Fiducian Group
Annual Report 2010

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FIDUCIAN PORTFOLIO SERVICES LIMITED ANNUAL REPORT ABN 13 073 845 931 30 JUNE 2010 integrity trustexpertise The name Fiducian is derived from the Latin word ‘Fiducia’. Over the years, persons of high integrity in positions of responsibility and who command trust and respect for their knowledge and expertise have been spoken of as exercising their duties in a fiduciary capacity. The company logo of a lion symbolises Strength, Character and Security – characteristics which sit well with the Integrity, Trust and Expertise associated with the meaning of our name. It is therefore, within the ambit of working in a fiduciary manner and with high transparency, that we have built our services for the benefit of our clients, members, staff and shareholders. We pride ourselves as having a high level of integrity and in inspiring a similar level among all our group members. P a g e i i i f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 c o n t e n t s j o i n t r e P o r t o F t h e c h a i r m a n a n d t h e m a n a G i n G d i r e c t o r c o r P o r a t e d i r e c t o r Y d i r e c t o r S ’ r e P o r t a u d i t o r ’ S i n d e P e n d e n c e d e c l a r a t i o n c o r P o r a t e G o v e r n a n c e S t a t e m e n t S h a r e h o l d e r i n F o r m a t i o n F i n a n c i a l r e P o r t S t a t e m e n t S o F c o m P r e h e n S i v e i n c o m e S t a t e m e n t S o F F i n a n c i a l P o S i t i o n S t a t e m e n t S o F c h a n G e S i n e Q u i t Y S t a t e m e n t S o F c a S h F l o W n o t e S t o t h e F i n a n c i a l S t a t e m e n t S d i r e c t o r S ’ d e c l a r a t i o n i n d e P e n d e n t a u d i t o r ’ S r e P o r t t o t h e m e m B e r S 2 8 9 2 2 2 3 3 0 3 3 3 4 3 5 3 6 3 7 3 8 7 8 7 9 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 joiNt report of the chAirmAN ANd the mANAgiNg director dear Shareholder, on behalf of the directors, we jointly report on the consolidated operating performance of Fiducian Portfolio Services limited and its controlled operating entities for the year ended 30 june, 2010. P a g e 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 fiNANciAL iNformAtioN Results for 2009-2010 Fiducian is pleased to report a net consolidated profit after income tax of $4.11 million. this is an increase of 25% on the prior year of $3.28 million, in an environment where financial markets initially improved, but then succumbed to uncertainty about a sustainable global economic recovery. the consequential eBitda earnings before interest expense, tax, depreciation and amortisation was $6.18 million compared with $5.01 million last year. net margin income increased by 6.7% (2009: decrease 21.2%), predominantly as a consequence of growing Funds under management and improved market valuations. Fiducian has been built to withstand external pressures and has significant capacity for further growth in revenue. operating expenses were again contained, with employee benefits slightly less and overall expenses decreasing by 1.3% (2009: increase 1.4%). Fiducian believes that its employees are its strength and therefore endeavours to involve all employees in its culture, commonly referred to as the ‘Fiducian Family’. Fiducian therefore follows a policy of training, building, and retaining quality staff in good and poor economic times, so they can participate in the future expansion of the business. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 j o i n t r e P o r t o f t h e c h a i r m a n a n d t h e m a n a g i n g d i r e c t o r c o n t i n u e d cApitAL mANAgemeNt Final Dividend the Board is confident about the future of the business in its current form, its profitability, prospects and likely cash flow outlook, particularly in an improving economic and financial market environment. as a result, a fully franked final dividend of 4.75 cents per share has been declared which will bring the total fully franked dividend declared for the 2010 financial year to 8.50 cents (2009: 6.75 cents). the final dividend will be paid on issued shares held on 8 September 2010 and be payable on 15 September 2010. Cash Flow net operating cash flows of $4.83 million were achieved (2009: $3.18 million). after acquisition of client portfolios ($0.39 million), capital items ($0.24 million), share buy backs ($0.38 million) and dividend outlays ($2.19 million) net cash increased by $1.66 million (2009: decrease $3.09 million). cash at year end was $9.5 million (2009: $7.8 million), of which $5.0 million is required for regulatory purposes. a key feature of the company is that it remains debt free and exhibits a positive working capital and cash flow position. On Market Buy-Back Fiducian bought 261,015 shares on market during the year (2009: 428,550) for a total consideration, including brokerage, of $0.38 million (2009: $0.87 million) at an average price per share of $1.44 (2009: $2.03). there are 32.208 million shares on issue at year end (2009: 32.394 million). Acquisitions Fiducian acquired one small client portfolio of clients during the year, to enlarge the hobart office. acquisitions, which can be easily absorbed into the Fiducian culture, will continue to be assessed as and when available. Adviser, Staff and Director Options in accordance with the terms and conditions of the approved adviser Share option Plan, no options will be cancelled this year and no options are proposed to be issued. in accordance with the terms and conditions of the approved employee and director Share option Plan, no options will be issued to employees, but the managing director is entitled to 40,000 options at an exercise price of $1.28, subject to shareholder approval. fiNANciAL pLANNiNg The Network the Fiducian Financial Services brand is continuing to grow, with quality franchised and salaried Financial advisers networked across the country. Good strategic financial advice and a high frequency of client contact and communication by all Fiducian Financial advisers has resulted in impressive client retention levels. however, where there is persistent financial market volatility, or political uncertainty as caused by the recent Federal election, our clients tend to defer new investment decisions. We have therefore put in place marketing initiatives to explain the economic environment and encourage long-term investors to take advantage of the current market weakness. P a g e 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 j o i n t r e P o r t o f t h e c h a i r m a n a n d t h e m a n a g i n g d i r e c t o r c o n t i n u e d Practice development managers based in Sydney, melbourne and Brisbane continue to work hard to support and grow the adviser network throughout australia. Salaried Offices company owned offices with salaried Financial advisers based in Sydney, melbourne, Brisbane and tasmania have continued to contribute to overall results. inflows from advisers in these offices during the current year represented 38% of total adviser inflows (2009: 28%). Franchised Offices Fiducian expects the highest level of compliance and client service from its franchise network. even though the generation of higher inflows is important, our commitment is to quality, which has meant that the number of authorised representatives has remained constant. inflows from franchisees comprised 58% of total adviser inflows (2009: 60%) pLAtform AdmiNiStrAtioN Platform administration offers portfolio wrap administration for superannuation and investment services to the adviser market place. the hallmark of the Fiducian administration offering is quality in terms of daily processing, accuracy and customer service. a new version of our ‘on line’ reporting system was introduced during the year to provide daily reports to investors on their asset valuations, fees and charges. Funds under Administration Funds under administration rose in total by 16.3% to $1.14 billion (2009: decline 21.4% to $984m) predominantly due to relatively good inflows and improved market valuations of investment funds. Independent Advisers in addition to providing administration services to Fiducian advisers and badge arrangements, services are provided to some independent advisers who hold their own aFSl licence. Funds under administration for independent advisers remained steady at 16% of total funds under administration. Corporate Superannuation corporate superannuation increased by 21% during the year, but forms only a small portion of funds under administration. Fiducian has focussed on the small employer market so all employees using our superannuation fund can receive the appropriate services of a Financial adviser. it compliments our core personal superannuation and investment service offerings and our strong belief that proper financial planning advice is essential for all investors. iNVeStmeNt mANAgemeNt Fiducian is a multi asset, multi style investment manager. We design Funds that seek to deliver above average returns over the short to medium term, which by consistent averaging, tend to deliver superior returns, compared with their peers, over the longer term. Blending of underlying portfolios within asset sectors and tilts towards different manager’s styles, depending on the economic cycle, also has the potential to reduce volatility. the investment team and investment committee remain confident that the Fiducian philosophy of liquidity and transparency will also benefit investors. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 j o i n t r e P o r t o f t h e c h a i r m a n a n d t h e m a n a g i n g d i r e c t o r c o n t i n u e d implementation of our processes has achieved consistently steady results over the longer term. as a result, Fiducian continues to grow its role as the investment manager for clients of Financial advisers, a number of wholesale mandates by notable charities, endowment funds and some high net worth individuals. iNformAtioN techNoLogY the Fiducian information technology (Fit) team’s main focus last year was to significantly improve our proprietary state-of-the-art financial planning software (Force) and provide it to our adviser network. Following the launch of Force version 3, the Fit team has directed its efforts towards improvements to the administration system. in addition, a web based system was developed for Fiducian Business Services, our subsidiary that provides support to accountants for bookkeeping, accounts preparation and self managed superannuation fund administration. hUmAN reSoUrceS Management and Staff the Fiducian management team is focused on building a successful company. the effective reporting processes enhance Board oversight of business activity and performance on a monthly basis. Key performance indicators have been identified for management in each area of the business operations which are used to monitor performance at least on a quarterly basis. Advisers Council this council is drawn from our supporting Financial advisers and has again made a significant contribution to the company during the past year. it continues to fulfil its role as a sounding board for the company’s management and Board, and is a valuable resource and forum to allow Financial advisers to alert the company to issues that may need consideration. Board of Directors the company’s five year strategic plan has been reviewed by management at the request of the Board, in conjunction with the preparation of the annual Business Plan and Budget for the 2010-11 year. management remains committed to achieving the goals and objectives set down in these plans. P a g e 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 j o i n t r e P o r t o f t h e c h a i r m a n a n d t h e m a n a g i n g d i r e c t o r c o n t i n u e d cUrreNt ecoNomic ANd mArKet eNViroNmeNt over the 2009-10 financial year, the australian and international share markets indices continued to experience a rollercoaster ride, based largely on changes in sentiment of investors, but overall posted good gains, before weakening towards the end of the financial year. our house view is for continuing firmer share markets through the coming year. this could still occur in fits and starts, but we are currently optimistic about positive returns from them and consequently continued improvements for our clients and our corporate financial position. as always, we recommend that investors should consult a Fiducian Financial adviser to develop an investment strategy that could help them achieve their financial goals. oUtLooK the Board expects profit to grow in coming years as management continues to focus on expanding its range of business activities and on realizing the full potential of financial planning, platform administration, investment management, business services and information technology, whilst controlling expenditure. Fiducian has always insisted on fees being fully disclosed and charged for services provided. Since our products were launched in march 1997, fees have always been segregated item by item to show fees paid to the platform operator, fees to the Fund manager and fees to the Financial adviser/dealer. all our clients are expected to receive continuous advice and agree to their adviser’s remuneration in writing. all our product disclosure documents specify that adviser fees are negotiable between client and adviser. in our view, we believe that Fiducian has been operating in a transparent and ethical manner since inception, sometimes ahead of the times. if, as a result of the various regulatory reviews, new remuneration policy and regulations are imposed on the industry, Fiducian should be able to adapt quickly without financial damage to the Group. the business plan for 2011 financial year looks at expanding the revenue base by further utilizing all segments of the Fiducian business model and expanding its resourcing for services to the self managed superannuation fund, accounting and legal community. the cash management strategy for the next financial year is to utilize the growing profitability to improve the level of dividends being paid to shareholders. Surplus cash will be also used to make meaningful acquisitions, where possible, or be used to make further share buy backs. We would like to thank all participants for their individual contributions to the growth and success of Fiducian. Yours faithfully, robert Bucknell Chairman indy Singh Managing Director a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 c o r P o r a t e d i r e c t o r y directors sha re reg ister r Bucknell Fca Chairman i Singh cFP, Btech, mcomm (Bus), aSia, aSFa, dip. FP Managing Director F Khouri B Bus, FcPa, Ftia c Stone B comm, llB, llm, ca, aciS secretary i Singh cFP, Btech, mcomm (Bus), aSia, aSFa, dip. FP notice of annua l genera l me e t ing the annual general meeting of Fiducian Portfolio Services limited Will be held at level 4, 1 York Street, Sydney Time Date 10:00am Wednesday 27 october 2010 computershare investor Services Pty limited level 3 60 carrington Street Sydney nSW 2000 a udi to r Pricewaterhousecoopers chartered accountants darling Park tower 2 201 Sussex Street Sydney nSW 1171 B an kers Westpac Banking corporation 341 George Street Sydney nSW 2000 anZ Banking Group 55 collins Street melbourne vic 3000 Pri nciPal r e gis te r e d offi ce in aus tr al ia level 4 1 York Street Sydney nSW 2000 (02) 8298 4600 Wholly oWne d oPerating e nti tie s Fiducian Financial Services Pty ltd harold Bodinnar & associates Pty ltd money & advice Pty ltd Fiducian Business Services Pty ltd sto ck ex ch an g e listin g Fiducian Portfolio Services limited (FPS) shares are listed on the australian Securities exchange. WeB sit e address www.fiducian.com.au P a g e 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Fiducian Portfolio Services limited and its wholly owned operating entities throughout the year ended 30 june 2010. Directors the following persons were directors of Fiducian Portfolio Services limited during the financial year and up to the date of this report. r Bucknell i Singh a Koroknay F Khouri c Stone a Koroknay was a director from the beginning of the financial year until his resignation on 28 February 2010. c Stone was appointed as a director on 3 march 2010 and continues in office at the date of this report. Principal activities during the year the principal continuing activities of the Group consisted of: (a) the operator of Fiducian investment Service (b) the trustee of Fiducian Superannuation Service (c) the responsible entity of Fiducian Funds; and (d) the dealer for specialist financial planning services through its wholly owned operating entities: (i) Fiducian Financial Services Pty ltd (ii) harold Bodinnar & associates Pty ltd (iii) money & advice Pty ltd Dividends – Fiducian Portfolio Services Limited dividends paid to members during the financial year were as follows: Final ordinary franked dividend for the year ended 30 june 2009 of 3.0 cents (2008: Fully franked 6.5 cents) per share paid on 17 September 2009. interim ordinary fully franked dividend for the year ended 30 june 2010 of 3.75 cents (2009: Fully franked 3.75 cents) per share paid on 15 march 2010. total dividends in respect of the year 2010 $’000 2009 $’000 973 2,115 1,213 2,186 1,215 3,330 in addition to the above dividends, since the end of the financial year, the directors have declared the payment of a final fully franked dividend for the year ended 30 june 2010 of 4.75 cents per ordinary share held at 8 September 2010 and payable on 15 September 2010. Review of operations a summary of consolidated revenues and results by significant industry segments is set out below: SegMeNT ReveNueS SegMeNT ReSuLTS Funds management and administration Financial planning intersegment sales 2010 $’000 20,335 7,864 (4,928) 23,271 2009 $’000 19,399 7,188 (4,565) 22,022 Profit from ordinary activities before income tax expense income tax expense net profit attributable to members of Fiducian Portfolio Services limited 2010 $’000 5,307 596 - 5,903 (1,791) 4,112 2009 $’000 4,620 181 - 4,801 (1,517) 3,284 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 9 d i r e c t o r s ’ r e P o r t c o n t i n u e d Comments on operations and results comments on the operations, business strategies, prospects and financial position are contained in the joint report of the chairman and managing director. Shareholder returns the valuation of investment funds has remained subdued and impacted on the growth of management fees received by Fiducian, as more fully detailed in the joint report of the chairman and managing director. despite this, Fiducian has maintained profit for the second half of this year and will distribute a dividend of 4.75 cents per share. the share price has declined in common with the aSX index and generally in common with other comparative companies in the financial services sector. Significant changes in the state of affairs Significant changes in the state of affairs of the Group during the financial year were as follows: contributed equity has reduced by $378,042 (inclusive of brokerage) as a result of the buy back of 261,015 shares on the stock exchange at an average price of $1.44 per share during the year, and increased by $52,812 as a result of the exercise of 75,225 share options at an average price of $0.70 per share. Further, no options were issued to the managing director, staff or advisers during the year, whilst 48,988 options issued to advisers were forfeited during the year. other than this, there were no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year on 1 july 2010 the operations of harold Bodinnar & associates Pty ltd and money & advice Pty ltd were merged into Fiducian Financial Services Pty ltd. all entities traded as ‘Fiducian Financial Services’ under the same aFS licence. the merger will provide some ongoing administrative savings and marketing consistency within the financial planning division. under the rules of the adviser Share option Plan, the directors are required to grant options to advisers within three months of the announcement of the Group’s results to the australian Securities exchange. no options are being issued this year (2009: nil). under the same rules no adviser options (2009: 48,988) are expected to be cancelled subsequent to the end of the financial year, subject to any regulatory approvals if required. under the rules of the employee and director Share option Plan the directors have not granted any options to employees after year end (2009: nil), but 40,000 options are proposed to be granted at an exercise price of $1.28 to the managing director (2009: nil), subject to shareholder approval. to the date of this report no employee options have lapsed and no options have been lapsed or exercised by the managing director. under the rules of the employee and director Share option Plan and adviser Share option Plan, to the 24th august 2010 the following shares have been issued since the end of the financial year as a result of options, granted on the dates listed, being exercised: DATe OPTIONS gRANTeD ISSue PRICe OF ShAReS NuMBeR OF ShAReS ISSueD 23 august 2005 adviser $0.87 68,203 other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent years. Likely developments and expected results of operations the chairman and managing director have commented on expected results of operations in their joint report. other than this, the directors have excluded further information on likely developments in the operations of the Group and the expected results of those operations in future financial years, since, in the opinion of the directors, it would prejudice the interests of the Group if this information was included. P a g e 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d environmental regulation the Group is not subject to significant environmental regulations under a commonwealth, State or territory law. key manag ement Pe r so nnel disc lo sures (a) Directors the following persons were directors of Fiducian Portfolio Services limited during the financial year: Chairman (non-executive) r Bucknell Executive director Non-executive directors i Singh – managing director a Koroknay (resigned 28 February 2010) F Khouri c Stone (appointed 3 march 2010) (b) Information on directors R Bucknell FCA. chairman – non executive. age 69 Experience and expertise chairman since inception in 1996. extensive experience in accounting and business management over the past 46 years as a chartered accountant in public practice. Other current directorships none Former directorships in the last 3 years none Special responsibilities chairman of the Group, and audit, remuneration and internal compliance committees. Interest in shares and options 1,000,000 ordinary shares in Fiducian Portfolio Services limited. I Singh CFP, BTech, MComm (Bus), ASIA, ASFA, Dip. FP. managing director. age 61 Experience and expertise Founder and managing director since inception in 1996. General management and hands-on experience in the investment of savings and superannuation funds over the past 21 years. Other current directorships none Former directorships in the last 3 years none Special responsibilities managing director, member of investment, audit and internal and external compliance committees. Interest in shares and options 9,777,580 ordinary shares in Fiducian Portfolio Services limited. 