FIDUCIAN PORTFOLIO
SERVICES LIMITED
ANNUAL
REPORT
2014
ACN 073 845 931
i n t e g r i t y t r u s t e x p e rt i s e
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.
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 S
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 1
3 4
3 5
3 6
3 7
3 9
4 0
8 7
8 8
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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 2014.
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FINANCIAL INFORMATION
Results for 2013-2014
Consolidated Reportable Profit after income tax for the 2014 financial year is $3.98 million and represents an increase
of 17.4% in comparison to $3.39 million for the prior year. The earnings before interest expense, tax, depreciation and
amortisation (EBITDA) was $6.76 million compared with $5.35 million for the same period last year – an increase of 26.4%.
Reportable Profit is impacted by the accounting treatment to acquisitions by amortisation of $0.52 million. As such,
Underlying Net Profit after Tax adjusted for amortisation is $4.50 million and represents adjusted earnings per share of 14.5
cents for the full year.
In summary, all operational divisions contributed positively to the result. The acquisitions executed last year have assimilated
well within our business. Our system developments finalised predominantly last financial year also delivered greater cost
efficiency and operational control.
In respect of financial planning, the Future of Financial Advice (FOFA) regulatory changes now appear accepted within the
industry. As we have said in the past, our financial planning services were FOFA compliant well in advance of the regulatory
changes being proposed. In addition, further regulatory change has come through the new Prudential Standards which have
a significant impact on our activities as Trustee of a Superannuation Fund. To comply with these standards, we expect to
introduce changes to the corporate structure of Fiducian Portfolio Services Limited, which is currently the parent listed entity
but also the trustee of the Fiducian Superannuation Service, the Responsible Entity of Fiducian Funds and the Operator of
Fiducian Investment Services our IDPS wrap platform. In coming months, we plan to separate the Parent Entity from Trustee
and Responsible Entity functions. While this is a significant activity, we remain confident that it will not impact on our
operations or growth in funds inflows whilst enhancing the group’s corporate governance.
Despite operational challenges imposed by legislative change over the past few years, net operating expenses have been
further reduced by 6.9% in 2014 (2013 decreased by 14.6%).
Fiducian 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 and more importantly at this juncture, bring to bear their expertise which
has been gained through years of loyal service.
Our diversity policy encourages persons of different sexes, ethnic backgrounds, ages and skills to participate and receive
recognition, reward and management responsibility commensurate with their performance. No senior management
positions changed during the year. Employees are from over 20 different countries of origin, 26% are over 55 years of age
and 42% are female with 31% in senior roles.
CAPITAL MANAGEMENT
A key feature of the company is that it currently remains debt free and exhibits a positive working capital and cash flow
position.
Final Dividend
The Board remains cautious in nature, but is confident that the future of the business is positive and likely to continue to
strengthen. As a result, a fully franked final dividend of 5.0 cents per share has been declared which will bring the total fully
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franked dividend declared for the 2014 financial year to 9.1 cents, an increase of 30% (2013: 7.0 cents). The final dividend
will be paid on issued shares held on 5th September 2014 and be paid on 19th September 2014.
Acquisitions
During the year, we added to our existing salaried operations in Sydney by absorbing one small accounting practice and
an additional small financial planning client base. Both are being serviced by existing staff. In April this year, a financial
planning practice with $66 million in funds under advice was also acquired in Tasmania. As acquisitions continue to
assimilate into our processes, they should deliver increased corporate strength and demonstrate our disciplined approach to
balancing growth and returns.
On Market Buy-Back
Over the year, Fiducian bought 774,532 shares on market (2013: 259,502) for a total consideration, including brokerage,
of $0.91 million (2013: $0.25 million) at an average price per share of $1.17 (2013: $0.96). There are 30.758 million shares
on issue at year end (2013: 31.532 million).
Cash Flow
Net operating cash flows of $5.86 million were achieved (2013: $4.81 million) – an increase of 21.8%. After payment
for prior and current year business acquisitions ($0.87 million), share buy backs ($0.91 million), dividend outlays ($2.40
million), fixed assets ($0.09 million), receipts of loan repayment by staff / advisers ($0.10) and investments ($0.06 million)
net cash increased by $1.75 million (2013: increase $1.77 million). Cash at year end was $11.2 million (2013: $9.4 million).
An amount of $5.0 million is required for regulatory purposes. Business acquisitions of prior years should assist our future
revenue and earning capacity.
