VeSTing CondiTionS
PerFormanCe
CondiTionS
Series 6 – 30 June 2008 Issue
Series 7 – 29 September 2009 Issue
Series 10 – 25 June 2010 Issue
Series 11 – 25 June 2010 Issue
Series 12 – 25 June 2010 Issue
Series 13 – 25 June 2010 Issue
Nil1
Nil1
Nil2
Nil3
3 years from date of commencement of employment
2 years and 341 days from date of issue
Series 14 – 1 November 2010 Issue
2 years and 343 days from date of issue
Series 15 – 18 August 2011 Issue
2 years and 317 days from date of issue
Series 16 – 6 October 2011 Issue
2 years and 330 days from date of issue
Series 17 – 1 March 2012 Issue
3 years from date of issue
1 Change in control provision was triggered on 23 October 2009 by GPG increasing its shareholding above 50%.
2 Shares vested 1 year from date of commencement of employment on 26 March 2011.
3 Shares vested 2 years from date of commencement of employment on 26 March 2012.
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
In accordance with Mr Swanson’s employment contract,
Mr Swanson is entitled to a long term incentive comprising
10 million Shares in accordance with the ESP, and vesting
progressively over three years from the commencement
date of his contract as follows:
Series 10:
2 million shares at an issue price of 50 cents vesting on
26 March 2011 (vested);
Series 11:
4 million shares at an issue price of 58 cents vesting on
26 March 2012 (vested); and
Series 12:
4 million shares at an issue price of 65 cents vesting on
26 March 2013.
The Shares issued to Mr Swanson will vest progressively
each year as outlined above. Unvested Shares will be
immediately forfeited in accordance with the terms of the
Plan if Mr Swanson terminates his employment (other than
because of a breach by the Company of its obligations, or
because of a reduction in remuneration or status following
a change of control). If Mr Swanson’s employment is
terminated by the Company for any other reason then the
Shares in the next unvested tranche will vest automatically,
and the remaining unvested Shares will be forfeited.
The use of derivatives over ClearView Securities could
distort the proper functioning of performance and vesting
conditions of the ESP. Accordingly, derivatives over
ClearView shares are not permitted to be held in relation
to any ClearView shares that are unvested or the subject
of a holding lock under the ESP.
28
Directors’ Report CONTiNuedClearView wealth limited Total Shares issued to eligible employees under the executive Share Plan
Details of all shares issued by the Company to Eligible Employees under the ESP as at the date of this report are:
SerieS
ClaSS oF SHareS
granT daTe
iSSue and
exerCiSe PriCe $
Fair Value aT
granT daTe $
FirST VeSTing
daTe
Final exerCiSe
daTe
Series 6
Series 7
Series 10
Series 11
Series 12
Series 13
Series 14
Series 15
Series 16
Series 17
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Shares granted to KmP
30/06/2008
29/09/2009
25/06/2010
25/06/2010
25/06/2010
25/06/2010
25/10/2010
01/07/2011
01/09/2011
01/03/2012
0.589
0.488
0.500
0.580
0.650
0.533
0.500
0.500
0.500
0.500
0.103
0.065
0.112
0.081
0.060
0.101
0.067
0.098
0.106
0.091
30/06/2008
30/06/2013
23/10/2009
29/09/2014
26/03/2011
26/03/2015
26/03/2012
26/03/2015
26/03/2013
26/03/2015
01/06/2013
01/06/2015
01/10/2013
01/10/2015
01/07/2014
01/07/2016
01/09/2014
01/09/2016
01/03/2015
01/03/2017
During and since the end of the financial year an aggregate
of 5,000,000 shares (2011: 3,000,000) were granted by the
Company to KMP under the ESP.
the revised ESP Rules and this Series accrues interest at the
lower of the dividends paid on the shares and the statutory
interest rate.
Interest-bearing loans have been granted by the Company
to the following KMP to fund the acquisition of shares under
the ESP. The loans bear interest at the RBA rate plus a
margin of 0.25% other than Series 6 that was issued prior to
Until vesting and performance conditions are achieved, the
shares are subject to a holding lock. If the conditions are met,
the loans must be repaid before the holding lock is released.
SerieS
KmP To WHiCH THe SerieS relaTeS
Series 61
Series 71
Series 102
Series 113
Series 12
Series 14
Series 15
Series 17
Justin McLaughlin
Athol Chiert / Justin McLaughlin
Simon Swanson
Simon Swanson
Simon Swanson
Clive Levinthal
Greg Martin / Chris Robson
Barry Odes
Fair Value aT
granT daTe $
exerCiSe PriCe
Per SHare $
aggregaTe
Value aT
granT daTe $
0.103
0.065
0.112
0.081
0.060
0.067
0.098
0.091
0.589
0.488
0.500
0.580
0.650
0.500
0.500
0.500
51,500
98,057
224,074
323,295
241,927
67,000
294,000
182,000
exPirY daTe
30/06/2013
29/09/2014
26/03/2015
26/03/2015
26/03/2015
1/10/2015
01/07/2016
01/03/2017
1 A change in control provision was triggered on 23 October 2009 by GPG increasing its shareholding above 50%. As a result, the vesting conditions for employees that were issued shares
prior to the date of change of control were accelerated. As previously outlined to shareholders, the change in control only affects any performance or vesting conditions applicable to
particular ESP Shares. It does not affect the in-built performance condition in the form of the annual RBA interest rate plus a margin of 0.25%, nor does it automatically release ESP
Shares from the disposal restrictions and holding lock.
2 Shares vested 1 year from date of commencement of employment on 26 March 2011.
3 Shares vested 2 years from date of commencement of employment on 26 March 2012.
All unvested Shares will automatically vest in accordance
with the rules of the Plan upon a change in control. The
change of control relating to Mr Swanson’s unvested shares
is dealt within the terms entered into with Mr Swanson in his
Employment Agreement dated 26 March 2010.
Accordingly shares issued under Series 6, 7,10 and 11 have
met the vesting conditions up to the date of this report.
29
ClearView annual report 2012 Directors and KMP equity holdings
Fully paid ordinary shares of the Company (including those held under the ESP) owned by the KMP as at 30 June are
outlined below and in Note 35.
r
e
H
T
o
T
e
n
.
o
n
S
e
g
n
a
H
C
F
o
d
n
e
e
C
n
a
l
a
B
.
o
n
r
a
e
Y
l
a
i
C
n
a
n
i
F
d
l
e
H
e
C
n
a
l
a
B
.
o
n
S
n
o
i
T
i
d
n
o
C
g
n
i
T
S
e
V
o
T
T
C
e
J
B
u
S
(250,000)
300,000
-
-
100,000
5,606,766
727,035
1,527,035
-
-
-
-
d
e
T
S
e
V
e
C
n
a
l
a
B
.
o
n
d
n
e
r
a
e
Y
T
a
-
-
-
-
.
o
n
e
l
B
a
S
i
C
r
e
x
e
T
e
Y
T
o
n
T
u
B
d
e
T
S
e
V
-
-
-
-
- 12,000,000
4,000,000
6,000,000
6,000,000
1,500,000
-
1,500,000
1,500,000
2,000,000
2,000,000
1,000,000
1,000,000
55,000
1,055,000
1,000,000
1,500,000
-
1,500,000
1,500,000
2,075,000
2,000,000
98,400
550,000
250,000
-
100,000
5,606,766
5,606,766
100,000
239,682
800,000
800,000
-
-
-
-
- 12,000,000
8,000,000
2,000,000
2,000,000
3,000,000
1,500,000
-
-
-
-
1,000,000
1,000,000
3,000,000
3,000,000
1,500,000
1,500,000
-
-
-
-
1,500,000
75,000
75,000
-
-
1,500,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
d
n
a
d
e
T
S
e
V
.
o
n
e
l
B
a
S
i
C
r
e
x
e
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
T
C
e
J
B
u
S
S
e
r
a
H
S
g
n
i
T
S
e
V
o
T
.
o
n
S
n
o
i
T
i
d
n
o
C
T
o
n
S
e
r
a
H
S
.
o
n
S
n
o
i
T
i
d
n
o
C
g
n
i
T
S
e
V
o
T
T
C
e
J
B
u
S
T
a
e
C
n
a
l
a
B
F
o
g
n
i
n
n
i
g
e
B
.
o
n
r
a
e
Y
l
a
i
C
n
a
n
i
F
-
-
-
-
300,000
550,000
100,000
100,000
5,606,766
5,606,766
1,527,035
800,000
4,000,000
8,000,000 12,000,000
-
1,500,000
1,500,000
S
a
d
e
T
n
a
r
g
.
o
n
n
o
i
T
a
S
n
e
P
m
o
C
-
-
-
-
-
-
2,000,000
1,000,000
-
-
-
-
2,000,000
1,000,000
1,000,000
55,000
1,000,000
-
1,500,000
1,500,000
-
-
2,000,000
75,000
75,000
2,000,000
250,000
201,600
451,600
-
-
-
-
-
-
100,000
-
139,682
139,682
-
-
8,000,000
4,000,000 12,000,000
-
-
-
1,000,000
3,000,000
3,000,000
1,500,000
1,500,000
-
-
-
-
-
-
1,500,000
1,500,000
75,000
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
2012
R Kellerman
D Goodsall
J Murphy
S Thomas
S Swanson
A Chiert
B Odes
C Robson
C Levinthal
J McLaughlin
G Martin
2011
R Kellerman
D Goodsall
J Murphy
P Wade
S Thomas
S Swanson
A Hutchison
A Chiert
C Robson
C Levinthal
J McLaughlin
G Martin
30
Directors’ Report CONTiNuedClearView wealth limited
Key terms of employment contracts
The following contractual and other arrangements are in place in respect of the KMP as at the date of this report.
All current Directors are subject to re-election by shareholders at least every 3 years.
KmP
Term
noTiCe Period BY eiTHer THe
emPloYee or THe ComPanY
oTHer
Simon Swanson
Ongoing
6 months notice
Athol Chiert
Ongoing
6 months notice for the first
3 years of employment, 3
months notice after 3 years
Barry Odes
Ongoing
13 weeks
Chris Robson
Ongoing
13 weeks
Clive Levinthal
Ongoing
13 weeks
Greg Martin
Ongoing
13 weeks
Justin McLaughlin
Ongoing
12 months notice for the first
3 years of employment, 6
months notice after 3 years
If, in the 6 months following a change in control,
Mr Swanson’s remuneration or his duties and
responsibilities are reduced through no fault of his
own, then Mr Swanson will have a right to terminate
the contract with immediate effect. In this case, and
in addition to vesting of Mr Swanson’s ESP Shares, the
Company will be obliged to pay Mr Swanson 6 months’
base salary plus the maximum short term incentive
amount for that calendar year.
For all terminations after the first 3 years of employment
an additional 26 week payment is payable.
In the case of redundancy, a severance payment
of 3 months’ base salary (or any greater payment
required under the National Employment Standards).
In the case of redundancy, a severance payment
of 3 months’ base salary (or any greater payment
required under the National Employment Standards).
In the case of redundancy, a severance payment
of 3 months’ base salary (or any greater payment
required under the National Employment Standards).
In the case of redundancy, a severance payment
of 3 months’ base salary (or any greater payment
required under the National Employment Standards).
For all terminations after the first 3 years of employment
an additional 26 week payment is payable.
All current KMP contracts provide for an annual review of fixed remuneration.
Signed in accordance with a resolution of the Board of Directors made pursuant to s298(2) of the Corporations Act 2001.
On behalf of the Directors
ray Kellerman
Chairman
Sydney, 17 August 2012
31
ClearView annual report 2012 auditor’s independence declaration
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1217 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
ClearView Wealth Limited
Level 12, 20 Bond Street
Sydney, NSW 2000
17 August 2012
Dear Board Members
ClearView Wealth limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of ClearView Wealth Limited.
As lead audit partner for the audit of the financial statements of ClearView Wealth Limited for the financial year ended
30 June 2012, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
deloiTTe TouCHe ToHmaTSu
Philip Hardy
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
32
ClearView wealth limited
Corporate governance
The Board and management of ClearView Wealth
Limited (ClearView, the Company or the Group) are
committed to achieving high corporate governance
standards and to following the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations with 2010 amendments.
The Board and management are likewise committed to
following the Australian Prudential Regulation Authority
(APRA) standards that relate to the Group. ClearView owns
an APRA regulated Life Insurance company, ClearView Life
Assurance Limited, which is subject to a regulatory regime
prescribed under the Life Insurance Act 1995. ClearView
has also been registered as a Non Operating Holding
Company under that regime and as such is subject to the
Life Prudential Standards issued by APRA.
As part of the governance process, the Board and
management regularly review the Group’s policies and
practices to ensure that they meet the interests of
stakeholders and that the Group continues to maintain
and improve its governance standards.
The key group charters and policies are available on
the ClearView website at www.clearview.com.au under
the investors section. These documents are updated
and reviewed regularly by the Board recognising that
corporate governance is about continual improvement.
A description of the Group’s main corporate governance
practices is set out below under the eight principles that
the ASX Corporate Governance Council believes underlie
good corporate governance.
Principle 1 – Lay solid foundations
for management and oversight
role of the Board
As representatives of the shareholders, the Board is
responsible for the performance and overall governance
of ClearView. In practice this is achieved through
formal delegation to the Managing Director for day
to day management of the Group and to its Board
Committees for detailed consideration of matters and
making recommendations. The Board currently has two
committees – the Audit, Risk and Compliance Committee
and the Nomination and Remuneration Committee.
Key responsibilities of the Board
The Board’s key responsibilities are outlined in the Board
Charter. The primary functions of the Board includes:
• Strategic and financial performance – determine strategic
objectives, capital management and the Company’s
dividend policy, and approve all accounting policies,
financial reports and material external communications
by the Group;
• Executive management – approve the appointment and
where appropriate the termination and remuneration of
the Managing Director and senior executives;
• Audit and risk management – ensure effective audit,
risk management and compliance systems are in
place and manage its material business risks;
• Strategic planning – oversee the development, monitoring
and the execution of ClearView’s corporate strategy;
• Corporate governance – ensure the Company has
effective corporate governance policies in place including
continuous disclosure standards;
• Delegations – approve and monitor delegations of
authority at the Board and management levels;
• Human resource and remuneration – actively oversee
the design of the Group’s remuneration system and
monitoring its effectiveness; and
• Performance evaluation – review and evaluate the
performance of the Board, each Board Committee
and each individual director.
meetings of the Board
In accordance with the Board Charter, the Board meets
at least six times a year and more frequently if required.
During the financial year, the Board held 12 Board
meetings. The number of meetings attended by each
director is disclosed in the Directors’ Report on page 19.
33
ClearView annual report 2012 Corporate governance
CONTINUED
Principle 1 – Lay solid
foundations for management
and oversight continued
Performance evaluation of the senior management team
At least once a year, the Board, assisted by the Nomination
and Remuneration Committee, monitors the performance
of senior executives and the implementation of their
objectives against measurable and qualitative targets.
The Board also reviews and approves the objectives and
targets of senior executives set annually.
Principle 2 – Structure
the Board to add value
Board size and composition
The Board, with assistance from the Nomination and
Remuneration Committee, determines the size and
composition of the Board subject to the needs of the
business, the Company’s Constitution and regulatory
requirements. Based on the current Board Charter, the
Board must have a minimum of five directors at all times,
a majority of independent directors (as defined by the ASX
Corporate Governance Principles and Recommendations),
and a majority of directors who are Australian residents.
The Board should also comprise a mix of executive and
non-executive directors as well as directors with a broad
range of appropriate skills, expertise and experience.
As at 30 June 2012, the Board consisted of:
• 4 independent Non-executive Directors
• Ray Kellerman (Chairman)
• Anne Keating
• David Goodsall
• Susan Thomas
• 2 non-independent Non-executive Directors; and
• Anthony Eisen (alternate Director Michael Jefferies
– resigned and appointed as an alternate director
to Anthony Eisen on 27 July 2011)
• John Murphy
• one Executive Director
• Simon Swanson.
Information concerning each Director’s qualifications
and experience is disclosed on pages 10 to 12 of the
Directors’ Report.
Criteria for an independent director
An independent director is a non-executive director who is
independent of management and free of any business or
other relationship that could materially interfere with, or
could reasonably be perceived to materially interfere with,
the exercise of their unfettered and independent judgment.
Circumstances in which a director will not be considered
independent include if the director:
i.
ii.
is a substantial shareholder (as defined in the
Corporations Act) of the Company or an officer of,
or otherwise associated directly with, a substantial
shareholder of the Company;
is employed, or has previously been employed in an
executive capacity by the Company or another entity
within the Group, and there has not been a period of
at least three years between ceasing such employment
and serving on the Board;
iii. has within the last three years been a principal of a
material professional adviser or a material consultant
to the Company or another entity within the Group, or an
employee materially associated with the service provided;
iv. is a material supplier or customer of the Company
or another entity within the Group, or an officer of or
otherwise materially associated directly or indirectly
with a material supplier or customer; or
v.
has a material contractual relationship with the Company
or another entity within the Group other than as a director.
Family ties and cross-directorships may be relevant
in considering interests and relationships which may
compromise independence and should be disclosed by
directors to the Board.
The Board regularly assesses whether a non-executive
director is ‘independent’ in accordance with the above criteria.
meeting the “Fit and Proper” Test
ClearView has put in place a policy and comprehensive
measures to ensure that individuals who are appointed
to senior positions including board positions have the
appropriate fitness and propriety to effectively discharge
their responsibilities and duties.
Conflicts of interest
Directors must, where possible, avoid conflicts of
interest except in those circumstances permitted by the
Corporations Act 2001. Directors are required to disclose
any conflicts of interest in matters considered by the
Board and unless the Board resolves otherwise, must not
participate in Board discussion or vote on the matter.
34
ClearView wealth limited The Chairman
Performance evaluation
The Chairman of the Board is an independent non-
executive director appointed by the Directors. The role
of the Chairman and the Managing Director are separate.
The responsibilities of the Chairman include:
• Chair Board meetings;
• Establish the agenda for Board meetings, in consultation
with the Managing Director and the Company Secretary;
• Chair meetings of shareholders, including the Annual
General Meeting of the Company;
• Be the primary spokesperson for the Company at any
Annual General Meeting;
At least once a year the Board will, with the advice and
assistance of the Nomination and Remuneration Committee,
review and evaluate the performance of the Board, each
Board Committee and each individual Director against the
relevant charters, corporate governance policies and agreed
goals and objectives. Following each review and evaluation,
the Board will consider how to improve its performance. The
Board will agree and set the goals and objectives each year
and, if necessary, amend the relevant charters and policies.
In 2012, a performance evaluation for the Board, its
committees and Directors took place and was in accordance
with the process described in the previous paragraph.
• Represent the views of the Board to shareholders,
Succession
The Board, with assistance from the Nomination and
Remuneration Committee, considers the succession of its
members as required. Any Director who has been in office
for more than three years since his or her last election,
or who has been appointed to fill a casual vacancy,
is required to retire at the next Annual General Meeting
and may be eligible for re-election.
the general public, governmental authorities, regulators
and other stakeholders;
• Develop and maintain key strategic relationships; and
• Be available to meet with APRA on request.
Board appointments
Recommendations and nominations for new directors are
made by the Nomination and Remuneration Committee and
approved by the Board. When the Board considers that a
suitable candidate has been found, that person is appointed
by the Board but must stand for election by shareholders
at the next Annual General Meeting. On appointment, new
directors receive a Letter of Appointment, which sets out
their duties, terms and conditions of appointment and their
remuneration. The Company also enters into a Deed of
Indemnity with each director and the Company Secretary.
In appointing directors, the Board considers:
• The size and composition of the Board;
• The strategic needs of ClearView and its subsidiaries;
• Regulatory requirements; and
• The skills, expertise, experience and independence
of the potential director.
access to information and independent advice
All Directors are given unrestricted access to all records
and information relating to ClearView and are encouraged
to speak with members of senior management at any time
to request relevant information. Directors are also entitled
to seek independent advice or information concerning any
aspect of ClearView at the Company’s expense. However,
prior approval from the Chairman is required, which is not
to be withheld unreasonably.
35
ClearView annual report 2012 Corporate governance
CONTINUED
Principle 2 – Structure the Board
to add value continued
Board Committees
The Board has established committees to assist in the
execution of its duties and responsibilities, and to allow
matters to be discussed and considered in greater detail.
The Board Committee structure also enables the Board
to utilise the skills and experience of ClearView’s Directors
to its best advantage.
Current committees of the Board are the Nomination
and Remuneration Committee and the Audit, Risk and
Compliance Committee. Management regularly attends
the committee meetings at the invitation of the relevant
committee. Each Committee has its own charter, which
must be approved by the Board, outlining the composition,
responsibilities and administration of the Committee.
Minutes of Committee meetings are prepared by the
appointed secretary and the Chair of each Committee
reports back on the Committee meeting to the Board at
the next Board meeting.
Specific responsibilities of the Nomination and
Remuneration Committee include reviewing:
• The performance of the Board, each Board Committee
and each individual director;
• The remuneration arrangements of the directors,
the Managing Director and his direct reports;
• Remuneration by gender;
• Major changes and developments in the Company’s
recruitment, retention and termination policies and
procedures for senior management;
• Major changes and development in the Company’s
remuneration policy with a formal review at least every
three years; and
• Facilitating shareholder and other stakeholder
engagements in relation to the company’s remuneration
policies and practices.
The Nomination and Remuneration Committee has the
authority, at any time, to conduct or direct any investigation
it considers necessary to fulfil its responsibilities.
Membership of each Committee as at the date of the report
is set out in the table below:
investment Committee
CommiTTee
nominaTion &
remuneraTion
audiT, riSK
& ComPlianCe
Ray Kellerman
(Chairman, Independent)
Chair
Anne Keating
(Independent)
Anthony Eisen
David Goodsall
(Independent)
John Murphy
Susan Thomas
(Independent)
X
X
X
X
Chair
X
X
Details regarding the experience and tenure of the
members and the attendance at Committee meetings
are included in the Directors’ Report starting on page 10.
nomination and remuneration Committee
The Nomination and Remuneration Committee advises the
Board on matters related to the appointment, succession
and remuneration of directors and senior executives, as
well as the composition and performance of the Board. The
Chairman of this Committee is an independent director and
the Committee has a majority of independent directors. The
Nomination and Remuneration Committee meets at least
annually in accordance with the Board approved charter.
The Investment Committee was disbanded with effect
from 27 July 2011.
audit, risk and Compliance Committee
The Audit, Risk and Compliance Committee assists the
Board with ensuring that effective internal controls, risk
management and corporate governance exist within the
Group. The Chairman of this Committee is an independent
director and the Committee has a majority of independent
directors. The Chairman of this Committee is not chair
of the Board. The Audit, Risk and Compliance Committee
meets at least three times a year in accordance with the
Board approved charter.
Specific responsibilities of Audit, Risk and Compliance
Committee include:
• Risk management – ensuring that the Group has the
appropriate risk management framework to identify
and deal with material business risks and maintain
compliance with statutory and regulatory requirements
by the ClearView Companies. This framework includes
a documented Risk Management Strategy and a formal
whistleblower policy and procedure;
• Financial reporting – reviewing and overseeing the
integrity of ClearView’s accounting and financial reporting
processes, the Group’s financial statements and any other
material regulatory documents before they are approved
by the Board;
36
ClearView wealth limited • Taxation – reviewing and approving significant taxation
issues and taxation treatment policies;
Directors, officers and employees may only trade in Group
securities if all of the following requirements are met:
• Internal controls – monitoring the effectiveness of
a. the trading window is open;
b.
they are not in possession of price sensitive information;
c.
they have followed the notice procedure set out in the
policy; and
d.
the relevant approving officer has given consent to trade.
There are two types of trading windows that may be open:
i.
Regular trading window – the six week period
commencing on the business day after any of
the following:
• the date of release of the half year announcement
to the ASX;
• the date of release of the preliminary final results
to the ASX;
• the date of the Annual General Meeting.
ii. Board-discretionary trading window – any trading
period opened by the Board by notice. This would
generally occur only if there had been some disclosure
document released to the market, such as a prospectus.
All Directors, officers and employees must give written
notification, in accordance with the table set out below:
emPloYee
Chairman
MD
All other Directors
All other employees
deSignaTed aPProVing oFFiCer
MD or CFO
Chairman
MD or CFO
MD or CFO
the internal controls systems of the ClearView Group
(including information technology security and control);
• Auditors – appointing and overseeing of the internal and
external auditors, the terms of their engagement, the scope
and quality of the audit and the auditor’s independence;
• Compliance – monitoring the effectiveness of the
Group’s compliance with laws and regulations as well
as internal company policies and the results of any
instances of non-compliance.
Principle 3 – Promote ethical
and responsible decision making
Code of Conduct
ClearView has established a Code of Conduct (the Code)
which sets out the standards of ethical, honest and
law-abiding behaviour expected by ClearView’s Directors
and employees. The Code requires its Directors and
employees to conduct themselves in an ethical, honest
and legal manner in accordance with both the Code
and ClearView’s policies and values. It also encourages
employees and Directors to report breaches of the Code
to management or the Board and provides protection for
those who report breaches.