215,000 options for ordinary shares in Fiducian Portfolio Services limited. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 1 d i r e c t o r s ’ r e P o r t c o n t i n u e d key ma nag e ment Pe r so nnel disc lo sures c o n tin ue d (b) Information on director (continued) A Koroknay BA, LLB(hons), LLM(hons). independent non-executive director. age 61 Experience and expertise Board member since january 2002, resigning on 28 February 2010. Practising lawyer since 1972 with extensive experience in legal aspects of the financial services industry. Other current directorships non-executive director: hunter hall Global value limited (since march 2004) Former directorships in the last 3 years none Special responsibilities member of remuneration and internal compliance committees. Interest in shares and options none F g Khouri B Bus, FCPA, FTIA independent non-executive director. age 55 Experience and expertise appointed to the Board 6 july 2007. Public accountant, registered company auditor and business adviser since 1976 to small and medium enterprises, currently as a partner in the firm hG Khouri & associates. Other current directorships none Former directorships in the last 3 years none Special responsibilities member of the Board audit and remuneration committees. Interest in shares and options 194,373 ordinary shares in Fiducian Portfolio Services limited. 7,374 options for ordinary shares in Fiducian Portfolio Services limited C h Stone B Comm/LLB, LLM, CA, ACIS independent non-executive director. age 51 Experience and expertise appointed to the Board 3 march 2010. Practicing lawyer, holding senior legal and/or legal compliance roles in local and global financial services organisations, with 20 years experience. currently head of compliance of State Street australia limited, and has 8 years experience as a chartered accountant in taxation and superannuation matters. Other current directorships none Former directorships in the last 3 years none Special responsibilities member of the Board internal compliance committee. Interest in shares and options none P a g e 1 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d key ma nag e ment Pe r so nnel discl osures c o nt in ue d (c) Company secretary the company secretary is mr i Singh cFP, m comm. (Bus), aSia, aSFa, dip FP. mr Singh has been the company secretary since inception in 1996, and is supported by legal counsel employed by Fiducian. (d) Meeting 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 2010, and the numbers of meetings attended by each director were: FuLL MeeTINgS OF DIReCTORS MeeTINgS OF COMMITTeeS r e Bucknell i Singh** a Koroknay (resigned 28 February 2010) F Khouri c Stone (appointed 3 march 2010) Corporate Trustee* Audit Internal Invest- Compliance ment Remun- ration A B A 13 13 13 13 7 7 4 4 3 13 13 4 5 5 1 B 4 4 3 4 1 A 9 9 B 9 9 A 1 1 B 1 1 A B A B *** *** 1 1 11 12 *** *** *** *** 1 1 *** *** 1 1 9 9 *** *** *** *** *** *** *** *** *** *** *** *** *** *** A = Number of meetings attended. B = Number of meetings held during the time the director held office or was a member of the committee during the year. * = Meetings of the Board in its capacity as Trustee of the Fiducian Superannuation Service. ** = In addition, I Singh attended 8 of the 8 meetings held with the two independent members of the External Compliance Committee. *** = Not a member of the relevant committee at the time of meeting. (e) Other key management personnel the following person has authority for and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year: Name Position i Singh managing director Employer Fiducian Portfolio Services limited the above person was also the key management person during the year ended 30 june 2010. (f) Remuneration report the remuneration report is set out under the following main headings: a Principles used to determine the nature and the amount of remuneration B details of remuneration c Service agreements d Share-based compensation e additional information the information provided under headings a - d includes remuneration disclosures that are required under accounting Standards aaSB 124 related Party disclosures. these disclosures have been transferred from the director’s report and have been audited. the disclosures in Section e are additional disclosures required by the corporations act 2001 and the corporations regulations 2001 which have not been audited. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 3 d i r e c t o r s ’ r e P o r t c o n t i n u e d key ma nag e ment Pe r so nnel discl osures c o nt in ue d (f) Remuneration report (continued) A. Principles used to determine the nature and the amount of remuneration the objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. the framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market practice for delivery of reward. the Board ensures that executive reward satisfies the following key criteria for good reward governance practices: • competitiveness and reasonableness • acceptability to shareholders • performance linkage / alignment of executive compensation • transparency • capital management. (a) Non-executive directors Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. non-executive directors’ fees and payments are reviewed annually by the Board. non-executive directors are no longer entitled to options under the employee and director Share option Plan. Directors’ fees the current base remuneration was last reviewed in june 2009. the chairman and other external directors are paid a fixed fee plus a fee based on time spent on committees (directors with earnings derived from commissions based on business placed with the Group may also receive commissions as advisers). the chairman’s fixed fee is higher than other non-executive directors based on comparative roles, time and fees in the external market. non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. the maximum pool currently stands at $350,000 per annum and was approved by shareholders at the annual General meeting on 24 october 2007. no increase is being sought at the next annual General meeting. Retirement allowances for directors there are no retirement allowances for non-executive directors other than superannuation accumulation arising from any contributions made for them. (b) Executive Director remuneration and other terms of employment for the managing director is formalised in a service agreement. the managing director’s agreement provides for the provision of performance based cash bonuses and, where eligible, participation in the employee and director Share option Plan. other major provisions of the agreement are set out below: i Singh, Managing Director • term of agreement - until 30 june 2014 • Base salary, inclusive of superannuation and salary sacrifice benefits. • death and tPd/trauma cover. • Short term performance incentives. • long term incentives through the Fiducian Portfolio Services limited employee and director Share option Plan, and • retirement benefits. the combination of these comprises the executive’s total remuneration package. an external remuneration consultant advises the remuneration committee, at least every 3 years, to ensure that the Group has structured an executive remuneration package that is market competitive and complimentary to the reward strategy of the organisation. their most recent review was in july, 2009. P a g e 1 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d key ma nag e ment Pe r so nnel discl osures c o nt in ue d (f) Remuneration report (continued) Base salary mr Singh receives a base pay that comprises the fixed component of pay and the potential for rewards, which reflects the market value for his role. the base salary is reviewed annually by the remuneration committee at the commencement of each financial year. there are no guaranteed base pay increases fixed in the executive’s contract. Benefits executive benefits include death cover of $1 million and tPd/ trauma insurance cover of $0.65 million. Short-term incentives mr Singh is entitled to a discretionary cash performance bonus of up to 20% of his total package as assessed by the remuneration committee against performance indicators and objectives set by the Board. it is limited to being met within the budget or out of over-budget financial performance. as in previous years mr Singh has declined to accept any entitlement that may be due for the financial year. Long-term incentives mr Singh is entitled to a discretionary performance bonus of up to 100,000 options per year determined as at 30 june each year, based on the following measures: • the company’s pre-tax profit or • the 30 day average for june market value for ordinary shares in the company increasing by at least 15% over the previous year. the options are issued under the company’s eSoP at the rate of 5,000 options for each one percent increase in excess of 15% and only after approval by shareholders in the company. as the pre-tax criteria was met, mr Singh is entitled to receive 40,000 options at an exercise price of $1.28 per share, subject to shareholder approval. Retirement benefits retirement benefits are delivered under the Fiducian Superannuation Service. this fund provides accumulation benefits based on the SGc contributions by the specified executive, on commercial terms and conditions. other retirement benefits may be provided directly by the Group only if approved by the shareholders. Payment of a termination benefit on early termination by the managing director or by mutual consent is equal to 6 months of the gross annual remuneration. B. Details of remuneration i Singh – Managing Director & Company Secretary the key management personnel of the Group were the following executive and non-executive directors during the year: • r Bucknell – Chairman • • a Koroknay – Non-executive Director • F Khouri – Non-executive Director • c Stone – Non-executive Director Amounts of remuneration details of the remuneration of the directors, including mr Singh, the only key management personnel of Fiducian Portfolio Services limited, are set out in the following tables. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 5 d i r e c t o r s ’ r e P o r t c o n t i n u e d key manag ement Pe r so nnel disc lo sures c o nt in ue d (f) Remuneration report (continued) Key management personnel of Fiducian Portfolio Services Limited and the Group 2010 NAMe ShORT-TeRM eMPLOyee BeNeFITS POST eMPLOyMeNT BeNeFITS ShARe-BASeD PAyMeNT CASh SALARy AND FeeS (a) CASh BONuS NON-MONeTARy BeNeFITS SuPeR- ANNuATION ReTIReMeNT BeNeFITS OPTIONS (e) TOTAL $ $ $ $ $ $ $ Non-executive directors r Bucknell (b) (Chairman) a Koroknay (c) F Khouri (d)(e) c Stone Executive director i Singh (f) totals 135,300 23,149 39,310 15,449 435,539 648,747 - - - - - - - - - - - 1,926 3,131 722 - - 17,689 23,468 - - - - - - - 135,300 - - - - - 25,075 42,441 16,171 453,228 672,215 (a) excludes GSt if paid to another firm. (b) including amounts paid to the director’s company only in respect to director’s duties. (c) including amounts paid to the director’s firm only in respect of director’s duties. (d) this excludes gross commission of $237,212 for financial planning paid to companies in which the director has an interest. (e) adviser options were also issued to a company, in which mr Khouri is a shareholder and director in his capacity as a financial adviser, and are not included above. (f) no options were issued to mr Singh in respect of the 2009 financial year. 40,000 options are proposed to be issued to mr Singh in respect of the 2010 year, subject to shareholder approval prior to issue and their value is therefore not included. 2009 NAMe ShORT-TeRM eMPLOyee BeNeFITS POST eMPLOyMeNT BeNeFITS ShARe-BASeD PAyMeNT CASh SALARy AND FeeS (a) CASh BONuS NON-MONeTARy BeNeFITS SuPeR- ANNuATION ReTIReMeNT BeNeFITS OPTIONS (e) TOTAL $ $ $ $ $ $ $ Non-executive directors r Bucknell (b) (Chairman) a Koroknay (c) F Khouri (d)(e) Executive director i Singh (f) totals 135,900 38,688 37,564 437,926 650,078 - - - - - - - - - - - 2,890 3,461 13,752 20,103 - - - - - - 135,900 - - 41,578 41,025 1,635 1,635 453,313 671,816 (a) excludes GSt if paid to another firm. (b) including amounts paid to the director’s company only in respect to director’s duties. (c) including amounts paid to the director’s firm only in respect of director’s duties. (d) this excludes gross commission of $207,443 for financial planning paid to companies in which directors have an interest. (e) adviser options were also issued to a company, in which mr Khouri is a shareholder and director, in his capacity as a financial adviser, and are not included above. (f) 15,000 options were issued to mr Singh in respect of the 2008 financial year, after shareholder approval at the aGm in october 2008. consequently $1,635, being the calculated fair value of those options, has been included in his remuneration in the 2009 year. no options were proposed to be issued to mr Singh in respect of the 2009 year. P a g e 1 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d key ma nag e ment Pe r so nnel discl osures c o nt in ue d (f) Remuneration report (continued) C. Service Agreements and Induction Process the service agreement of the executive director is detailed in paragraph a(b) earlier. there are no service agreements with non-executive directors or employees. in preparation for appointment to the Board, all non-executive directors undergo an induction program and receive an induction pack of documents necessary for the new director to understand Fiducian’s policies, procedures, culture and ethical values to enable the new director to carry out his duties in an effective and efficient manner. D. Share-based compensation (i) Option compensation and holdings options over shares in Fiducian Portfolio Services limited are granted under the employee and director Share option Plan, which was approved by shareholders on 28 july 2000. the Plan is described under note 26. the numbers of options for ordinary shares in the company held directly by directors of Fiducian Portfolio Services limited and details of options for ordinary shares in the company provided as remuneration to the key management personnel of the Group, are set out below. 2010 NAMe i Singh F Khouri* BALANCe AT The START OF The yeAR 215,000 - gRANTeD DuRINg The yeAR AS ReMuNeRATION exeRCISeD LAPSeD DuRINg The yeAR BALANCe AT The eND OF The yeAR veSTeD AND exeRCISABLe - - - - - - 215,000 215,000 - - * 7374 Adviser options are held by an entity in which F Khouri has an interest. 2009 NAMe i Singh F Khouri* BALANCe AT The START OF The yeAR 200,000 - gRANTeD DuRINg The yeAR AS ReMuNeRATION exeRCISeD LAPSeD DuRINg The yeAR BALANCe AT The eND OF The yeAR veSTeD AND exeRCISABLe - - 15,000 - - - 215,000 200,000 - - * 10,682 Adviser options are held by an entity in which F Khouri has an interest. Note: The assessed fair value at grant date of options granted to the individuals is detailed in Note 26. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 7 d i r e c t o r s ’ r e P o r t c o n t i n u e d key manag ement Pe r so nnel disc lo sures c o nt in ue d (f) Remuneration report (continued) D. Share-based compensation (continued) (ii) Share holdings the numbers of shares in the company held by current directors of Fiducian Portfolio Services limited, including their personally related and associated entities, are set out below. no shares were granted during the period as compensation. 2010 NAMe i Singh r e Bucknell a Koroknay F Khouri c Stone 2009 NAMe i Singh r e Bucknell a Koroknay F Khouri BALANCe AT The START OF The yeAR ReCeIveD DuRINg The yeAR ON The exeRCISe OF OPTIONS OTheR ChANgeS DuRINg The yeAR BALANCe AT The eND OF The yeAR 9,662,380 1,069,000 - 134,373 - - - - - - 102,200 (69,000) - 60,000 - 9,764,580 1,000,000 - 194,373 - BALANCe AT The START OF The yeAR ReCeIveD DuRINg The yeAR ON The exeRCISe OF OPTIONS OTheR ChANgeS DuRINg The yeAR BALANCe AT The eND OF The yeAR 9,583,807 1,050,000 - 107,373 - - - - 78,573 19,000 - 27,000 9,662,380 1,069,000 - 134,373 Shares provided on exercise of options no ordinary shares in the company were provided as a result of the exercise of remuneration options to any director of Fiducian Portfolio Services limited and other key management personnel of the Group during the period (2009: nil). entities with which a director has an interest exercised no adviser options during the year (2009: nil). no amounts are unpaid on any shares issued on the exercise of options. E. Additional information Principles used to determine the nature and amount of remuneration: relationship between remuneration and company performance the overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis given to the current and prior year. increases in base salary have been minimal to nil over the past 2 years in these tougher economic times. cash bonuses and entitlements have not been granted or paid and the grants of options entitlements have been only in accordance with the incentive programs being nil in relation to the past two financial years. Details of remuneration: cash bonuses and options For each cash bonus and grant of options included in the tables below, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. no part of the bonus is payable in future years. the options vest after one year, with no conditions. the minimum value of the options yet to vest is therefore the value of the option on grant date. the maximum value of the options yet to vest has been determined assuming the share price on the date the options are exercised will not exceed $2.50 for the options that vest in the 2010 financial year. all options are currently vested. P a g e 1 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d key manag ement Pe r so nnel disc lo sures c o nt in ue d (f) Remuneration report (continued) E. Additional information (continued) CASh BONuS OPTIONS NAMe i Singh PAID % 0% 0% 0% FORFeITeD % 100% 100% 100% FINANCIAL yeAR gRANTeD veSTeD % FORFeITeD % FINANCIAL yeARS IN whICh OPTIONS veST MINIMuM TOTAL vALue OF gRANT yeT TO veST $ MAxIMuM TOTAL vALue OF gRANT yeT TO veST $ 2010 2009 2008 100% 100% 100% 0% 0% 0% 2010 2009 2008 - - - - - - Share-based compensation: Performance based Options Further details relating to options are set out below. 