Staff and Managing Director Options
In accordance with the terms and conditions of the approved Employee and Director Share Option Plan, no options will
be issued to employees but 100,000 options will be issued to the Managing Director in accordance with his contract of
employment. These options will be issued at $1.63, a discount of 5% over the weighted volume average price in June and
may be converted to shares by making a payment of their value to the company after 1 year and within 5 years.
FINANCIAL PLANNING
During the year Funds under Advice grew 18.1% to 1.37 billion as financial planner productivity and net flow lifted.
Fiducian expects the highest level of compliance and client service from its financial planning network. Even though the
generation of higher inflows is important, our commitment is to quality. As such, our extensive internal training programs,
that differentiate our financial planners from the marketplace enable them to deliver superior quality advice continues. As a
consequence and despite financial market volatility, client retention remains high.
Over the years, there have been large scale groups merging to become bank or institutionally aligned and a number of
smaller groups becoming insolvent or wound down due to claims or compliance issues. In addition, the propensity for credit
seems to have contracted and lending covenants being imposed upon smaller dealerships appear much tighter. We shall
be exploring opportunities here.
Regulatory changes whereby accountants will be required to be licensed if they offer self managed super funds advice
should also provide Fiducian further opportunities.
Salaried Offices
Company owned offices with salaried financial planners are based in New South Wales, Victoria, Western Australia,
Queensland and Tasmania and continue to contribute to overall results. Salaried offices now comprise over 46% of funds
under administration. Acquisitions made during the year should in due course bolt on to our existing presence in Tasmania
and Sydney and add to our results.
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Franchised Offices
Franchised offices now comprise around 44% of our funds under administration. Another five franchisees were added
during the financial year resulting in a total of 42 franchised financial planners nationally which we continue to assist
through practice development. In addition, referral arrangements continue to be initiated with accountants, who
themselves have shown an interest in holistic financial planning given regulation changes to Self Managed Super Funds.
As such, an additional 3 accountants have joined our ‘Associate’ franchise program which can also convert them to a full
operating franchise when educational requirements are completed.
BUSINESS SERVICES
Fiducian Business Services (FBS) is our subsidiary that was established to provide support to accountants for bookkeeping,
accounts preparation and self managed superannuation fund administration. It now has two accounting practices which
operate as Fiducian Accountants & Business Advisers (FABA) in New South Wales and Queensland. Cross referrals of our
financial planning clients needing accounting help and our accounting clients needing financial planning help further
supports Fiducian’s value proposition of service to all our clients. Our Self Managed Superannuation Fund administration
facility has been showing steady growth in the number of funds administered. It is supported by our presence in India for
cost effective processing. During the year one small accounting practice was purchased and absorbed into existing Sydney
operations. Succession continues to be an issue for an ageing sole practitioner demographic and we shall be seeking such
acquisition opportunities at realistic valuations.
PLATFORM ADMINISTRATION
Platform Administration offers portfolio wrap administration for superannuation and investment services to financial planners. The
hallmark of the Fiducian administration offering is quality in terms of daily processing, accuracy and customer service.
Funds Under Administration
Funds under administration increased in total by 11% to $1.03 billion (2013: $0.93 billion). Though the bulk of our withdrawals
are from IFAs, we believe that the rate of IFA withdrawals could slow as many of their clients have been with Fiducian for a long
time. Net Inflow continued to be positive from our aligned financial planners, both salaried and franchised.
Independent Financial Planners (IFAs)
Funds under administration for IFAs are around 10% of total funds under administration. Some IFAs have sold their
businesses to other Dealer Groups, which generally have their own recommended product lists and platform arrangements
which can result in funds being withdrawn from Fiducian. Whilst this is the case, efforts are underway to build new
relationships and net inflow from non-aligned financial planner groups. Our full service offer, supported by last year’s
product restructure could allow a non-aligned small dealer with a Fiducian relationship become competitive against large
scale financial planning dealer groups.
Corporate Superannuation
Corporate superannuation decreased by 16% (2013: decrease 25%) during the year. It forms only a small portion of
funds under administration. The product has now been altered and does not offer default investment options which under
new legislation can only be offered by funds authorised to offer a MySuper product. Fiducian‘s core belief is that holistic
personalised financial planning advice is essential for all clients. Corporate superannuation and MySuper do not encourage
personalised financial planning advice and therefore it has been decided to wind down this fund and transfer those
members who wish to stay with Fiducian to the Fiducian Superannuation Service.
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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 and deliver superior returns, compared with their peers, over the longer term.
Blending of underlying portfolios within asset sectors and tilts towards different managers’ 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.