Securities Trading Policy
The Securities Trading Policy has been established to govern
the trading in shares and securities by its Directors, officers
and employees. This policy is designed to raise awareness
and minimise any potential for breach of insider trading,
either in substance or appearance. All Directors, officers
and employees are required to conduct their personal
investment activity in a manner that is lawful and avoids
conflicts of interest between the individual’s personal
interests and those of the Group and its clients.
All directors, officers and employees are prohibited from
trading in the Company’s securities at any time if they are
in possession of non-public price sensitive information
regarding the Group and its securities or any other listed
company and its securities which are included on an
excluded list.
37
ClearView annual report 2012
Corporate governance
CONTINUED
Principle 3 – Promote ethical and
responsible decision making continued
diversity
ClearView aspires to develop and foster a strong culture
of diversity where every employee is respected for who
they are and their skills and expertise. On 1 June 2011, the
Board adopted a Diversity Policy which addresses the ASX
Corporate Governance Principles and Recommendations
in relation to diversity.
ClearView’s approach to diversity is underpinned by key
principles including:
• That a diverse Board, senior management team and
workforce is critical to the delivery of ClearView’s strategy;
• A commitment to the promotion of a culture of diversity
is necessary to achieve success;
• The workforce selection processes is the foundation
of achieving meaningful diversity;
• The development of structured programs and the
implementation of such programs at appropriate career
stages for employees will support ClearView’s diversity
aspirations; and
ClearView Workforce diversity – Women representation
• Effective measurement and reporting in respect
of diversity will allow the Board to actively recruit
and manage a diverse workplace.
The Board has committed to measurable diversity
targets which include:
• At least one female Director should be on the Board
at all times;
• The proportion of women in leadership roles should be
at least 33% of the total ClearView full time workforce.
Leadership roles is the proportion of women (permanent
and fixed term) who are no more than two direct reports
from the Managing Director, who have direct reports of
their own (i.e. they are in a management role) or who are
in senior roles of influence; and
• Female representation of the total workforce should meet
or exceed industry benchmarks to be obtained from the
Equal Opportunity for Women in the Workplace Agency
(financial services sector) on an annual basis.
2012
2011
Women
ToTal
% Women
Women
ToTal
% Women
2
12
83
97
7
30
158
195
29%
40%
53%
50%
2
12
76
90
7
28
137
172
29%
43%
55%
52%
Board
Leadership Group
Other workforce
Total
Proportion of employees by age
age
<25
25-34
35-44
45-54
55+
Total
38
numBer
PerCenTage oF
WorKForCe
21
60
53
40
21
11%
31%
27%
20%
11%
195
100%
ClearView wealth limited Principle 6 – Respect the rights
of shareholders
The Board aims to ensure that shareholders are informed
of all material information necessary to assess the
performance of the Group. Information is communicated
to the shareholders through:
• ASX announcements and market releases;
• The Company’s website, on which all investor documents
are posted;
• The annual and interim reports; and
• The Annual General Meeting (AGM) and any other
shareholder meetings.
ClearView encourages all shareholders to attend,
participate and vote at its Annual General Meeting
(AGM). The Notice of AGM is accompanied by explanatory
notes on the items of business to assist shareholders to
understand the business that will be considered at the
meeting. The Board also requests that the Company’s
external auditor attends the meeting and is available to
answer shareholder questions about the conduct of the
audit and the preparation and content of the audit report.
Principle 4 – Safeguard integrity
in financial reporting
Board audit, risk and Compliance Committee (BarCC)
The BARCC is in place to assist the Board with safeguarding
the integrity in financial reporting, risk management and
ensuring that effective internal controls exist within the Group.
More information on this Committee, its responsibilities and
members are outlined in Principle 2 on page 34.
external auditors
The BARCC invite the external auditors to attend
committee meetings. The external auditors can also meet
privately with the BARCC. The engagement partner of
Deloitte Touche Tohmatsu was appointed as the external
auditor of ClearView Wealth Limited in 2009. The partner
managing the audit will be rotated after a maximum of
five years in line with Deloitte’s policy and the Corporations
Act requirements. The BARCC ensures the independence
of the external auditors who also provide an annual
declaration of their independence to the Committee.
Principle 5 – Make timely
and balanced disclosures
ClearView is committed to providing timely and
relevant information about its business operations to
all shareholders and potential investors to enable them
to make informed decisions about their investments.
ClearView strives to ensure that all disclosures are not
only made in a timely manner but are factual, do not omit
material information, and are expressed in a clear and
objective manner to allow an investor to assess the impact
of the information when making investment decisions.
ClearView’s approach to communicating with
shareholders and the market is set out in its Continuous
Disclosure Obligation Policy which reflects its obligations
under the ASX Listing Rules and the Corporations Act. The
Company Secretary has been nominated as the person
responsible for communications with the ASX. This role
includes responsibility for ensuring compliance with the
continuous disclosure requirements in the ASX Listing
Rules and posting material information to the ASX. Any
material information, once disclosed to the ASX, is then
posted to the ClearView website.
39
ClearView annual report 2012 Corporate governance
CONTINUED
Principle 7 –
Recognise and manage risk
risk management strategy,
roles and responsibilities
Risk management is an integral part of the Company’s
management process. The Board has adopted a formal
Risk Management Strategy (RMS) and structured risk
management framework (RMF) to identify and manage the
key risks that have the potential to significantly impact its
business operations, capital or customer entitlements. The
RMS and RMF are fundamental to the business decisions of
the Company, including resource allocation decisions and
prioritisation of activities, and are reviewed annually.
The BARCC, on behalf of the Board, monitors the operation
of the RMF and facilitates review of the key process and
procedures underlying the RMF. Management is responsible
for designing and implementing the risk management and
internal control systems and reporting on the effectiveness
of the risk management controls to the BARCC and
the Board. The Board has received assurance from the
Managing Director and the Chief Financial Officer that the
declaration provided in accordance with section 295A of
the Corporation Act is founded on a sound system of risk
management and internal control and that the system is
operating effectively in all material respects in relation to
financial reporting risks. The internal auditors monitor key
risks in accordance with the internal audit plan and report
to the BARCC as part of the risk assessment process. KPMG
are retained to provide outsourced internal audit services.
The RMS and RMF consider the key stakeholders in the
Company beyond the shareholders including:
• the benefit, security and expectations of policyholders
and investment product and advice clients;
• risk impacts on and from ClearView’s staff, distribution
partners, and suppliers and counterparties; and
• requirements and objectives of the Company’s regulators.
The RMS specifies the Board’s risk appetite and tolerance
standard which guides the Company in its decisions as to
the acceptance, management and rejection of risks. A risk
register is maintained that identifies the key risks of the
Company by type, impact and likelihood, and indicates
the key processes and mechanisms to control, mitigate or
transfer those risks within the allowed tolerances. The RMS
and RMF include suitable monitoring mechanisms.
As part of the RMS and RMF, the Company has adopted a
Capital Management Plan (CMP) with respect to supporting
the residual risk exposures and the ongoing capital needs
of the Company.
40
ClearView wealtH liMiteD
Key risks which may affect ClearView
The Company’s activities expose it to a variety of risks,
both financial and non-financial. Key risks include:
• Asset risks, including market risk (interest rate risk
and price risk), credit risk and liquidity risk;
• Insurance risk;
• Asset-liability mismatch risks;
• Expense risks and client discontinuance (lapses,
withdrawals and lost client) risks; and
• Compliance risk, operational risk and strategic risk.
One of the Company’s most significant risks is insurance
risk. To limit its exposure to accepted insurance risk,
ClearView Life purchases reinsurance. ClearView Life cedes
to specialist reinsurance companies a proportion of its
portfolio for certain types of insurance risk. This serves
primarily to reduce the net liability on large individual risks
and provide protection against large losses. The reinsurers
used are regulated by the Australian Prudential Regulation
Authority (APRA) and are members of large international
groups with sound credit ratings.
A more detailed discussion on the Company’s key risks and
how they are monitored is found in Note 5 of the Financial
Statements on pages 65 to 70.
Principle 8 – Remunerate
fairly and responsibly
The Board has established a Nomination and Remuneration
Committee as set out under Principle 2 on page 34 to
ensure the directors, management and employees are
remunerated fairly and responsibly.
The Nomination and Remuneration Committee reviews
the remuneration of senior executives and non-executive
directors annually. ClearView employee remuneration is
based on experience, capability and responsibility as well
as performance targets on both a company and individual
level. Senior employees and executives of the Group
participate in an ownership-based compensation scheme.
The objective of the ownership-based compensation is to
encourage participants to focus on the long term results of
the Company. The total annual remuneration paid to non-
executives may not exceed the limit set by shareholders
at the AGM. For further details in relation to director and
senior executive remuneration see the Remuneration
Report on pages 21 to 31.
2012 Financial Report Contents
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
42
43
44
45
21 Property, plant and equipment
22 Business acquisitions
23 Payables
24 Provisions
25 Deferred tax balances
26 Policy liabilities
1 General information
46
27 Issued capital
2 Application of new and revised Accounting Standards 46
28 Share-based payments
3
4
Significant accounting policies
Critical accounting judgments and key sources
of estimation uncertainty
5 Risk management
6 Solvency requirements of the statutory funds
7
8
9
Segment information
Fee and other revenue
Investment Income
10 Operating expenses
11 Income tax
12 Movements in reserves
13 Sources of profit
14 Earnings per share
15 Cash and cash equivalents
16 Investments
17 Receivables
18 Fixed interest deposits
19 Goodwill
20 Intangible assets
49
59
65
70
71
72
73
73
74
76
77
78
79
79
80
80
80
81
29 Shares granted under the Executive Share Plan
30 Provision for deferred consideration
31 Dividends
32 Reconciliation of net profit for the year
to net cash flows from operating activities
33 Subsidiaries
34 Investment in associate
35 Related party transactions
36 Financial Instruments
37 Disaggregated information by fund
38 Investment in controlled unit trusts
39 Leases
40 Contingent liabilities and contingent assets
41 Subsequent events
42 Capital commitments
Directors’ Declaration
Independent Auditor’s Report
Shareholders’ Information
Directory
The Financial Report was authorised for issue by the Directors on 17 August 2012
82
83
83
84
85
87
88
89
94
94
94
95
96
97
98
101
108
111
112
113
113
113
114
115
117
41
ClearView annual report 2012
statement of Comprehensive income
FOR THE YEAR ENDED 30 JuNE 2012
CoNsolidated
CompaNy
Note
2012
$’000
2011
$’000
2012
$’000
2011
$’000
8
9
10
10
26
26
26
34
11
14
40,873
(2,791)
38,082
43,532
61,568
40,303
(3,759)
36,544
45,670
53,805
143,182
136,019
(2,738)
89,123
140,444
(11,527)
225,142
(17,575)
1,408
(9,938)
3,021
(5,430)
-
-
-
-
6,141
6,141
40
6,181
-
-
-
-
-
-
-
44,521
44,521
30
44,551
-
-
-
(46,259)
(48,420)
(968)
(2,684)
(7,680)
(7,834)
(453)
19,680
(199)
-
563
(232)
(47,001)
(121,986)
-
21
(1,529)
(12,612)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,946
14,610
22,336
14,658
5,993
8,665
5,213
141
5,072
41,867
(647)
42,514
22,336
8,665
5,072
42,514
5.46
5.24
2.12
2.10
-
-
-
-
Continuing operations
Revenue from continued operations
Premium revenue from insurance contracts
Outward reinsurance expense
Net life insurance premium revenue
Fee and other revenue
Investment income
operating revenue before net
fair value gains on financial assets
Net fair value (losses) / gains on financial assets
Net operating revenue
Claims expense
Reinsurance recoveries revenue
Commission expense
Operating expenses
Depreciation and amortisation expense
Loss from disposal of property, plant and equipment
Change in life insurance policy liabilities
Change in reinsurers’ share of life insurance liabilities
Change in life investment policy liabilities
Share of profit of associate
Movement in liability of non-controlling interest
in controlled unit trusts
profit before income tax expense
Income tax expense / (benefit)
total comprehensive income for the year
attributable to:
Equity holders of the parent
earnings per share
From continuing operations
Basic (cents per share)
Diluted (cents per share)
To be read in conjunction with the accompanying notes.
42
ClearView wealth limited
statement of Financial position
FOR THE YEAR ENDED 30 JuNE 2012
assets
Cash and cash equivalents
Investments
Receivables
Fixed interest deposits
Reinsurers’ share of life insurance policy liabilities
Deferred tax asset
Property, plant and equipment
Investment in associate
Goodwill
Intangible assets
total assets
liabilities
Payables
Current tax liabilities
Provisions
Provision for deferred consideration
Life insurance policy liabilities
Life investment policy liabilities
Liability to non-controlling interest in controlled unit trusts
Deferred tax liabilities
total liabilities
Net assets
equity
Issued capital
Retained losses
Profit reserve
Executive Share Plan Reserve
CoNsolidated
CompaNy
Note
2012
$’000
2011
$’000
2012
$’000
2011
$’000
15
16
17
18
26
25
21
34
19
20
193,371
185,822
11,820
16,240
1,178,840
1,417,658
225,877
220,336
9,591
91,991
1,901
14,418
1,776
163
4,858
7,205
22,021
2,447
24,297
1,288
163
4,858
49,177
51,883
11,676
21,093
-
877
6,851
21,392
-
8,542
-
-
-
-
-
-
-
-
1,546,086 1,717,642
271,343
273,361
23
24
30
26
26
25
12,656
11,569
544
2,724
28
-
5,070
686
(83,687)
(62,728)
1,219,068
1,367,887
131,064
147,018
408
157
461
544
81
1,038
-
100
-
-
-
-
-
-
-
-
-
-
1,282,805 1,469,659
1,086
1,138
263,281
247,983
270,257
272,223
27
12
12
12
276,565
276,565
276,565
276,565
(15,034)
(29,631)
(47,905)
(47,905)
-
-
1,750
1,049
39,847
1,750
42,514
1,049
Equity attributable to equity holders of the parent
263,281
247,983
270,257
272,223
total equity
263,281
247,983
270,257
272,223
To be read in conjunction with the accompanying notes.
43
ClearView annual report 2012
statement of Changes in equity
FOR THE YEAR ENDED 30 JuNE 2012
sHaRe Capital
exeCutive
sHaRe plaN
ReseRve
pRoFit
ReseRve
RetaiNed
losses
attRiButaBle
to oWNeRs oF
tHe paReNt
CoNsolidated
Balance at 1 July 2010
Profit for the year
total comprehensive income for the year
Recognition of share based payments
$’000
276,565
-
-
-
Balance at 30 June 2011
276,565
Profit for the year
total comprehensive income for the year
Recognition of share based payments
Dividend paid
ESP loans settled through dividend
-
-
-
-
-
$’000
518
-
-
531
1,049
-
-
502
-
199
Balance at 30 June 2012
276,565
1,750
CompaNy
Balance at 1 July 2010
Profit for the year
total comprehensive income for the year
Recognition of share based payments
$’000
276,565
-
-
-
Balance at 30 June 2011
276,565
Profit for the year
total comprehensive income for the year
Recognition of share based payments
Dividend paid
ESP loans settled through dividend
-
-
-
-
-
$’000
518
-
-
531
1,049
-
-
502
-
199
$’000
$’000
$’000
-
-
-
-
-
-
-
-
-
-
-
(38,296)
8,665
8,665
-
238,787
8,665
8,665
531
(29,631)
247,983
22,336
22,336
-
(7,739)
-
22,336
22,336
502
(7,739)
199
(15,034)
263,281
$’000
$’000
$’000
-
42,514
42,514
-
(47,905)
-
-
-
229,178
42,514
42,514
531
42,514
(47,905)
272,223
5,072
5,072
-
(7,739)
-
-
-
-
-
-
5,072
5,072
502
(7,739)
199
Balance at 30 June 2012
276,565
1,750
39,847
(47,905)
270,257
4444
ClearView wealth limited
statement of Cash Flows
FOR THE YEAR ENDED 30 JuNE 2012
Cash flows from operating activities
Receipts from client and debtors
Payments to suppliers and other creditors
Receipts from / (payments to) Group entities
Withdrawals paid to life investment clients
Dividends and trust distributions received
Interest received
Income taxes paid
Loans granted to affiliates
CoNsolidated
CompaNy
Note
2012
$’000
2011
$’000
2012
$’000
2011
$’000
440,512
353,094
(66,805)
(75,388)
-
-
(557,525)
(427,925)
18,687
25,654
21,537
27,740
-
(278)
5,552
-
-
625
(3,128)
(1,922)
(3,128)
(270)
-
-
-
(857)
(1,403)
-
-
964
(24)
-
Net cash (utilised) / generated by operating activities
32
(142,875)
(102,864)
2,771
(1,320)
Cash flows from investing activities
Net cash movement due to subsidiary acquisition
Payments for investment securities
Proceeds from sales of investment securities
Acquisition of property, plant and equipment
Acquisition of capitalised software
Transaction costs paid
22
-
(9,658)
(5,500)
(13,908)
(1,920,189)
(3,241,003)
2,168,784
3,384,255
(1,607)
(4,312)
(431)
-
-
(1,170)
-
-
-
-
-
(629)
87
-
(1,170)
Fixed interest deposits (invested) / redeemed
(65,741)
(21,662)
1,349
(21,033)
Loans granted to affiliates
Acquisition of client book / business
Settlements made against deferred consideration
Loans redeemed from associate
Dividends received from group entities
(279)
-
-
(449)
(617)
(1,067)
-
-
50
-
Net cash generated by investing activities
176,039
108,865
-
-
-
-
-
-
-
-
4,500
349
43,500
6,847
Cash flows from financing activities
Net movement in liability
of non-controlling interest in unit trusts
Repayment of ESP loans
Dividends paid
Net cash utilised in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents
at the beginning of the financial year
(18,075)
(17,341)
-
199
(7,739)
-
-
(25,615)
(17,341)
7,549
(11,320)
15
185,822
197,142
199
(7,739)
(7,540)
(4,420)
16,240
-
-
-
-
5,527
10,713
Cash and cash equivalents at the end of the financial year
193,371
185,822
11,820
16,240
To be read in conjunction with the accompanying notes.
45
ClearView annual report 2012
Notes to the Financial statements
FOR THE YEAR ENDED 30 JuNE 2012
1 General information
ClearView Wealth Limited (the Company or Consolidated Entity) is a limited company incorporated in Australia. The address
of its registered office is disclosed in the Directory at the back of the annual report. The principal activities of the Company
and its subsidiaries (the Group) are described in note 7.
2 Application of new and revised accounting standards
The following new and revised Australian Accounting Standards and Interpretations have been adopted in the current year
and have affected the amounts reported in these financial statements.
standards affecting presentation and disclosure
Amendments to AASB 7
‘Financial Instruments: Disclosure’
Amendments to AASB 101
‘Presentation of Financial Statements’
The amendments (part of AASB 2010-4 ‘Further Amendments to
Australian Accounting Standards arising from the Annual Improvements
Project’) clarify the required level of disclosures about credit risk and
collateral held and provide relief from disclosures previously required
regarding renegotiated loans.
The amendments (part of AASB 2010-4 ‘Further Amendments to
Australian Accounting Standards arising from the Annual Improvements
Project’) clarify that an entity may choose to present the required analysis
of items of other comprehensive income either in the statement
of changes in equity or in the notes to the financial statements.
standards and interpretations adopted with no effect on financial statements
The following new and revised Standards and Interpretations have also been adopted in these financial statements.
Their adoption has not had any significant impact on the amounts reported in these financial statements but may affect
the accounting for future transactions or arrangements.
Amendments to AASB 124
‘Related Party Disclosures’
(revised December 2009)
AASB 123 (revised December 2009) has been revised on the following
two aspects: a) AASB 123 (revised December 2009) has changed the
definition of a related party and b) AASB 124(revised December 2009)
introduces a partial exemption from the disclosure requirements for
government-related entities.
The Company and its subsidiaries are not government-related entities.
The application of the revised definition of related party set out in
AASB 124 (revised December 2009) in the current year has resulted in
the identification of related parties that were not identified as related
parties under the previous standard.
Specifically, associates of the ultimate holding company of the Company
are treated as related parties of the Group under the revised Standard
whilst such entities were not treated as related parties of the Group
under the previous Standard. The related party disclosures set out in
note 35 to the consolidated financial statements have been changed
to reflect the application of the revised Standard. Changes have been
applied retrospectively.
46
46 ClearView wealth limited
ClearView wealth limited AASB 2009-14
‘Amendments to Australian
Interpretation – Prepayments of
a Minimum Funding Requirement’
AASB 2009-12
‘Amendments to Australian
Accounting Standards’
AASB 2010-5
‘Amendments to Australian
Accounting Standards’
AASB 2010-6
‘Amendments to Australian
Accounting Standards – Disclosures
of Transfers of Financial Assets’
Interpretation 114 addresses: when refunds or reductions in future
contributions should be regarded as available in accordance with
paragraph 58 of AASB 119; how minimum funding requirements
might affect the availability of reductions in future contributions; and
when minimum funding requirements might give rise to a liability. The
amendments now allow recognition of an asset in the form of prepaid
minimum funding contributions. The application of the amendments
to Interpretation 114 has not had material effect on the Group’s
consolidated financial statements. The amendments (part of AASB
2010-4 ‘Further Amendments to Australian Accounting Standards arising
from the Annual Improvements Project’) clarify that an entity may
choose to present the required analysis of items of other comprehensive
income either in the statement of changes in equity or in the notes to the
financial statements.
The application of AASB 2009-12 makes amendments to AASB 8
‘Operating Segments’ as a result of the issuance of AASB 124 ‘Related
Party Disclosures’ (2009). The amendment to AASB 8 requires an entity
to exercise judgement in assessing whether a government and entities
known to be under the control of that government are considered
a single customer for the purposes of certain operating segment
disclosures. The Standard also makes numerous editorial amendments
to a range of Australian Accounting Standards and Interpretations.
The application of AASB 2009-12 has not had any material effect on
amounts reported in the Group’s consolidated financial statements.
The Standard makes numerous editorial amendments to a range
of Australian Accounting Standards and Interpretations. The application
of AASB 2010-5 has not had any material effect on amounts reported
in the Group’s consolidated financial statements.
The application of AASB 2010-6 makes amendments to AASB 7
‘Financial Instruments – Disclosures’ to introduce additional disclosure
requirements for transactions involving transfer of financial assets.
These amendments are intended to provide greater transparency
around risk exposures when a financial asset is transferred and
derecognized but the transferor retains some level of continuing
exposure in the asset.
To date, the Group has not entered into any transfer arrangements
of financial assets that are derecognized but with some level of
continuing exposure in the asset. Therefore, the application of the
amendments has not had any material effect on the disclosures made
in the consolidated financial statements.
47
ClearView annual report 2012 Application of new and revised accounting standards continued
2
standards and interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the following Standards and Interpretations, including those
Standards or Interpretations issued by the IASB or IFRS Interpretations Committee where an equivalent Australian Standard
or Interpretation has not been made by the AASB, were on issue but not yet effective.
staNdaRd/iNteRpRetatioN
AASB 9 ‘Financial Instruments’, AASB 2009-11 ‘Amendments to Australian
Accounting Standards arising from AASB 9’ and AASB 2010-7 ‘Amendments
to Australian Accounting Standards arising from AASB 9 (December 2010)’
AASB 10 ‘Consolidated Financial Statements’
AASB 11 ‘Joint Arrangements’
AASB 12 ‘Disclosure of Interests in Other Entities’
AASB 127 ‘Seperate Financial Statements’ (2011)
AASB 128 ‘Investments in Associates and Joint Ventures’ (2011)
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8
‘Amendments to Australian Accounting Standards arising from AASB 13’
AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments
to Australian Accounting Standards arising from AASB 119 (2011)’
AASB 2010-8 ‘Amendments to Australian Accounting Standards -
Deferred Tax: Recovery of underlying Assets’
AASB 2011-4 ‘Amendments to Australian Accounting Standards Remove
Individual KMP Disclosure Requirements’
AASB 2011-7 ‘Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements standards’
AASB 2011-9 ‘Amendments to Australian Accounting Standards -
Presentation of Items of Other Comprehensive Income’
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS32)
Disclosures - Ofsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7)
Mandatory Effective Date of IFRS 9 and Transition Disclosures
(Amendments to IFRS 9 and IFRS 7)
eFFeCtive FoR aNNual
RepoRtiNG peRiods
BeGiNNiNG oN oR aFteR
expeCted to Be
iNitially applied iN tHe
FiNaNCial yeaR eNdiNG
1 January 2013
30 June 2014
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
1 January 2013
30 June 2014
1 January 2012
30 June 2013
1 July 2013
30 June 2014
1 January 2013
30 June 2014
1 July 2012
30 June 2013
1 January 2014
1 January 2013
30 June 2015
30 June 2014
1 January 2015
30 June 2016
48
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited Significant accounting policies
3
statement of compliance
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
These financial statements are general purpose financial
statements which has been prepared in accordance with
the Corporations Act 2001, Accounting Standards and
Interpretations, and comply with other requirements
of the law.