2010 NAMe i Singh A ReMuNeRATION CONSISTINg OF OPTIONS (%) B vALue AT gRANT DATe $ C vALue AT exeRCISe DATe $ D vALue AT LAPSe DATe $ e TOTAL OF COLuMNS B-D $ 0% - - - - A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B B = The value at grant date calculated in accordance with AASB 2 Share based Payment of options granted during the year as part of remuneration. C = The value at exercise date of the options that were granted as part of remuneration and were exercised during the year. D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year. 2009 NAMe i Singh A ReMuNeRATION CONSISTINg OF OPTIONS (%) B vALue AT gRANT DATe $ C vALue AT exeRCISe DATe $ D vALue AT LAPSe DATe $ e TOTAL OF COLuMNS B-D $ 0.36% 1,635 - - 1,635 A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B B = The value at grant date calculated in accordance with AASB 2 Share based Payment of options granted during the year as part of remuneration. C = The value at exercise date of the options that were granted as part of remuneration and were exercised during the year. D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year. Directors’ superannuation directors have superannuation monies invested in Fiducian Superannuation Service. these monies are invested subject to the normal terms and conditions applying to this superannuation fund. Loans to directors no loans were made to directors during the financial year (2009: nil). Other transactions with key management personnel a director, mr r e Bucknell, is a director and shareholder of hunter Place Services Pty ltd, a company which provides his services as a director to the company. a director, mr a Koroknay, was a consultant with the legal firm hWlebsworth, which provided legal services to the Group during the year on normal commercial terms and conditions until his retirement on 28 February 2010. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 1 9 d i r e c t o r s ’ r e P o r t c o n t i n u e d key manag ement Pe r so nnel disc lo sures c o nt in ue d E. Additional information (continued) Other transactions with key management personnel (continued) a director, mr F Khouri, is an authorised representative under the Fiducian Financial Services Pty ltd australian Financial Services licence and is a director and shareholder of hawkesbury Financial Services Pty ltd, which is a franchisee of Fiducian Financial Services Pty ltd. hawkesbury Financial Services Pty ltd places business with and receives commissions from the company. all transactions are on normal commercial terms and conditions. aggregate amounts of each of the above types of other transactions with directors of Fiducian Portfolio Services limited: Amounts recognised as an expense directors’ fees and committee fees legal & consulting fees commission paid or payable Shares under option CONSOLIDATeD 2010 $ 2009 $ 218,987 218,503 - - 237,213 207,443 456,200 425,946 unissued ordinary shares of Fiducian Portfolio Services limited under option at the date of this report are disclosed in note 26 of the Financial report. no option holder has any right under the options to participate in any other share issue of the company or any other entity until after the exercise of the option. Shares issued on the exercise of options the details of ordinary shares of Fiducian Portfolio Services limited issued during the year ended 30 june 2010 on the exercise of options granted under the Fiducian Portfolio Services limited employee & director Share option Plan and the adviser Share option Plan are disclosed under note 26 to the Financial report. Indemnification and insurance of officers the constitution of Fiducian Portfolio Services limited provides the following indemnification of officers: (a) to indemnify officers of the company and related bodies corporate to the maximum extent permitted by law unless a liability arises out of conduct involving a lack of good faith. in the case of a related body corporate, the indemnification of officers does not extend to any proceedings for a liability incurred by the officer based upon events that occurred before that body corporate became a related body corporate. (b) to allow the company to pay a premium for a contract insuring directors, the secretary and executive officers of Fiducian Portfolio Services limited and its related bodies corporate. the liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in the capacity as officers of the company or a related body corporate. no liability has arisen under these indemnities as at the date of this report. during the year Fiducian Portfolio Services limited paid a premium under a combined policy of insurance for liability of officers of the company and related bodies corporate, professional indemnity and crime. in accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the nature of the liabilities covered by, the insurance contract is prohibited by a confidentiality clause in the contract. the officers of the company covered by the insurance policy include the directors: r e Bucknell, i Singh, a Koroknay, F Khouri, c Stone, other officers of Fiducian Portfolio Services limited and independent members of the external compliance and investment committees, j evans, P emery and m devlin. P a g e 2 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 d i r e c t o r s ’ r e P o r t c o n t i n u e d Proceedings on behalf of the company no person has applied to the court under Section 237 of the corporations act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. no proceedings have been brought or intervened in on behalf of the company with leave of the court under section 237 of the Corporations Act 2001. Non-audit services the company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the company and/or Group are important. the board of directors is satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the corporations act 2001 for the following reasons: • • all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor. none of the services undermine the general principles relating to auditor independence as set out in aPeS110 Code of Ethics for Professional Accountants. during the year the fees paid or payable for services provided by the auditor (Pricewaterhousecoopers) of the parent entity, its related practices and non-related audit firms, are shown in note 27 to the consolidated financial report. Auditor’s independence declaration a copy of the auditor’s independence declaration as required under Section 307c of the Corporations Act 2001 is set out on page 22. Rounding of amounts the company is of a kind referred to in class order 98/0100, issued by the australian Securities and investments commission, relating to the “rounding off” of amounts in the directors’ report. amounts in the directors’ report have been rounded off in accordance with that class order to the nearest thousand dollars, or in certain cases, to the nearest dollar. Auditor Pricewaterhousecoopers continues in office in accordance with section 327 of the Corporations Act 2001. this report is made in accordance with a resolution of the directors. i Singh Director Sydney, 27 august 2010 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 2 1 a u d i t o r ’ s i n d e P e n d e n c e d e c l a r a t i o n PricewaterhouseCoopers ABN 52 780 433 757 Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999 Auditor’s Independence Declaration as lead auditor for the audit of Fiducian Portfolio Services limited for the year ended 30 june 2010, i declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. this declaration is in respect of Fiducian Portfolio Services limited and the entities it controlled during the year. darren ross Partner Pricewaterhousecoopers Sydney 27 august 2010 liability limited by a scheme approved under Professional Standards legislation P a g e 2 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 c o r P o r a t e g o v e r n a n c e s t a t e m e n t Fiducian Portfolio Services limited (the company) and the Board are committed to achieving and demonstrating the highest standards of corporate governance. the Board continues to review the framework and practices to ensure they meet the interests of shareholders. the company and its controlled entities together are referred to as the Group in this statement. a description of the company’s main corporate governance practices is set out below. all these practices, were in place for the entire year and comply with the august 2007 aSX Principles of Good Corporate Governance and Best Practice Recommendations, except where noted. Principle 1: Lay solid foundations for management and oversight the relationship between the Board and senior management is critical to the Group’s long term success. the directors are responsible to the shareholders for the performance of the Group in both the short and the longer term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. their focus is to enhance the interests of shareholders and to ensure that the Group is properly managed. the responsibilities of the Board include: • • providing strategic guidance to the Group including contributing to the development of and approving the corporate strategy. reviewing and approving business plans, the annual budget and financial plans, including available resources and capital expenditure initiatives. • overseeing and monitoring: • organisational performance and the achievement of the Group’s strategic goals and objectives. • compliance with the company’s code of conduct (see page 26). • progress of major capital expenditures and other significant corporate projects, including any acquisitions or divestments. • monitoring financial performance, including approval of the annual and half-year financial reports and liaison with the company’s auditors. • appointment, performance assessment and, if necessary, removal of the managing director • ratifying the appointment and /or removal and contributing to the performance assessment for the members of the senior management team. • ensuring there are effective management processes in place and approving major corporate initiatives. • enhancing and protecting the reputation of the organisation. • ensuring that adequate disaster recovery and business continuity plans are regularly monitored, tested and results reported. • overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders. • balancing sometimes competing objectives in the best interests of the Group. day to day management of the Group’s affairs and the implementation of the corporate strategies and policy initiatives are formally delegated by the Board to the managing director. Principle 2: Structure the Board to add value the Board operates in accordance with the broad principles set out in its charter which is also available on the company’s website at www.fiducian.com.au. the charter details the Board’s composition and responsibilities. Board members the following persons were directors of Fiducian Portfolio Services limited during the financial year: Chairman (non-executive) executive Managing Director Non-executive directors r Bucknell i Singh a Koroknay F Khouri c Stone details of each director’s experience, expertise and qualifications are set out each year in the directors’ report of the annual report to Shareholders under the heading “information on directors”. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 2 3 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 2: Structure the Board to add value (continued) Board composition the charter states: • the Board is comprised of both an executive director and a majority of non-executive directors,with a minimum of four directors. • non-executive directors bring a fresh perspective to the Board’s consideration of strategic, risk and performance matters. • in recognition of the importance of independent views and the Board’s role in supervising the activities of management, the chairman must be an independent non-executive director, the majority of the Board must be independent of management and all directors are required to exercise independent judgement and review and constructively challenge the performance of management. • the chairman is elected by the full Board and is required to meet regularly with the managing director. • the company is to maintain a mix of directors on the Board from different backgrounds with complimentary skills and experience. • the Board is required to undertakes an annual Board performance review and consider the appropriate mix of skills required by the Board to maximise its effectiveness and its contribution to the Group. the Board seeks to ensure that: • at any point in time, its membership represents an appropriate balance between directors with experience and knowledge of the Group and directors with an external or fresh perspective. • the size of the Board is conducive to effective discussion and efficient decision-making. Chairman and Managing Director the Board charter specifies that these are separate roles to be undertaken by separate people. • the chairman is responsible for leading the Board, ensuring that Board activities are organised and efficiently conducted, and directors are properly briefed for meetings. • the managing director is responsible for implementing Group strategies and policies. Directors’ independence directors are obliged to be independent in judgement and ensure that all reasonable steps and due care are taken by the Board to arrive at sound decisions. the Board has adopted specific guidelines in relation to directors’ independence. these state that when determining independence, a director must be a non-executive and: • not be a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company. • not have been employed in an executive capacity by the Group within three years before commencing to serve on the Board. • not have been, within the last three years, a principal of a material professional adviser or a material consultant to the Group, or an employee materially associated with the service provided. • not have been a material supplier or customer of the Group, or an officer of or otherwise associated directly or indirectly with a material supplier or customer. • not have a material contractual relationship with the Group, other than as a director of Fiducian. • not have been on the Board for a period which could, or could reasonably be perceived, to materially interfere with the director’s independent exercise of their judgement. materiality for these purposes is determined on both quantitative and qualitative bases. With good cause, the Board may, at its discretion, determine that a director is independent, or has lost their independence, notwithstanding that all the above criteria are or are not satisfied. P a g e 2 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 2: Structure the Board to add value (continued) the Board assesses independence each year. to enable this process, the directors must provide all information that may be relevant to the assessment. matters that could affect the independence of directors are detailed below: • mr Bucknell and mr Singh have both served on the Board since inception of the Group, being for more than ten years. Both bring a depth of experience and independent judgement to their roles as directors and remain vital to the growth of the Group. mr. Bucknell is deemed by the Board to be an independent director. • mr Koroknay (who retired on 28 February 2010) and mr Khouri both have business dealings with the Group as disclosed in the annual report at the end of each financial year. however, these are not of a value or significance that adversely affect the director’s independence. they have declared their interests in those dealings with the company and take no part in decisions relating to them. Independent professional advice directors and members of Board committee have the right to obtain independent professional advice at the expense of the Group on matters arising in the course of their Board duties and responsibilities, with prior approval of the Board. Term of office the company’s constitution specifies that all non-executive directors must retire from office no later than the third annual general meeting following their last election. a retiring director is eligible to stand for re-election. Induction the induction provided to new directors enables them to actively participate in Board decision-making as soon as possible. it ensures that they have a full understanding of the company’s financial position, strategies, operations and risk management policies. it also explains the respective rights, duties, responsibilities and roles of the Board. Performance assessment the Board undertakes an annual self assessment of its collective performance, the performance of the chairman and of its committees. the assessment also considers the adequacy of induction and continuing education, access to information and the support provided by the managing director. the results and any action plans are documented together with specific performance goals which are agreed for the coming year. an assessment carried out in accordance with this process was undertaken during july, 2010. Board committees the board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of important aspects of the business and/or complex issues. current committees of the board are the remuneration, internal compliance, external compliance and risk, investment and audit committees. they are comprised of a mix of executive and non-executives directors, and external specialists, the names and qualifications of whom are detailed in each annual report to Shareholders. each committee has its own written charter setting out its role and responsibilities, composition, structure, membership requirements and the manner in which the committee is to operate. all of these charters are reviewed as required, but at least every three years. a copy of each charter is available on the company’s website. minutes of all committee meetings are tabled at the next Board meeting where any significant matters are addressed and resolutions or requests for further information are sent back to the relevant committee. Specific reporting by the committees to the Board are addressed in the charter of the individual committees. Nomination Committee the Board has considered recommendation 2.4 of the aSX corporate Governance Principles and has taken the view that participation by the full board is more effective than a smaller nomination committee, particularly given the size of the board. there is therefore no nomination committee at present. Remuneration Committee the remuneration committee is comprised of the non-executive chairman and one other non-executive director. the committee evaluates the managing director’s performance, determines bonus’s payable to him and establishes the salary package appropriate for each year. external advice is obtained when deemed appropriate, but at least at three yearly intervals. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 2 5 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 2: Structure the Board to add value (continued) Compliance committees (a) an Internal Compliance Committee is comprised of the non-executive chairman, one other non-executive director, and the managing director. the committee monitors compliance systems, procedures, policies and programs established to ensure disclosure by management to the Board of areas of operating and non-financial risk including disclosure documents required to be given under statute. the compliance manager attends and participates at the meetings. (b) the external Compliance and Risk Committee is comprised of two independent members and the managing director. the committee monitors compliance of systems, procedures, policies and programs established to ensure disclosure and reporting relating to compliance with obligations imposed by the corporations and superannuation laws, and that the interests of fund members are protected. the compliance manager attends and participates at the meetings. Audit committee the audit committee is comprised of the non-executive chairman, one other non-executive director and the managing director. the financial controller and auditor attend and participate at meetings. the committee monitors all accounting policies to ensure they comply with accepted accounting standards and practices and is further discussed under Principle 4. Investment committee the investment committee is comprised of two independent members, the managing director and senior staff that form the investment management team. the committee monitors that procedures are fully carried out by the investment management team, in accordance with the investment guidelines set by the Board. Managing Director’s attendance at Compliance and Audit committees the Board has ensured that the compliance and audit committees have a majority of independent members; but it expects the managing director to attend these committees as a member. attendance by the managing director has been beneficial as clarification can be provided promptly and any corrective measures required can be actioned swiftly and efficiently. Commitment the chairman is expected to spend at least 45 days per year preparing for and attending Board meetings and meeting with the managing director. other non-executive directors are expected to spend at least 20 days per year preparing for and attending Board meetings. all non-executive directors are expected to allow sufficient additional time to attend committee meetings and associated activities. Prior to appointment or being submitted for re-election, each non-executive director is required to specifically acknowledge that they have and will continue to have the time available to undertake relevant educational development and discharge their responsibilities to the Board and any of its committees, of which they are a member. the number of Board and committee meetings attended by each director during each financial year is disclosed in the directors’ report of each annual report of the Group. the executive director has no appointments as a director outside the Group, other than to his own family companies. Principle 3: Promote ethical and responsible decision making Code of conduct the directors and management actively promote ethical and responsible decision making in line with the Group’s motto of ‘integrity, trust and expertise.’ additionally the Board and management believe that shareholder and public confidence is based upon the procedures in place internally which work to promote and ensure the highest standards of ethical behaviour are maintained. the company has developed a code of conduct (the code) which has been fully endorsed by the Board and applies to all directors and employees. the code is regularly reviewed and updated, as necessary, to ensure it reflects the highest standards of behaviour, professionalism and practices necessary to maintain confidence in the Group’s integrity and to take into account legal obligations and reasonable expectations of the company’s stakeholders. in summary, the code requires that at all times all company personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the law and company policies. a copy of the code of conduct is available on the company’s website. P a g e 2 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 3: Promote ethical and responsible decision making (continued) Share trading policy the purchase and sale of company securities by directors and employees is detailed in a written policy statement on insider and personal trading. this policy is discussed with and given to each new director or employee as part of the induction process. each director and employee is required to sign an annual declaration confirming their compliance. Generally, directors and employees are only allowed to buy or sell Fiducian securities during the six weeks immediately after the release to the market of financial information or any other major statement that may affect the share price. the compliance officer advises both directors and staff when such periods commence and conclude. the code requires employees who are aware of unethical practices within the group or breaches of the company’s trading policy to report these using the company’s whistleblower program. this can be done anonymously. the directors are satisfied that the Group has complied with its policies on trading in securities. a copy of the trading policy is available on the company’s website. Principle 4: Safeguard integrity in financial reporting Audit committee the audit committee consists of the following directors: r Bucknell (chairman) i Singh F Khouri all members of the audit committee are financially literate and have the appropriate understanding of the industry in which the Group operates. the chairman, mr r Bucknell, has relevant qualifications and experience by virtue of being a former partner in a major accounting firm and mr F Khouri is a partner in a public accounting practice and a registered company auditor. the audit committee operates in accordance with a charter which is available on the company’s website. the main responsibilities of the audit committee are to: • review, assess and approve the annual and half-year financial reports and all other financial information published by the company or released to the market. • assist the Board in reviewing the effectiveness of the organisation’s internal financial controls covering: • effectiveness and efficiency of operations. • reliability of financial reporting, including important judgements and accounting estimates. • compliance with applicable laws and regulations • areas of financial risk • security of computer systems and applications • fraud and theft • recommend to the Board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance. • consider the independence and competence of the external auditor on an ongoing basis. • review and approve the level of non-audit services provided by the external auditors and ensure that it does not adversely impact on auditor independence. • review and monitor related party transactions and assess their propriety. • report to the Board on matters relevant to the committee’s role and responsibilities. in fulfilling its responsibilities, the audit committee • receives regular reports from management and the external auditor. • meets with the external auditor at least twice a year, or more frequently if necessary. • reviews the processes the managing director and senior managers have in place to support their certifications to the Board a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 2 7 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 4: Safeguard integrity in financial reporting (continued) • reviews any significant disagreements between the auditors and management, irrespective of whether they have been resolved. • has the right of access to the external auditors at any time • provides the external auditor with a clear line of direct communication, at any time, to the chairman. the audit committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party. External auditors the company and audit committee policy is to appoint external auditors who clearly demonstrate quality and independence. the performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. Pricewaterhousecoopers has been the appointed external auditor since inception in 1996. it is Pricewaterhousecoopers policy to rotate audit engagement partners on listed companies at least every five years, and in accordance with that policy a new audit engagement partner was introduced in the financial year ended 30 june 2009. an analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in the directors’ report and in each annual report to Shareholders. it is the policy of the external auditors to provide an annual declaration of their independence to the audit committee. the external auditor normally attends the annual general meeting to be available to answer shareholder questions about the conduct of the audit and the preparation and content of the financial report and audit thereof. Principles 5 and 6: Make timely and balanced disclosures and respect the rights of Shareholders Continuous disclosure and shareholder communication the company has written policies and procedures on information disclosure that focus on continuous disclosure of any information concerning the Group that a reasonable person would expect to have a material effect on the price of the company’s shares. in addition, the company releases quarterly cash flow reports to the aSX. the managing director has been nominated as the person responsible for communications with the australian Securities exchange (aSX). this role includes responsibility for ensuring compliance with the continuous disclosure requirements in the aSX listing rules and overseeing and co-ordinating information disclosure to the aSX, analysts, brokers, shareholders, the media and the public. Shareholders can receive updates on the Group’s information released to the aSX on the aSX’s website. When analysts are briefed on aspects of the Group’s operations, the material used in such presentations is that already released to the aSX and posted on the company’s website. Primary responsibility for compliance with Group policy on balanced and timely disclosure rests with the managing director who is assisted by the Group’s General counsel and the cFo. Fiducian provides electronic reports and other communication to shareholders, who provide their email address. hard copies will be sent to other shareholders. all shareholders receive a copy of the company’s annual and half-yearly reports. in addition, the company provides opportunities for shareholders to participate through electronic means with company announcements, media briefings, details of company meetings, press releases for the last three years and financial reports for the last five years, which are all available on the aSX’s website. Principle 7: Recognise and manage risk the Board, through the audit, compliance and internal risk committees, is responsible for ensuring that there are adequate policies in relation to risk management, compliance and internal control systems. in summary, the company policies are designed to ensure strategic, operational, legal, reputational and financial risks are identified, assessed effectively and efficiently managed and monitored to achieve the Group’s objectives. P a g e 2 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 c o r P o r a t e g o v e r n a n c e s t a t e m e n t c o n t i n u e d Principle 7: Recognise and manage risk (continued) a detailed risk management Strategy and Plan is formalised which details the policies in place in relation to risk management processes, compliance and internal control systems, procedures, registers and reporting. the head of each business unit reports monthly, by exception, against the risk management Plan to the risk manager. Further, detailed checklist reports are prepared quarterly by each business unit to confirm compliance with all licensing, corporations and superannuation law requirements to the external compliance and risk committee, which then reports to the Board. in addition, the Board each year approves a strategic plan together with operating objectives and budgets which also encompasses the Group’s vision and mission. the Board monitors progress against these objectives and budgets, including the establishment and monitoring of KPis of both a financial and non-financial nature. also, regular financial reporting is received by the Board on such matters as the Group’s liquidity, funds under management inflows and outflows, funds performances and economic and financial market changes, impacts and forecasts. these measures assist the Board in managing business risk and any necessary mitigation strategies. The environment, health and safety management systems the company recognises the importance of environmental and occupational health and safety (oh&S) issues and is committed to high levels of performance, whilst recognising that the Group’s operations expose it to little safety risk or environmental hazards. Corporate reporting the managing director and Financial controller have made the following signed certifications to the Board • that the company’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the company and Group and are in accordance with relevant accounting standards; and • that the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board, and that the company’s risk management and internal compliance and control is operating efficiently and effectively in all material respects in relation to financial reporting risks. Principle 8: Remunerate fairly and responsibly. Remuneration committee the remuneration committee consists of the following non-executive directors (both of whom are independent): r Bucknell (chairman) a Koroknay (resigned 28 February 2010) F Khouri (appointed 12 july 2010) the managing director has signed a formal employment contract at the time of his appointment covering a range of matters including his duties, rights, responsibilities and any entitlements on termination. Further information on the managing director’s remuneration, including principles used to determine remuneration, is set out in the directors’ report under the heading “remuneration report” in each annual report issued by the company. in accordance with Group policy, the managing director is not permitted to enter into any transactions that would limit the economic risk of options or other unvested entitlements. the committee evaluates the managing director using criteria such as business performance, accomplishment of short and long-term strategic objectives and the development of management, taking this documented evaluation into account, and the assessment by external consultants at least every three years, when considering the managing director’s remuneration package, to ensure that it is reasonable and competitive. the remuneration committee advises the Board on remuneration and incentive policies and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for the managing director. the Board assumes responsibility for overseeing management succession planning, including the implementation of appropriate executive development programmes and ensuring adequate arrangements are in place, so that an appropriate candidate can be recruited for later promotion to the managing director’s position. the managing director is responsible for the remuneration of all other senior managers and staff. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 2 9 s h a r e h o l d e r i n f o r m a t i o n a. distriBution of equity security holders By size of holding analysis of numbers of equity security holders by size of holding, as at 19 august 2010: DISTRIBuTION : 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 50,000 50,001 - 100,000 100,001 - and over total holders OPTIONS ORDINARy ShAReS 2 26 6 13 3 1 51 93 334 107 102 21 26 683 there were no holders of a less than marketable parcel of ordinary shares. B. equi ty security holders Twenty largest quoted equity security holders. the names of the twenty largest registered shareholders of quoted equity securities as at 19 august 2010, are listed below. NAMe NuMBeR heLD PeRCeNTAge OF ISSueD ShAReS indyshri Singh Pty limited national nominees limited hSBc custody nominees (australia) limited anZ nominees limited jP morgan nominees australia limited hunter Place Services Pty ltd norcad investments Pty ltd mr inderjit Singh d r Smith holdings Pty ltd imperial Pacific Fund managers Pty ltd cogent nominees Pty ltd 1 2 3 4 5 6 7 8 9 10 11 12 mr erich Gustav Brosell 13 14 15 16 mr Walter Frederick holland 17 18 19 mr david colin archibald 20 mr victor john Plummer citigroup nominees Pty limited (cwlth Bank officers Super a/c) Bond Street custodians limited (Ganes value Growth a/c) imperial Pacific Fund managers Pty ltd Perpetual trustees consolidated limited citigroup nominees Pty limited (cwlth Small co Fund no 2) 9,142,080 3,875,111 3,014,565 1,603,182 1,456,572 1,000,000 977,998 567,500 550,000 492,402 470,889 455,975 367,829 364,536 361,000 300,000 298,707 235,575 200,000 176,757 25,910,678 28.39 12.03 9.36 4.98 4.52 3.10 3.04 1.76 1.71 1.53 1.46 1.42 1.14 1.13 1.12 0.93 0.93 0.73 0.62 0.55 80.45 unquoted equity securities as at 19 august 2010: TyPe OF SeCuRITy options – managing director options – employees options – advisers NuMBeR ON ISSue NuMBeR OF hOLDeRS 215,000 521,625 148,212 884,837 1 33 17 51 P a g e 3 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 s h a r e h o l d e r i n f o r m a t i o n c o n t i n u e d c. suBstanti al shar e ho ld e rs Substantial shareholders and associates as at 19 august 2010 (more than 5% of a class of shares) in the company are set out below: NAMe NuMBeR heLD PeRCeNTAge indyshri Singh Pty limited and associates national nominees limited hSBc custody nominees (australia) limited anZ nominees limited 9,764,580 3,875,111 3,014,565 1,603,182 30.32% 12.03% 9.36% 4.98% d. voting r ig hts the voting rights attaching to each class of equity securities are set out below: Ordinary shares on a show of hands each holder of ordinary shares has 1 vote and upon a poll 1 vote for each share held. Options no voting rights. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 1 P a g e 3 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 fiNANciAL report F i n a n c i a l r e P o r t S t a t e m e n t S o F c o m P r e h e n S i v e i n c o m e S t a t e m e n t S o F F i n a n c i a l P o S i t i o n S t a t e m e n t S o F c h a n G e S i n e Q u i t Y S t a t e m e n t S o F c a S h F l o W n o t e S t o t h e F i n a n c i a l S t a t e m e n t S d i r e c t o r S ’ d e c l a r a t i o n i n d e P e n d e n t a u d i t o r ’ S r e P o r t t o t h e m e m B e r S 3 4 3 5 3 6 3 7 3 8 7 8 7 9 this financial report covers both Fiducian Portfolio Services limited as an individual entity and the consolidated entity consisting of Fiducian Portfolio Services limited and its controlled entities. the financial report is presented in australian currency. Fiducian Portfolio Services limited is a company limited by shares, incorporated and domiciled in australia. its registered office and principal place of business is: Fiducian Portfolio Services limited level 4, 1 York Street Sydney nSW 2000 a description of the nature of the consolidated entity’s operations and its principal activities is included in the joint report of the chairman and managing director, and in the director’s report on pages 2 - 21, both of which are not part of this financial report. the financial report was authorised for issue by the directors on 27 august 2010. the company has the power to amend and reissue the financial report. through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the company. all press releases, financial reports and other information are available on our website: www.fiducian.com.au. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 3 s t a t e m e n t s o f c o m P r e h e n s i v e i n c o m e f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 NOTeS CONSOLIDATeD PAReNT eNTITy revenue from ordinary activities other income dividend from subsidiary commissions paid to advisers employee benefits expense depreciation and amortisation expense other expenses Profit before income tax expense income tax expense Profit for the year 4 5 6(a) 6(b) 7 24 2010 $’000 2009 $’000 2010 $’000 2009 $’000 22,830 21,422 19,932 18,837 441 - (5,279) (7,947) (277) 600 - (4,978) (7,956) (208) 403 - (6,309) (5,580) (175) 562 200 (6,024) (5,655) (131) (3,865) (4,079) (2,963) (3,169) 5,903 (1,791) 4,801 (1,517) 5,308 (1,606) 4,620 (1,403) 4,112 3,284 3,702 3,217 Other comprehensive income for the full year, net of tax - - - - Total comprehensive income for the year 4,112 3,284 3,702 3,217 earnings per share 33 earnings per share from profit from continuing operations attributable to the ordinary equity holders of the company: Basic earnings per share diluted earnings per share 12.71 cents 10.09 cents 12.34 cents 9.82 cents The above statements of comprehensive income should be read in conjunction with the accompanying notes. P a g e 3 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 s tat e m e n t s o f f i n a n c i a l P o s i t i o n a s a t 3 0 j u n e 2 0 1 0 NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 ASSeTS Current assets cash and cash equivalents trade and other receivables total current assets Non-current assets receivables other financial assets other financial assets at fair value through profit or loss Property, plant and equipment deferred tax assets intangible assets total non-current assets Total assets LIABILITIeS Current liabilities Payables current current tax liabilities total current liabilities Non-current liabilities Payables non current deferred tax liabilities Provisions total non-current liabilities Total liabilities Net assets eQuITy contributed equity reserves retained profits Total equity contingent liabilities commitments for expenditure 9,478 2,600 7,821 2,292 12,078 10,113 7,128 3,905 11,033 6,428 2,867 9,295 2,310 - 440 166 755 4,283 7,954 2,342 - 506 201 704 4,284 8,037 20,032 18,150 2,157 393 2,550 44 - 655 699 2,191 127 2,318 139 12 553 704 2,310 3,875 2,342 3,875 440 113 555 340 506 166 553 412 7,633 18,666 7,854 17,149 1,759 271 2,030 - - 494 494 1,679 137 1,816 - 12 424 436 3,249 16,783 3,022 15,128 2,524 16,142 2,252 14,897 7,847 342 8,594 8,160 300 6,668 7,847 342 7,953 8,160 300 6,437 16,783 15,128 16,142 14,897 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 28 29 The above statements of financial position should be read in conjunction with the accompanying notes. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 5 s t a t e m e n t o f c h a n g e s i n e q u i t y f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 Total equity at the beginning of the financial year Profit for the year 15,128 15,955 14,897 15,791 4,112 3,284 3,702 3,217 Transactions with equity holders in their capacity as equity holders contributions of equity, net of transaction costs Buy back of shares, inclusive of transaction costs dividends provided for or paid employee share options exercised 22 22 8 23 65 (378) 48 (870) 65 (378) 48 (870) (2,186) (3,330) (2,186) (3,330) 42 41 42 41 total transactions with equity holders (2,457) (4,111) (2,457) (4,111) Total equity at the end of the financial year 16,783 15,128 16,142 14,897 The above statements of changes in equity should be read in conjunction with the accompanying notes. P a g e 3 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 s t a t e m e n t s o f c a s h f l o W f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 Cash flows from operating activities receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) interest received income taxes (paid) / refunded Net cash inflow / (outflow) from operating activities Cash flows from investing activities Payments for computer software loans to related parties (associates, advisers and staff) Payments to acquire client portfolios dividend from subsidiary distributions from related trust repayment of loans by associates & advisers Payments for property, plant and equipment Net cash inflow / (outflow) from investing activities Cash flows from financing activities Payments for shares bought back Proceeds on exercise of options dividends paid Net cash inflow / (outflow) from financing activities NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 25,149 24,152 21,902 21,316 (19,169) (19,297) (17,522) (17,300) 5,980 444 (1,588) 4,855 577 (2,252) 4,380 406 (1,486) 4,016 539 (2,145) 32 4,836 3,180 3,300 2,410 (55) (223) (39) (223) (205) (387) - 26 140 (187) (1,819) (256) - 29 168 (11) (205) (1,819) - - 26 140 (11) - 200 29 168 (9) (668) (2,112) (89) (1,654) (378) 53 (870) 41 (378) 53 (870) 41 (2,186) (3,330) (2,186) (3,330) (2,511) (4,159) (2,511) (4,159) Net increase/decrease in cash held 1,657 (3,091) 700 (3,403) cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of year 7,821 10,912 6,428 9,831 9 9,478 7,821 7,128 6,428 The above statements of cash flow should be read in conjunction with the accompanying notes. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 7 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 1 summary o f s igni fi c ant ac co un ti n g Pol ici es the principal accounting policies adopted for the preparation of the financial report are set out below. these policies have been consistently applied to all the years presented, unless otherwise stated. the financial report includes separate financial statements for Fiducian Portfolio Services limited as an individual entity and the Group consisting of Fiducian Portfolio Services limited and its subsidiaries. (a) Basis of preparation this general purpose financial report has been prepared in accordance with australian accounting Standards, australian accounting interpretations, other authoritative pronouncements of the australian accounting Standards Board and the Corporations Act 2001. Compliance with IFRS the financial report of Fiducian Portfolio Services limited also complies with international Financial reporting Standards (iFrS) as issued by the international accounting Standards Board (iaSB). Historical cost convention the financial report has been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities at fair value through profit or loss, and certain classes of property, plant and equipment. Critical accounting estimates the preparation of financial reports in conformity with aiFrS requires the use of certain critical accounting estimates. it also requires management to exercise its judgement in the process of applying the Group’s accounting policies. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. (b) Principles of consolidation the consolidated financial report incorporates the assets and liabilities of all entities controlled by Fiducian Portfolio Services limited (company or parent entity) as at 30 june 2010 and the results of all controlled entities for the year then ended. Fiducian Portfolio Services limited and its subsidiaries together are referred to in this financial report as the Group. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. they are de-consolidated from the date that control ceases. the purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. investments in subsidiaries are accounted for at cost in the parent company’s financial report. intercompany transactions and balances on transactions between Group companies are eliminated. unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. P a g e 3 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (c) Revenue recognition revenue is measured at the fair value of the consideration received or receivable. amounts disclosed as revenue are net of returns and amounts collected on behalf of third parties. revenue is recognised for the major business activities as follows: (i) Management fees and commissions revenues comprising trustee and management fees are recognised on an accruals basis. (ii) Interest income interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. interest income on impaired loans is recognised using the original effective interest rate. (iii) Dividends dividends are recognised as revenue when the right to receive payment is established. (iv) Distributions from related trusts distributions from related trusts are recognised as revenue when the right to receive payment is established. (d) Income tax the income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for australia adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses. deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial reports. however, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting or taxable profit or loss. deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Fiducian Portfolio Services limited and its australian wholly-owned operating entities have not formed a tax consolidated group. (e) Operating leases leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 29). Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 3 9 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (f) Trustee company and Responsible entity the company acts as a trustee of Fiducian Superannuation Service and responsible entity of Fiducian Funds. the accounting policies adopted by the company in the preparation of the financial reports for the year ended 30 june 2010 reflect the fiduciary nature of the company’s responsibility for the assets and liabilities of the trusts. the financial reports do not include the trusts’ assets and liabilities as future economic benefits and obligations derived from the trusts’ assets and liabilities do not accrue to the company. in accordance with aaSB 137 Provisions, contingent liabilities and contingent assets, the trust assets and liabilities have not been disclosed as the directors consider the probability of the company having to meet the liabilities of the trusts is remote. (g) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or groups of assets (cash-generating units). non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. (h) Cash and cash equivalents For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (i) Trade receivables trade receivables are recognised at fair value and subsequently measured at amortised cost, less provision for impairment. trade receivables are due for settlement no more than 120 days from the date of recognition for trade receivables and financial planning fees, and no more than 30 days for other receivables. collectability of trade receivables is reviewed on an ongoing basis. receivables, which are known to be uncollectible, are written off. an allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (outside settlement terms) are considered indicators that the trade receivable is impaired. the amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. the amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. (j) Investments and other financial assets the Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, and other financial assets. the classification depends on the purposes for which the investments were acquired. management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. P a g e 4 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (j) Investments and other financial assets (continued) (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading which are acquired principally for the purpose of selling in the short term with the intention of making a profit. (ii) Loans and receivables loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. they arise when the Group provides money directly to a debtor with no intention of selling the receivable. they are included in current assets, except for those with maturities greater than 12 months after the statement of financial position date which are classified as non-current assets. loans and receivables are included in receivables in the statement of financial position in notes 10 and 11. (k) Fair value estimation the carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. (l) Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation. historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. all other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they were incurred. depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: Furniture, office equipment and computers 2 – 8 years leasehold improvements term of the lease the asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount in note 1(g). Gains and losses on disposals are determined by comparing proceeds with carrying amount. these are included in the statement of comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings. (m) Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised. instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. these units are all within the financial planning segment. Client portfolios consideration payable for the acquisition of client portfolios is deferred and amortised on a straight line basis over a period of 10 years. client portfolios are also tested for impairment annually, or more frequently if events or changes in circumstances indicate that they may be impaired, and are carried at cost less accumulated amortisation and impairment losses. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 4 1 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (m) Intangible assets (continued) IT development and software costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. costs capitalised include direct costs of materials and service and direct payroll and payroll related costs of employees’ time spent on the project. amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 5 years. the carrying amounts of all capitalised expenditure are tested for impairment annually to determine whether they exceed their recoverable amount. (n) Trade and other payables these amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. the amounts are unsecured and are usually paid within 30 days of recognition. (o) Provisions Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. a provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at reporting date. the discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. no such provision is required at year end. (p) employee benefits (i) Wages and salaries, annual leave and sick leave liabilities for wages and salaries, and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employee services up to the reporting date and are measured at the amount expected to be paid when the liabilities are settled. Sick leave is brought to account as incurred. (ii) Long service leave the liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit cost method. consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. expected future payments are discounted using market yields at the reporting date on national government bonds with terms of maturity and currency that match, as closely as possible, the estimated future cash outflows. (iii) Share-based payments Share-based compensation benefits are provided to employees and advisors via the two share option plans. information relating to these schemes is set out in note 26. P a g e 4 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (p) employee benefits (continued) no expense is recognised in respect of options granted before 7 november 2002 and vested before 1 january 2005 issued to employees for nil consideration. Shares issued following the exercise of such options are recognised at that time and the proceeds received allocated to share capital. Subsequent options issued to employees for nil considerations have the fair value of options granted under the Fiducian employee & director Share option Plan recognised as an employee benefit expense with a corresponding increase in equity. the fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. the fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. (q) Contributed equity ordinary shares are classified as equity. incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. if the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. no gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. (r) Dividends Provision is made only for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date. (s) earnings per share (i) Basic earnings per share Basic earnings per share is determined by dividing the net profit after income tax attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted earnings per share diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (t) goods and services tax revenues, expenses and assets are recognised net of the amount of associated GSt, unless the GSt incurred is not recoverable from the australian taxation office (ato). in this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. receivables and payables are stated inclusive of the amount of GSt receivable or payable. the net amount of GSt recoverable from, or payable to the ato is included with other payables in the statement of financial position. cash flows are presented on a gross basis. the GSt components of cash flows arising from investing or financing activities which are recoverable from, or payable to the ato, are presented as operating cash flow. (u) Rounding of amounts the company is of a kind referred to in class order 98/100 issued by the australian Securities and investments commission, relating to the “rounding off” of amounts in the financial report. amounts in the financial report have been rounded off in accordance with that class order to the nearest thousand dollars, or in certain cases, to the nearest dollar. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 4 3 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 (v) New accounting standards and interpretations certain new accounting standards and interpretations have been published that are not mandatory for 30 june 2010 reporting periods. the Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below. AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-Settled Sharebased Payment Transactions [AASB 2] (effective from 1 January 2010) the amendments made by the aaSB to aaSB 2 confirm that an entity receiving goods or services in a group share-based payment arrangement must recognise an expense for those goods or services regardless of which entity in the Group settles the transaction or whether the transaction is settled in shares or cash. they also clarify how the Group share-based payment arrangement should be measured, that is, whether it is measured as an equity- or a cash-settled transaction. the Group will apply these amendments retrospectively for the financial reporting period commencing on 1 july 2010. there will be no impact on the Group’s or the parent entity’s financial reports. AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132] (effective from 1 February 2010) in october 2009 the aaSB issued an amendment to aaSB 132 Financial instruments: Presentation which addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. the amendment must be applied retrospectively in accordance with aaSB 108 Accounting Policies, Changes in Accounting Estimates and Errors. the Group will apply the amended standard from 1 july 2010. as the Group has not made any such rights issues, the amendment will not have any effect on the Group’s or the parent entity’s financial reports. AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013) aaSB 9 Financial instruments addresses the classification and measurement of financial assets and is likely to affect the Group’s accounting for its financial assets. the standard is not applicable until 1 january 2013 but is available for early adoption. the Group expects this to have limited impact on the financial statements. Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective from 1 January 2011) in december 2009 the aaSB issued a revised aaSB 124 Related Party Disclosures. it is effective for accounting periods beginning on or after 1 january 2011 and must be applied retrospectively. the amendment removes the requirement for government-related entities to disclose details of all transactions with the government and other government- related entities and clarifies and simplifies the definition of a related party. the Group will apply the amended standard from 1 july 2011. When the amendments are applied, the Group and the parent will need to disclose any transactions between its subsidiaries and its associates. the impact will not be material as these transactions are currently reported in note 30. AASB Interpretation 19 Extinguishing financial liabilities with equity instruments and AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19 (effective from 1 July 2010) aaSB interpretation 19 clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap). it requires a gain or loss to be recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. the Group will apply the interpretation from 1 july 2010. it is not expected to have any impact on the Group or the parent entity’s financial reports since it is only retrospectively applied from the beginning of the earliest period presented (1 july 2009) and the Group has not entered into any debt for equity swaps since that date. P a g e 4 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 2 criti cal a cc o unti ng e stima t es a nd as sumPti on s the Group makes estimates and assumptions concerning the future. the resulting accounting estimates will, by definition, seldom equal the related actual results. the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) estimated impairment of goodwill the Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(m). the recoverable amounts of the cash-generating units have been determined based on earnings multiples requiring the use of sustainable revenue estimates and comparable market transactions. (ii) estimated impairment of client portfolios the Group tests annually whether acquired client portfolios have suffered any impairment, in accordance with the accounting policy stated in note 1(m). the recoverable amounts of cash-generating units have been determined based on discounted cash flow models which require the use of assumptions on discount rates, recurring revenues and cash flow projections. the key estimates and assumptions do not have a significant risk of causing a material adjustment within the next financial year to the carrying amount of assets and liabilities recognised in the financial report. (iii) valuation of illiquid unlisted unit trusts investments in unlisted unit trusts are generally priced at the prevailing unit price issued by the manager. Where a unit trust is frozen and redemptions are restricted the unit price issued by the manager may not reflect fair value of the underlying investment. in such cases management may determine that an additional provision is required to reflect a liquidity or valuation discount. Such provisions are subjective as a result of limited information and therefore require a high degree of estimation. 3 segment info rm at io n (a) Description of segments Business segments the Group is organised into the following divisions by product and service type. Funds Management and Administration the company operates in a single segment as trustee for a public offer superannuation fund - Fiducian Superannuation Service, operator of an investor directed Portfolio Service – Fiducian investment Service and responsible entity for managed investment schemes - Fiducian Funds. Financial Planning the company continued its specialist financial planning operations through its subsidiaries, Fiducian Financial Services Pty ltd, harold Bodinnar & associates Pty ltd and money & advice Pty ltd. these all trade under the name of Fiducian Financial Services. From 1 july 2010 these operations were consolidated into Fiducian Financial Services Pty ltd. Geographical segments the Group operates in a single geographical segment, australia. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 4 5 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 3 segment inf or matio n con tin ue d (b) Primary reporting – business segments FuNDS MANAgeMeNT AND ADMINISTRATION FINANCIAL PLANNINg INTeR- SegMeNT eLIMINATIONS CONSOLIDATeD $’000 $’000 $’000 $’000 2010 Sales to external customers intersegment sales total sales revenue other revenue total segment revenue Profit from ordinary activities before income tax expense income tax expense Profit from ordinary activities after income tax expense Segment assets Segment liabilities - 22,830 19,932 - 19,932 403 20,335 2,898 4,928 7,826 38 7,864 (4,928) (4,928) - (4,928) 5,307 596 - - 22,830 441 23,271 5,903 (1,791) 4,112 18,666 3,703 (2,337) 20,032 2,524 2,386 (1,661) 3,249 acquisitions of plant and equipment, intangibles and other non-current segment assets depreciation, amortisation and impairment 66 175 330 102 net cash inflow from operating activities 3,300 1,536 - - - 396 277 4,836 P a g e 4 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 3 segment info rm at io n con tin ue d (b) Primary reporting – business segments (continued) FuNDS MANAgeMeNT AND ADMINISTRATION FINANCIAL PLANNINg INTeR- SegMeNT eLIMINATIONS CONSOLIDATeD $’000 $’000 $’000 $’000 2009 Sales to external customers intersegment sales total sales revenue other revenue total segment revenue Profit from ordinary activities before income tax expense income tax expense Profit from ordinary activities after income tax expense - 21,422 18,837 - 18,837 562 19,399 2,585 4,565 7,150 38 7,188 (4,565) (4,565) - (4,565) 4,620 181 - - 21,422 600 22,022 4,801 (1,517) 3,284 Segment assets 17,149 2,604 (1,603) 18,150 Segment liabilities 2,252 1,697 (927) 3,022 acquisitions of plant and equipment, intangibles and other non-current segment assets depreciation, amortisation and impairment 232 131 net cash inflow from operating activities 2,410 579 77 770 - - - 811 208 3,180 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 4 7 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 3 segment info rm at io n con tin ue d (c) Other segment information (i) Segment revenue (a) Sales between segments are carried out at arm’s length and are eliminated on consolidation. the revenue from external parties reported to the board is measured in a manner consistent with that in the statements of comprehensive income. Segment revenue reconciles to total revenue from continuing operations as follows: total segment revenue intersegment eliminations total revenue from continuing operations (note 4) CONSOLIDATeD 2010 $’000 2009 $’000 27,758 (4,928) 22,830 25,987 (4,565) 21,422 the entity is domiciled in australia. the amount of its revenue from external customers in australia is $22,830,000 (2009: 21,422,000). (ii) EBITDA the board assesses the performance of the operating segments based on the measures of profit contribution and eBitda. a reconciliation of eBitda to operating profit before income tax is provided as follows: eBitda Finance costs depreciation amortisation Profit before income tax from continuing operations (iii) Segment assets CONSOLIDATeD 2010 $’000 6,182 (2) (134) (143) 5,903 2009 $’000 5,013 (4) (90) (118) 4,801 the amounts provided to the board with respect to total assets are measured in a manner consistent with that of the financial report. these assets are allocated based on the operations of the segment and the physical location of the asset. all assets are located in australia. (iv) Segment liabilities the amounts provided to the board with respect to total liabilities are measured in a manner consistent with that of the financial report. these liabilities are allocated based on the operations of the segment. P a g e 4 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 4 revenu e From continuing operations Sales revenue NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 Fees and commissions received 22,390 21,023 19,970 18,798 other revenue from ordinary activities 440 399 (38) 39 22,830 21,422 19,932 18,837 5 other inc o me interest received/receivable distributions from related trusts Fair value gains/(losses) on other financial assets at fair value through profit or loss 13 6 exPense s Profit before income tax includes the following specific expenses: (a) Depreciation, amortisation and impairment Depreciation Furniture, office equipment and computers total depreciation Amortisation leasehold improvements capitalised computer software client portfolio acquisition costs total amortisation Impairment Goodwill total depreciation, amortisation and impairment (b) Other expenses Other expenses Professional services Sales marketing and travel rental expense relating to operating leases Premises and equipment communication and computing Printing and stationery auditors doubtful debts administration and other 27 444 53 (56) 441 64 64 16 70 127 213 - 277 148 623 647 139 827 157 395 (2) 931 3,865 565 8 27 600 70 70 17 20 101 138 - 208 150 682 684 124 812 244 360 (36) 1,059 4,079 406 53 (56) 403 48 48 16 69 42 127 - 175 131 511 378 73 570 123 385 (2) 794 527 8 27 562 53 53 17 19 42 78 - 131 132 583 383 69 561 207 349 (16) 901 2,963 3,169 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 4 9 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 7 inco me tax e x Pe nse NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 (a) Income tax expense current tax deferred tax adjustments for current tax of prior periods income tax expense Deferred income tax (revenue) expense included in income tax expense comprises: decrease (increase) in deferred tax assets (decrease) increase in deferred tax liabilities 15 20 deferred tax (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense 1 ,855 1,481 1 ,626 1,337 (63) (1) (12) 48 (14) (6) 17 49 1 ,791 1,517 1 ,606 1,403 (51) (12) (63) (18) 6 (12) (2) (12) (14) 9 8 17 5,903 4,801 5,308 4,620 tax at the australian tax rate of 30% 1,771 1,440 1,592 1,386 tax effect of amounts which are not deductible (taxable) in calculating taxable income: entertainment tax offset for franked dividends Sundry items under provision in prior years income tax expense (c) Amounts recognised directly in equity aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited or credited to equity current tax – credited directly to equity 22(b) 12 - 9 13 - 16 10 - 10 11 (60) 17 1,792 1,469 1,612 1,354 (1) 48 (6) 49 1,791 1,517 1,606 1,403 - - - - - - - - (d) Tax consolidation legislation Fiducian Portfolio Services limited and its australian wholly-owned operating entities have not formed a tax consolidated group. P a g e 5 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 8 divi dend s PAReNT eNTITy 2010 $’000 2009 $’000 Ordinary shares Final ordinary franked dividend for the year ended 30 june 2009 of 3.0 cents (2008: Fully franked 6.5 cents) per share paid on 17 September 2009. 973 2,115 interim ordinary fully franked dividend for the year ended 30 june 2010 of 3.75 cents (2009: Fully franked 3.75 cents) per share paid on 15 march 2010. total dividends paid in cash 1,213 1,215 2,186 3,330 the directors have declared the payment of a final fully franked dividend for the year ended 30 june 2010 in the amount of 4.75 cents per ordinary share to be paid on shares registered on 8 September 2010 and payable on 15 September 2010. Franked dividends the franked portions of the final dividends recommended after 30 june 2010 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax for the year ending 30 june 2011. Franking credits available for subsequent financial years based on a tax rate of 30% CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 5,213 4,478 4,536 3,902 the above amounts represent the balances of the franking account as at the end of the financial year, adjusted for: (a) franking credits that will arise from the payment of the amount of the provision for income tax. (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date. (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. the consolidated amounts include franking credits that would be available to the parent entity if distributable profits from subsidiaries were paid as dividends. the impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of approximately $656,000 (2009: $416,000). a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 1 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 9 current as set s – c as h an d ca sh eq uival en ts cash at bank and in hand Bank bills of exchange deposits securing bank guarantees CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 9,328 7,672 7,006 6,306 - 150 - 149 - 122 - 122 9,478 7,821 7,128 6,428 the Group’s and the parent entity’s exposure to interest rate risk is discussed in note 35. 10 current as set s – t r ad e a nd o ther re cei v aB les amounts receivable from related entities: controlled entities related trusts Business development loans* Staff loans* other receivables Prepayments less: Provision for impairment of receivables * Refer to Note 11 for the non-current portion of these receivables. Movements in provision for impairment of receivables Balance at beginning of year Written off against provision movement Balance at end of year - - 1,846 1,752 212 24 125 465 2,672 (72) 2,600 (74) - 2 (72) 101 24 100 389 2,366 (74) 2,292 (54) - (20) (74) 1,343 1,821 212 24 53 461 3,914 (9) 3,905 (9) - - (9) 673 1,676 101 24 25 377 2,876 (9) 2,867 (9) - - (9) at 30 june 2010, a provision for impairment exists for trade receivables outstanding greater than 120 days. there has been no history of default and no material losses are expected. information about the Group’s and the parent entity’s exposure to interest rate risk in relation to trade and other receivables is provided in note 35. P a g e 5 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 11 non- cur re nt a ss e ts – r ecei vaB les Business development loans* loans to staff* less: Provision for impairment of receivables CONSOLIDATeD 2009 $’000 2010 $’000 PAReNT eNTITy 2009 $’000 2010 $’000 2,122 190 2,312 (2) 2,310 2,147 211 2,358 (16) 2,342 2,122 190 2,312 (2) 2,310 2,147 211 2,358 (16) 2,342 *Refer to Note 10 for the current portion of these receivables. loans to staff members are granted for an initial term of 3 years, at commercial interest rates and secured. the board may extend the term. (a) Impaired receivables and receivables past due an amount of $2,000 (2009: $16,000) has been provided against one loan. other than this none of the non-current receivables are impaired or past due. (b) Fair values the fair values and carrying values of non-current receivables of the Group and parent entity are as follows: Business development loans loans to staff 2010 2009 CARRyINg AMOuNT FAIR vALue CARRyINg AMOuNT FAIR vALue $’000 $’000 $’000 $’000 2,120 190 2,310 2,120 190 2,310 2,131 211 2,342 2,131 211 2,342 (c) Risk exposure information about the Group’s and the parent entity’s exposure to credit and interest rate risk is provided in note 35. the maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 3 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 12 non- cur re nt a ss e ts – oth er f ina nc ial asset s NAMe OF eNTITy COuNTRy OF INCORPORATION CLASS OF ShAReS eQuITy hOLDINg COST OF PAReNT eNTITy’S INveSTMeNT Fiducian Financial Services Pty ltd australia ordinary harold Bodinnar & associates Pty ltd australia ordinary SSP Pty ltd australia ordinary Fiducian Business Services Pty ltd australia ordinary inheritance Planners Pty ltd australia ordinary money & advice Pty ltd australia ordinary 100 100 100 100 100 100 total investment by parent entity these financial assets are carried at cost. 2010 $’000 100 3,325 - 10 - 440 3,875 2009 $’000 100 3,325 - 10 - 440 3,875 13 non- cur re nt a ss e ts – oth er f ina nc ial asset s at f a i r va lue through Pr of i t o r los s Investment in unlisted unit trust at beginning of year capital distribution revaluation - fair value gains / (losses) at end of year investment in related trust CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 506 (10) (56) 440 440 480 - (26) 506 506 506 (10) (56) 440 440 480 - 26 506 506 Financial assets held at fair value through profit and loss comprise investments into a related Fiducian trust. at the year end redemptions from this unlisted unit trust were frozen. unit prices continue to be issued by the respective managers of the underlying unlisted unit trusts but as there is no trading following the redemption freeze estimation is required in order to determine fair value. refer to assumptions in note 2(iii) for further details. changes in fair values of these financial assets at fair value through profit or loss are recorded in other income in the statement of comprehensive income. refer to note 5. Risk exposure information about the Group’s and the parent entity’s exposure to credit and price risk is provided in note 35. investments in other financial assets continue to remain illiquid and will be held to maturity. the parent entity continues to receive income and capital distributions which are expected to continue over the life of the investment. it is valued at current published prices at 30 june 2010 with no impairment charge being made against the investment. reasonably possible shifts have been disclosed in note 35(a). P a g e 5 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 14 non-current assets – ProPerty, Plant and equiPment Plant and equipment Furniture, office equipment and computers less: accumulated depreciation CONSOLIDATeD PAReNT eNTITy 2010 $’000 1,128 (962) 166 2009 $’000 1,215 (1,014) 201 2010 $’000 918 (805) 113 2009 $’000 908 (742) 166 Movements reconciliation of the carrying amounts of each class of property, plant and equipment are set out below. FuRNITuRe AND OFFICe eQuIPMeNT COMPuTeRS LeASehOLD IMPROveMeNTS $’000 $’000 $’000 Consolidated At 1 July 2008 cost or fair value accumulated depreciation net book amount year ended 30 June 2009 opening net book amount additions disposals depreciation / amortisation charge closing net book amount At 30 June 2009 cost or fair value accumulated depreciation net book amount year ended 30 June 2010 opening net book amount additions disposals depreciation / amortisation charge closing net book amount At 30 June 2010 cost or fair value accumulated depreciation net book amount 410 (330) 80 80 2 - (20) 62 412 (350) 62 62 32 (175) 150 69 269 (200) 69 329 (204) 125 125 9 - (50) 84 338 (254) 84 84 155 (98) (85) 56 395 (339) 56 TOTAL $’000 1,204 (927) 277 277 11 - (87) 201 465 (393) 72 72 - - (17) 55 465 (410) 55 1,215 (1,014) 201 55 - - (14) 41 465 (424) 41 201 187 (273) 51 166 1,129 (963) 166 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 5 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 14 non-current assets – ProPerty, Plant and equiPment continued Parent entity At 1 July 2008 cost or fair value accumulated depreciation net book amount year ended 30 June 2009 opening net book amount additions disposals depreciation / amortisation charge closing net book amount At 30 June 2009 cost or fair value accumulated depreciation net book amount year ended 30 June 2010 opening net book amount additions disposals depreciation / amortisation charge closing net book amount At 30 June 2010 cost or fair value accumulated depreciation net book amount FuRNITuRe AND OFFICe eQuIPMeNT COMPuTeRS LeASehOLD IMPROveMeNTS $’000 $’000 $’000 TOTAL $’000 172 (113) 59 59 1 - (15) 45 173 (128) 45 45 3 - (15) 33 176 (143) 33 262 (166) 96 96 8 - (38) 66 270 (204) 66 66 8 - (34) 40 278 (238) 40 465 (393) 72 72 - - (17) 55 465 (410) 55 55 - - (15) 40 465 (425) 40 899 (672) 227 227 9 - (70) 166 908 (742) 166 166 11 - (64) 113 919 (806) 113 P a g e 5 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 15 n on-cur r e nt as se t s – def er red ta x a ssets NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 The balance comprises temporary differences attributable to: doubtful debts employee benefits accrued expenditure Provision for audit and taxation services Provision for depreciation unrealised gains (losses) amortisation of client portfolios net deferred tax assets Movements: opening balance at 1 july credited to the statement of income 7 closing balance at 30 june deferred tax assets likely to be recovered within 12 months deferred tax assets likely to be recovered after 12 months 22 440 18 8 106 18 143 755 704 51 755 488 267 755 27 387 29 50 97 8 106 704 686 18 704 493 211 704 3 329 18 3 106 18 78 555 553 2 555 353 202 555 7 303 28 44 97 8 66 553 562 (9) 553 382 171 553 16 non-cu rr e nt asse ts – i nta n gi B le assets Deferred expenditure capitalised expenditure – computer software less: accumulated amortisation Client portfolios cost of acquisition of client portfolios less: accumulated amortisation goodwill Goodwill on acquisition less: accumulated amortisation and impairment 5,632 (5,446) 186 5,577 (5,363) 214 5,614 (5,431) 183 5,575 (5,362) 213 1,379 (481) 898 3,663 (464) 3,199 4,283 1,225 (354) 871 3,663 (464) 3,199 4,284 418 (261) 157 - - - 418 (219) 199 - - - 340 412 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 7 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 16 n on-cur r e nt as se t s – in ta n g iB le assets c o n tin ue d (a) Movements movements in each category are set out below: CONSOLIDATeD ACQuISITION OF CLIeNT gOODwILL ON PORTFOLIOS ACQuISITION CAPITALISeD COMPuTeR SOFTwARe* $’000 $’000 $’000 At 1 July 2008 cost accumulated amortisation and impairment net book amount year ended 30 June 2009 opening net book amount additions impairment charge amortisation charge closing net book amount At 30 June 2009 cost accumulated amortisation and impairment net book amount year ended 30 June 2010 opening net book amount additions disposals impairment charge amortisation charge** closing net book amount At 30 June 2010 cost accumulated amortisation and impairment net book amount 648 (254) 394 394 577 - (100) 871 1,225 (354) 871 871 154 - - (127) 898 1,379 (481) 898 3,663 (464) 3,199 3,199 - - - 3,199 3,663 (464) 3,199 3,199 - - - - 3,199 3,663 (464) 3,199 TOTAL $’000 9,665 (6,061) 3,604 3,604 800 - (120) 4,284 5,354 (5,343) 11 11 223 - (20) 214 5,577 (5,363) 214 10,465 (6,181) 4,284 214 55 (13) - (70) 186 4,284 209 (13) - (197) 4,283 5,632 (5,446) 186 10,674 (6,391) 4,283 * Capitalised computer software costs includes an internally generated intangible asset. The assets in this category have been amortised on the basis of a 5 year useful life. ** Amortisation of $197,000 (2009: $120,000) is included in depreciation, amortisation and impairment expense in the statement of comprehensive income. P a g e 5 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 16 no n-cu rr e nt as se t s – i nta ng iB le assets c o n tin ue d (b) Impairment tests for goodwill Goodwill is allocated to the Group’s cash-generating units (cGus) identified according to business segment. the recoverable amount of a cGu is determined based on market value calculations. these calculations use recurring income measures consistent with market valuations of similar financial services businesses. (c) Impact of possible changes in key assumptions there are no key assumptions made in the assessment of impairment of goodwill. (d) Impairment charge there has been no impairment charge recorded against goodwill during the financial year ended 30 june 2010 (2009: nil). 17 current lia Bi li tie s – t r ade a nd ot her Pa ya B les trade payables other payables amounts due to related entities client portfolio deferred settlement annual leave entitlements accrued CONSOLIDATeD PAReNT eNTITy 2010 $’000 822 487 - 44 804 2,157 2009 $’000 761 522 - 182 726 2,191 2010 $’000 819 299 47 - 594 1,759 2009 $’000 722 355 20 - 582 1,679 information about the Group’s and the parent entity’s exposure to credit and interest rate risk is shown in note 35. 