In investment performance surveys, our diversified funds remain regularly in the top quartile or top of the second quartile
over multiple time periods, which is what our investment process is designed to deliver. Last year, there were some notable
performances. The Fiducian Ultra Growth Fund was ranked 1st out of its 106 fund peer group survey. Performance last year
from some Fiducian specialist funds was also very pleasing, with reported annual investment returns by the Fiducian India
Fund 43.0%, Fiducian Technology Fund 28.6% and the Fiducian Australian Smaller Companies Fund 28.3%.
INFORMATION TECHNOLOGY
Fiducian Information Technology division has successfully delivered FasTrack our administration system which provides
greater control, efficiency and substantial cost savings and as well, opens up new business opportunities. Reporting of
member accounts is now also available on tablets and mobile phones. These improvements are now in place and provide
greater integration with our on-line reporting tools and financial planning software FORCe which is licensed to our aligned
financial planning groups.
HUMAN RESOURCES
Management and Staff
Staff numbers have been stable throughout the year and so has the management team on whom we place a great deal
of reliance. Effective reporting processes enhance Board oversight of business activity and monthly performance. 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.
Planners Council, IT and Platform User Groups
The Planners Council is drawn from our supporting financial planners 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 planners to alert the company to issues that may need consideration.
The IT User Group again deserves commendation for its contribution to the development and enhancements to our financial
planning software (FORCe), on-line reporting tool (Fiducian OnLine) and platform administration system (FasTrack).
The Platform User Group has also made valuable contributions to our system improvements, product enhancements and client
administration efficiencies.
Board of Directors
The Board of directors is working constructively to evaluate and support management’s recommendations for the company.
The Business Plan for the year ahead has adopted key measures for performance to lift profits including acquisitions. Future
performance can also be influenced by continuing strength in financial markets and decisive political leadership. Management
remains committed to achieving the goals and objectives set down in these plans.
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CURRENT ECONOMIC AND MARKET
ENVIRONMENT
Share markets are not currently expensive by historical measures and there is a large amount of cash waiting on the
sidelines to enter, which could strengthen them further. The Australian market has finally exceeded its high point of 2007
on an accumulation basis (including dividends). However, the price index still remains below its previous high. We have
seen a strong share market recovery in the United States, Japan and Europe. However, it has still not translated into an
equivalent strength in the Australian share market. On this measure alone, there appears further upside for the Australian
share market. Regardless, investors still remain somewhat cautious and the Global Financial Crisis remains etched in
their memories. Our house view is for share markets to again deliver positive returns this year as news of European and
US economic improvements come through. We also believe that fears about China are overdone and it should, along
with India continue to show economic growth and support developed financial markets. As always, we recommend that
investors should consult a Fiducian financial planner to develop a diversified investment strategy that could help them
achieve their financial goals.
OUTLOOK
The Board expects profit growth to continue in coming years as management focuses on realizing the full potential of
financial planning, platform administration, investment management, information technology and business/accounting
services by building scale on existing capacity and leveraging its relatively fixed cost base.
Fiducian also continues to keep abreast of changes to superannuation legislation and implement required changes to
comply with the Prudential Standards introduced by APRA, which includes creation of a separate Trustee.
Expenditure controls and profitable growth remain a priority. However, the business plan for 2015 financial year looks
at expanding the revenue base by growing the existing Fiducian business model organically yet making more sizeable
acquisitions where they can become earnings accretive and build scale quicker. Therefore our cash management strategy
for the next financial year is to utilize profits to pay dividends and to use any surplus to support meaningful acquisitions or
make further share buybacks where beneficial.
We would like to thank all participants for their individual contributions to the growth and success of Fiducian in what has
been an eventful yet successful year with much accompanying change in legislation.
Robert Bucknell
Chairman
Indy Singh
Managing Director
26 August 2014 26 August 2014
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C O R P O R A T E D I R E C T O R Y
DIRECTORS
SHA RE REGI ST ER
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 ANNUAL
GEN ERAL MEE T I NG
The annual general meeting of
Fiducian Portfolio Services Limited
Will be held at Level 4, 1 York Street, Sydney
Time
Date
10:00am
Thursday 23 October 2014
PRI NCIPAL R E GI ST E R E D
OFFI CE IN AU ST RALI A
Level 4
1 York Street
Sydney NSW 2000
(02) 8298 4600
WHOLLY OW NE D
OPERATING EN T I TI E S
Fiducian Financial Services Pty Ltd
Fiducian Business Services Pty Ltd
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
A UDIT OR
PricewaterhouseCoopers
Chartered Accountants
Darling Park Tower 2
201 Sussex Street
Sydney NSW 2000
B AN KERS
Westpac Banking Corporation
341 George Street
Sydney NSW 2000
ANZ Banking Group
388 Collins Street
Melbourne VIC 3000
STOC K EXC HA NGE LIST ING
Fiducian Portfolio Services Limited (FPS) shares
are listed on the Australian Securities Exchange.