The financial statements comprise the consolidated
financial statements of the Group. For the purpose
of preparing the consolidated financial statements,
the Company is a for-profit entity.
Accounting Standards include Australian Accounting
Standards. Compliance with Australian Accounting
Standards ensures that the financial statements and notes
of the company and the Group comply with International
Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue
by the Directors on 17 August 2012.
Basis of preparation
The consolidated financial statements have been prepared
on the basis of historical cost, except for certain non-
current assets and financial instruments that are measured
at revalued amounts or fair values, as explained in the
accounting policies below. Historical cost is generally based
on the fair values of the consideration given in exchange
for assets. All amounts are presented in Australian dollars,
unless otherwise noted.
The Company is a company of the kind referred to in ASIC
Class Order 98/100, dated 10 July 1998, and in accordance
with that Class Order amounts in the financial report
are rounded off to the nearest thousand dollars, unless
otherwise indicated.
(a) Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities (including
special purpose entities) controlled by the Company (its
subsidiaries). Control is achieved where the Company has
the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities.
Income and expenses of subsidiaries acquired or disposed
of during the year are included in the consolidated
statement of comprehensive income from the effective
date of acquisition and up to the effective date of disposal,
as appropriate. Total comprehensive income of subsidiaries
is attributed to the owners of the Company and to the
non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
All intra-group transactions, balances, income and
expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries
that do not result in the Group losing control are accounted
for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are
adjusted to reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity
and attributed to the owners of the Company.
(b) Business combinations
Acquisitions of subsidiaries and businesses are accounted
for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the fair
values (at the date of exchange) of assets given, liabilities
incurred or assumed, and equity instruments issued by the
Group in exchange for control of the acquiree. Acquisition
related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognised at their fair value
at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets
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 the replacement
by the Group of an acquiree’s share based payment
awards are measured in accordance with AASB 2 Share-
based Payment; and
• assets (or disposal groups) that are classified as held
for sale in accordance with AASB 5 Noncurrent 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.
49
ClearView annual report 2012 3
Significant accounting
policies continued
Non-controlling interests that are present ownership
interests and entitle their holders to a proportionate share
of the entity’s net assets in the event of liquidation may
be initially measured either at fair value or at the non-
controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets. The
choice of measurement basis is made on a transaction-by-
transaction basis. Other types of non-controlling interests
are measured at fair value or, when applicable, on the basis
specified in another Standard.
Where the consideration transferred by the Group in a
business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value.
Changes in the fair value of the contingent consideration that
qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against
goodwill. 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.
The subsequent accounting for changes in the fair
value of contingent consideration that do not qualify
as measurement period adjustments depends on how
the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured
at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent
consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance
with AASB 139, or AASB 137 ‘Provisions, Contingent
Liabilities and Contingent Assets’, as appropriate, with the
corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the
Group’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (i.e. the date
when the Group attains control) and the resulting gain or loss,
if any, is recognised in profit or loss. Amounts arising from
interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income
are reclassified to profit or loss where such treatment would
be appropriate if that interest were disposed of.
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 (see above), or additional assets or liabilities are
recognised, to reflect new information obtained about
facts and circumstances that existed as at the acquisition
date that, if known, would have affected the amounts
recognised as at that date.
The measurement period is the period from the date
of acquisition to the date the Group obtains complete
information about facts and circumstances that existed
as at the acquisition date – and is subject to a maximum
of one year.
Business combinations that took place prior to 1 July 2009
were accounted for in accordance with the previous version
of AASB 3.
(c) investments in associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate
in the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
The results and assets and liabilities of associates are
incorporated in these financial statements using the
equity method of accounting. under the equity method,
investments in associates are carried in the consolidated
statement of financial position at cost as adjusted for post-
acquisition changes in the Group’s share of the net assets of
the associate, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group’s
interest in that associate (which includes any long-term
interests that, in substance, form part of the Group’s net
investment in the associate) are recognised only to the
extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group’s share
of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the
date of acquisition is recognised as goodwill. The goodwill
is included within the carrying amount of the investment
and is assessed for impairment as part of that investment.
Any excess of the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent liabilities over
the cost of acquisition, after reassessment, is recognised
immediately in profit or loss.
The requirements of AASB 139 are applied to determine
whether it is necessary to recognise any impairment loss
with respect to the Group’s investment in an associate.
When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment
in accordance with AASB 136 ‘Impairment of Assets’ as a
single asset by comparing its recoverable amount (higher
of value in use and fair value less costs to sell) with its
carrying amount. Any impairment loss recognised forms
part of the carrying amount of the investment. Any reversal
of that impairment loss is recognised in accordance with
AASB 136 to the extent that the recoverable amount of the
investment subsequently increases.
50
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited (f) principles underlying the conduct of life
insurance business
The life insurance operations of the Group are conducted
within separate statutory funds as required by the
Life Insurance Act 1995 (Life Act) and are reported in
aggregate with the shareholders’ funds in the statement
of comprehensive income, statement of financial position,
statement of changes in equity and statement of cash
flows. The life insurance operations consist of the provision
of life insurance and life investment contracts.
Life insurance contracts involve the acceptance of
significant insurance risk. Insurance risk is defined as
significant if, and only if, an insured event could cause
an insurer to pay significant benefits in any scenario,
excluding scenarios that lack commercial substance.
Insurance contracts include those where the insured
benefit is payable on the occurrence of a specified event
such as death, injury or disability caused by accident or
illness. The insured benefit is not linked to the market
value of the investments held by the Group, and the
financial risks are substantially borne by the Group. Any
contracts issued by the Group and regulated under the
Life Act that do not meet the definition of a life insurance
contract are classified as life investment contracts.
Life investment contracts include investment-linked
contracts where the benefit is directly linked to the market
value of the investments held in the particular investment-
linked fund. While the underlying assets are registered in
the name of ClearView Life Assurance Limited (ClearView
Life) and the investment-linked policy owner has no direct
access to the specific assets, the contractual arrangements
are such that the investment-linked policy owner bears the
risks and rewards of the fund’s investment performance.
A component of the life investment contracts includes
a minimum unit price guarantee. ClearView Life derives
fee income from the administration of investment-
linked funds. Life investment contracts do not contain
any discretionary participation features (i.e. those where
the amount or timing of allocation of the profit from the
underlying investments is at the discretion of the insurer).
When a group entity transacts with its associate, profits
and losses resulting from the transactions with the
associate are recognised in the Group’s consolidated
financial statements only to the extent of interests in the
associate that are not related to the Group.
(d) Goodwill
Goodwill arising on an acquisition of a business is carried
at cost as established at the date of the acquisition of the
business (see (b) above) less accumulated impairment
losses, if any.
For the purposes of impairment testing, goodwill is
allocated to each of the Group’s cash-generating units
(or groups of cash-generating units) that is expected
to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated
is tested for impairment annually, or more frequently when
there is indication that the unit may be impaired. 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 for goodwill is recognised directly in profit
or loss in the consolidated income statement.
An impairment loss recognised for goodwill is not reversed
in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
The Group’s policy for goodwill arising on the acquisition
of an associate is described at (c) above.
(e) Goods and services tax
Revenues, expenses and assets are recognised net
of the amount of goods and services tax (GST), except:
i.
where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of
an item of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on
a gross basis. The GST component of cash flows arising
from investing and financing activities which is recoverable
from, or payable to, the taxation authority is classified
within operating cash flows.
51
ClearView annual report 2012 3
Significant accounting
policies continued
In accordance with AASB 1038 ‘Life Insurance Contracts’,
financial assets backing policy liabilities are designated
at fair value through profit and loss. ClearView Life has
determined that all assets held within the statutory funds
back policy liabilities. Financial assets backing policy
liabilities consist of high quality investments such as cash,
equities, fixed income securities, property trusts
and infrastructure assets.
The management of financial assets and policy liabilities
is closely monitored to ensure that investments are
appropriate given the expected pattern of future cash
flows arising from the policy liabilities.
(g) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Fee revenue is recognised when:
Financial advice revenue
Financial advice revenue is recognised on an accrual basis
to the extent that it is probable that the income benefit will
flow to the Group and the revenue can be reliably measured.
Ongoing trail revenue is recorded over the effective period
in which customers’ funds are invested in products.
dividend and interest revenue
Dividend revenue from investments is recognised when
the Group’s right to receive payment has been established.
Interest revenue is recognised when it is probable that the
economic benefits will flow to the Group and the amount
of revenue can be measured reliably. Interest revenue
is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset
to that asset’s net carrying amount on initial recognition.
• The amount can be measured reliably;
investment income
• It is probable that the future economic benefit associated
with transactions will flow to the entity; and
Income on investment units and shares is deemed to accrue
on the date the distributions are declared to be effective.
• The stage of completion can be measured reliably.
distribution income
premium revenue
Premium revenue only arises in respect of life insurance
contracts. Premiums with a regular due date are recognised
as revenue on a due basis. Premiums with no due date are
recognised as revenue on a cash received or receivable basis.
unpaid premiums are only recognised as revenue
during the days of grace and are included as Premiums
Receivable (part of Receivables) in the statement of
financial position. Premiums due after, but received before,
the end of the financial year are shown as Life Insurance
premium in advance (part of Payables) in the statement
of financial position.
Premiums and contributions on life investment contracts
are treated as deposits and are reported as a movement
in life investment contract liabilities.
management fee revenue
Fee revenue comprising management fee revenue with
respect to life investment contracts is recognised in the
statement of comprehensive income on an accrual basis
as the services are provided. A single management fee is
applied for each Investment Option, which is based on the
value of the assets held in each Investment Option. The
fee is calculated each time an Investment Option is valued,
but before the unit price is declared. The fee is treated as
a reduction in the investment contract liabilities.
Distribution income from investments in unit trusts is
recognised on a receivable basis as of the date the unit
value is quoted ex-distribution.
(h) Claims
life insurance contracts
Claims incurred relate to life insurance contracts and are
treated as expenses. Claims are recognised upon notification
of the insured event. The liability in respect of claims includes
an allowance (estimate) for incurred but not reported claims
and an allowance (estimate) for expected declinature of
notified claims. Claims are shown gross of reinsurance
recoverable. Any reinsurance recoveries applicable to the
claims are included in receivables.
life investment contracts
There is no claims expense in respect of life investment
contracts. Surrenders and withdrawals which relate to life
investment contracts are treated as a movement in life
investment contract liabilities.
Surrenders and withdrawals are recognised as at the
date of redemption of policy units, which occurs once
all documentation has been provided and completed.
52
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited (i) Reinsurance
Amounts paid to reinsurers under life insurance contracts
held by the Company are recorded as an outward
reinsurance expense and are recognised in the statement
of comprehensive income from the reinsurance premium
payment due date.
Reinsurance recoveries receivable on claims incurred
are recognised as revenue. Recoveries are assessed in a
manner similar to the assessment of life insurance contract
liabilities. Recoveries are measured as the present value of
the expected future receipts, calculated on the same basis
as the life insurance contract liabilities.
(j) policy acquisition costs
The policy acquisition costs incurred are recorded in the
statement of comprehensive income and represent the
fixed and variable costs of acquiring new business. The
policy acquisition costs include commission, policy issue
and underwriting costs, and related costs. The acquisition
costs incurred in relation to life insurance contracts are
capitalised in the valuation of policy liabilities.
(k) Basis of expense apportionment
All expenses of the life insurance business incurred
by ClearView Life and charged to the statement of
comprehensive income have been apportioned in
accordance with Part 6, Division 2 of the Life Act.
The basis is as follows:
• Expenses relating specifically to either the ClearView
Life shareholder’s fund or a particular statutory fund are
allocated directly to the respective funds. Such expenses
are apportioned between policy acquisition costs and policy
maintenance costs with reference to the objective when
each expense is incurred and the outcome achieved.
• Other expenses are subject to apportionment under
section 80 of the Life Act and are allocated between the
funds in proportion to the activities to which they relate.
They are apportioned between policy acquisition costs
and policy maintenance costs in relation to their nature
as either acquisition or maintenance activities. Activities
are based on direct measures such as time, head counts
and business volumes.
Life investment contracts are held within statutory funds
No.2 and No.4. Life insurance contracts are principally held
within statutory fund No.1, except for a small, closed book
of rider insurance covers held in statutory fund No.2. The
allocation of expenses between the primary life investment
or life insurance contracts is inherent in the allocation to the
statutory funds, as described above. The apportionment
basis is in line with the principles set in the Life Insurance
Prudential Standard valuation standard (Prudential Standard
LPS1.04 Valuation of Policy Liabilities).
All expenses relate to non-participating business
as the Company only writes this category of business.
(l) policy liabilities
Policy liabilities consist of life insurance policy liabilities
and life investment policy liabilities.
life insurance contracts
The value of life insurance policy liabilities is calculated
using the Margin on Services methodology. under this
methodology, planned profit margins and an estimate of
future liabilities are calculated separately for each related
product group, with future cash flows determined using
best estimate assumptions and discounted to the reporting
date. Profit margins are systemically released over the
term of the policies in line with the pattern of services to
be provided. The future planned profit margins are deferred
and recognized over time by including the value of the
future planned profit margins within the value of the policy
liabilities. Further details of the actuarial assumptions used
in these calculations are set out in note 4.
life investment contracts
Life investment policy liabilities are valued at fair value,
which is based on the valuation of the assets held within
the unitised investment linked policy investment pools.
(m) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash, which
are subject to an insignificant risk of changes in value.
(n) employee benefits
A liability is recognised for benefits accruing to employees
in respect of wages and salaries, annual leave and long
service leave when it is probable that settlement will be
required and they are capable of being measured reliably.
A liability and expense for bonuses is recognised where
contractually obliged or where there is a past practice that
has created a constructive obligation.
Termination benefits are payable when employment is
terminated before the normal retirement date, or when
an employee accepts voluntary redundancy in exchange
for these benefits. A liability for termination benefits is
recognised when the Group is demonstrably committed to
either terminating the employment of current employees
according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result
of an offer made to encourage voluntary redundancy.
Benefits falling due more than 12 months after reporting
date are discounted to a present value.
53
ClearView annual report 2012 3
Significant accounting
policies continued
Liabilities recognised in respect of short-term employee
benefits, are measured at their nominal values using
the remuneration rate expected to apply at the time
of settlement.
Liabilities recognised in respect of long-term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the Group
in respect of services provided by employees up to the
reporting date.
defined contribution plans
Contributions to defined contribution superannuation plans
are expensed when employees have rendered service
entitling them to the contributions.
(o) Financial assets
All financial assets are recognised and derecognised on
trade date where the purchase or sale of a financial asset
is under a contract whose terms require delivery of the
financial asset within the timeframe established by the
market concerned, and are initially measured at fair value,
plus transaction costs, except for those financial assets
classified as at fair value through profit or loss, which are
initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets ‘at fair value through profit or
loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-
for-sale’ (AFS) financial assets and ‘loans and receivables’.
The classification depends on the nature and purpose
of the financial assets and is determined at the time of
initial recognition.
effective interest method
The effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the debt
instrument, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition. Income
is recognised on an effective interest basis for debt
instruments other than those classified as at FVTPL.
Financial assets at Fvtpl
Financial assets are classified as at FVTPL when the
financial asset is either held for trading or it is designated
as at FVTPL.
A financial asset is classified as held for trading if:
• It has been acquired principally for the purpose of selling
it in the near term; or
• On initial recognition it is part of a portfolio of identified
financial instruments that the Group manages together and
has a recent actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective
as a hedging instrument.
A financial asset other than a financial asset held
for trading may be designated as at FVTPL upon initial
recognition if:
• Such designation eliminates or significantly reduces
a measurement or recognition inconsistency that would
otherwise arise; or
• The financial asset forms part of a group of financial
assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis,
in accordance with the Group’s documented risk
management or investment strategy, and information
about the grouping is provided internally on that basis; or
• It forms part of a contract containing one or more
embedded derivatives, and AASB 139 Financial
Instruments: Recognition and Measurement permits
the entire combined contract (asset or liability) to be
designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognised in
profit or loss. The net gain or loss recognised in profit or
loss incorporates any dividend or interest earned on the
financial asset and is included in the ‘net fair value gains
and losses’ line item in the statement of comprehensive
income. Fair value is determined based on the bid price
determined at 7:00pm in accordance with the policy
adapted by the custodian on the reporting date.
Held-to-maturity investments
Bills of exchange and debentures with fixed or
determinable payments and fixed maturity dates that the
Group has the positive intent and ability to hold to maturity
are classified as held-to-maturity investments. Held-to-
maturity investments are measured at amortised cost
using the effective interest method less any impairment,
with revenue recognised on an effective yield basis.
54
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited available for sale financial assets
Listed shares and listed redeemable notes that are traded in
an active market are classified as Available For Sale (AFS) and
are stated at fair value. Investments in unlisted shares that
are not traded in an active market can be classified as AFS
financial assets and stated at fair value where the directors
consider that fair value can be reliably measured. Fair value
is determined based on the bid price at reporting date.
Gains and losses arising from changes in fair value
are recognised in other comprehensive income and
accumulated in the investments revaluation reserve, with
the exception of impairment losses, interest calculated
using the effective interest method, and foreign exchange
gains and losses on monetary assets, which are recognised
in profit or loss. Where the investment is disposed of or is
determined to be impaired, the cumulative gain or loss
previously accumulated in the investments revaluation
reserve is reclassified to profit or loss in the consolidated
income statement.
Dividends on AFS equity instruments are recognised
in profit or loss when the Group’s right to receive the
dividends is established.
The fair value of AFS monetary assets denominated in
a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting
period. The foreign exchange gains and losses that are
recognised in profit or loss are determined based on the
amortised cost of the monetary asset. Other foreign
exchange gains and losses are recognised in other
comprehensive income.
loans and receivables
Trade receivables, loans, and other receivables that have
fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’.
Loans and receivables are measured at amortised cost
using the effective interest method, less any impairment.
Interest income is recognised by applying the effective
interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
impairment of financial assets
Financial assets, other than those at FVTPL, are assessed
for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired
when there is objective evidence that, as a result of one
or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of
the investment have been affected.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on
a collective basis.
For financial assets carried at amortised cost, the amount
of the impairment loss recognised is the difference
between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the financial
asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount
is reduced through the use of an allowance account. When
a trade receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired,
cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in
the period.
With the exception of AFS equity instruments, if, in a
subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed
through profit or loss to the extent that the carrying
amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would
have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses
previously recognised in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income.
derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all
the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability
for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a
transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised
borrowing for the proceeds payable.
55
ClearView annual report 2012 3
Significant accounting
policies continued
(p) Financial liabilities and equity instruments issued
by the Group
Classification as debt or equity
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
equity instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group
are recognised as equal to the proceeds received, net of
direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities
‘at FVTPL’ or ‘other financial liabilities’.
Financial liabilities at Fvtpl
Financial liabilities are classified at FVTPL when the
financial liability is either held for trading or it is
designated as at FVTPL.
A financial liability is classified as held for trading if:
• It has been acquired principally for the purpose
of repurchasing it in the near term; or
• On initial recognition it is part of a portfolio of identified
financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-
taking; or
• It is a derivative that is not designated and effective
as a hedging instrument.
A financial liability other than a financial liability held
for trading may be designated as at FVTPL upon initial
recognition if:
• Such designation eliminates or significantly reduces
a measurement or recognition inconsistency that would
otherwise arise; or
• The financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis,
in accordance with the Group’s documented risk
management or investment strategy, and information
about the grouping is provided internally on that basis; or
• It forms part of a contract containing one or more
embedded derivatives, and AASB 139 ‘Financial
Instruments: Recognition and Measurement’ permits
the entire combined contract (asset or liability) to be
designated at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or
loss incorporates any interest paid on the financial liability
and is included in the ‘other gains and losses’ line item in
the statement of comprehensive income.
other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the
financial liability, or where appropriate a shorter period,
to the net carrying amount on initial recognition.
derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled
or they expire.
(q) 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 the Group will be required to settle the
obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at reporting date, taking into account the risks
and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the
present value of those cashflows.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
56
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are
initially measured at fair value at the date of acquisition.
At subsequent reporting dates, such contingent liabilities
are measured at the higher of the amount that would
be recognised in accordance with AASB 137 ‘Provisions,
Contingent Liabilities and Contingent Assets’ and the
amount initially recognised less cumulative amortisation
recognised in accordance with AASB 118 ‘Revenue’.
(r) Restructurings
A restructuring provision is recognised when the Group has
developed a detailed formal plan for the restructuring and
has raised a valid expectation in those affected that it will
carry out the restructuring by starting to implement the
plan or announcing its main features to those affected by
it. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring,
which are those amounts that are both necessarily entailed
by the restructuring and not associated with the ongoing
activities of the entity.
(s) intangible assets acquired in a business combination
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised
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.
(t) impairment of other tangible and intangible assets
At each reporting date, the Group reviews its tangible
and intangible assets to determine whether there is any
indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can
be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
annually and whenever there is an indication that the
asset may be impaired. The recoverable amount is the
higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows
are discounted to their present value using a discount rate
that reflects current market assessments of the time value
of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised in profit or loss immediately, unless the relevant
asset is carried at fair value, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount
does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the
asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately
in profit or loss, unless the relevant asset is carried at fair
value, in which case the reversal of the impairment loss is
treated as a revaluation increase.
(u) property plant and equipment
Each class of property, plant and equipment is carried at
cost less, where applicable, any accumulated depreciation
and impairment. Property, plant and equipment is
amortised over its expected useful life being, 3 years
(33% p.a. amortisation) and furniture & fittings 5 years
(20% p.a. amortisation). Depreciation is calculated on a
straight-line basis so as to write off the net cost or other
revalued amount of each asset over its expected useful life
to its estimated residual value. The estimated useful lives,
residual values and depreciation method are reviewed at
the end of each annual reporting period, with the effect
of any changes recognised on a prospective basis.
The cost of improvements to, or on, leasehold properties is
amortised over the unexpired term of the lease. These are
subject to impairment reviews at least annually or more
frequently where there is an indication of impairment.
57
ClearView annual report 2012 3
Significant accounting
policies continued
(v) intangible assets – software development
An internally generated asset arising from development
is recognised if, and only if, all of the following have
been demonstrated:
• The technical feasibility of completing the intangible asset
so that it will be available for use;
The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s
estimate of equity instruments that will eventually vest.
At the end of each reporting period, the Group revises its
estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to the employee share plan reserve.
• The intention to complete the intangible asset and use it;
(x) income tax
• The ability to use the intangible asset;
Current tax
• How the intangible asset will generate probable future
economic benefits;
• The availability of adequate technical, financial, and other
resources to complete the development and use the
intangible asset; and
• The ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the
recognition criteria listed above. Where no internally
generated intangible asset can be recognised, development
expenditure is recognised in profit or loss in the period in
which it is incurred.
Subsequent to initial recognition, internally generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the
same basis intangible assets that are aquired separately.
Amortisation is charged to the statement of comprehensive
income on a straight-line basis over periods generally ranging
from 3 to 5 years. Management reviews the appropriateness
of the amortisation period on an annual basis.
(w) share-based payments
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair
value of the equity instruments at the grant date. Fair
value is measured via option pricing, using a binomial
model. The expected life used in the model has been
adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions,
and behavioural considerations. Details regarding the
determination of the fair value of equity-settled share-
based transactions are set out in note 28.
Current tax is calculated by reference to the amount
of income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by the reporting date. Current tax
for current and prior periods is recognised as a liability
(or asset) to the extent that it is unpaid (or refundable).
deferred tax
Deferred tax is accounted for using the balance sheet
liability method. Temporary differences are differences
between the tax base of an asset or liability and its carrying
amount in the Statement of Financial Position. The tax base
of an asset or liability is the amount attributed to that asset
or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient
taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets
can be utilised. However, deferred tax assets and liabilities
are not recognised if the temporary differences giving rise
to them arise from the initial recognition of assets and
liabilities (other than as a result of a business combination)
which affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in
relation to taxable temporary differences arising from the
initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries
and associates and interests in joint ventures except
where the Group is able to control the reversal of the
temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary
differences associated with these investments and interests
are only recognised to the extent that it is probable that
there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
58
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period(s) when
the asset and liability giving rise to them are realised or
settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the reporting date. The
measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in
which the Group expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Critical judgments in applying the Group’s accounting
policies and key sources of estimation uncertainty
The critical judgments that management has made in
the process of applying the Group’s accounting policies
and in the application of Australian Accounting Standards
that have a significant effect on the financial report and
estimates include:
• Life insurance policy liabilities, including the actuarial
methods and assumptions and allocation of expenses
between acquisition and maintenance costs;
• Assets arising from reinsurance contracts;
• Recoverability of intangible assets;
Current and deferred tax for the period
• Impairment of goodwill; and
Current and deferred tax is recognised as an expense or
income in the income statement, except when it relates
to items credited or debited directly to equity, in which
case the deferred tax is also recognised directly in equity,
or where it arises from the initial accounting for a business
combination, in which case it is taken into account in the
determination of goodwill or excess.