18 current lia Bi li tie s – c urrent t ax l iaB ili ti es income tax 393 127 271 137 19 non c urr e nt l i aBi li ti e s – tra de and oth er Pa ya B les client portfolio deferred settlement 44 139 - - a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 5 9 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 20 non- cur r ent lia Bi li tie s – deferred ta x li a B ili ti es NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 The balance comprises temporary differences attributable to: Amounts recognised in profit and loss income receivable depreciation and amortisation net deferred tax liabilities Movements: opening balance 1 july credited to the statement of income 7 closing balance 30 june deferred tax liabilities likely to be settled within 12 months deferred tax liabilities likely to be settled after 12 months - - - 12 (12) - - - - 12 - 12 6 6 12 12 - 12 - - - 12 (12) - - - - 12 - 12 4 8 12 12 - 12 21 non- cur r ent lia Bi li tie s – Provisio ns employee benefits – long service leave 655 553 494 424 the provision for long service leave includes all pro-rata entitlements where employees have not yet completed the required period of service and also those where employees are entitled to pro-rata payments. the entire amount is presented as non-current as no material amounts are expected to be settled within the next 12 months. P a g e 6 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 22 contri But e d e qu ity (a) Share capital ordinary shares – fully paid (b) Movements in ordinary share capital CONSOLIDATeD 2009 $’000 2010 $’000 PAReNT eNTITy 2009 $’000 2010 $’000 7,847 8,160 7,847 8,160 DATe 1 july 2008 30 june 2009 DeTAILS NuMBeR OF ShAReS AveRAge PRICe opening Balance Shares bought back on-market and cancelled Buy-back transaction costs current tax credit recognised directly in equity options exercised transfer from share-based payments reserve Balance Shares bought back on-market and cancelled Buy-back transaction costs current tax credit recognised directly in equity options exercised 32,762,285 (428,550) $2.03 60,302 $0.68 32,394,037 (261,015) $1.44 75,225 $0.70 30 june 2009 transfer from share-based payments reserve Balance 32,208,247 $’000 8,982 (867) (3) - 41 7 8,160 (377) (1) - 53 12 7,847 (c) Ordinary shares ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (d) Share buy-back Between july 2009 and june 2010 the company purchased and cancelled ordinary shares on-market in order to reduce the company’s capital and surplus liquidity, as originally announced in 2005 and last extended on 4 September 2009. during the financial year the shares were acquired at an average price of $1.44 per share, with prices ranging from $1.25 to $1.57. the net cost of $376,799, and $1,130 of transaction costs, was deducted from equity. at 30 june 2010, 240,985 shares remained available to be repurchased under the most recently announced buy back. (e) Options information relating to Fiducian Portfolio Services employee & director and adviser option Plans and options issued, exercised and lapsed during the year is set out in note 26. (f) Capital risk management the Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital. this is balanced against the need to maintain a minimum level of capital as required under the Group’s aFS licences, and the Group has operated well in excess of these minimums. in order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, or issue new shares upon exercise of outstanding options. there has been no borrowing to maintain capital adequacy. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 6 1 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 23 reserves Movements Share based payments reserve Balance 1 july option expense transfer to share capital (options exercised) Balance 30 june NOTeS CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 300 54 (12) 342 259 48 (7) 300 300 54 (12) 342 259 48 (7) 300 the share based payments reserve is used to recognise the fair value of options issued but not exercised. 24 retain e d Pr of i t s movements in retained profits were as follows: Balance 1 july net profit for the year dividend from subsidiary dividends paid Balance 30 june 6,668 4,112 - (2,186) 8,594 6,714 3,284 - (3,330) 6,668 6,437 3,702 - (2,186) 7,953 6,550 3,017 200 (3,330) 6,437 8 25 k ey ma na ge me nt Pe r so n nel disc lo sures (a) Key management personnel compensation Short-term employee benefits Post employment benefits Share-based payments 648,747 650,078 648,747 650,078 23,468 - 20,103 1,635 23,468 - 20,103 1,635 672,215 671,816 672,215 671,816 detailed remuneration disclosures are provided in sections a-e of the remuneration report contained in the directors’ report. (b) equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in section d of the remuneration report. (ii) Option holdings the numbers of options over ordinary shares in the company held during the financial year by each director of Fiducian Portfolio Services limited, including their personally related and associated entities, are set out below. no shares were granted during the period as compensation. P a g e 6 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 25 key manage me nt Pe r so nn el discl osures c o n tin ued (b) equity instrument disclosures relating to key management personnel (continued) 2010 NAMe BALANCe AT The START OF The yeAR gRANTeD DuRINg The yeAR AS ReMuNeRATION exeRCISeD LAPSeD DuRINg The yeAR BALANCe AT The eND OF The yeAR veSTeD AND exeRCISABLe i Singh* F Khouri** 215,000 - - - - - - - 215,000 215,000 - - * 40,000 options are proposed to be issued in accordance with Mr Singh’s employment contract after the end of the year. ** 7,374 Adviser options are held by an entity in which F Khouri has an interest. 2009 NAMe BALANCe AT The START OF The yeAR gRANTeD DuRINg The yeAR AS ReMuNeRATION exeRCISeD LAPSeD DuRINg The yeAR BALANCe AT The eND OF The yeAR veSTeD AND exeRCISABLe i Singh* F Khouri** 200,000 - - - 15,000 - - - 215,000 200,000 - - * No options are proposed to be issued in accordance with Mr Singh’s employment contract after the end of the year. ** 10,682 Adviser options are held by an entity in which F Khouri has an interest. note: the assessed fair value at grant date of options granted to the individuals is detailed in note 26. (iii) Shareholdings the numbers of shares in the company held during the financial year by each director of Fiducian Portfolio Services limited, including their personally related and associated entities, are set out below. there were no shares granted during the period as compensation. 2010 NAMe i Singh r e Bucknell a Koroknay F Khouri c Stone 2009 NAMe i Singh r e Bucknell a Koroknay F Khouri BALANCe AT The START OF The yeAR ReCeIveD DuRINg The yeAR ON The exeRCISe OF OPTIONS OTheR ChANgeS DuRINg The yeAR BALANCe AT The eND OF The yeAR 9,662,380 1,069,000 - 134,373 - - - - - - 102,200 (69,000) - 60,000 - 9,764,580 1,000,000 - 194,373 - BALANCe AT The START OF The yeAR ReCeIveD DuRINg The yeAR ON The exeRCISe OF OPTIONS OTheR ChANgeS DuRINg The yeAR BALANCe AT The eND OF The yeAR 9,583,807 1,050,000 - 107,373 - - - - 78,573 19,000 - 27,000 9,662,380 1,069,000 - 134,373 Shares provided on exercise of options no ordinary shares in the company were provided as a result of the exercise of remuneration options to any director of Fiducian Portfolio Services limited and other key management personnel of the Group during the period (2009: nil). entities with which a director has an interest exercised no adviser options during the year (2009: nil). no amounts are unpaid on any shares issued on the exercise of options. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 6 3 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 25 key manage me nt Pe r so nn el discl osures c o n tin ued (c) Loans to directors no loans were made to directors during the financial year (2009: nil). (d) Other transactions with key management personnel a director, mr r e Bucknell, is a director and shareholder of hunter Place Services Pty ltd, a company which provides his services as a director to the company. a former director, mr a Koroknay, was a consultant with the legal firm hWl ebsworth, which provided legal services to the Group during the year on normal commercial terms and conditions. a director, mr F Khouri, is an authorised representative under the Fiducian Financial Services Pty ltd australian Financial Services licence and is a director and shareholder of hawkesbury Financial Services Pty ltd, which is a franchisee of Fiducian Financial Services Pty ltd. hawkesbury Financial Services Pty ltd places business with and receives commissions from the company. all transactions are on normal commercial terms and conditions. aggregate amounts of each of the above types of other transactions with directors of Fiducian Portfolio Services limited: Amounts recognised as an expense directors’ fees and committee fees legal & consulting fees commission paid or payable Shares under option CONSOLIDATeD 2010 $ 2009 $ 218,987 218,503 - - 237,213 207,443 456,200 425,946 unissued ordinary shares of Fiducian Portfolio Services limited under option at the date of this report are disclosed in note 26 of the financial report. no option holder has any right under the options to participate in any other share issue of the company or any other entity until after the exercise of the option. Shares issued on the exercise of options the details of ordinary shares of Fiducian Portfolio Services limited issued during the year ended 30 june 2010 on the exercise of options granted under the Fiducian Portfolio Services limited employee & director Share option Plan and the adviser Share option Plan are disclosed under note 26 to the financial report. P a g e 6 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 26 share Bas ed Pay me nt s (a) employee and director share option plan (eSOP) the establishment of the Fiducian Portfolio Services limited eSoP was approved by shareholders at the 2000 annual general meeting. the eSoP is designed to provide long-term incentives for senior managers and directors to deliver long-term shareholder returns. under the plan, participants are granted options which only vest if certain performance standards are met. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or receive any guaranteed benefits. the parent entity has established the eSoP, which is designed to provide incentives to employees and directors. all grants of options under the eSoP are subject to compliance with the corporations act 2001 and aSX listing rules. the directors may, from time to time, determine which employees and directors may participate in the eSoP, and the number of options that may be issued to them. the directors have an absolute discretion to determine who will participate and the number of options that may be issued. the eSoP provides for an upper limit on the number of options that may be outstanding, the exercise price, exercise period and expiry, and adjustments in the event of capital restructuring. the directors have resolved that the eSoP no longer applies to non-executive directors. options are granted under the plan for no consideration. employee options are granted for a five year period where 35% vest after one year, a further 45% vest after two years and the remaining 15% vest after three years. director options vest after one year. options granted under the plan carry no dividend or voting rights. When exercisable, each option is converted into one ordinary share on payment of the exercise price. the exercise price of options is based on the volume weighted average price at which the company’s share are traded on the australian Securities exchange during the month preceding the date the options are granted. the directors determined to issue no options (2009:260,000 at an exercise price of $2.30) to staff during the year, and no options expired (2009: 500) in respect of the year ended 30 june 2010. Subject to prior approval by shareholders, the company may issue each year a maximum of 100,000 options to the executive director for each year of service, subject to performance criteria. the directors have resolved to issue 40,000 options at an exercise price of $1.28 (2009: nil) to the executive director in respect of the year ended 30 june 2010, subject to shareholder approval. (b) Adviser share option plan (ASOP) the parent entity has established the aSoP, which is designed to provide incentives to adviser groups to reflect their ongoing commitment by way of contributions of income to the parent entity. all grants of options under the aSoP are subject to compliance with the corporations act 2001 and aSX listing rules. options granted under the plan carry no dividend or voting rights. When exercisable, each option is converted into one ordinary share on payment of the exercise price. the board may invite an adviser group to participate in the aSoP. Where the adviser group has accepted this invitation, the adviser group will be eligible to participate in the aSoP in a particular year. no consideration is payable in respect of acceptance of an invitation to participate nor for the grant of options. each option allows the holder to acquire one ordinary share on exercise of the option provided income to the Group is maintained in the three years after issue, or the options lapse in whole or in part. the number of options to be issued in respect of an adviser group for a financial year is determined (by a formula) at the date of announcement of Fiducian’s audited annual results to the aSX following the financial year. the aSoP provides for an upper limit on the number of options that may be outstanding, the exercise price, exercise period and expiry, and adjustments in the event of capital restructuring. the aSoP has been extended to 2011 or when 17,347,000 options and preference shares have been issued. options are granted for no consideration. the total adviser options and preference shares issued since inception total 6,847,517. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 6 5 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 26 share Bas e d Payme nts c o nt in ue d Set out below are summaries of options granted under various option plans: gRANT DATe exPIRy DATe BALANCe AT exeRCISeD exeRCISe START OF The DuRINg The DuRINg The yeAR gRANTeD PRICe yeAR yeAR FORFeITeD BALANCe AT eND OF The yeAR DuRINg The yeAR NuMBeR NuMBeR NuMBeR NuMBeR NuMBeR veSTeD AND exeRCISABLe AT eND OF The yeAR NuMBeR Consolidated and parent entity – 2010 ESOP – Managing Director – Note 26(a) 26 oct 2006 26 oct 2011 $1.29 30 oct 2007 30 oct 2012 $2.65 29 oct 2008 29 oct 2013 $2.30 ESOP – Staff – Note 26(a) 24 aug 2004 24 aug 2009 $0.55 22 Feb 2005 22 Feb 2010 $0.73 3 jul 2006 3 jul 2011 31 jul 2007 31 jul 2012 $1.29 $2.65 27 aug 2008 27 aug 2013 $2.30 ASOP – Advisers – Note 26(b) 23 aug 2005 23 aug 2010 $0.87 29 aug 2006 29 aug 2011 $1.68 30 Sept 2007 30 Sept 2012 $3.45 30 Sept 2008 30 Sept 2013 $2.70 total 100,000 100,000 15,000 215,000 27,000 33,400 133,250 130,000 260,000 583,650 94,603 58,567 25,330 31,900 210,400 1,009,050 Weighted average exercise price $1.92 - - - - - - - - - - - - - - - - - 100,000 100,000 100,000 100,000 15,000 15,000 215,000 215,000 - - - - 131,625 131,625 130,000 104,000 260,000 91,000 521,625 326,625 - - - - (27,000) (33,400) (1,625) - - (62,025) (13,200) - - - - - - - - - - - 81,403 - - - (48,500) 10,067 (488) 24,842 31,900 81,403 10,067 - - (13,200) (48,988) 148,212 91,470 (75,225) (48,988) 884,837 633,095 $0.70 $1.70 $2.03 $1.85 the weighted average share price at the date of exercise of options exercised during the year ended 30 june 2010 was $1.50 (2009 - $2.03). the volume weighted average remaining contractual life of share options outstanding at the end of the period was 2.06 years (2009 - 2.85 years). P a g e 6 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 26 share Bas ed Pay me nt s co n tin ue d gRANT DATe exPIRy DATe BALANCe AT exeRCISeD exeRCISe START OF The DuRINg The DuRINg The yeAR gRANTeD PRICe yeAR yeAR FORFeITeD BALANCe AT eND OF The yeAR DuRINg The yeAR NuMBeR NuMBeR NuMBeR NuMBeR NuMBeR veSTeD AND exeRCISABLe AT eND OF The yeAR NuMBeR Consolidated and parent entity – 2009 ESOP – Managing Director – Note 26(a) 26 oct 2006 26 oct 2011 $1.29 30 oct 2007 30 oct 2012 $2.65 29 oct 2008 29 oct 2013 $2.30 ESOP – Staff – Note 26(a) 24 aug 2004 24 aug 2009 $0.55 22 Feb 2005 22 Feb 2010 $0.73 3 jul 2006 3 jul 2011 31 jul 2007 31 jul 2012 $1.29 $2.65 100,000 100,000 - 200,000 29,000 38,400 138,875 130,000 - - 15,000 15,000 - - - - 27 aug 2008 27 aug 2013 $2.30 - 260,000 - - - - (2,000) (5,000) (5,125) - - - - - - - - 100,000 100,000 100,000 100,000 15,000 - 215,000 200,000 27,000 33,400 27,000 33,400 (500) 133,250 106,600 - - 130,000 260,000 45,500 - 336,275 260,000 (12,125) (500) 583,650 212,500 ASOP – Advisers – Note 26(b) 3 Sept 2003 3 Sept 2008 $0.48 24 aug 2004 24 aug 2009 $0.55 78,501 19,637 23 aug 2005 23 aug 2010 $0.87 122,806 29 aug 2006 29 aug 2011 $1.68 30 Sept 2007 30 Sept 2012 $3.45 70,382 31,480 - - - - - 30 Sept 2008 30 Sept 2013 $2.70 - 31,900 (14,941) (63,560) (19,637) - - - - - (13,599) (14,604) 94,603 94,603 - - - (11,815) 58,567 (6,150) 25,330 - 31,900 - - - total 859,081 306,900 (60,302) (96,629) 1,009,050 507,103 322,806 31,900 (48,177) (96,129) 210,400 94,603 Weighted average exercise price $1.56 $2.34 $0.68 $0.88 $1.92 $1.53 a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 6 7 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 26 share Bas e d Payme nts c o nt in ue d Fair value of options granted no options were issued during the year ended 30 june 2010. the assessed fair value at grant date of options granted during the year ended 30 june 2009 was 11 cents per option for executive director, 39 cents per option for staff and 17 cents per share for advisers. the fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. the model inputs for options granted during the year ended 30 june 2009 included: eSOP – DIReCTOR 2009 2010 eSOP – eMPLOyeeS 2009 2010 eSOP – ADvISeRS 2010 2009 (a) options are granted for no consideration, have a five year life, and each tranche vests and is exercisable progressively after 1 year. (b) exercise price (c) grant date: (d) expiry date: (e) share price at grant date: (f) expected price volatility of the company’s shares: (g) expected dividend yield: (h) risk-free interest rate: (i) lapse (exit) rate - - - - - - - $2.30 29 oct 2008 29 oct 2013 $1.80 56% 4.4% 6.00% 0% - - - - - - - - $2.30 27 aug 2008 27 aug 2013 $2.30 56% 4.4% 7.25% 25% - - - - - - - - $2.70 30 Sep 2008 30 Sep 2013 $2.10 56% 4.4% 7.00% 46% the expected price volatility is based on the historic volatility at grant date (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. (c) expenses arising from share-based payment transactions total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows: CONSOLIDATeD PAReNT eNTITy 2010 $ 2009 $ 2010 $ 2009 $ options issued under eSoP 53,276 56,377 53,276 56,377 P a g e 6 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 27 remun e ra tio n o f au di t ors during the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: CONSOLIDATeD PAReNT eNTITy 2010 $ 2009 $ 2010 $ 2009 $ (a) Audit services Pricewaterhousecoopers australian firm: audit and review of financial reports 114,000 108,300 104,000 102,800 other audit related work, including audit of entities for which the parent entity is trustee, manager or responsible entity 281,300 252,000 281,300 246,500 (b) Non-audit services Pricewaterhousecoopers australian firm: non audit-related services total remuneration - - - - 395,300 360,300 385,300 349,300 it is the Group’s policy to employ Pricewaterhousecoopers on assignments additional to their statutory audit duties where Pricewaterhousecoopers’ expertise and experience with the Group are important. 28 conti ngen t li a Bi li tie s the parent entity and Group had contingent liabilities at 30 june 2010 in respect of: (a) bank guarantees for property leases of parent and group entities amounting to $567,000. (2009: $579,000). (b) bank guarantee for aFS licence of a subsidiary amounting to $20,000 (2009: $20,000). Client retention service fee under the terms of salary agreements made by harold Bodinnar & associates Pty ltd with certain long serving salaried financial advisers, those advisers are entitled to a service fee subsequent to their retirement from the company, under conditions designed to protect the company’s client base. eligibility to this service fee is based on service period and certain income criteria that may increase or decrease prior to retirement date and in the subsequent two years. Payment of this fee is subject to further ongoing conditions, including client retention, the provision of support services to the entity to achieve this aim, and is payable in arrears out of income earned from the retained client base over a period of two years. the benefit is personal to the adviser, is not transferable, can be stopped by or repaid to harold Bodinnar & associates Pty ltd should there be a breach of conditions, and will be reduced if the adviser purchases some or all of their client base at or after retirement. no material losses are anticipated in respect of the above contingent liabilities, as the expected reduction in servicing cost post retirement is estimated to offset the benefit payment. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 6 9 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 29 com mi tme nt s f or e x Pe ndit ure (a) Capital expenditure commitments payable within one year - - - - CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 (b) Operating leases the Group leases various offices under non-cancellable operating leases expiring within 12 months to five years. the leases have varying terms, escalation clauses and renewal rights. on renewal, the terms of the leases are renegotiated. Within one year later than one year but not later than 5 years 358 1,338 1,696 284 952 1,236 358 1,332 1,690 284 946 1,230 30 related Par ty tr ansac tio ns (a) Parent entity the parent entity within the Group is Fiducian Portfolio Services limited. (b) Subsidiaries interests in subsidiaries are set out in note 12. the consolidated financial report incorporate the assets, liabilities and results of Fiducian Financial Services Pty ltd, harold Bodinnar & associates Pty ltd, money & advice Pty ltd and Fiducian Business Services Pty ltd in accordance with the accounting policy described in note 1(b). (c) Key management personnel disclosures relating to key management personnel are set out in note 25. (d) Transactions with related parties transactions between Fiducian Portfolio Services limited and other entities in the wholly-owned group during the years ended 30 june 2010 and 2009 consisted of: a. commission paid by Fiducian Portfolio Services limited b. Provision of software by Fiducian Portfolio Services limited c. recovery of group costs, such as insurance, by Fiducian Portfolio Services limited d. interest free working capital advanced by and repaid to Fiducian Portfolio Services limited e. collection of fees and commission by aFS licensed companies on behalf of other members of the group. the above transactions were on normal commercial terms and conditions and at market rates. P a g e 7 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 30 related Par ty tr ansac ti ons c o n tin ue d (d) Transactions with related parties (continued) the following transactions occurred with related parties: OwNeRShIP INTeReST* 2010 $ 2009 $ 2010 $ 2009 $ CONSOLIDATeD PAReNT eNTITy wholly owned group Fiducian Financial Services Pty ltd Dividend paid to parent entity Commission paid Expenses paid and systems costs recovered harold Bodinnar & associates Pty ltd Commissions paid Management fees and marketing incentive money & advice Pty ltd Commissions paid Expenses paid and systems costs recovered 100% 100% 100% Fiducian Business Services Pty ltd 100% - - - - - - - - - - - - - - - - - 2,833,808 376,684 200,000 2,612,676 381,855 2,004,548 245,453 1,875,439 169,091 89,343 264,470 76,413 334,075 - - Related trusts Fiducian investment Service Operator fees income Fiducian Superannuation Service Trustee fees income Fiducian Funds Responsible entity fees income Director associated entities hawkesbury Financial Services Pty ltd Commissions paid nil nil nil 4,200,166 4,025,874 4,200,166 4,025,874 12,417,159 11,766,421 12,417,159 11,766,421 3,344,955 3,091,198 3,344,955 3,091,198 237,213 207,443 - - * “Ownership Interest” means the percentage of capital of the company held directly and/or indirectly through another entity by Fiducian Portfolio Services Limited a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 1 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 30 related Par ty tr ansac ti ons c o nt in ue d e) Outstanding balances arising from sales/purchases of services provided the following balances are outstanding at the reporting date in relation to transactions with related parties: current receivables (sales of goods and services) current receivables (income from related trusts) current payables (purchases of goods and services) PAReNT eNTITy 2010 $ 2009 $ 1,342,895 673,951 1,821,241 1,676,036 3,164,136 2,349,987 46,435 20,467 no provisions for doubtful receivables have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad and doubtful receivables due from related parties. 31 econom ic de Pe nd enc y the trading activity of the entity depends upon remaining as operator of the Fiducian investment Service, trustee of Fiducian Superannuation Service and responsible entity of Fiducian Funds. 32 reconc i liatio n o f Pr ofit o r loss af ter in c ome t a x t o net cas h inf loW f ro m oPe rat in g act ivi tie s Profit for the year non-cash employee benefit expense dividend and investment income depreciation and amortisation net (gain) loss on sale of non-current assets Changes in operating assets and liabilities: decrease/(increase) in accounts receivable increase/(decrease) in income tax payable decrease/(increase) in other assets at fair value increase/(decrease) in trade creditors increase/(decrease) in other creditors increase/(decrease) in related entities balance decrease/(increase) in future income tax benefit increase/(decrease) in provision for deferred income tax CONSOLIDATeD PAReNT eNTITy 2010 $’000 4,112 218 (53) 277 165 (168) 266 56 61 (35) - (51) (12) 2009 $’000 3,284 200 (8) 208 - 544 (723) (27) 1 (287) - (18) 6 2010 $’000 3,702 122 (53) 175 10 (230) 134 56 97 (56) (643) (2) (12) 2009 $’000 3,217 157 (208) 131 - 527 (759) (27) (14) (386) (245) 9 8 net cash inflow from operating activities 4,836 3,180 3,300 2,410 P a g e 7 2 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 33 earn ing s Pe r shar e earnings per share using weighted average number of ordinary shares outstanding during the period: (a) Basic earnings per share Profit from continuing operations attributable to the ordinary equity of the company (b) Diluted earnings per share Profit from continuing operations attributable to the ordinary equity and potential ordinary equity of the company (c) weighted average number of shares used as the denominator Weighted average number of shares used as the denominator: Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share CONSOLIDATeD 2010 2009 12.71 cents 10.09 cents 12.34 cents 9.82 cents CONSOLIDATeD 2010 NuMBeR 2009 NuMBeR 32,351,179 32,537,946 959,693 914,124 33,310,872 33,452,070 (d) Reconciliation of earnings used in calculating basic and diluted earnings per share net profit and earnings used calculating basic and diluted earnings per share CONSOLIDATeD 2010 $’000 4,112 2009 $’000 3,284 (e) Information concerning the classification of securities ptions granted to employees under the Fiducian Portfolio Services limited employee Share option Plan (eSoP) and adviser Share option Plan (aSoP) are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent that they are dilutive. the options have not been included in the determination of basic earnings per share. details relating to the options are set out in note 26. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 3 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 34 even ts oc cur ri ng aft e r B a lan ce da te / r ePort in g da te on 1 july 2010 the operations of harold Bodinnar & associates Pty ltd and money & advice Pty ltd were merged into Fiducian Financial Services Pty ltd. all entities traded as ‘Fiducian Financial Services’ under the same aFS licence. the merger will provide some ongoing administrative savings and marketing consistency within the financial planning division. under the rules of the adviser Share option Plan, the directors are required to grant options to advisers within three months of the announcement of the Group’s results to the australian Securities exchange. no options are being issued this year (2009: nil). under the same rules no adviser options (2009: 48,988) are expected to be cancelled subsequent to the end of the financial year, subject to any regulatory approvals if required. under the rules of the employee and director Share option Plan the directors have not granted any options to employees after year end (2009: nil), but 40,000 options are proposed to be granted at an exercise price of $1.28 to the managing director (2009: nil), subject to shareholder approval. to the date of this report no employee options have lapsed and no options have been lapsed or exercised by the managing director. 35 financ i al ri sk ma nage me nt the Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk), credit risk and liquidity risk. the Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. the Group uses different methods to measure different types of risk to which it is exposed. these methods include sensitivity analysis in the case of interest rate and other price risks, and aging analysis for credit risk. the Board sets policies which are implemented by management, reviewed monthly for interest rate risk, credit risk and the investment of excess liquidity. the Group and parent entity hold the following financial instruments: Financial assets cash and cash equivalents trade and other receivables Financial assets at fair value through profit or loss Financial liabilities trade and other payables CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 9,478 4,910 440 7,821 4,634 506 7,128 6,215 440 6,428 5,209 506 14,828 12,961 13,783 12,143 2,201 2,330 1,759 1,679 P a g e 7 4 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 35 financia l r is k m anage m en t c o n tin ue d (a) Market risk (i) Foreign exchange risk the Group operates only in australia and is not exposed to foreign exchange risk. (ii) Price risk the Group and parent entity are exposed to equity securities and other investment price risk. this arises from (a) unlisted investments held by the Group and classified on the statement of financial position at fair value through profit or loss, and (b) from the derivation of fees for the management of investment and superannuation funds. Price risk on unlisted investments is discussed in note 13 and sensitivity analysis is conducted on the upper range of outcomes of -10%. it is unlikely this investment will increase in value. to minimise its price risk the Group and parent entity offer a range of investment funds in a variety of domestic and international equities, property and fixed interest securities, and across a number of investment managers. exposure to these funds is driven by clients and their financial advisers, and is not managed by the Group. not all of the funds are publicly traded or invest in publicly traded securities. Sensitivity analysis is therefore based on the assumption that all funds under advice, administration and management had increased or decreased by 10% (2009 - 10%) against actual market movements, with all other variables held constant other than commission that is paid out of such income. revenue impact from -10% movement in valuation of unlisted unit trusts revenue impact from +/- 10% movement in funds under administration and management (iii) Interest rate risk IMPACT ON POST-TAx PROFIT IMPACT ON eQuITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 (44) (51) (44) (51) 1,681 1,581 1,681 1,581 the Group’s main interest rate risk arises from deposits in australian dollars, and short term loans to staff and advisers. the group has no borrowings. cash at bank and on deposit Staff & adviser loans 30 JuNe 2010 30 JuNe 2009 weighted average interest rate % 4.1% 6.9% Balance $’000 9,478 2,546 12,024 weighted average interest rate % 2.0% 5.4% Balance $’000 7,821 2,467 10,288 Bank deposits are at call and staff and adviser loans have terms extending between 2 and 9 years, and may be repayable sooner in certain circumstances. the Group’s main interest rate risk arises from cash and cash equivalents with variable interest rates. at 30 june 2010 if interest rates change by +/- 100 basis points (2009: +/- 100 basis points) from the year end rates with all other variables held constant, post-tax profit would have been $84,000 higher or lower (2009: 72,000). a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 5 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 35 financia l r is k m anage m en t c o n tin ue d (b) Credit risk the Group and parent entity have negligible credit risk from receivables, as management fee and commission income is received within one month of it falling due, and commissions are only paid following the receipt of this income. the credit quality of other financial assets can be assessed against external credit ratings as follows: cash and cash equivalents aa investment in related trust unrated loans to staff and advisers unrated CONSOLIDATeD PAReNT eNTITy 2010 $’000 2009 $’000 2010 $’000 2009 $’000 9,478 9,478 7,821 7,821 7,128 7,128 6,428 6,428 440 506 440 506 2,310 2,342 2,310 2,342 the maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised on page 74. (c) Liquidity risk the Group and parent entity maintain sufficient liquid reserves to meet all foreseeable working capital, investment and regulatory licensing requirements. the group has no undrawn credit or other borrowing facilities in place. due in less than 1 year due between 1 and 2 years (d) Fair value estimation 2,157 44 2,201 2,191 139 2,330 1,759 - 1,759 1,679 - 1,679 the fair value of financial assets and financial liabilities must be estimated for recognition and measurements or for disclosure purposes. as of 1 july 2009, Fiducian Portfolio Services ltd has adopted the amendment to aaSB 7 Financial instruments: disclosures which requires disclosure of fair value measurements by levels of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) P a g e 7 6 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 n o t e s t o t h e f i n a n c i a l s t a t e m e n t s c o n t i n u e d f o r t h e y e a r e n d e d 3 0 j u n e 2 0 1 0 35 financia l r is k m anage m en t c o nt in ue d (d) Fair value estimation (continued) the following table presents the group’s and the parent entity’s assets and liabilities measured and recognised at fair value according to the fair value hierarchy at 30 june 2010. comparative information has not been provided as permitted by the transitional provisions of the new rules. Parent and group - at 30 June 2010 assets other financial assets at fair value through profit or loss investment in related trust total assets Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 - - - - 440 440 440 440 the fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. the quoted market price used for financial assets held by the Group is the current bid price. these instruments are included in level 1. the Group holds none of these investments. the fair value of financial instruments that are not traded in an active market (for example, debt investments and derivative financial instruments) is determined using valuation techniques. these instruments are included in level 2. the Group held none of these investments during the year. in the circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such instruments are included in level 3. the Group’s accounting policy is to value the investment in related trust at fair value through profit or loss, made difficult as a result of a redemption freeze. the Group has performed a review at 30 june 2010 which focussed on directional movements in the credit quality of the investments held by the underlying fund managers since the prior year, as well as monitoring the underlying funds for indicators of impairment. From this review the Group believes the value recorded represents fair value, with reasonably possible changes in fair value shown in note 35(a)(ii). the following table presents the changes in level 3 instruments for the year ended 30 june 2010: Parent and group opening balance transfers in to level 3 capital distribution losses recognised in profit or loss Investment in related trust $’000 506 - (10) (56) 440 the carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short- term nature. the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments. the fair value of current borrowings approximates the carrying amount, as the impact of discounting is not significant. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 7 d i r e c t o r s ’ d e c l a r a t i o n in the directors’ opinion: (a) the financial statements and notes set out on pages 33 to 77 are in accordance with the corporations act 2001, including (i) complying with accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 june 2010 and of their performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. note 1(a) confirms that the financial statements also comply with international Financial reporting Standards as issued by the international accounting Standards Board. the directors have been given the declarations by the managing director and Financial controller required by section 295a of the corporations act 2001. this declaration is made in accordance with a resolution of the directors. i Singh Director Sydney, 27 august 2010 P a g e 7 8 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 i n d e P e n d e n t a u d i t o r ’ s r e P o r t t o t h e m e m B e r s o f f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d Independent auditor’s report to the members of Fiducian Portfolio Services Limited PricewaterhouseCoopers ABN 52 780 433 757 Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999 Report on the financial report We have audited the accompanying financial report of Fiducian Portfolio Services limited (the company), which comprises the statement of financial position as at 30 june 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Fiducian Portfolio Services limited and the Fiducian Portfolio Services group (the consolidated entity). the consolidated entity comprises Fiducian Portfolio Services limited and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report the directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with australian accounting Standards (including the australian accounting interpretations) and the Corporations Act 2001. this responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. in note 1, 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. these auditing 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 entity’s preparation and fair presentation of the financial report 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 entity’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. our procedures include reading the other information in the annual report to determine whether it contains any material inconsistencies with the financial report. our audit did not involve an analysis of the prudence of business decisions made by directors or management. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. liability limited by a scheme approved under Professional Standards legislation. a n n u a l r e P o r t 2 0 1 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 P a g e 7 9 i n d e P e n d e n t a u d i t o r ’ s r e P o r t t o t h e m e m B e r s o f f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d c o n t i n u e d Independence in conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion in our opinion: (a) the financial report of Fiducian Portfolio Services limited and the Fiducian Portfolio Services group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company and consolidated entity’s financial position as at 30 june 2010 and of their performance for the year ended on that date; and (ii) complying with australian accounting Standards (including the australian accounting interpretations) and the Corporations Regulations 2001 and (b) the consolidated financial report and notes also comply with international Financial reporting Standards as disclosed in note 1. Report on the Remuneration Report We have audited the remuneration report included in page 13 to 18 of the directors’ report for the year ended 30 june 2010. 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. Auditor’s opinion in our opinion, the remuneration report of Fiducian Portfolio Services limited for the year ended 30 june 2010, complies with section 300a of the Corporations Act 2001. Matters relating to the electronic presentation of the audited financial report this auditor’s report relates to the financial report and remuneration report of Fiducian Portfolio Services limited (the company) for the year ended 30 june 2010 included on Fiducian Portfolio Services limited’s web site. the consolidated entity’s directors are responsible for the integrity of the Fiducian Portfolio Services limited’s web site. We have not been engaged to report on the integrity of this web site. the auditor’s report refers only to the financial report and remuneration report named above. it does not provide an opinion on any other information which may have been hyperlinked to/from these statements or the remuneration report. if users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report and remuneration report to confirm the information included in the audited financial report and remuneration report presented on this web site. Pricewaterhousecoopers darren ross Partner Sydney 27 august 2010 P a g e 8 0 f i d u c i a n P o r t f o l i o s e r v i c e s l i m i t e d a c n 0 7 3 8 4 5 9 3 1 a n n u a l r e P o r t 2 0 1 0 Fiducian PortFolio ServiceS limited level 4, 1 York Street, Sydney nSW 2000 australia GPo Box 4175, Sydney nSW 2001 australia telephone: +61 (2) 8298 4600 Fax: + 61 (2) 8298 4611 www.fiducian.com.au

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