(y) leases
Leases are classified as finance leases when the terms
of the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee.
All other leases are classified as operating leases.
4
Critical accounting
judgments and key sources
of estimation uncertainty
In the application of the Group’s accounting policies
management is required to make judgments, estimates
and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on
historical experience and various other factors that are
believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period or in the period of
the revision and future periods if the revision affects both
current and future periods.
• Deferred tax assets.
life insurance policy liabilities
Life insurance policy liabilities are, in the majority of
cases, determined using an individual policy-by-policy
calculation. Where material liabilities are not determined
by individual policy valuation, they are computed using
statistical or mathematical methods, which are expected
to give approximately the same results as if an individual
liability were calculated for each contract. The calculations
are made by suitably qualified personnel on the basis of
recognised actuarial methods, with due regard to relevant
actuarial principles. The methodology takes into account
the risks and uncertainties of the particular classes of life
insurance business written.
The key factors that affect the estimation of these liabilities
and related assets are:
• The cost of providing benefits and administering these
insurance contracts;
• The costs incurred in acquiring the policies, including
commisions, underwriting and policy issue costs;
• Mortality and morbidity experience on life insurance
products; and
• Discontinuance experience, which affects ClearView Life’s
ability to recover the cost of acquiring new business over
the term of the contracts.
In addition, factors such as regulation, competition, interest
rates, taxes, securities market conditions and general
economic conditions affect the level of these liabilities.
Details of specific actuarial policies and methods are set
out further below.
59
ClearView annual report 2012 4
Critical accounting judgments
and key sources of estimation
uncertainty continued
assets arising from reinsurance contracts
Assets arising from reinsurance contracts are computed
using the same methods as used for insurance policy
liabilities. In addition, the recoverability of these assets is
assessed on a periodic basis to ensure that the balance is
reflective of the amounts that will ultimately be received,
taking into consideration factors such as reinsurer
counterparty and credit risk.
Impairment is recognised where there is objective evidence
that the Company may not receive amounts due to it and
these amounts can be reliably measured.
Recoverability of acquired intangible assets
The carrying amount of acquired intangible assets at the
financial position date was $45.1 million (2011: $51.9 million).
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where
they satisfy the definition of an intangible asset. 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 acquired separately.
At each reporting date ClearView is required to assess whether
there is any indication that the intangibles may be impaired.
Triggers for impairment have historically been identified and
approved for each cash generating unit (CGu). Further details
have been provided in each relevant section below.
Client Book – intangible
The intangible assets arose on the acquisition of CVGH
and CCFA. The intangibles represent the value of the in
force insurance and investment contracts, and value of the
existing financial advice and funds management revenues
(the client book).
Each client book has its own assessment of useful
life depending on the nature of the clients in each
segment and their relative characteristics, based on age,
demographics and type of product to which it relates.
The policy adopted to write-off the client books resembles
the anticipated ageing profile of the revenue stream.
ClearView has historically identified its CGus at the
segment reporting level (lowest level of cash generating
units). The CGus identified are as follows:
• Life Insurance;
• Wealth Management; and
• Financial Planning.
As a result of the integration of the ClearView Financial
Management Limited (CFML) and CCFA businesses which
were subsequently renamed ClearView Financial Advice
Pty Limited (CFA), and the integration of the employees,
systems and processes, there was a reorganisation of
the financial advice CGu. Effective 1 July 2011, all the
ClearView advisers now operate under the CFA licence
and as a result, the client book intangibles relating to the
financial advice segments are treated as one intangible
encompassing both client books.
The life insurance client book is written off on a straight line
basis over 12 years. Triggers that need to be considered
in testing for annual impairment for the life insurance
contracts are as follows:
Cornerstone software system (CWt)
• Mortality and morbidity (claims);
The intangible assets arose on the acquisition of ComCorp
Financial Advice Pty Limited (CCFA) and primarily represent
the value of acquired CWT.
• Maintenance costs;
• Persistency (lapse); and
The value of the CWT system is amortised on a straight line
basis over a five year period which the Directors assess as
the intangible asset’s useful life.
• Discount rates.
The wealth management client book is written off at
15% per annum on a reducing balance method.
Triggers that need to be considered in testing for annual
impairment for the wealth client book are as follows:
• Investment returns;
• Outflows;
• Discount rates; and
• Maintenance costs.
60
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited During the current reporting period, the useful life of the
financial advice client book intangible was changed to
reflect a remaining useful life of 10 years (effective 1 July
2011) – reduced from 15 years previously. Triggers that
need to be considered in testing for annual impairment
for the planning client book are as follows:
The Group tests for impairment at each reporting date.
Management believes that any reasonable possible change
in the key assumptions on which the recoverable amount
is based would not cause the aggregate carrying amount
to exceed the aggregate recoverable amount of the cash-
generating unit.
• Investment returns;
• Outflows;
• Discount rates; and
• Maintenance costs.
Management prepare an embedded value for the
ClearView Group at each reporting period. The embedded
value is prepared at a reportable segment level (CGus).
The embedded value methodology is used to test the
acquired intangibles for any impairment triggers. As at
30 June 2012, no impairment was required to the carrying
value of the intangibles.
Further information about the intangible assets is detailed
in note 20.
impairment of Goodwill
The carrying amount of goodwill at the reporting date
was $4.9 million (2011: $4.9 million).
Determining whether goodwill is impaired requires an
estimation of the value-in-use of the cash-generating units
to which the goodwill has been allocated. The value-in-use
calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and
a suitable discount rate in order to determined the present
value of those cash flows.
Goodwill
CFA acquired the business of CCFA on 9 April 2009.
Goodwill arose in respect of the amount of consideration
paid in that related to the expected cost synergies,
revenue growth, improved referral source penetration,
future market development and the assembled work force
and ingrained experience of personnel. These assets are
not recognised separately from goodwill as the future
economic benefits arising from them are not capable
of being measured separately.
CCFA was acquired in 2009 as the first major step of the
Group in developing a presence in the wealth management
and financial advice industry. The goodwill that arose on
the acquisition has at the reporting date been allocated
to the financial advice cash generating unit.
The Future of Financial Advice reform package (FOFA)
includes changes that involve (inter alia) a prospective
ban on conflicted remuneration structures, including
commissions and volume based payments, in relation
to the distribution of and advice on retail investment
products including managed investments, superannuation
and margin loans. under the Government’s proposed
amendments to the FOFA legislation, it will commence
on 1 July 2013 unless the licensee elects to comply
earlier. The progress of the proposed regulatory reforms
will be monitored and their impact assessed as further
information and legislation is released.
Further information about the goodwill is detailed in note 19.
deferred tax asset – timing differences
The Board has considered that it is probable that sufficient
taxable income will be available against which deductible
temporary differences can be utilised.
The Group has fully utilised the carried forward revenue
losses as at the reporting date.
deferred tax asset – Capital losses
ClearView Life has amounts of realised and unrealised
capital losses within its superannuation business in its No.
2 and No.4 Statutory Funds. The Board has considered
the likelihood of the recovery of these losses and their fair
value, and has concluded that it is appropriate to reduce
the deferred tax asset (DTA) held in respect of those capital
losses below the nominal full recovery amount. This has
been implemented via placing a cap on the recognised
DTA. The DTA relating to capital losses are estimated to
be utilised in the foreseeable future and is expressed as
a percentage of the value of investments held. The same
methodology has been adopted for unit pricing purposes
and this financial report.
In addition to the above, the group has accumulated
capital losses that arose within the parent entity related
to the losses realised on the historic disposal of a subsidiary
entity. At the current time, no DTA is recognised in respect
of these losses. This is discussed further in Note 25.
61
ClearView annual report 2012 4
Critical accounting judgments
and key sources of estimation
uncertainty continued
actuarial methods and assumptions
The projection method uses the discounted value of future
policy cash flows (premiums, expenses and claims) plus a
reserve for expected future profits. The policy liabilities for
life investment contracts are determined as the fair value
of the policyholders’ accounts under the accumulation
method with no future profit reserve.
(b) actuarial assumptions used in the valuation
of life insurance policy liabilities
Key assumptions used in the calculations of life insurance
policy liabilities are as follows:
discount rates: Discount rates are based on a yield
curve derived from Commonwealth Government bond
market yields as at the valuation date, plus an illiquidity
adjustment based on the difference between these yields
and BBSW swap rates as at the valuation date. As an
indication, the resulting average effective discount rate
adopted was 4.0% (2011: 6.0%).
acquisition expenses: Per policy acquisition expense
assumptions were based on the actual expenses for the
12 months to 30 June 2012.
maintenance expense and inflation: The per policy
maintenance expense assumptions were based on the per
policy unit costs implied by ClearView Life’s 2013 business
plan (2011: Based on the 2012 business plan). Expense
inflation of 2.5% p.a. (2011: 2.5% p.a.) was assumed.
lapses: Rates adopted vary by product, duration, age
and premium frequency, and have been based on an
analysis of ClearView Life’s experience over recent years
with allowance for expected trends.
mortality: Rates adopted vary by product, age, gender,
and smoking status and have been based on ClearView
Life’s mortality experience. The underlying mortality table
used was IA95-97, including allowance for selection.
morbidity (tpd and trauma): Rates adopted vary by age,
gender, and smoking status and have been based on
known industry experience plus advice from ClearView
Life’s reinsurers.
The effective date of the actuarial report on life insurance
policy liabilities, life investment policy liabilities and
solvency reserves is 30 June 2012. The actuarial report was
prepared by the ClearView Life Appointed Actuary, Greg
Martin. The actuarial report indicates that the Appointed
Actuary is satisfied as to the accuracy of the data upon
which the policy liabilities have been determined.
(a) methods used in the valuation of policy liabilities
The policy liabilities have been determined in accordance
with applicable accounting standards. Policy liabilities for
life insurance contracts are valued in accordance with AASB
1038 ‘Life Insurance Contracts’, whereas policy liabilities for
life investment contracts are valued in accordance with AASB
139 ‘Financial Instruments: Recognition and Measurement’.
These life insurance and life investment policy liability
determinations are also consistent with the requirements
of the relevant Prudential Standards and the Life
Insurance Act 1995. Life insurance policy liabilities have
been calculated in a way which allows for the systematic
release of planned margins as services are provided to
policyholders and premiums are received.
The methods used for the major product groups are
as follows:
Related pRoduCt GRoup
metHod
Fund 1 Legacy Lump Sum
Projection
Fund 2 Legacy Lump Sum
Projection
pRoFit
CaRRieR
Premiums
Premiums
Fund 1 Legacy
Income Protection
Fund 1 Non-advice
Lump Sum
Fund 1 LifeSolutions
Lump Sum Ordinary
Fund 1 LifeSolutions
Lump Sum Super
Accumulation N/A
Projection
Premiums
Projection
Premiums
Projection
Premiums
Fund 1 LifeSolutions
Income Protection Ordinary
Fund 1 LifeSolutions
Income Protection Super
Projection
Premiums
Projection
Premiums
Fund 2 Investments
Accumulation N/A
Fund 4 Investments
Accumulation N/A
62
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited (c) effects of changes in actuarial assumptions
taxation
It has been assumed that current tax legislation and rates
continue unaltered.
mortality and morbidity
Appropriate base tables of mortality and morbidity are
chosen for the type of products written. An investigation
into the actual experience of the insurance portfolio over
recent years is performed and the Company’s mortality
and morbidity experience is compared against the rates
in the base tables. Where the data is sufficient to be fully
statistically credible, the base table is adjusted to reflect
the portfolio’s experience. Where data is insufficient to
be fully statistically credible, the base table is adjusted
having regard to the extent of the credibility of the
portfolio’s experience, the overall experience of the industry
experience known and advise from ClearView’s reinsurers.
lapse
An investigation into the actual lapse experience of
ClearView Life over the most recent years is performed
and statistical methods are used to determine appropriate
lapse rates. An allowance is then made for any trends in
the data to arrive at a best estimate of future lapse rates.
(over 12 months ended June)
12 moNtHs to 30 JuNe 2012
iNCRease /
(deCRease)
oN pRoFit
maRGiNs
$’000
17,844
(14,367)
14,466
17,943
iNCRease /
(deCRease)
oN poliCy
liaBilities
$’000
(13,895)
-
-
(13,895)
assumptioN CateGoRy
Discount rates and inflation
Lapses
Mortality and morbidity
Total
(d) processes used to select assumptions
discount rate
Benefits under life insurance contracts are not contractually
linked to the performance of the assets held. As a result,
the life insurance policy liabilities are discounted for the
time value of money using discount rates that are based on
current observable, objective rates that relate to the nature,
structure and term of the future obligations. The discount
rate is based on Commonwealth Government bond
rates adjusted for the value of the illiquidity of the policy
liability. The effect of this approach is unchanged from that
adopted last year.
maintenance expenses and inflation
Maintenance expenses are set having regard to the cost
base in the three year Board adopted business plan
excluding short term growth and development costs.
Per policy maintenance expenses are assumed to increase
in the future with inflation, at a rate that allows for basic
price increases (CPI).
acquisition expenses
Per policy acquisition expenses were derived from the analysis
of acquisition expenses adopted for this financial report.
63
ClearView annual report 2012 4
Critical accounting judgments and key sources
of estimation uncertainty continued
(e) sensitivity analysis
The Company conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables such
as discount rates, expenses, mortality, morbidity and lapses. The valuations included in the reported results and ClearView
Life’s best estimate of future performance are calculated using certain assumptions about these variables. The movement
in any key variable may impact the reported performance and net assets of ClearView Life and the consolidated entity, and
as such represents a risk.
vaRiaBle
impaCt oF movemeNt iN uNdeRlyiNG vaRiaBle
Interest Rate Risk
Expense Risk
Mortality Rates
Morbidity Rates
Lapses
The life insurance policy liabilities are calculated using a discount rate that is derived from
market interest rates. Changes in market interest rates will affect the present value of
cash flows and profit margins in the policy liabilities, which in turn will affect the profit and
shareholder equity. The change in interest rates would also impact the emerging profit via
its impact on the investment returns on the assets held to back the liabilities.
An increase in the level (or inflation) of expenses over the assumed levels will decrease
emerging profit. However, a change in the base expense assumptions adopted for the
policy liability is unlikely to impact the current policy liability determination as such a
change is absorbed into the policy liability profit margin reserve in the first instance.
For life insurance contracts providing death benefits, increased rate of mortality would
lead to higher levels of claims, increasing associated claims cost and thereby reducing
emerging profit. However, a change in the mortality assumptions adopted for the policy
liability is unlikely to directly impact the current policy liability determination as such
a change is absorbed into the policy liability profit margin reserve in the first instance.
The cost of claims under TPD and trauma cover depends on the incidence of policyholders
becoming totally and permanently disabled or suffering a “trauma” event such as a heart
attack or stroke. Higher incidence would increase claim costs, thereby reducing profit and
shareholder equity. The impact on the policy liability of a change in morbidity assumptions
is as per mortality above.
Lapse risk represents the extent to which policyholders choose not to renew their policy, and
allow it to lapse. An increase in the lapse rates will have a negative effect on emerging profit
owing to the loss of future revenue, including that required to recover acquisition costs. The
impact on the policy liability of a change in lapse assumptions is as per mortality above.
64
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited The table below illustrates how outcomes during the financial year ended 30 June 2012, in respect of the key actuarial
variables, would have impacted the reported life insurance policy liabilities, profit and equity for that financial period.
vaRiaBle
Interest rates
Mortality & morbidity
Lapses
Maintenance expenses
impaCt oN poliCy liaBilities
impaCt oN Net pRoFit aNd
sHaReHoldeR eQuity
GRoss oF
ReiNsuRaNCe
$’000
Net oF
ReiNsuRaNCe
$’000
GRoss oF
ReiNsuRaNCe
$’000
Net oF
ReiNsuRaNCe
$’000
7,006
(7,006)
6,948
(6,948)
(4,904)
4,904
(4,864)
4,864
-
-
-
-
-
-
-
-
-
-
-
-
(807)
807
(646)
646
(580)
580
(708)
708
(643)
643
(580)
580
CHaNGe iN
vaRiaBle*
+100 bp
-100 bp
110 %
90 %
110 %
90 %
110 %
90 %
* Note: The interest rate sensitivities show the change to policy liabilities and profit from a change in the discount rate by adding or subtracting 1% from the yield curve adopted. The other
sensitivities show how different the policy liabilities and reported profit would have been if the ClearView Life experience in the current year in relation to those variables had been higher
or lower by 10% of that experienced.
5 Risk management
The Company’s activities expose it to a variety of risks,
both financial and non-financial. Key risks include:
• Asset risks, including market risk (interest rate risk
and price risk), credit risk and liquidity risk;
• Insurance risk;
• Asset-liability mismatch risks;
The Audit, Risk and Compliance Committee, on behalf
of the Board, monitors the operation of the RMF and
facilitates review of the key process and procedures
underlying the RMF. Internal audit activities are focused
on key risks and on the key risk controls identified as part
of the risk assessment process. KPMG is retained
to provide outsourced internal audit services.
The RMS and RMF considers the key stakeholders in the
Company, beyond the shareholders, including:
• Expense risks and client discontinuance (lapses,
• The benefit security and expectations of policyholders
withdrawals and lost client) risks; and
and investment product and advice clients.
• Non-financial risks, including compliance risk, operational
• Risk impacts on and from our staff, our distribution
risk and strategic risk.
Risk management strategy, roles and responsibilities
Risk management is an integral part of the Company’s
management process. The Company’s Board has adopted
a formal Risk Management Strategy (RMS) and structured
risk management framework (RMF) to assist it in identifying
and managing the key risks to achieving the Company’s
objectives. The RMS and RMF are fundamental to the
business decisions of the Company, including resource
allocation decisions and prioritisation of activities.
partners and suppliers and counterparties.
• Requirements and objectives of our regulators.
The RMS specifies the Board’s risk appetite and tolerance
standard which guides the Company in its decisions as to
the acceptance, management and rejection of risks. A risk
register is maintained that identifies the key risks of the
Company by type, impact and likelihood, and indicates
the key process and mechanisms to control, mitigate or
transfer those risks within the allowed tolerances. The RMS
and RMF includes suitable monitoring mechanisms.
As part of the RMS and RMF, the Company has adopted a
Capital Management Plan (CMP) with respect to supporting
the residual risk exposures retained by the Company and
the ongoing capital needs of the Company.
65
ClearView annual report 2012 5 Risk management continued
asset risks
The primary asset risks borne by the Company relate
to the financial assets of the Company and its operating
subsidiaries excluding those in the non-guaranteed
investment linked funds in ClearView Life’s statutory fund
No.4 (referred to below as ClearView assets). The primary
financial risks related to the financial assets in the non-
guaranteed investment linked funds in ClearView Life’s
statutory fund No.4 are borne by policyholders as the
investment performance on those assets is passed through,
in full, to the policyholders (referred to below as Policyholder
assets). Nonetheless, the Company has a secondary
exposure to the Policyholder assets and off-balance sheet
client funds, via the impact on the fees charged by the
Company which vary with the level of Policyholder and client
funds under management and under administration, as well
as related reputational exposure.
(a) market risk
Market risk is the risk that financial assets will be affected
by changes in interest rates, foreign exchange rates and
equity prices.
interest rate risk
Interest rate risk arises on ClearView’s assets which are
invested in fixed interest funds and cash. Interest rate risk
is managed by the Company through:
• Maintaining the level of interest rate exposure within the
tolerances set by the Board in the RMS;
• Investing ClearView’s assets in accordance with the Board
approved Investment Policy and Guidelines; and
• By holding capital reserves in accordance with the
Company’s CMP with respect to the residual interest rate
risk exposure retained, in addition to the regulatory capital
reserves held within ClearView Life in respect of interest
rate risk.
equity price risk
Equity price risk is the risk that the fair value of investments
in equities decreases or increases as a result of changes in
market prices, whether those changes are caused by factors
specific to the individual share price or factors affecting
all equity instruments in the market. As at 30 June 2012,
ClearView’s assets included only a small portfolio of equities
exposed to such risk.
In contrast to this, the Policyholder assets and other client
funds under management and under administration, involve
significant investment in equities. As noted above, the
Policyholder asset risks are borne by the policyholders. The
Company is exposed to secondary risks on its management
66
and advice fees that are driven by the total funds under
management and administration, as well as reputational risks
from poor investment returns.
The investment of the Policyholder assets and client moneys
controlled by ClearView is undertaken in accordance with
the Investment Policy and Guidelines approved by the Board,
which inter alia stipulates the investment allocation mix, the
portfolio’s risk characteristics, management response plans
and the use of derivatives. To the extent required, capital
reserves are held in accordance with the CMP with respect
to the Company’s residual fee risk exposure.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to
the Group. Credit risk exposures arising from investment
activities are assessed by the Company’s internal
investment management committee (the ClearView
Investment Committee (CIC) appointed by the Board) prior
to investing ClearView assets into any significant financial
asset. The ongoing credit standing of material investments
are monitored by the CIC, with the CIC charged to maintain
the credit quality of ClearView assets within the Board’s
investment guidelines.
The large majority of debt assets invested in by the
Company on behalf of policyholders and clients (including
Policyholder assets) are managed under mandates with
appointed funds managers. Those mandates include
credit rating, diversification and maximum counterparty
exposure rules and standards that are to be met. The funds
managers’ adherence to those requirements are subject
to ongoing monitoring by the funds managers, and are
separately monitored by the Company’s custodian. Formal
compliance reporting is monitored monthly by the CIC.
Credit risk arising from other third party transactions,
such as reinsurance recovery exposures and exposure to
outsource service providers, are assessed prior to entering
into financial transactions with those parties, are approved
by the Board where material, and are monitored by
appropriate mechanisms on an ongoing basis (for example
a quarterly monitoring and compliance reporting process
in respect of the Company’s outsourced custodian).
The Company does not expect any of its material
counterparties to fail to meet their obligations and does
not require collateral or other security to support these
credit risk exposures.
Specific capital reserves are held against credit risk under
the regulatory solvency and capital adequacy standards
of ClearView Life, with credit risk also considered with the
Company’s CMP reserves.
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited (c) liquidity risk
Liquidity risk is primarily the risk that the Company will
encounter difficulty in meeting its obligations due to an
inability to realise some or all of its assets in order to fund
its cash flow needs, including the payment of amounts
to its policyholders and clients. A secondary risk relates
to the risk of the illiquidity of the external (including off
Balance Sheet) funds its clients invest in, which may result
in restricted fee flows to the Company and/or reputational
damage via association.
The primary risk is controlled through focusing the
Company’s assets, as well as Policyholder assets and the
investment of client funds controlled by the Company, into
assets which are highly marketable and readily convertible
into cash. In addition, the Company maintains suitable
cash holdings at call and an appropriate overdraft facility.
The Company’s cash flow requirements are reviewed
and forecast daily for a one week forward period. This
assessment takes into account the timing of expected cash
flows, the likelihood of significant benefit outflows over the
short term and known significant one-off payments.
2012
Equity securities
Fixed interest securities
unit trusts
Total
2011
Equity securities
Fixed interest securities
unit trusts
Total
under the terms of the Company’s products (issued via
ClearView Life and ClearView Financial Management) the
payment of unit fund redemptions to policyholders and unit
trust investors may be delayed, if necessary, until funds are
available. To date no such delays have been imposed.
The risks in respect of external (third party) funds are
controlled via the Company’s Approved Product List,
which restricts the external funds available for use by
the Company’s advisers and planners to investment
platform providers that are assessed to be reputable
and financially sound.
Fair value Hierarchy
The table below summarises financial instruments carried
at fair value, by valuation method. The different levels have
been defined as follows:
• level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities;
• level 2: inputs other than quoted prices included within
level 2 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
• level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
level 1
$’000
level 2
$’000
level 3
$’000
total
$’000
376,850
-
-
486,904
315,086
691,936
-
486,904
469,817
-
-
576,764
371,077
840,894
-
576,764
-
-
-
-
-
-
-
-
376,850
486,904
315,086
1,178,840
469,817
576,764
371,077
1,417,658
67
ClearView annual report 2012 5 Risk management continued
insurance risk
The risks under the life insurance contracts written by the Company are exposure to various key variables. The table below
provides an overview of the key insurance contract types and exposure variables.
type oF CoNtRaCt
detail oF CoNtRaCt WoRKiNGs
Non-participating life
insurance contracts with
fixed terms (Term Life
and Disability)
Benefits paid on death
or ill health that are fixed
and not at the discretion of
the issuer
NatuRe oF CompeNsatioN
FoR Claims
Key vaRiaBles tHat aFFeCt
tHe timiNG aNd uNCeRtaiNty
Benefits defined by the
insurance contract are
determined by the contract
obligation of the issuer and
are not directly affected
by the performance of
the underlying assets or
the performance of the
contracts as a whole
Mortality
Morbidity
Discontinuance rates
Expenses
Policy Terms
Premium Rates
Insurance risks are controlled through the use of underwriting procedures, appropriate premium rating methods and
approaches, appropriate reinsurance arrangements, effective claims management procedures and sound product terms
and conditions due diligence.
(a) Risk management objectives and policies for
underwriting procedures
mitigating insurance risk
ClearView Life issues term life insurance contracts and
disability insurance contracts. The performance of the
Company and its continuing ability to write business depends
on its ability to manage insurance risk. The Company’s RMS
summarises its approach to insurance risk management.
(b) methods to limit, manage or transfer insurance
risk exposures
Reinsurance
ClearView Life purchases reinsurance to limit its exposure
to accepted insurance risk. ClearView Life cedes to
specialist reinsurance companies a proportion of its
portfolio for certain types of insurance risk. This serves
primarily to reduce the net liability on large individual risks
and provide protection against large losses. The reinsurers
used are regulated by the Australian Prudential Regulation
Authority (APRA) and are members of large international
groups with sound credit ratings.
ClearView Life periodically reviews its reinsurance
arrangements and retention levels.
underwriting decisions are made using the underwriting
procedures reflected in ClearView Life’s underwriting
systems and detailed in ClearView Life’s underwriting
manual. Such procedures include limits as to delegated
authorities and signing powers. The underwriting process
is subject to ClearView Life’s internal control processes and
are subject to review by the reinsurers from time to time.
Claims management
Strict claims management procedures help ensure the
timely and correct payment of claims in accordance
with policy conditions, as well as limiting exposure to
inappropriate and fraudulent claims.
(c) Concentration of insurance risk
The insurance business of the Company is principally
written on individual lives (not group business). Individual
business is not expected to provide significant exposure
to risk concentration. Nonetheless, the residual risk
exposure is reduced through the use of reinsurance.
68
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited (d) pricing risk, and terms and conditions
expense and discontinuance Risks
of insurance contracts
The key risk controls in respect of pricing and policy terms
and conditions include:
• Review of product pricing by the Appointed Actuary
of ClearView Life, including annual analysis of experience
and product line profitability in the annual ClearView Life
Financial Condition Report;
• Formal Appointed Actuary Board reporting on new
product pricing, reinsurance and terms and conditions;
• Assessment by the Company’s reinsurers of the
pricing adopted, including the offer of corresponding
reinsurance terms;
Expense risks and discontinuance risks involve:
• The extent to which the expenses of the business are not
maintained at a level commensurate with premium and
fee flows of the business, including the level of business
growth and new business and client acquisition; and
• The extent to which the rate of loss of policyholders,
investment clients and other customers exceed
benchmark standards and pricing targets, resulting
in the loss of future profit margins, current period expense
support, and loss of opportunity to recover historic
acquisition costs incurred.
The Company principally manages its risks via:
• Formal internal policy document and Product Disclosure
• Budgeting and expense management reporting and
Statement due diligence review and sign-off processes; and
management processes;
• The ability to re-price products (change premium rates
• Modelling of anticipated client loss rates and ongoing
and fees) on most products in the event of adverse claims
and/or other product experience.
It is noted that similar processes and controls apply
to the pricing and terms and conditions applicable to the
investment products issued by the Company.
asset-liability mismatch Risk
Asset-liability mismatch risk arises to the extent to which
the assets held by the Company to back its liabilities
(especially its policy liabilities and investment contract
liabilities) do not closely match the nature and term of
those liabilities. In practice, the market risk and credit risk
exposures of the Company primarily relate to the extent
that the Company retains a net exposure with respect to
these risks – that is the extent to which the liabilities and
their values do not mirror the variation in asset values.
In this context it is noted:
• The investment linked liabilities of the Company directly link
the underlying assets held to support those liabilities, with
the primary market risks and credit risks passed on to the
policyholder and unit trust investors (as discussed above).
• The assets held to support the capital guaranteed units
in the ClearView Life No.2 and No.4 statutory funds are
maintained, in accordance with the Board’s investment
Policy and Guidelines, in high quality, short dated fixed
interest assets and cash. Asset-liability risk is substantially
reduced via this means.
• Similarly, assets held to support the policy liabilities and
risk capital of the ClearView Life No.1 statutory fund are
maintained, in accordance with the Board’s investment
Policy and Guidelines, in high quality, short dated fixed
interest assets and cash that closely match those policy
liabilities and capital reserves.
monitoring of discontinuance rates;
• Adoption of appropriate business retention strategies; and
• Maintaining strong distribution partner relationships.
Non-Financial Risks – Compliance, operational
and strategic Risks
The Company has exposure to a number of operational,
compliance and strategic risks. The management of these
risks forms a substantial part of the focus of the RMS and
RMF. Key elements of the RMF include:
• Formal internal executive compliance and risk
management functions within the Company;
• A specific focus area of the Board Audit, Risk and
Compliance Committee;
• Detailed compliance registers, reporting timetables,
incidence reporting and due diligence processes;
• Internal audit, whistleblowing policy and facilities, detailed
financial reconciliations and unit pricing checking processes,
detail IT development and implementation processes;
• Maintain sound process documentation and process
automations, and monitoring of outsource service
provider service performance and standards;
• Comprehensive internal management information
reporting and monitoring, emerging risk exposures
reporting, staff training programs, staff recruitment
standards (including fit and proper standards); and
• Maintaining an appropriate risk culture within the
business, including executive focus, and including
risk management as a formal part of all key business
decisions, and appropriate risk management supporting
remuneration structures. Within this content the
business initiated a Risk Management Committee with
representatives across the business.
69
ClearView annual report 2012 5 Risk management continued
Capital management and reserving
In terms of regulatory requirements:
• ClearView Life is subject to minimum regulatory capital
requirements, as determined by the Appointed Actuary
in accordance with APRA Life Insurance Prudential
Standards, in respect of the principal financial risks
exposures retained by ClearView Life.
• ClearView Financial Management and ClearView Financial
Advice are also required to maintain minimum regulator
capital as required by ASIC.
• ClearView Life Nominees Pty Limited (CLN) is also required
to maintain minimum regulatory capital as required by APRA
6
Solvency requirements
of the statutory funds
Nonetheless, the Company maintains additional capital
reserves in accordance with its Board adopted CMP
that retains capital reserves to support its retained risk
exposures, ensures there is a low likelihood that the
Company (and its regulated) subsidiaries will breach their
regulatory requirements, and has sufficient capital to
manage its near term business plans and provide a buffer
(capital and time) to take action to deal with reasonably
foreseeable adverse events that may impact the
businesses. These additional reserves are partly held within
the subsidiaries where the key risks reside, and partly
in a central reserve within the parent entity.
The distribution of the retained profits shown in the
financial statements is limited by the regulatory capital
requirements (APRA and ASIC) applicable to the Company
and its subsidiaries. The APRA Prudential Standard
LPS 2.04 Solvency Standard prescribes the minimum capital
requirements (solvency requirements), for each statutory
fund of ClearView Life. The solvency reserve ratios, as
defined by APRA, are as follows:
Solvency reserve %1
Coverage of reserve2
statutoRy
FuNd No. 1
statutoRy
FuNd No. 2
statutoRy
FuNd No. 4
statutoRy
FuNd total
18.0
2.9
0.5
13.0
0.2
10.4
0.6
5.8
1 The solvency reserve is the amount by which the solvency requirement exceeds the sum of the minimum termination value of life and investment contracts and other non-policy
liabilities. The solvency reserve % shown is the amount of the solvency reserve expressed as a percentage of the sum of the minimum termination value of life insurance and investment
contracts and other non-policy liabilities. A smaller percentage indicates a smaller solvency reserve (relative to the liabilities of the fund).
2 The coverage of the solvency reserve is the number of times the solvency reserve is covered by the assets in excess of the solvency requirement. A number greater than 1 indicates that
a fund has assets in excess of the solvency requirement. All of ClearView Life’s statutory funds have assets in excess of the solvency requirements.
ClearView Life is required to maintain minimum levels
of capital to meet both solvency and capital adequacy
requirements.
The Solvency Standard sets out the level of capital required
to ensure that under a range of adverse circumstances
ClearView Life can meet its existing obligations to members
and creditors. This is essentially based on ensuring
sufficient capital is available to meet accrued liabilities and
obligations if there were an orderly termination of the fund.
The Capital Adequacy Standard sets out the level of capital
required, based on a going concern basis where the
requirement is for ClearView Life to demonstrate that it has
sufficient capital to accept premiums and investments from
new and existing policyholders, fund its business plans,
absorb short term adverse experience from time to time,
and continue to remain solvent.
ClearView Life is required to comply with these standards
on a continuous basis and reports results to APRA on
a quarterly basis.
70
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited 7 Segment information
AASB 8 requires operating segments to be identified on the
basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segment and
to assess its performance.
The information reported to the Group’s Board of
Directors, being the chief operating decision maker,
for the purpose of resource allocation and assessment
of performance is focused on the products and services
of each reporting segment.
The principal activities and the Group’s reportable
segments under AASB 8 are as follows:
• Life Insurance;
• Wealth Management;
• Financial Advice; and
• Listed Entity / Other.
(a) life insurance (“protection” products)
ClearView provides life insurance protection products
through its wholly owned subsidiary ClearView Life
Assurance Limited (CLAL). The products provided by
ClearView Life include:
• A comprehensive range of life protection products
provided via both ClearView financial advisers and third
party, external advisers (“IFAs”). The product suite,
LifeSolutions, was launched in December 2011 and is
a high quality advice based product suite, providing top
quartile benefits and terms at market competitive prices.
LifeSolutions includes term life, permanent disability,
trauma and critical illness benefits, child cover, accident
covers, income protection and business expense covers.
Policies can be issued directly or via the ClearView
Retirement Plan as superannuation;
• A range of non-advice life protection products distributed
via direct marketing, telemarketing and “over-the-
counter” to customers, clients and supporters of strategic
partners of ClearView. Products include term life,
accidental death, injury covers, trauma and critical illness,
and funeral insurance.
(b) Wealth management (“investment” products)
ClearView provides investment products via three
primary avenues:
• Life investment contracts issued by ClearView Life.
Products include ordinary savings, superannuation
and allocated pension products, with the latter two
provided via the ClearView Retirement Plan. This business
represents the majority of the in force wealth business;
• Managed Investment Schemes (MIS) Products issued via
CFML as the ASIC licensed responsible entity, including by
providing MIS products to ClearView’s WealthSolutions
platform; and
• A superannuation and retirement income wrap (issued via
the ClearView Retirement Plan) and an Investor Directed
Portfolio Service (IDPS) wrap (provided by CFML) offered
via the WealthSolutions platform which was launched in
December 2011.
ClearView’s wealth products are distributed primarily via
ClearView financial planners and advisers.
(c) Financial advice
ClearView provides financial advice services through its
wholly owned subsidiary CFA. CFA employs a number of
salaried financial advisers and as well as providing dealer
group services to a number of franchised financial advisers,
including a growing group of highly experienced and
successful financial advisers that specialise in life insurance.
(d) listed entity / other
This represents the investment earnings on the cash and
investments held in the listed and central services entities
and in the shareholders fund of ClearView Life, less the costs
associated with maintaining a listed entity. The Company
manages capital at the listed entity level in accordance with
its capital management plan.
Asset segment information has not been disclosed
because the allocation of assets is not used for evaluating
segment performance and deciding the allocation of
resources to segments.
Asset segment information is critical to the performance
of each company and their respective regulatory
obligations and is managed at a company level.
Information regarding these segments is provided below.
The accounting policies of the reportable segments are
the same as the Company’s accounting policies described
in note 3.
71
ClearView annual report 2012
7 Segment information continued
exteRNal ReveNue
iNteR-seGmeNt
segment revenue
Life Insurance
Wealth Management
Financial Advice
Listed entity / Other
2012
$’000
2011
$’000
39,820
87,891
12,633
2,838
37,891
84,827
11,390
1,911
Consolidated segment revenue
143,182
136,019
2012
$’000
-
-
9,142
-
9,142
2011
$’000
-
-
7,760
-
2012
$’000
39,820
87,891
21,775
2,838
total
2011
$’000
37,891
84,827
19,150
1,911
7,760
152,324
143,779
Segment profit or loss represents the profit or loss earned by
each segment including the allocation of directly attributable
costs of each segment and an allocation of central services
costs according to an expense allocation model which
allocates costs across each segment on a reasonable basis.
This is the measure reported to the chief operating decision
maker for the purposes of resource allocation and assessment
of segment performance.
2012
underlying net profit / (loss) after tax
Amortisation of acquired intangibles
AIFRS policy liability adjustment
Income tax effect
Reported profit / (loss)
2011
underlying net profit / (loss) after tax1
Amortisation of acquired intangibles
Systems upgrade
Transition costs
AIFRS policy liability adjustment
Income tax effect
Reported profit / (loss)
liFe
iNsuRaNCe
WealtH
maNaGemeNt
FiNaNCial
adviCe
listed eNtity/
otHeR
11,137
(1,417)
13,895
(4,169)
19,446
8,975
(1,418)
(326)
(389)
(568)
385
6,659
7,537
(4,469)
-
-
(587)
(863)
-
90
1,154
-
-
28
3,068
(1,360)
1,182
11,109
(5,250)
(334)
(767)
-
331
5,089
(1,232)
(733)
-
465
-
-
(1,223)
(1,326)
-
452
(2,736)
-
514
(347)
total
19,241
(6,749)
13,895
(4,051)
22,336
19,317
(7,401)
(660)
(3,705)
(568)
1,682
8,665
1 The Wealth Management and Financial Advice profit has been restated to show profit from ClearView Managed Investment Schemes in Wealth Management due to a structural
reorganisation of reportable segments.
8 Fee and other revenue
CoNsolidated
2011
$’000
11,260
34,127
283
45,670
2012
$’000
12,469
30,439
624
43,532
CompaNy
2011
$’000
-
-
-
-
2012
$’000
-
-
-
-
Financial advice fees
Management fees
Other
Total fee and other revenue
72
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
9 Investment income
Interest income
Dividend income
Distribution income
Total investment income
10 Operating expenses
CoNsolidated
CompaNy
2012
$’000
29,895
18,687
12,986
61,568
2011
$’000
10,426
39,011
4,368
53,805
2012
$’000
1,641
4,500
-
6,141
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
administration expenses
Administration and other operational costs
Custody and investment management expenses
Total administration expenses
employee costs and directors’ fees
Employee expenses
Share based payments
Employee termination payments
Directors’ fees
13,596
6,312
19,908
12,327
6,707
19,034
23,124
21,479
502
156
560
531
276
666
Total employee costs and directors’ fees
24,342
22,952
other expenses
Restructuring and transition expenses1
Professional fees
Total other expenses
total operating expenses
depreciation and amortisation expenses
Depreciation expenses
Amortisation expenses
total amortisation and depreciation expenses
-
2,009
2,009
46,259
662
7,018
7,680
4,449
1,985
6,434
48,420
433
7,401
7,834
306
-
306
37
(10)
-
460
487
-
175
175
968
-
-
-
1 Included in restructuring and transition expenses in the prior year are termination payments made to terminated employees as part of the transition of the CVGH businesses as well as
provision for the restructuring of the financial advice business.
73
2011
$’000
1,021
43,500
-
44,521
CompaNy
2011
$’000
546
-
546
20
6
-
611
637
1,428
73
1,501
2,684
-
-
-
ClearView annual report 2012
10 Operating expenses continued
Remuneration of auditors
auditor of the parent entity
Audit and review of financial reports
Audit of APRA and ASIC regulatory returns
Audit of Managed Investment Schemes
Total remuneration for audit services
Preparation and lodgement of tax returns
Other non-audit services - taxation advice
Other non-audit services - compliance
Other non-audit services - consulting
Total remuneration for non-audit services
Total remuneration
11 Income tax
a) income tax recognised in profit or loss
income tax (benefit) / expense comprises:
Current tax expense
Deferred tax expense
Over provided in prior years – Current tax expense
under / (over) provided in prior years – Deferred tax expense
Income tax expense / (benefit)
deferred income tax expense / (benefit) included
in income tax expense comprises:
Decrease / (increase) in deferred tax asset
Increase in deferred tax liability
b) tax losses
unused tax losses for which no deferred tax asset has
been recognised
CoNsolidated
CompaNy
2012
$
2011
$
2012
$
2011
$
288,750
91,150
105,100
485,000
91,500
63,150
31,000
21,750
207,400
692,400
312,500
198,000
92,000
602,500
73,500
43,500
30,000
283,700
430,700
1,033,200
92,500
157,812
-
-
-
-
92,500
157,812
-
-
-
-
32,500
30,000
-
32,500
125,000
-
30,000
187,812
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
5,721
9,879
(1,241)
251
14,610
9,879
251
10,130
1,255
5,631
(774)
(119)
5,993
5,355
157
5,512
(145)
356
(99)
29
141
141
-
141
CompaNy
2011
$’000
(1,116)
542
(73)
-
(647)
(647)
-
(647)
149,710
120,004
32,671
32,689
Potential tax benefit
21,511
18,538
9,801
9,807
74
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
The prima facie income tax expense / (benefit) on pre-tax accounting profit from operations reconciles to the income tax
expense in the financial statements as follows:
c) Reconciliation of income tax expense to
prima facie tax payable
Profit before income tax expense
Prima facie tax calculated at 30%
tax effect of amounts which are non deductible /
assessable in calculating taxable income:
Differences in tax rate for the life company policyholders
Franking credits on dividends and distributions received
Non-deductible transaction costs
Difference in realised profit / (loss)
Accrued benefits on acquisition
Non allowable expenses
Non assessable / deductible premiums
under provision in prior years
Other
Income tax expense / (benefit)
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
36,946
11,084
14,658
4,397
5,213
1,564
41,867
12,560
(209)
(3,413)
(3)
3,658
(85)
2,107
73
(986)
2,384
14,610
107
(5,083)
2
(3,392)
-
2,692
6,465
(893)
1,698
5,993
-
-
(1,350)
(13,050)
(3)
-
-
-
-
(70)
-
141
2
(42)
-
-
-
(74)
(43)
(647)
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities
on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the
previous reporting period.
Franking account
The balance of the franking account after allowing for tax
payable in respect of the current year’s profit, the receipt of
franked dividends recognised as receivables and the payment
of any dividends recognised as a liability at the reporting date.
3,813
4,180
3,813
4,180
The ability of the Company to continue to pay franked dividends is dependent upon the receipt of franked dividends from
its investment assets and the group itself paying tax.
75
ClearView annual report 2012
11 Income tax continued
Relevance of tax consolidation to the Group
ClearView Wealth Limited and its wholly-owned Australian
resident entities have formed a tax consolidated group with
effect from 1 February 2007 and are therefore taxed as a
single entity from that date. The members in the ClearView
tax consolidated group are identified in note 33.
under the Tax Act, ClearView being the head company of the
tax consolidated group is treated as a life insurance company
for income tax purposes as one of the subsidiary members of
the tax consolidated group is a life insurance company.
Entities within the tax consolidated group have entered into
a tax sharing and funding agreement with the head entity.
This agreement has been amended to reflect the changes
in the structure of the tax consolidated group and a life
insurer becoming part of the group. These amendments
were executed on 20 August 2010.
under the terms of the tax funding arrangement, ClearView
and each of the entities in the tax consolidated group has
12 Movements in reserves
Retained losses
Balance at the beginning of the financial year
Net profit attributable to members of the parent entity
Dividend paid during the year
Balance at the end of the financial year
executive share plan reserve
Balance at the beginning of the financial year
Arising on share based payments
ESP loans settled through dividend
Balance at end of the financial year
profit Reserve
Balance at the beginning of the financial year
Net profit attributable to the parent entity
Dividend paid during the year
Balance at end of the financial year
agreed to pay a tax equivalent payment to or from the
head entity, based on the current tax liability or current
tax asset of the entity.
The tax funding agreement also provides for the head
entity to make payments for tax losses of a group member
that is determined in accordance with the provisions of the
agreement. Settlement for these amounts is based on the
extent to which the losses are utilised.
The tax sharing arrangement between members of the
tax consolidated group provides for the determination
of the allocation of income tax liabilities between the
entities should the head entity default on its tax payment
obligations or if an entity should leave the tax-consolidated
group. The effect of the tax sharing agreement is that each
member’s liability for tax payable by the tax consolidated
group is limited to the amount payable to the head entity
under the tax funding arrangement.
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
(29,631)
22,336
(7,739)
(15,034)
1,049
502
199
1,750
-
-
-
-
(38,296)
(47,905)
(47,905)
8,665
-
-
-
-
-
(29,631)
(47,905)
(47,905)
518
531
-
1,049
-
-
-
-
1,049
502
199
1,750
42,514
5,072
(7,739)
39,847
518
531
-
1,049
-
42,514
-
42,514
76
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
13 Sources of profit
Components of profit related to movements in
life insurance liabilities
Planned profit margins released
Profit / (loss) arising from difference between actual and
expected experience
Impact of IFRS change in economic assumptions
One-off expenses
Life insurance
Components of profit related to movements in
life investment liabilities
Expected profit margin
One-off expenses
One-off tax adjustment
Life investment
Investment earnings on assets in excess of life insurance
and investment contract liabilities
Profit for the statutory funds
Profit for the shareholders fund
Profit for ClearView Life Assurance Limited
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
8,661
1,256
9,726
-
19,643
5,719
-
-
5,719
2,430
27,792
519
28,311
10,556
(2,515)
(398)
(502)
7,141
9,021
(771)
(331)
7,919
2,565
17,625
360
17,985
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
ClearView annual report 2012
14 Earnings per share
earnings per share
Basic earnings
Diluted earnings
Basic earnings per share
CoNsolidated
2011
CeNts
2.12
2.10
2012
CeNts
5.46
5.24
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Profit for the year attributable to owners of the Company
Earnings used in the calculation of basic earnings per share
22,336
22,336
8,665
8,665
Weighted average number of ordinary shares for the purpose of basic earnings per share ('000's)
409,312
409,312
diluted earnings per share
The earnings used in the calculation of diluted earnings per share are as follows:
Profit for the year attributable to owners of the Company
Interest on ESP loans after tax
Earnings used in the calculation of total diluted earnings per share
22,336
419
22,755
8,665
353
9,018
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted
average number of ordinary shares used in the calculation of basic earnings per share as follows:
Weighted average number of ordinary shares used in
the calculation of basic earnings per share
Shares deemed to be dilutive in respect of the employee share plan
Weighted average number of ordinary shares used in the
calculation of diluted earnings per share (all measures)
409,312
409,312
24,741
434,053
19,631
428,943
78
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
15 Cash and cash equivalents
Cash at bank
Deposits at call
Total cash and cash equivalents
16 Investments
equity securities
Investment in Group Companies
Held directly
Held indirectly via unit trust
debt securities / fixed interest securities
Held directly
Held indirectly via unit trust
property
Held indirectly via unit trust
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
193,371
185,294
11,820
16,240
-
528
-
-
193,371
185,822
11,820
16,240
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
-
376,850
160,002
536,852
450,403
36,501
486,904
155,084
155,084
-
225,542
220,041
469,817
161,552
631,369
576,764
38,395
615,159
171,130
171,130
335
-
295
-
225,877
220,336
-
-
-
-
-
-
-
-
-
-
Total investments
1,178,840
1,417,658
225,877
220,336
The listed shares held by the Company represent the 3.35 million shares in Nexbis Limited held at 30 June 2012 (3.35
million at 30 June 2011). On the 5 July 2012, Nexbis Limited announced that a scheme of arrangement had been
implemented and all the ordinary shares in Nexbis Limited had been transferred to Aseana One Corp. Accordingly
on the 10 July 2012, the company received $0.10 per share and no longer holds any listed shares.
The fair value of securities is their value at last bid price as determined at 7:00pm on the reporting date in accordance
with the policies of the custodian.
79
ClearView annual report 2012
17 Receivables
Trade receivables
Provision for doubtful receivables
Premium receivable
Provision for outstanding life insurance premiums
Accrued dividends
Investment income receivable
Outstanding settlements
Prepayments
Other debtors
Loans receivable
Receivables from controlled / associated entities
Total receivables
CoNsolidated
2011
$’000
186
-
951
(352)
2,297
632
1,098
1,439
884
-
70
7,205
2012
$’000
459
(270)
1,021
(424)
2,605
908
2,210
1,582
1,067
279
154
9,591
CompaNy
2011
$’000
2012
$’000
-
-
-
-
-
-
-
-
6
-
11,670
11,676
-
-
-
-
-
56
-
-
560
-
6,235
6,851
Life insurance premiums have a 65 day grace period before the policy is lapsed and therefore a provision for outstanding
life insurance premiums is maintained. Loans bear interest and have fixed terms of repayment in accordance with loan
agreements. Outstanding settlements usually require payment within three days of the date of the transaction.
18 Fixed interest deposits
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
Fixed interest bank term deposits
91,991
22,021
21,093
21,392
Fixed interest term deposits, held at year end, yield a weighted average fixed interest rate of 5.3% (2011: 6.4%).
19 Goodwill
Gross carrying amount
Balance at the beginning of the financial year
Additional amount recognised through acquisition of business
Reversal of deferred consideration
Balance at the end of the financial year
Net book value
Balance at the beginning of the financial year
Balance at the end of the financial year
CoNsolidated
2011
$’000
4,187
777
(106)
4,858
4,187
4,858
2012
$’000
4,858
-
-
4,858
4,858
4,858
CompaNy
2011
$’000
2012
$’000
-
-
-
-
-
-
-
-
-
-
-
-
80
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
20 Intangible assets
2012
$’000
$’000
$’000
Capitalised
soFtWaRe
CWt
soFtWaRe
ClieNt BooK
Gross carrying amount
Balance at the beginning of the financial year
Acquired directly during the year
Balance at the end of the financial year
accumulated amortisation and impairment losses
Balance at the beginning of the year
Amortisation expense in the current year
Balance at the end of the financial year
Net book value
Balance at the beginning of the financial year
Balance at the end of the financial year
2011
Gross carrying amount
Balance at the beginning of the financial year
Acquired directly during the year
Balance at the end of the financial year
accumulated amortisation and impairment losses
Balance at the beginning of the year
Amortisation expense in the current year
Balance at the end of the financial year
Net book value
Balance at the beginning of the financial year
Balance at the end of the financial year
-
4,312
4,312
-
269
269
-
4,043
$’000
-
-
-
-
-
-
-
-
1,500
58,596
-
1,500
668
300
968
832
532
$’000
1,500
-
1,500
368
300
668
1,132
832
-
58,596
7,545
6,449
13,994
51,051
44,602
$’000
58,467
129
58,596
444
7,101
7,545
58,023
51,051
CoNsolidated
total
$’000
60,096
4,312
64,408
8,213
7,018
15,231
51,883
49,177
$’000
59,967
129
60,096
812
7,401
8,213
59,155
51,883
The intangible assets are amortised over their expected useful lives. As required under accounting standards at each
reporting date the Company assesses whether there is an indication of impairment. Further details have been provided
in note 4.
81
ClearView annual report 2012 21 Property, plant and equipment
2012
$’000
$’000
$’000
$’000
$’000
oFFiCe
FuRNituRe
oFFiCe
eQuipmeNt
ComputeR
HaRdWaRe
ComputeR
soFtWaRe
leaseHold
impRovemeNts
CoNsolidated
total
$’000
Gross carrying amount
Balance at the beginning
of the financial year
Additions
Written off
Balance at the end
of the financial year
accumulated depreciation /
amortisation and impairment
Balance at the beginning
of the financial year
Depreciation expense
Written off
Balance at the end
of the financial year
Net book value
Balance at the end
of the financial year
718
405
(661)
462
148
167
(220)
95
32
2
(12)
22
16
6
(2)
20
553
53
(11)
595
256
158
(5)
409
367
2
186
12
-
-
12
6
3
-
9
3
850
2,165
1,147
(1)
1,996
451
328
(1)
778
1,607
(685)
3,087
877
662
(228)
1,311
1,218
1,776
2011
$’000
$’000
$’000
$’000
$’000
$’000
Gross carrying amount
Balance at the beginning
of the financial year
Additions
Reclassifications
Balance at the end
of the financial year
accumulated depreciation /
amortisation and impairment
Balance at the beginning
of the financial year
Depreciation expense
Additions
Reclassifications
Balance at the end
of the financial year
Net book value
Balance at the end
of the financial year
740
120
(142)
718
46
108
3
(9)
148
103
-
(71)
32
49
6
-
(39)
16
285
242
26
553
44
119
91
2
256
570
16
297
5
4
3
12
1
2
3
-
6
6
369
297
184
850
80
198
127
46
451
1,502
663
-
2,165
220
433
224
-
877
399
1,288
No property, plant and equipment is held in the Company.
82
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited 22 Business acquisitions
Clearview Group Holdings pty limited
The initial accounting for the acquisition of ClearView
Group Holdings Pty Limited (CVGH) was finalised in the prior
comparable reporting period.
On 7 January 2011, ClearView and Bupa finalised the
adjustment amount relating to the CVGH acquisition. The
final amount was $9.7 million and represented the increase
in the net assets acquired between 31 December 2009 and
9 June 2010. This resulted in a total acquisition purchase
23 Payables
Trade payables
Reinsurance creditors
Employee entitlements
Life insurance premiums in advance
Life investment premium deposits
Other creditors
Lease incentive in advance
Outstanding investment settlements
Amounts in controlled entities
Total payables
price of $204.7 million, which was $3.9 million above that
estimated on 30 June 2010 as a result of completion
adjustments. This led to a $3.5 million reduction to
the profit on acquisition reported at 30 June 2010. The
finalisation of the net asset adjustment resulted in an
increase in the payment due to Bupa from $5.8 million
to $9.7 million which was paid to Bupa on 7 January 2011.
CoNsolidated
CompaNy
2012
$’000
3,595
-
3,450
401
845
535
1,557
2,273
-
12,656
2011
$’000
4,062
761
3,793
356
729
400
-
1,468
-
11,569
2012
$’000
79
-
65
-
-
2
-
-
315
461
2011
$’000
137
-
45
-
-
-
-
-
856
1,038
Payables are non-interest bearing and unsecured. Trade payables relate to accrued expenses, management fees,
financial advice payables and accrued commission payable to financial planners.
Other creditors usually require payment within 10 to 30 days. The Group has policies and procedures in place to ensure
that all payables are paid within the credit time frame.
Outstanding investment settlements usually require payment within three days of the date of the transaction.
83
ClearView annual report 2012
24 Provisions
Current and non current
Make good provision
Provision for restructuring
Employee leave provisions
Other provisions
Total
make good provision
Balance at the beginning of the financial year
Provision acquired in a business combination
Additional provisions raised
utilised during the period
Balance at the end of the financial year
provision for restructuring1,2
Balance at the beginning of the financial year
Additional provisions raised1,2
utilised during the period
unutilised provisions reversed during the period
Balance at the end of the financial year
employee leave provision
Balance at the beginning of the financial year
Additional provisions raised
utilised during the period
Balance at the end of the financial year
other provisions
Balance at the beginning of the financial year
Additional provisions raised
utilised during the period
unutilised provisons reversed during the period
Balance at the end of the financial year
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
227
-
2,063
434
2,724
384
-
30
(187)
227
1,427
-
(1,427)
-
-
2,111
546
(594)
2,063
1,148
121
(786)
(49)
434
384
1,427
2,111
1,148
5,070
352
48
-
(16)
384
864
2,039
(1,437)
(39)
1,427
2,330
377
(596)
2,111
2,819
1,208
(2,578)
(301)
1,148
-
-
-
81
81
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
121
(91)
(49)
81
-
-
-
100
100
-
-
-
-
-
1,962
-
(1,962)
-
-
-
-
-
-
125
152
(177)
-
100
1 The provision for restructuring arose on the acquisition of CVGH as detailed in note 22. Restructuring provisions were raised in accordance with the approved restructuring plan
for the CVGH business. These restructuring costs relate to termination payments and outplacement costs. The restructure was completed in November 2010.
2 An additional provision of $1.4 million was raised in June 2011 as a result of an approved restructuring plan for the financial advice business unit to further improve performance
and reduce costs. The restructure was completed by 31 August 2011.
84
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
25 Deferred tax balances
deferred tax assets
Non-current
Deferred tax assets
deferred tax liabilities
Non-current
Deferred tax liabilities
deferred tax assets
amounts recognised in profit or loss
Tax losses carried forward
Accruals not currently deductible
Depreciable and amortisable assets
Provisions
unrealised losses
Other
Deferred tax assets
deferred tax liabilities
amounts recognised in profit or loss
unrealised gains on investments
Other
Deferred tax liabilities
CoNsolidated
2012
$’000
2011
$’000
14,418
14,418
24,297
24,297
408
408
-
928
71
1,560
11,046
813
14,418
87
321
408
157
157
7,279
1,610
(59)
1,587
12,966
914
24,297
157
-
157
CompaNy
2011
$’000
8,542
8,542
-
-
7,279
74
-
-
282
907
8,542
-
-
-
2012
$’000
877
877
-
-
-
48
-
-
228
601
877
-
-
-
85
ClearView annual report 2012
25 Deferred tax balances continued
2012
Gross deferred tax liabilities
Gross deferred tax assets
Total
2011
Gross deferred tax liabilities
Gross deferred tax assets
Total
2012
Gross deferred tax assets
2011
Gross deferred tax assets
opeNiNG
BalaNCe
$’000
(157)
24,297
24,140
-
29,652
29,652
tRaNsFeRs
FRom
suBsidiaRies
(CHaRGe) /
CRedit to
iNCome
$’000
$’000
-
-
-
-
-
-
(251)
(9,879)
(10,130)
(157)
(5,355)
(5,512)
CoNsolidated
ClosiNG
BalaNCe
$’000
(408)
14,418
14,010
(157)
24,297
24,140
CompaNy
8,542
(7,524)
(141)
877
12,282
(4,387)
647
8,542
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax
benefit through future taxable profits is probable. unused tax losses for which no deferred tax assets have been recognised
are attributable to tax losses of a capital nature of $150 million (tax effected $21.5 million) consolidated and $32.7 million
(tax effected $9.8 million) for the company.
86
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited 26 Policy liabilities
(a) Reconciliation of movements in policy liabilities
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
life investment policy liabilities
Opening gross life investment policy liabilities
Net increase in life investment policy liabilities reflected in the
income statement
Decrease in life investment policy liabilities due to
management fee reflected in the income statement
Life investment policy contributions recognised in
policy liabilities
Life investment policy withdrawals recognised in
policy liabilities
1,367,887
1,405,415
47,001
121,986
(27,516)
(30,785)
220,723
261,105
(389,027)
(389,834)
Closing gross life investment policy liabilities
1,219,068
1,367,887
life insurance policy liabilities
Opening gross life insurance policy liabilities
Movement in outstanding claims
Decrease in life insurance policy liabilities reflected in the
income statement
Closing gross life insurance policy liabilities
total gross policy liabilities
Reinsurers’ share of life insurance policy liabilities
Opening balance
Movement in outstanding reinsurance
Decrease / (increase) in reinsurance assets reflected in the
income statement
Closing balance
Net policy liabilities at balance date
Current
Non-current
(62,728)
(1,279)
(19,680)
(62,918)
753
(563)
(83,687)
(62,728)
1,135,381
1,305,159
(2,447)
(2,015)
347
199
(664)
232
(1,901)
(2,447)
1,133,480
1,302,712
1,217,081
1,369,587
(83,601)
(66,875)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Included in life investment policy liabilities are contracts for which there is a guarantee that the unit price will not fall.
The amount of the gross policy liabilities for such contracts is $151.9 million (2011: $134.3 million).
87
ClearView annual report 2012
26 Policy liabilities continued
(b) Components of net life insurance policy liabilities
Future policy benefits
Future expenses and commissions
Less future revenues
Best estimate liability
Present value of future planned profit margins
Net life insurance policy liabilities
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
150,680
48,352
157,123
44,524
(409,744)
(379,253)
(210,712)
(177,606)
125,124
(85,588)
112,431
(65,175)
-
-
-
-
-
-
-
-
-
-
-
-
(c) disclosures on asset restrictions, managed assets and trustee activities
Restrictions on assets
Investments held in the life statutory funds (funds) can only be used within the restrictions imposed under the Life
Insurance Act 1995. The main restrictions are that the assets in a fund can only be used to meet the liabilities and expenses
of that fund, to acquire investments to further the business of the fund or as a distribution when solvency and capital
adequacy requirements are met for that fund. The shareholder can only receive a distribution from a fund if the capital
adequacy requirements continue to be met after the distribution.
27 Issued capital
issued and fully paid ordinary shares
Balance at the beginning of the financial year
Balance at the end of the financial year
executive share plan
Balance at the beginning of the year
Shares granted under executive share plan (note 28)
Executive Balance at the end of the year
2012
No. oF sHaRes
2012
$’000
2011
No. oF sHaRes
CompaNy
2011
$’000
409,312,192
276,565
409,312,192
409,312,192
276,565
409,312,192
276,565
276,565
20,650,000
10,475,000
31,125,000
-
-
-
17,650,000
3,000,000
20,650,000
-
-
-
In accordance with AASB 2, Share-Based Payments the shares issued under the executive share plan are treated as options
and are accounted for as set out in note 3(w).
The Company does not have a limited amount of authorised capital and issued shares do not have a par value.
Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
88
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
28 Share-based payments
ClearView operates the ClearView Executive Share Plan
(ESP or Plan). The ownership-based compensation scheme
allows participation of executives, senior employees and
contractor participants of the Group. In November 2011,
the ESP rules were extended to allow financial advisers
(as contractor participants) to participate in the Plan and
to make Non-executive Directors ineligible to participate.
(a) details of the esp
objectives
The objective of the ESP is to assist in the recruitment of highly
skilled individuals and successful financial advisers and to
reward, retain and motivate eligible employees (which, as
defined in the ESP Rules, may include employee participants
and contractor participants) (eligible employees) of the
Company and its associated bodies corporate.
Through participation in an ownership type arrangement,
experienced and successful advisers are offered a direct
equity interest in ClearView through participation in the ESP.
offer
under the ESP, the Board may invite Eligible Employees
to participate in an offer (offer) of fully paid ordinary
shares in ClearView (shares), subject to the terms of
conditions of the ESP.
Consideration
Each Share is issued at a price to be determined by the
Board prior to making an Offer and this price is set out in the
invitation (invitation) to Eligible Employees to participate
in the ESP. This price may be the market price of a share
(as defined in the ESP Rules) on the date of the Invitation.
limits on issue of shares
Shares may not be offered under the ESP to an Eligible
Employee if that Eligible Employee would hold, after the
issue of the Shares, an interest in more than 5% of the
issued Shares or be able to control the right to vote more
than 5% of the votes that might be cast at a general
meeting of ClearView.
Further, no Invitation can be made to an Eligible Employee
if the total number of Shares issued under the ESP, and
Shares issued during the past five (5) years under any
executive share scheme of the Company, exceeds six per
cent (6%) of the total number of issued Shares of the
Company, at the time the Invitation is made, provided that
an Invitation can be made where that limit is exceeded
if the Invitation:
• Is made only to an Eligible Employee who will become
a contractor participant if the Invitation is accepted; and
• Will not, if accepted, result in the total number of Shares
on issue under this Plan, exceeding ten percent (10%) of
the total number of issued Shares of the Company, at the
time the Invitation is made.
Financial assistance
The Company may provide financial assistance to an
Eligible Employee for the purposes of subscribing for Shares
under the ESP. The financial assistance will be a limited
recourse loan equal to the purchase value of the Shares,
repayable within 60 days after the 5th anniversary of the
grant of the financial assistance. The financial assistance
will become immediately repayable in the event of certain
“disqualifying circumstances” including failure to meet
performance or vesting conditions, cessation of the
employee participant’s employment in circumstances
defined in the ESP Rules or termination of the contractor
participant’s contract with a Group Company for the
provision of services. For employee participants, the
financial assistance is secured over the Shares and rights
attached to the Shares.
The interest rate on the financial assistance is the interest
rate specified in the Invitation (if any). If no interest rate
is specified in the Invitation the interest rate will be the
Reserve Bank of Australia cash rate plus a margin of 25
basis points per annum, calculated annually. Interest is
capitalised and treated as part of the limited recourse
principal, except that after tax dividends on Shares issued
under the ESP will be applied towards reduction of the loan.
Rights
Shares issued under the ESP will rank equally with all other
issued Shares even if subject to a holding lock.
Quotation
The Company will apply to the ASX for official quotation
of shares issued under the ESP.
89
ClearView annual report 2012 28 Share-based payments continued
Restrictions
The Shares granted under the ESP to participants will be
subject to a holding lock restricting the holder from dealing
with the shares. This holding lock will cease to have effect if:
a.
The Board accepts a disposal request (as defined
in the ESP Rules) (disposal Request);
The amount payable by these employee participants
to ClearView following such a disposal is the amount
outstanding in relation to the financial assistance, including
accrued interest. The employee participants may retain any
surplus proceeds.
The above provisions concerning change of control
apply only to employee participants and not contractor
participants under the ESP.
b. 5 years have passed from the Acquisition Date; or
(b) proposed issues of shares under the esp
As outlined above, it is part of ClearView’s business strategy
to expand its financial advice and distribution capabilities
by recruiting financial advisers to its dealer group and
establishing distribution agreements with third party dealer
groups, including financial advisers.
As announced to ASX on 22 February 2012 in the release
of ClearView’s half year results, ClearView has previously
approved the allocation of up to 4% of its share capital
to eligible advisers joining the ClearView dealer group.
At the time of announcement, this represented a total
of 17,617,488 Shares.
As at the date of this Report, 11,725,000 Shares have been
issued under the ESP to advisers that joined ClearView’s
dealer group since 1 January 2012. Accordingly, this leaves
a total of a further 5,892,488 Shares that may be issued by
ClearView within the 4% cap.
administration of the esp
The ESP is administered by the Board. The Board may make
rules and regulations for its operation that are consistent
with the rules of the ESP. The Company pays all costs
and expenses of operating the ESP. Employees are liable
for any brokerage and tax payable associated with their
participation in the ESP.
amendment of the esp
Subject to the ASX Listing Rules and its undertakings to
individual employees in respect of issued shares, the Board
may at any time amend any provision of the rules of the ESP.
termination of the esp
The Board may resolve at any time to terminate, suspend
or reinstate the operation of the ESP for the issue of shares
in future.
c. If the participant:
i. is an employee participant, their employment with
the Group ceases, or
ii. is a contractor participant, their contractor
agreement is terminated; or
d. The ESP is terminated, or
e. The holding lock period otherwise ceases,
provided that the financial assistance and any interest that
has accrued has been repaid.
The holding lock is imposed through the share registry
and in accordance with the ASX Listing Rules. Participants
will not be able to sell their shares on ASX or have an
off-market transfer registered (and are also otherwise
prohibited from dealing in the shares) while the holding
lock is in place.
Change of control
under the ESP Rules, all performance and vesting
conditions in relation to Shares held by an Eligible Employee
who is an employee participant are deemed to have been
satisfied upon a change of control. A change of control is
defined under the ESP Rules as being when an acquirer and
its related bodies corporate holds more than 50% of the
Shares in ClearView.
As the performance and vesting conditions are deemed
to have been met, such employee participants are entitled
under the ESP Rules to make a Disposal Request. The
holding lock applicable to their Shares will cease to have
effect upon the Board (in its absolute discretion) accepting
the Disposal Request. ClearView must then dispose of these
Shares on behalf of the employee participant in one or
more of the following ways (in the discretion of the Board):
• reallocate the Shares to give effect to acquisitions
by other Eligible Employees under the ESP;
• sell to ClearView in accordance with buy-back provisions
of the Corporations Act; or
• offer or sell to buyers on ASX.
90
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
share-based payment arrangements
The following share-based payment arrangements were in existence during the current and comparative reporting periods:
sHaRe seRies
NumBeR
GRaNt date
expiRy date
FaiR value
at exeRCise
pRiCe $
FaiR value at
GRaNt date $
Series 5 – 16 April 2008 Issue1
Series 6 – 30 June 2008 Issue
Series 7 – 29 September 2009 Issue2
Series 8 – 8 October 2009 Issue1
Series 9 – 28 October 2009 Issue3
Series 10 – 25 June 2010 Issue
Series 11 – 25 June 2010 Issue
Series 12 – 25 June 2010 Issue
Series 13 – 25 June 2010 Issue
Series 14 – 1 November 2010 Issue4
Series 15 – 18 August 2011 Issue
Series 16 – 6 October 2011 Issue
Series 17 – 1 March 2012 Issue
Series 18 – 1 March 2012 Issue
Series 19 – 3 April 2012 Issue
Series 20 – 3 April 2012 Issue
Series 21 – 25 May 2012 Issue
Series 22 – 29 June 2012 Issue
1,000,000
16/04/2008
16/04/2013
500,000
30/06/2008
30/06/2013
3,500,000
2,000,000
29/09/2009
29/09/2014
08/10/2009
08/10/2014
250,000
28/10/2009
28/10/2014
2,000,000
4,000,000
4,000,000
25/06/2010
26/03/2015
25/06/2010
26/03/2015
25/06/2010
26/03/2015
400,000
25/06/2010
01/06/2015
3,000,000
3,000,000
3,950,000
2,150,000
2,500,000
600,000
700,000
2,325,000
1,000,000
25/10/2010
01/10/2015
01/07/2011
01/07/2016
01/09/2011
01/09/2016
01/03/2012
01/03/2017
10/02/2012
10/02/2017
15/03/2012
15/03/2017
03/04/2012
03/04/2017
07/05/2012
07/05/2017
29/06/2012
29/06/2017
0.60
0.59
0.49
0.49
0.50
0.50
0.58
0.65
0.53
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.10
0.10
0.07
0.07
0.07
0.11
0.08
0.06
0.10
0.07
0.10
0.10
0.09
0.12
0.12
0.13
0.13
0.13
sHaRe seRies
type oF aRaNGemeNt
Series 5 – 16 April 2008 Issue1
Shares reallocated to Series 15
Series 6 – 30 June 2008 Issue
Series 7 – 29 September 20092
Series 8 – 8 October 2009 Issue1
KMP
KMP
and Senior Management
Shares reallocated to Series 15
Series 9 – 28 October 2009 Issue3
Shares reallocated to Series 16
FiRst
vestiNG date
FiNal
vestiNG date
Shares
reallocated
Shares
reallocated
30/06/2008
30/06/2013
23/10/2009
29/09/2014
Shares
reallocated
Shares
reallocated
Shares
reallocated
Shares
reallocated
26/03/2011
26/03/2015
26/03/2012
26/03/2015
26/03/2013
26/03/2015
0 1/06/2013
01/06/2015
01/10/2013
01/10/2015
01/07/2014
01/07/2016
01/09/2014
01/09/2016
01/03/2015
01/03/2017
Managing Director
Managing Director
Managing Director
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management
Contractor Participants
10/02/2015
10/02/2017
Contractor Participants
15/03/2015
15/03/2017
Contractor Participants
03/04/2015
03/04/2017
Contractor Participants
07/05/2015
07/05/2017
Contractor Participants
29/06/2015
29/06/2017
Series 10 – 25 June 2010 Issue
Series 11 – 25 June 2010 Issue
Series 12 – 25 June 2010 Issue
Series 13 – 25 June 2010 Issue
Series 14 – 1 November 2010 Issue4
Series 15 – 18 August 2011 Issue
Series 16 – 6 October 2011 Issue
Series 17 – 1 March 2012 Issue
Series 18 – 1 March 2012 Issue
Series 19 – 3 April 2012 Issue
Series 20 – 3 April 2012 Issue
Series 21 – 25 May 2012 Issue
Series 22 – 29 June 2012 Issue
1 These shares were reallocated to senior management and formed part of Series 15
2 500,000 shares were reallocated to senior management and formed part of Series 16
3 These shares were reallocated to senior management and formed part of Series 16
4 2,000,000 shares were reallocated to senior management and formed part of Series 17 and Series 22
91
ClearView annual report 2012 28 Share-based payments continued
iNputs iNto tHe model
seRies 5
seRies 6
seRies 7
seRies 8
seRies 9
Grant date share price ($)
Anticipated vesting price ($)
Expected volatility (%)
Anticipated option life (years)
0.60
0.60
24.12
3.00
0.59
0.59
25.26
3.00
0.49
0.55
30.24
1.75
0.49
0.55
30.43
1.73
0.50
0.62
25.64
2.95
iNputs iNto tHe model
seRies 10
seRies 11
seRies 12
seRies 13
seRies 14
Grant date share price ($)
Anticipated vesting price ($)
Expected volatility (%)
Anticipated option life (years)
0.50
0.57
28.78
2.75
0.58
0.66
28.78
2.75
0.65
0.74
28.78
2.75
0.53
0.61
28.78
2.94
0.50
0.59
29.71
2.94
iNputs iNto tHe model
seRies 15
seRies 16
seRies 17
seRies 18
seRies 19
Grant date share price ($)
Anticipated vesting price ($)
Expected volatility (%)
Anticipated option life (years)
iNputs iNto tHe model
Grant date share price ($)
Anticipated vesting price ($)
Expected volatility (%)
Anticipated option life (years)
0.50
0.59
31.49
3.03
0.50
0.57
35.35
2.91
0.50
0.57
36.70
3.00
0.50
0.63
37.06
4.95
0.50
0.64
36.47
4.95
seRies 20
seRies 21
seRies 22
0.50
0.63
36.61
5.00
0.50
0.61
36.94
4.95
0.50
0.60
37.33
5.00
The shares were priced using a binomial option pricing model with volatility based on the historical volatility of the share price.
Balance at the beginning of the financial year
Issued during the financial year
Cancelled during the year
2012
WeiGHted
aveRaGe
exeRCise
pRiCe
NumBeR oF
sHaRes
0.55
0.50
-
17,650,000
3,000,000
-
NumBeR oF
sHaRes
20,650,000
10,475,000
-
Balance at the end of the financial year
31,125,000
0.53
20,650,000
2011
WeiGHted
aveRaGe
exeRCise
pRiCe
0.56
0.50
-
0.55
The above reconciles the outstanding shares granted under the executive share plan at the beginning and end of the
financial year.
shares that were granted in the current year
16.225 million shares were issued during the year of which 5.75 million were reallocated from other series existing
at the beginning of the year. The net shares issued on the ASX were therefore 10.475 million shares.
A further 4.6 million shares have been issued subsequent to year end in accordance with the ASX waiver.
92
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited shares issued to eligible employees
NumBeR oF sHaRes
Series 6
Series 7
Series 9
Series 10
Series 11
Series 12
Series 13
Series 14
Series 15
Series 16
Series 17
Class oF
sHaRes
GRaNt date
Ordinary
30/06/2008
Ordinary
29/09/2009
Ordinary
28/10/2009
Ordinary
25/06/2010
Ordinary
25/06/2010
Ordinary
25/06/2010
Ordinary
25/06/2010
Ordinary
25/10/2010
Ordinary
01/07/2011
Ordinary
01/09/2011
Ordinary
01/03/2012
issue aNd
exeRCise
pRiCe $
FaiR value
atGRaNt
date $
0.589
0.488
0.500
0.500
0.580
0.650
0.533
0.500
0.500
0.500
0.500
0.103
0.065
0.070
0.112
0.081
0.060
0.101
0.067
0.098
0.106
0.091
FiRst
vestiNG date
FiNal
exeRCise date
30/06/2008
30/06/2013
23/10/2009
29/09/2014
28/10/2013
28/10/2014
26/03/2011
26/03/2015
26/03/2012
26/03/2015
26/03/2013
26/03/2015
01/06/2013
01/06/2015
01/10/2013
01/10/2015
01/07/2014
01/07/2016
01/09/2014
01/09/2016
01/03/2015
01/03/2017
shares issued to Contractor participants
seRies
vestiNG CoNditioNs
peRFoRmaNCe
CoNditioNs
Series 18 – 1 March 2012 Issue
Series 19 – 3 April 2012 Issue
Series 20 – 3 April 2012 Issue
Series 21 – 25 May 2012 Issue
Series 22 – 29 June 2012 Issue
Series 23 – 6 August 2012 Issue
4 years and 346 days from the date of issue and
achievement of specific sales target
4 years and 346 days from the date of issue and
achievement of specific sales target
5 years from the date of issue and achievement of specific
sales target
4 years and 347 days from the date of issue and
achievement of specific sales target
5 years from the date of issue and achievement of specific
sales target
5 years from the date of issue and achievement of specific
sales target (issued subsequent to year ending 30 June 2012)
No
No
No
No
No
No
shares that vested in the current period
The vesting conditions in the ESP stipulate that shares issued
in terms of the Plan to employees will automatically vest
with a change of control of the Company. The change in
control provisions do not apply to shares issued in terms
of the plan to contractor participants. Effective 23 October
2009, GPG obtained control of ClearView which resulted in
accelerating the vesting of the shares in the ESP at that time,
including Series 7 which had been issued prior to the change
of control. The shares issued subsequent to this, were issued
after the change of control and thus the normal vesting
conditions of the ESP still apply. On completion of the capital
raising GPG reduced its holding below 50%.
The first and second tranches of 2 and 4 million shares
respectively, issued to the managing director vested in the
prior and current year in accordance with his employment
contract. No other shares vested during the current
financial year.
shares that were cancelled during the year
No shares were cancelled during the year.
93
ClearView annual report 2012 29 Shares granted under
the Executive Share Plans
executive share plan
In accordance with the provisions of the ESP, as at
30 June 2012, executives, senior employees and contractor
participants have acquired 31,125,000 (2011: 20,650,000)
ordinary shares that will vest if certain conditions are met.
Shares granted under the ESP carry rights to dividends
and voting rights. Financial assistance amounting to
$17,410,584 (2011: $12,001,456) was made available
to executives, senior employees and contractor participants
to fund the acquisition of shares under the ESP. For details
of the ESP refer to note 28.
30 Provision for deferred consideration
Provision for Deferred Consideration – Current
Provision for Deferred Consideration – Non-current
Total
31 Dividends
Fully paid ordinary shares
Interim dividend per share: nil cents (2011: nil cents)
Final dividend per share: 1.8 cents (2011: 1.8 cents)
Total
CoNsolidated
2011
$’000
653
33
686
CoNsolidated
2011
$’000
-
7,739
7,739
2012
$’000
28
-
28
2012
$’000
-
8,011
8,011
CompaNy
2011
$’000
-
-
-
CompaNy
2011
$’000
-
7,739
7,739
2012
$’000
-
-
-
2012
$’000
-
8,011
8,011
The Directors declared that there will be a final fully franked dividend paid for the year ended 30 June 2012 of
$8.011 million (2011 : $7.739 million).
94
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
32 Reconciliation of net profit for the year to net cash flows from
operating activities
Net profit for the year
Fair value losses / (gains) on financial assets at fair value
through profit and loss
Realised gains on disposal of securities (shareholder)
unrealised gains on investments (shareholder)
Loss on disposal of property, plant and equipment
Depreciation on property plant and equipment
Amortisation of intangibles
Interest and dividend received from controlled entity
Other non cash items
Reinvested trust distribution income
Gain from associate
Movements in liabilities to non-controlling interest
in controlled unit trust
Employee share plan expense
Increase in receivables
Decrease in deferred tax asset
Decrease in payables
Decrease in policy liabilities
Increase / (decrease) in current tax liability
CoNsolidated
2011
$’000
8,665
(89,093)
(27)
(3)
-
433
7,401
-
-
(3,960)
(21)
12,612
530
(2,441)
5,353
(2,905)
(37,854)
(1,554)
2012
$’000
22,336
2,778
-
(40)
458
662
7,018
-
465
(17,227)
-
1,529
502
(445)
10,178
(3,333)
(168,300)
544
Net cash (utilised) / generated by operating activities
(142,875)
(102,864)
CompaNy
2011
$’000
42,513
-
(27)
(3)
-
-
-
2012
$’000
5,072
-
-
(40)
-
-
-
(4,500)
(43,500)
-
(1,050)
-
-
502
(4,825)
7,665
(597)
-
544
2,771
-
-
-
-
530
(2,762)
3,741
(101)
-
(1,711)
(1,320)
95
ClearView annual report 2012
33 Subsidiaries
Name oF eNtity
parent entity
ClearView Wealth Limited
subsidiaries
ClearView Group Holdings Pty Limited
ClearView Life Assurance Limited
ClearView Financial Management Limited
ClearView Life Nominees Pty Limited
ClearView Administration Services Pty Limited
ClearView Financial Advice Pty Limited
(formerly ComCorp Financial Advice Pty Limited)
Affiliate Financial Planning Pty Limited
Controlled unit trusts
International Fixed Interest Fund
Fund of Funds Australian Equity Fund
Bond Fund
Fund of Funds International Equity Fund
Property Fund
Money Market Fund
Infrastructure Fund
Emerging Markets Fund
oWNeRsHip iNteRest
CouNtRy oF
iNCoRpoRatioN
2012
%
2011
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
95
81
92
93
92
95
92
91
100
100
100
100
100
100
100
95
81
92
93
93
94
93
92
ClearView Administration Services Pty Limited was incorporated to centralise the administrative responsibilities of the
Group which include salary disbursements and settling all non-directly attributable overhead expenditure. ClearView
Administration Services Pty Limited recoups all expenditure by virtue of a management fee from the various group
companies and operates on a cost recovery basis.
96
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited 34 Investment in associate
Investment in associate
Reconciliation of investment in associate:
Balance at the beginning of the financial year
Share of profit / (loss) for the year
Balance at the end of the financial year
Name oF eNtity
associates
Berry Financial Services Pty Ltd
CoNsolidated
2011
$’000
163
142
21
163
2012
$’000
163
163
-
163
CompaNy
2011
$’000
-
-
-
-
2012
$’000
-
-
-
-
oWNeRsHip iNteRest
CouNtRy oF
iNCoRpoRatioN
pRiNCipal
aCtivity
2012
%
2011
%
Australia
Financial
Planning
40
40
Summarised financial information in respect of the Group’s associate is set out below:
Financial position
Total assets
Total liabilities
Net assets
Group’s share of associate’s net assets
Financial performance
Total revenue
Total profit for the year
Group’s share of associate’s profit
dividends received from associate
Nil
2012
$’000
47
148
(101)
(40)
222
1
-
2011
$’000
40
150
(110)
(44)
282
52
21
Contingent liabilities and capital commitments
There are no capital commitments and other expenditure commitments of associates and jointly controlled entities.
97
ClearView annual report 2012
35 Related party transactions
(a) equity interests in related parties
equity interests in subsidiaries
Details of the percentage of ordinary shares held
in subsidiaries are disclosed in note 33 to the
financial statements.
(b) transactions with Kmp
Kmp compensation
Details of KMP and Director’s compensation are disclosed
in the Directors’ Report on pages 23 to 25 of the annual
report. The aggregate compensation made to KMP of the
Company and the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share based payments
Total
(c) directors and Kmp equity holdings
CoNsolidated
2012
$
2011
$
3,378,545
3,539,355
226,955
378,171
625,048
487,007
3,983,671
4,651,410
Fully paid ordinary shares of ClearView Wealth Limited (including those held under the ESP owned by the Directors and
KMP are outlined below:
R
e
H
t
o
t
e
N
.
o
N
s
e
G
N
a
H
C
F
o
d
N
e
e
C
N
a
l
a
B
.
o
N
R
a
e
y
l
a
i
C
N
a
N
i
F
d
l
e
H
e
C
N
a
l
a
B
.
o
N
s
N
o
i
t
i
d
N
o
C
G
N
i
t
s
e
v
o
t
t
C
e
J
B
u
s
(250,000)
300,000
-
-
100,000
5,606,766
727,035
1,527,035
-
-
-
-
d
e
t
s
e
v
e
C
N
a
l
a
B
.
o
N
d
N
e
R
a
e
y
t
a
-
-
-
-
.
o
N
e
l
B
a
s
i
C
R
e
x
e
t
e
y
t
o
N
t
u
B
d
e
t
s
e
v
-
-
-
-
-
-
-
12,000,000
4,000,000
6,000,000
6,000,000
2,000,000
2,000,000
1,500,000
-
1,500,000
1,500,000
55,000
1,055,000
1,000,000
-
-
-
-
-
1,500,000
-
1,500,000
1,500,000
2,075,000
2,000,000
1,000,000
1,000,000
-
-
-
-
d
N
a
d
e
t
s
e
v
.
o
N
e
l
B
a
s
i
C
R
e
x
e
-
-
-
-
-
-
-
-
-
-
-
t
C
e
J
B
u
s
s
e
R
a
H
s
G
N
i
t
s
e
v
o
t
.
o
N
s
N
o
i
t
i
d
N
o
C
t
o
N
s
e
R
a
H
s
.
o
N
s
N
o
i
t
i
d
N
o
C
G
N
i
t
s
e
v
o
t
t
C
e
J
B
u
s
t
a
e
C
N
a
l
a
B
F
o
G
N
i
N
N
i
G
e
B
.
o
N
R
a
e
y
l
a
i
C
N
a
N
i
F
-
-
-
-
300,000
550,000
100,000
100,000
5,606,766
5,606,766
1,527,035
800,000
2012
R Kellerman
D Goodsall
J Murphy
S Thomas
S Swanson
4,000,000
8,000,000
12,000,000
s
a
d
e
t
N
a
R
G
.
o
N
N
o
i
t
a
s
N
e
p
m
o
C
-
-
-
-
-
B Odes
A Chiert
2,000,000
-
-
2,000,000
-
1,500,000
1,500,000
C Levinthal
1,000,000
55,000
1,000,000
J McLaughlin
-
1,500,000
1,500,000
G Martin
2,000,000
75,000
75,000
2,000,000
C Robson
1,000,000
-
-
1,000,000
98
-
-
-
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
R
e
H
t
o
t
e
N
.
o
N
s
e
G
N
a
H
C
F
o
d
N
e
e
C
N
a
l
a
B
.
o
N
R
a
e
y
l
a
i
C
N
a
N
i
F
d
l
e
H
e
C
N
a
l
a
B
.
o
N
s
N
o
i
t
i
d
N
o
C
G
N
i
t
s
e
v
o
t
t
C
e
J
B
u
s
98,400
550,000
250,000
-
100,000
5,606,766
5,606,766
100,000
239,682
800,000
800,000
-
-
-
-
d
e
t
s
e
v
e
C
N
a
l
a
B
.
o
N
d
N
e
R
a
e
y
t
a
-
-
-
-
-
.
o
N
e
l
B
a
s
i
C
R
e
x
e
t
e
y
t
o
N
t
u
B
d
e
t
s
e
v
-
-
-
-
-
-
-
-
-
-
12,000,000
8,000,000
2,000,000
2,000,000
3,000,000
1,500,000
-
-
3,000,000
3,000,000
1,500,000
1,500,000
1,000,000
1,000,000
-
-
1,500,000
75,000
75,000
-
-
-
-
-
1,500,000
1,500,000
-
-
-
-
t
C
e
J
B
u
s
s
e
R
a
H
s
G
N
i
t
s
e
v
o
t
.
o
N
s
N
o
i
t
i
d
N
o
C
t
o
N
s
e
R
a
H
s
.
o
N
s
N
o
i
t
i
d
N
o
C
G
N
i
t
s
e
v
o
t
t
C
e
J
B
u
s
t
a
e
C
N
a
l
a
B
F
o
G
N
i
N
N
i
G
e
B
.
o
N
R
a
e
y
l
a
i
C
N
a
N
i
F
2011
R Kellerman
250,000
201,600
451,600
D Goodsall
J Murphy
P Wade
S Thomas
-
-
-
-
-
-
100,000
-
139,682
139,682
-
-
S Swanson
8,000,000
4,000,000
12,000,000
A Hutchison
A Chiert
-
-
3,000,000
3,000,000
1,500,000
1,500,000
s
a
d
e
t
N
a
R
G
.
o
N
N
o
i
t
a
s
N
e
p
m
o
C
-
-
-
-
-
-
-
-
C Levinthal
1,000,000
-
-
1,000,000
J McLaughlin
G Martin
C Robson
-
-
-
1,500,000
1,500,000
75,000
-
-
-
-
-
-
All shares granted as compensation to KMP were made
in accordance with the provisions of the ESP.
(d) transactions between the Group and its
related parties
Other related parties include:
• Entities with significant influence over the Group
• Associates; and
• Subsidiaries.
Balances and transaction between the Company and
its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not
disclosed in this note. Details of transactions between the
Group and other related parties during the financial year
ended 30 June 2012 are disclosed below:
• Berry Investments Pty Limited charged ClearView
Financial Advice Pty Limited a management fee
of $80,000 (2011: nil) in respect of services provided
to ClearView Financial Advice.
d
N
a
d
e
t
s
e
v
.
o
N
e
l
B
a
s
i
C
R
e
x
e
-
-
-
-
-
-
-
-
-
-
-
-
99
ClearView annual report 2012
35 Related party transactions continued
(e) outstanding balances between the group and its related parties
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
H
t
l
a
e
W
$
e
F
i
l
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
e
C
N
a
R
u
s
s
a
$
l
a
i
C
N
a
N
i
F
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
t
N
e
m
e
G
a
N
a
m
$
l
a
i
C
N
a
N
i
F
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
y
t
p
e
C
i
v
d
a
$
N
i
m
d
a
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
y
t
p
s
e
C
i
v
R
e
s
$
e
F
i
l
W
e
i
v
R
a
e
l
C
d
e
t
i
m
i
l
y
t
p
s
e
e
N
i
m
o
N
$
total
$
2012
ClearView Wealth Limited
-
11,146,139
139,863
(315,293)
383,196
579
11,354,484
ClearView Life Assurance Limited
(11,146,139)
-
(142,524)
(1,289,282)
(1,852,851)
1,000
(14,429,796)
ClearView Financial Management Limited
(139,863)
142,524
-
(40,338)
(36,700)
4,590
(69,787)
-
(149,062)
(646)
1,495,205
ClearView Financial Advice Pty Limited
315,293
1,289,282
ClearView Admin Services Pty Limited
(383,196)
1,852,851
ClearView Life Nominees Pty Limited
(579)
(1,000)
40,338
36,700
(4,590)
149,062
646
2011
$
$
$
$
-
-
$
ClearView Wealth Limited
-
5,212,877
(636,386)
(219,561)
1,021,799
ClearView Life Assurance Limited
(5,212,877)
-
(1,354,416)
-
(1,676,429)
ClearView Financial Management Limited
636,386
1,354,416
-
(2,385)
(2,179,445)
ClearView Financial Advice Pty Limited
219,561
-
2,385
ClearView Admin Services Pty Limited
(1,021,799)
1,676,429
2,179,445
375,544
ClearView Life Nominees Pty Limited
-
-
-
-
-
(375,544)
-
-
-
1,655,417
-
$
-
-
-
-
-
(5,523)
$
5,378,729
(8,243,722)
(191,028)
(153,598)
3,209,619
-
-
(f) transactions other than financial instrument transactions
No director has entered into a material contract with the Company or the ClearView Group since the end of the
previous financial year and there were no material contracts involving directors’ interests existing at year end.
Other transactions with directors, executives and their related parties are conducted on arm’s length terms and
conditions, and are deemed trivial or domestic in nature. These transactions are in the nature of personal investment,
life insurance and superannuation.
loans to related parties
Loans to KMP in respect of ESP Shares
Loans to Associated Companies
Total
30 JuNe 2012
$
30 JuNe 2011
$
11,188,800
8,386,037
70,000
70,000
11,258,800
8,456,037
100
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
36 Financial instruments
(a) management of financial instruments
The financial assets of the Group are managed by specialist
investment managers who are required to invest the
assets allocated in accordance with directions from the
Board. BNP Paribas acts as master custodian on behalf
of the Group and, as such, provides services including
physical custody and safekeeping of assets, settlement
of trades, collection of dividends and accounting for
investment transactions. Daily operating bank accounts
and term deposits are managed within the Group by
the internal management and finance department.
(b) significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis
of measurement and the basis on which revenues and
expenses are recognised, in respect of each class of
financial asset and financial liability are disclosed in notes
3(o) and 3(p) to the financial statements respectively.
Financial assets
Investment in group companies
Available for sale assets
Cash and cash equivalents
Fixed interest deposits
Life insurance investment assets
Reinsurers’ share of life insuarnce Policy liabilities
Loans and receivables
Total
Financial liabilities
Policyholder liabilities
Payables
Current tax liabilities
Provisions
Provisions for deferred consideration
Total
(c) Capital risk management
The Group maintains capital to protect customers,
creditors and shareholders against unexpected losses
to a level that is consistent with the Group’s risk appetite.
The Group’s capital structure consists of ordinary equity
comprising issued capital, retained earnings and reserves
(as detailed in notes 12 and 27). The capital structure
remains unchanged from the previous financial period.
(d) Fair value of financial instruments
The fair values of financial assets and financial liabilities
are determined in accordance with the fair value hierarchy
detailed in note 5.
(e) Categories of financial instruments
The Company has investments in the following categories
of financial assets and liabilities:
CoNsolidated
2011
$’000
-
295
2012
$’000
-
335
193,371
91,991
185,822
22,021
1,178,505
1,417,363
1,901
9,591
2,447
7,205
1,475,694
1,635,153
1,133,480
1,302,712
12,656
11,569
544
2,724
28
-
5,070
686
CompaNy
2011
$’000
2012
$’000
225,542
220,041
335
11,820
21,093
-
-
11,676
270,466
-
459
544
81
-
295
16,240
21,392
-
-
6,851
264,819
-
1,038
-
100
-
1,149,432
1,320,037
1,084
1,138
These financial assets and liabilities are recognised in accordance with the accounting policies detailed in note 3(o) and 3(p)
to the financial statements respectively.
101
ClearView annual report 2012
36 Financial instruments continued
(f) Financial risk management objectives
The primary asset risks borne by the Company relate to
the financial assets of the Company and its operating
subsidiaries excluding those in the non-guaranteed
investment linked funds in ClearView Life’s statutory fund
No.4 (referred to below as ClearView assets). The primary
financial risks related to the financial assets in the non-
guaranteed investment linked funds in ClearView Life’s
statutory fund No.4 are borne by policyholders as the
investment performance on those assets is passed through,
in full, to the policyholders (referred to below as Policyholder
assets). Nonetheless, the Company has a secondary
exposure to the Policyholder assets and off-balance sheet
client funds, via the impact on the fees charged by the
Company which vary with the level of Policyholder and client
funds under management and under administration, as well
as related reputational exposure.
(g) market risk
Market risk is the risk that financial assets will be affected
by changes in interest rates, foreign exchange rates and
equity prices.
interest rate risk
Interest rate risk arises on ClearView’s assets which are
invested in fixed interest funds and cash. Interest rate risk
is managed by the Company through:
• Maintaining the level of interest rate exposure within the
tolerances set by the Board in the RMS;
• Investing ClearView’s assets in accordance with the Board
approved Investment Policy and Guidelines; and
• By holding capital reserves in accordance with the Company’s
CMP with respect to the residual interest rate risk exposure
retained, in addition to the regulatory capital reserves held
within ClearView Life in respect of interest rate risk.
equity price risk
Equity price risk is the risk that the fair value of investments
in equities decreases or increases as a result of changes
in market prices, whether those changes are caused by
factors specific to the individual share price or factors
affecting all equity instruments in the market. As at
30 June 2012, ClearView’s assets were not exposed to
equity price risk pre June 2012 as the only listed investment
that the Group held directly, Nexbis Limited, announced on
5 July 2012 that a Scheme of Arrangement had been
implemented following approval of Nexbis sharholders
at the Scheme meeting held on 18 June 2012 and by
the Federal Court at Australia on 22 June 2012.
Accordingly, on 2 July 2012 the Group received $0.10
cash per fully paid share.
In contrast to this, the Policyholder assets and other client
funds under management and under administration,
involve significant investment in equities. As noted above,
the Policyholder asset risks are borne by the policyholders.
The Company is exposed to secondary risks on its
management and advice fees that are driven by the total
funds under management and administration, as well
as reputational risks from poor investment returns.
The investment of the Policyholder assets and client
moneys controlled by ClearView is undertaken in
accordance with the Investment Policy and Guidelines
approved by the Board, which inter alia stipulates
the investment allocation mix, the portfolio’s risk
characteristics, management response plans and the
use of derivatives.
To the extent required, capital reserve are held
in accordance with the CMP with respect to the
Company’s residual fee risk exposure.
eFFeCt oN
opeRatiNG pRoFit
eFFeCt oN seCuRities
eFFeCt oN
opeRatiNG pRoFit
eFFeCt oN seCuRities
CoNsolidated
CoNsolidated
CompaNy
CompaNy
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
-
±17
-
±17
-
±17
-
±17
equity price risk -
0% change (2011: 9%)
Australia
102
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited Credit risk arising from other third party transactions,
such as reinsurance recovery exposures and exposure
to outsource service providers, are assessed prior to
entering into financial transactions with those parties, are
approved by the Board where material, and are monitored
by appropriate mechanisms on an ongoing basis (e.g. a
quarterly monitoring and compliance reporting process
in respect of the Company’s outsourced custodian).
The Company does not expect any of its material
counterparties to fail to meet their obligations and does
not require collateral or other security to support these
credit risk exposures.
Specific capital reserves are held against credit risk under
the regulatory solvency and capital adequacy standards
of ClearView Life, with credit risk also considered with the
Company’s CMP reserves.
The Group does have significant credit risk exposure
to counterparties but these counterparties have a high
credit rating. The table below shows the maximum
exposure to credit risk at the reporting date. It is the
opinion of the Board that the carrying amounts of these
financial assets represent the maximum credit risk
exposure at the balance sheet date. The table reflects
the credit risk exposure facing the Group.
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
CompaNy
2011
$’000
733,557
765,876
32,913
37,632
29,098
9,610
39,689
17,436
-
-
-
-
772,265
823,001
32,913
37,632
In the prior year, the methodology used to prepare the
sensitivity analysis was to determine the beta of the
listed investment (0.89) and multiply a 9% movement
in the value of the investment by the portfolio beta.
(h) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to
the Group. Credit risk exposures arising from investment
activities are assessed by the Company’s internal
investment management committee (the ClearView
Investment Committee (CIC) appointed by the Board) prior
to investing ClearView assets into any significant financial
asset. The ongoing credit standing of material investments
are monitored by the CIC, with the CIC charged to maintain
the credit quality of ClearView assets within the Board’s
investment guidelines.
The large majority of debt assets invested in by the
Company on behalf of policyholders and clients (including
Policyholder assets) are managed under mandates with
appointed funds managers. Those mandates include
credit rating, diversification and maximum counterparty
exposure rules and standards that are to be met. The funds
managers adherence to those requirements are subject
to ongoing monitoring by the funds managers, and are
separately monitored by the Company’s custodian. Formal
compliance reporting is monitored monthly by the CIC.
Cash and cash equivalents and debt securities /
fixed interest securities
Rating
AAA to AA-
A+ to A-
BBB+ to BBB-
Credit risk associated with receivables is considered
minimal. The main receivables balance is in relation
to trust distributions, receivables from funds managers
in the financial advice business and for premiums
receivable. Other receivables balances relate predominantly
to management fees from external unit trusts. The
concentration is spread across the various debtors with
no single significant debtor.
103
ClearView annual report 2012
36 Financial instruments continued
(i) liquidity risk
Liquidity risk is primarily the risk that the Company will
encounter difficulty in meeting its obligations due to an
inability to realise some or all of its assets in order to fund
its cash flow needs, including the payment of amounts
to its policyholders and clients. A secondary risk relates
to the risk of the illiquidity of the external (including off
balance sheet) funds its clients invest in, which may result
in restricted fee flows to the Company and/or reputational
damage via association.
The primary risk is controlled through focusing the
Company’s assets, as well as Policyholder assets and the
investment of client funds controlled by the Company, into
assets which are highly marketable and readily convertible
into cash. In addition, the Company maintains suitable
cash holdings at call and an appropriate overdraft facility.
The Company’s cash flow requirements are reviewed and
forecast daily for a 1 week forward period. This assessment
takes into account the timing of expected cash flows,
the likelihood of significant benefit outflows over the short
term and known significant one-off payments. In addition,
the Company ensures that it has cash in excess of the base
level financial requirements of its AFSL license.
under the terms of the Company’s products (issued via
ClearView Life and ClearView Financial Management) the
payment of unit fund redemptions to policyholders and unit
trust investors may be delayed, if necessary, until funds are
available. To date no such delays have been imposed.
The risks in respect of external (third party) funds are
controlled via the Company’s Approved Product List, which
restricts the external funds available for use by the Company’s
advisers and planners to investment platform providers that
are assessed to be reputable and financially sound.
The following tables summarise the realisation profile
of financial assets at the reporting date. There were no
financial assets past due or impaired at the reporting date.
CoNsolidated
less tHaN
3 moNtHs
3 to 6 moNtHs
6 moNtHs
to a yeaR
1 to 5 yeaRs
$’000
3,466
84
597
2,605
908
1,141
35
1,405
10,241
2,155
-
599
2,297
632
1,450
1,034
8,237
$’000
$’000
$’000
-
-
-
-
-
418
34
18
470
4
-
-
-
-
544
190
738
-
-
-
-
-
209
66
36
311
9
-
-
-
-
272
64
345
-
70
-
-
-
133
144
123
470
-
70
-
-
-
181
151
332
total
$’000
3,466
154
597
2,605
908
1,901
279
1,582
11,492
2,168
70
599
2,297
632
2,447
1,439
9,652
2012
Receivables
Amounts from controlled / associated entities
Outstanding life insurance
premiums net of provision
Accrued dividends
Investment income and distribution income
Reinsurance receivable1
Loans
Prepayments
Total
2011
Trade receivables
Loans to associate
Outstanding life insurance
premiums net of provision
Accrued dividends
Investment income and distribution income
Reinsurance receivable1
Prepayments
Total
104
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
2012
Trade receivables
Amounts from controlled / associated entities
Total
2011
Trade receivables
Amounts from controlled / associated entities
Investment income and distribution income
Total
less tHaN
3 moNtHs
3 to 6 moNtHs
6 moNtHs
to a yeaR
1 to 5 yeaRs
$’000
$’000
$’000
$’000
6
11,670
11,676
560
6,235
56
6,851
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Reinsurance receivables are reflected in accordance with the likely settlement of the underlying claims to which they relate.
CompaNy
total
$’000
6
11,670
11,676
560
6,235
56
6,851
The following tables summarise the maturity profile of the
Group and the Company’s financial liabilities all of which
are non-interest bearing. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the company can
be required to pay. The tables include both interest and
principle cash flows.
2012
Payables
Current tax liabilities
Provisions
Provision for
deferred consideration
Total
2011
Payables
Provisions
Provision for deferred
consideration
Total
CoNsolidated
1 to 5 yeaRs
oveR 5 yeaRs
$’000
$’000
1,204
-
1,154
-
-
-
928
-
total
$’000
12,656
544
2,724
28
$’000
377
-
279
-
656
2,358
928
15,952
3 to 6 moNtHs
6 moNtHs
to a yeaR
less tHaN
3 moNtHs
$’000
10,843
-
194
28
11,065
8,410
-
654
$’000
232
544
169
-
945
2,713
100
-
138
2,475
-
308
1,534
32
9,064
2,813
2,613
1,874
-
961
-
961
11,569
5,070
686
17,325
105
ClearView annual report 2012
36 Financial instruments continued
less tHaN
3 moNtHs
3 to 6 moNtHs
6 moNtHs
to a yeaR
1 to 5 yeaRs
oveR 5 yeaRs
$’000
461
-
-
461
1,038
-
1,038
$’000
-
544
81
625
-
100
100
$’000
$’000
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2012
Payables
Current tax liabilities
Provisions
Total
2011
Payables
Provisions
Total
(j) Financing facilities
the Group has access to the following facilities:
Bank Guarantees
– amount used
overdraft and credit
– amount used
– amount unused
CoNsolidated
2012
$’000
2011
$’000
2012
$’000
511
1,103
-
2,000
-
5,250
-
-
-
CompaNy
total
$’000
461
544
81
1,086
1,038
100
1,138
CompaNy
2011
$’000
-
-
-
ClearView Life Assurance Limited has a $2 million overdraft facility with National Australia Bank at a benchmark interest
rate of 10.76% p.a calculated daily. Any overdrawn balance in excess of the overdraft will incur an additional margin of
1.5% p.a above the benchmark interest rate. The bank overdraft is short-term in nature and was unutilised at 30 June 2012.
106
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
interest rate risk management
The Group’s activities expose it to the financial risk of changes
in interest rates. Floating rate instruments expose the Group
to cash flow risk, whereas fixed interest rate instruments
expose the Group to fair value interest rate risk. The Board
monitors the Group’s exposures to interest rate risk.
The tables below detail the Group’s exposure to interest rate
risk at the balance sheet date by the earlier of contractual
maturities or re-pricing.
CoNsolidated
CompaNy
WeiGHted
aveRaGe
iNteRest Rate
less tHaN
3 moNtHs
WeiGHted
aveRaGe
iNteRest Rate
less tHaN
3 moNtHs
2012
%
$’000
%
$’000
Financial assets
Variable interest rate instruments:
Cash and cash equivalents
Fixed interest securities
Total
2011
Financial assets
Variable interest rate instruments:
Cash and cash equivalents
Fixed interest securities
Total
3.73
5.30
5.25
5.99
30,713
91,991
122,704
97,082
22,021
119,103
3.94
5.47
5.47
5.99
11,820
21,093
32,913
16,240
21,392
37,632
interest rate sensitivity analysis for floating rate
financial instruments
The sensitivity analysis below has been determined
based on the Group’s exposure to interest rates at the
reporting date and the stipulated change taking place
at the beginning of the financial year and held constant
throughout the reporting period, in the case of instruments
that have floating interest rates. A 1% (2011: 0.25%)
increase or decrease is used when reporting interest risk
internally to key management personal and represents
management’s assessment of the reasonably possible
change in interest rates.
The following table illustrates the effect for the Group from
possible changes in market risk that were reasonably possible
based on the risk the Group was exposed to at reporting date:
eFFeCt oN
opeRatiNG pRoFit
eFFeCt oN seCuRities
eFFeCt oN
opeRatiNG pRoFit
eFFeCt oN seCuRities
CoNsolidated
CoNsolidated
CompaNy
CompaNy
CHaNGe iN vaRiaBle
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
±1.0% (2011: ±0.25%)
±548
±291
±548
±291
±329
±90
±329
2011
$’000
±90
The Group’s sensitivity to interest rates has increased during
the current period due to the sensitivity analysis being
performed with a higher change in variable. The method used
to prepare the sensitivity analysis has not changed in the year.
Based on the market exposure management believe that the
interest rate variation above is considered appropriate in the
current environment.
Fair value sensitivity analysis for fixed rate
financial instruments
The Group does account for fixed rate financial assets and
liabilities at fair value through profit and loss. Therefore a
change in long term interest rates at reporting date would
affect profit and loss.
107
ClearView annual report 2012
36 Financial instruments continued
(k) Foreign currency risk management
Foreign currency risk is the risk that the market value of
future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Group
undertakes certain investments denominated in foreign
currencies, hence is exposed to the effects of exchange
rate fluctuations. However, the foreign currency risk is
borne by the policyholder and the shareholder has no
exposure to foreign currency.
uSD
GBP
EuR
YEN
CHaNGe iN
aud Relative
to FoReiGN
CuRReNCy
eFFeCt oN Net
assets/iNv
RetuRN ($)
(5%)
(18%)
8%
(6%)
$’000
–
–
–
–
Forward foreign exchange contracts
The Group currently does not make use of forward foreign exchange contracts.
37 Disaggregated information by fund
abbreviated income statement
CleaRvieW liFe assuRaNCe limited (CompaNy)
sHaReHoldeRs
FuNd
statutoRy
FuNd No.1
statutoRy
FuNd No.2
statutoRy
FuNd No.4
austRaliaN NoN-paRtiCipatiNG
$’000
$’000
-
-
-
501
241
742
-
-
-
-
-
40,488
(2,754)
-
1,740
-
39,474
(11,278)
1,400
(19,373)
19,461
385
(37)
1,529
4,565
(108)
-
-
25,881
66,266
(18,487)
(18,354)
6,334
73,660
120,210
(248)
7
-
-
(1,079)
(19,250)
20
-
-
(3,288)
(43,714)
742
(223)
519
29,684
(8,905)
20,779
1,746
(777)
969
10,696
(4,652)
6,044
total
$’000
40,873
(2,791)
27,410
73,072
(11,526)
1,407
(39,702)
19,481
(47,002)
42,868
(14,557)
28,311
2012
Life insurance premium revenue
Outwards reinsurance expense
Fee revenue
Investment revenue
Net fair gains / (losses)
on financial assets at fair value
Net revenue and income
Claims expense
Reinsurance recoveries
Total administration expenses
Change in life insurance policy liabilities
Change in life investment policy liabilities
profit for the year before income tax
Income tax expense
Net profit attributable to members of
Clearview life assurance limited
108
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
abbreviated statement of financial position
CleaRvieW liFe assuRaNCe limited (CompaNy)
sHaReHoldeRs
FuNd
statutoRy
FuNd No.1
statutoRy
FuNd No.2
statutoRy
FuNd No.4
austRaliaN NoN-paRtiCipatiNG
$’000
total
$’000
2012
Investments in controlled unit trusts
Policy liabilities ceded under reinsurance
Other assets
total assets
Gross policy liabilities – Life insurance contracts
Gross policy liabilities –
Investment insurance contracts
Other liabilities
total liabilities
Net assets
shareholder’s retained profits
Opening retained profits
Operating profit
Dividend paid
Shareholder’s retained profits
Shareholder’s capital
total equity
$’000
-
-
11,186
11,186
-
-
189
189
10,997
(2,947)
519
(4,500)
(6,928)
17,925
10,997
-
92,376
1,121,440
1,213,816
1,411
40,899
42,310
490
5,811
-
36,727
1,901
94,623
98,677
1,158,167
1,310,340
(83,735)
48
-
(83,687)
-
91,348
1,127,721
1,219,069
10,661
(73,074)
115,384
63,905
20,779
-
84,684
30,700
115,384
1,330
92,726
5,951
5,320
17,500
1,133,041
1,152,882
25,126
157,458
1,282
969
-
2,251
3,700
5,951
3,482
6,044
-
9,526
15,600
25,126
65,722
28,311
(4,500)
89,533
67,925
157,458
109
ClearView annual report 2012 37 Disaggregated information by fund continued
abbreviated income statement
CleaRvieW liFe assuRaNCe limited (CompaNy)
sHaReHoldeRs
FuNd
statutoRy
FuNd No.1
statutoRy
FuNd No.2
statutoRy
FuNd No.4
austRaliaN NoN-paRtiCipatiNG
$’000
total
$’000
40,303
(3,759)
30,787
75,965
52,291
195,587
(17,575)
3,021
-
-
29,292
69,654
52,152
151,098
-
-
370
(50)
1,495
5,094
(540)
6,369
(1,213)
901
(1,329)
(13)
(20,077)
(34,022)
-
331
(3,481)
(118,505)
(121,986)
1,234
(432)
802
12,516
(3,770)
8,746
25,356
(7,371)
17,985
2011
Life insurance premium revenue
Outwards reinsurance expense
Fee revenue
Investment revenue
Net fair gains / (losses)
on financial assets at fair value
Net revenue and income
Claims expense
Reinsurance recoveries
Total administration expenses
Change in life insurance policy liabilities
Change in life investment policy liabilities
profit for the year before income tax
Income tax expense
Net profit attributable to members
of Clearview life assurance limited
$’000
-
-
-
333
216
549
-
-
(1)
-
-
548
(188)
360
39,933
(3,709)
-
884
463
37,571
(16,362)
2,120
(12,615)
344
-
11,058
(2,981)
8,077
110
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited abbreviated statement of financial position
CleaRvieW liFe assuRaNCe limited (CompaNy)
sHaReHoldeRs
FuNd
statutoRy
FuNd No.1
statutoRy
FuNd No.2
statutoRy
FuNd No.4
austRaliaN NoN-paRtiCipatiNG
$’000
total
$’000
2011
Investments in controlled unit trusts
Policy liabilities ceded under reinsurance
Other assets
total assets
Gross policy liabilities – Life insurance contracts
Gross policy liabilities –
Investment insurance contracts
Other liabilities
total liabilities
Net assets
shareholder’s retained profits
Opening retained profits
Operating profit
Capital transfer between funds
Finalisation of acquisition accounting
Dividend paid
Shareholder’s retained profits
Shareholder’s capital
total equity
$’000
–
–
10,818
10,818
–
–
340
340
10,478
(69)
360
41,262
–
(44,500)
(2,947)
13,425
10,478
38 Investment in controlled unit trusts
Name
International Fixed Interest Fund
Fund of Funds Australian Equity Fund
Bond Fund
Fund of Funds International Equity Fund
Property Fund
Money Market Fund
Infrastructure Fund
Emerging Markets Fund
Total
type
Debt
Equities
Debt
Equities
Property
Debt
Property
Equities
–
86,977
1,240,010
1,326,987
1,449
35,678
37,127
998
4,340
–
67,792
2,447
118,628
92,315
1,307,802
1,448,062
(62,762)
34
–
(62,728)
–
86,331
1,281,556
1,367,887
5,284
(57,478)
94,605
64,996
8,077
(9,179)
11
–
63,905
30,700
94,605
$’000
33,380
249,804
276,429
159,439
52,112
284,964
94,320
63,368
968
87,333
4,982
7,164
13,756
1,288,720
1,318,915
19,082
129,147
353
802
98
29
–
1,282
3,700
4,982
2012
%
3
21
23
13
4
23
8
5
26,448
8,746
(32,181)
469
–
3,482
15,600
19,082
91,728
17,985
–
509
(44,500)
65,722
63,425
129,147
CoNsolidated
2011
%
2
23
23
13
4
22
8
5
$’000
32,906
296,364
309,481
176,819
52,601
286,148
100,598
72,070
1,213,816
100
1,326,987
100
111
ClearView annual report 2012
39 Leases
leasing arrangements
Operating leases relate to:
• Premises leases (for financial advice offices) with lease
• Tools of trade cars utilised by employees in the
terms that extend to 30 November 2016. The Group does
not have an option to purchase the leased asset at expiry
of the lease.
performance of their work responsibilities. The Group
does not have an option to purchase the leased assets
at expiry of the leases.
• ClearView Administration Services Pty Limited has
entered into a lease agreement to lease premises for
its Sydney head office at 20 Bond Street with effect
from 1 December 2011 with a lease term that extends
to 30 November 2016.
Non-cancellable operating lease commitments
• Printers and copiers utilised in the business. The Group
does not have an option to purchase the leased assets
at expiry of the leases.
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Total
CoNsolidated
2011
$’000
1,667
4,492
6,159
2012
$’000
1,842
4,522
6,364
In respect of non-cancellable operating leases the following liabilities have been recognised:
make good provision (note 24)
Current
Non-current
Total
CoNsolidated
2011
$’000
384
-
384
2012
$’000
68
159
227
CompaNy
2011
$’000
-
-
-
CompaNy
2011
$’000
-
-
-
2012
$’000
-
-
-
2012
$’000
-
-
-
112
Notes to the Financial StatementsFOR THE YEAR ENDED 30 JuNE 2012 CONTINuEDClearView wealth limited
40 Contingent liabilities and contingent assets
The Group has entered into an agreement which an outsourced service provider for its Wrap platform. The fee payable
to this service provider is based on a percentage of assets under management on the platform. If these fees are less than
$1.05 million at the end of three years (November 2014), then ClearView will be liable to make good on the shortfall relative
to the fees paid over that period.
The Group has term deposits that back financial guarantees issued by National Australia Bank in favour of landlords
for leased premises in relation to rental deposits of $287,055 (2011: $379,314).
The Group has a term deposit to back financial guarantees issued by Westpac Bank in favour of the landlord of the new
Sydney Bond Street premises in relation to rental deposits of $655,798 (2011: $624,443).
41 Subsequent events
On 17 August 2012, the Group proposed a final dividend of $8.011 million representing 1.8 cent per share fully franked.
The record date for determining entitlement to the dividend is 14 September 2012 and the dividend will be paid on
27 September 2012. Since the dividend has not been declared at year end it has not been recognised as payable in
these accounts.
On 12 July 2012, a conditional, unsolicited takeover offer was received by ClearView from CCP BidCo Pty Ltd, an entity
owned and controlled by Crescent Capital Management Pty Ltd. The Board considers the offer price of $0.50 cents per share
is inadequate and materially undervalues ClearView. The Board has unanimously recommended (other than John Murphy
who has absented himself due to his association with a member of the CCP consortium) that shareholders reject the offer.
The reasons for rejecting the offer have been outlined in the Target’s Statement which has been lodged with the ASX. We
will keep shareholders informed of developments as and when they occur.
Further to the conditional, unsolicited take over offer, the Board has engaged financial and legal advisers on commercial
terms normal to a transaction of this nature. Furthermore, the Board intends to implement retention arrangements
with the senior executive team in order to assist in providing continuity of management, and to align the amount of the
benefits that might be paid to executives with those received by shareholders under a successful transaction. The retention
arrangements will be payable in the event of a change of control of ClearView, and will be payable only if the individual
does not voluntarily resign within 6 months from the date of announcement of the CCP BidCo Offer. Further details on the
retention arrangements have been provided in the Target’s Statement released to the ASX.
The Directors are not aware of any other matter or circumstance not otherwise dealt with in this report or the financial
statements that has significantly, or may significantly, affect the operations of the consolidated entity, the results of those
operations or the state of the affairs of the consolidated entity in future financial years.
42 Capital commitments
The Group has committed to the following capital expenditures subsequent to the year end.
Life Administration System
Premises fit-out
Technology projects
Total
CoNsolidated
2011
$’000
1,300
1,574
358
3,232
2012
$’000
-
-
-
-
CompaNy
2011
$’000
-
-
-
-
2012
$’000
-
-
-
-
113
ClearView annual report 2012
directors’ declaration
The Directors declare that:
(a) In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable;
(b) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
the performance of the Company and the consolidated entity;
(c) In the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board as disclosed in note 3; and
(d) The Directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
Ray Kellerman
Chairman
Sydney, 17 August 2012
114
ClearView wealth limited
independent auditor’s Report
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1217 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
independent auditor’s Report to the members of Clearview Wealth limited
Report on the Financial Report
We have audited the accompanying financial report of ClearView Wealth Limited, which comprises the consolidated
statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity, and the consolidated statement of cash flows for the year ended on that date, notes
comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration
of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time
during the financial year as set out on pages 42 to 114.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of a financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of a financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In Note 3, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements,
that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control, relevant to the Company’s preparation of the financial report that gives a true and fair view, in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
ClearView annual report 2012 115
independent auditor’s Report
CONTINuED
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001, which has been given to the directors of
ClearView Wealth Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of ClearView Wealth Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2012
and of their performance for the year ended on that date;
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 3.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 31 of the directors’ report for the year ended 30 June
2012. 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.
Opinion
In our opinion the Remuneration Report of ClearView Wealth Limited for the year ended 30 June 2012, complies with
section 300A of the Corporations Act 2001.
deloitte touCHe toHmatsu
philip Hardy
Partner
Chartered Accountants
Sydney, 17 August 2012
116
ClearView wealth limited
shareholders’ information
AS AT 31 JuLY 2012
Ordinary Share Capital
There are 445,037,192 fully paid ordinatry shares held by 2,334 shareholders. All the shares carry one vote per share.
Substantial shareholders
As at the date of this Annual Report, the following entities have notified ClearView that they hold a substantial holding in shares.
RaNK
Name
1
2
3
4
Guinness Peat Group plc
CCP BidCo and its Associates1
Investec Bank (Australia) Limited and
Investec Wentworth Private Equity Limited
Paradice Investment Management Pty Ltd
1 This relates to a relevant interest in relation to a number of shareholdings.
Twenty largest shareholders
RaNK
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
19
19
19
GPG Nominees Pty Limited
IWPE Nominees Pty Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Portfolio Services Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr Simon Swanson
VBS Investments Pty Ltd
Bell Potter Nominees Ltd
Investec Bank (Australia) Ltd
GPG Australia Nominees Limited
IWPE Nominees Pty Limited
Gannet Capital Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty Limited
Mr Ronald James Lambert
Mr Gerard Sherlock
HSBC Custody Nominees (Australia) Limited
Baniar Group Pty Ltd
Experien Insurance Services Pty Ltd
Manyata Holdings Pty Limited
Greg Martin
No oF sHaRes
as peR NotiCe
210,699,272
54,221,364
39,688,239
% oF
issued
Capital
47.34
12.19
8.92
27,178,246
6.11
uNits
% oF uNits
194,073,002
43.61
26,458,826
20,275,813
19,276,633
18,054,702
12,983,125
12,490,051
10,000,000
9,750,380
8,839,120
7,937,647
7,787,150
5,291,766
4,875,191
3,018,527
2,500,000
2,325,000
2,257,414
2,000,000
2,000,000
2,000,000
2,000,000
5.95
4.56
4.33
4.06
2.92
2.81
2.25
2.19
1.99
1.78
1.75
1.19
1.10
0.68
0.56
0.52
0.51
0.45
0.45
0.45
0.45
ClearView annual report 2012 117
shareholders’ information
AS AT 31 JuLY 2012 CONTINuED
Distribution of shareholders
The distribution of Shareholders as at 8 August 2012 is as follows:
RaNGe
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
total
uNmaRKetaBle paRCels
total
HoldeRs
uNits
% oF issued
Capital
292
735
423
755
129
97,037
2,316,205
3,365,568
22,113,566
417,144,816
2,334
445,037,192
0.02
0.52
0.76
4.97
93.73
100.00
miNimum
paRCel siZe
HoldeRs
uNits
Minimum $500.00 parcel at $0.50 per unit
1,000
252
66,880
Shares under voluntary escrow
There are no shares subject to voluntary escrow as at 30 June 2012.
118
ClearView wealth limited
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ClearView annual report 2012 119
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120 ClearView wealth limited
Directory
Auditors
Deloitte touche tohmatsu
Accounting and
Custodian Services
BnP Paribas Services Australasia
Pty Limited
Stock Listing
ClearView Wealth Limited is listed
on the Australian Securities exchange
(ASX) under the ASX code ‘CVW’.
Directors
Ray Kellerman (Chairman)
Anne Keating
Anthony eisen
(alternate Michael Jefferies)
David Goodsall
John Murphy
Simon Swanson
Susan thomas
Former Director
Peter Wade
Managing Director
Simon Swanson
Company Secretaries
Chris Robson
Athol Chiert
Registered office
and Contact Details
Level 12, 20 Bond Street
Sydney nSW 2000
GPo Box 4964
Sydney nSW 2001
telephone:
Facsimile:
email:
Website:
02 8095 1300
02 9233 1960
ir@clearview.com.au
www.clearview.com.au
Share Registry
For all enquiries relating to
shareholdings, dividends and
related matters, please contact
the share registry:
Computershare Investor
Services Pty Limited
Level 3, 60 Carrington Street
Sydney nSW 2000
telephone:
1300 855 080
03 9415 4000
Facsimile:
03 9473 2500
ClearView Wealth Limited
ABN 83 106 248 248
www.clearview.com.au