WEB SIT E ADDRE SS
www.fiducian.com.au
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D I R E C T O R S ’ R E P O R T
Your directors present their report on Fiducian Portfolio Services Limited (“the Company“) and on the consolidated entity
(referred to here after as the Group) and its wholly owned operating entities throughout the year ended 30 June 2014.
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
F Khouri
C Stone
Principal activities
During the year the principal continuing activities of the Group consisted of:-
(a) Operating an Investor Directed Portfolio Service and Managed Discretionary Account service through Fiducian Investment
Service;
(b) Acting as the Trustee of Fiducian Superannuation Service;
(c) Acting as the Responsible Entity of Fiducian Funds;
(d) Providing specialist financial planning services through its wholly owned operating entity, Fiducian Financial Services Pty Ltd;
(e) Providing accountancy resource services through its wholly owned operating entity, Fiducian Business Services 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 2013 of 3.60 cents
(2012: Fully franked 2.50 cents) per share paid on 20 September 2013.
Interim ordinary fully franked dividend for the year ended 30 June 2014 of 4.10 cents
(2013: Fully franked 3.40 cents) per share paid on 26 March 2014.
Total dividends in respect of the year
2014
$’000
2013
$’000
1,131
794
1,265
2,396
1,076
1,870
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 2014 of 5.00 cents per ordinary share held at 5 September 2014 and
payable on 19 September 2014.
Review of operations
A summary of consolidated revenues and results by significant industry segments is set out below:-
SEGMENT REVENUES
SEGMENT RESULTS
2014
$’000
2013
$’000
2014
$’000
2013
$’000
4,843
Funds management and administration
Financial planning
(3)
Accountancy resource services 1,114 850 (12) (77)
-
Intersegment sales
18,257
7,715
18,584
10,392
4,022
2,065
(7,217)
(4,716)
-
Profit from ordinary activities before income tax expense
Income tax expense
Net profit attributable to members of Fiducian Portfolio Services Limited
6,075
(2,092)
3,983
4,763
(1,371)
3,392
22,873
22,106
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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 improved substantially during the year and favourably impacted the management
fees received by Fiducian, as more fully detailed in the Joint Report of the Chairman and Managing Director. This has
enabled Fiducian to increase profit for the second half of the year and propose a dividend distribution of 5.00 cents per
share, bringing the full year dividend to 9.10 cents per share.
Significant changes in the state of affairs
During the financial year the Group acquired an accounting practice and two financial planning practices and their portfolio
of clients were transferred to the respective operating entities progressively during the financial year.
Contributed equity has reduced by $907,932 (inclusive of transaction costs) as a result of the buy back of 774,532 shares
on the stock exchange at an average price of $1.17 per share during the year.
Other than this, there were no significant changes in the state of affairs of the Group during or since the financial year.
Matters subsequent to the end of the financial year
Under the Rules of the Employee and Director Share Option Plan the Directors have offered 100,000 options to the
Managing Director after year end (2013: 100,000). To the date of this report no (2013: 155,000) employee options have
lapsed.
To the date of this report, the Company has not bought back any shares on the market (2013: 81,000 shares at an average
price of $1.03).
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.
Environmental regulation
The Group is not subject to significant environmental regulations under a Commonwealth, State or Territory law.
Employee Diversity
Fiducian is proud to be an equal opportunity employer. It endorses diversity and currently has a number of employees that
bring different skill-sets from their country of origin. We recognise that diversity includes, but is not limited to gender, age,
ethnicity and cultural backgrounds. Our diversity policy encourages persons of different sexes, ethnic backgrounds, ages
and skills to participate and receive recognition, reward and authority commensurate with their performance. Employees
are comprised of staff from over 21 countries of origin, 26% over 55 years, and 42% female with 31% in senior roles.
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KEY MANAG EME N T PE R SON NEL D IS CL OSURES
(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
F Khouri
C Stone
(b) Information on directors
R Bucknell FCA. Chairman – non executive.
Experience and expertise
Chairman since inception in 1996. Extensive experience in accounting and business management over the past 50 years as
a Chartered Accountant.
Other current directorships
None
Former directorships in the last 3 years
None
Special responsibilities
Chairman of the Group, member of the Remuneration, Internal Compliance Committees and Board Audit Committee.
Interest in shares and options
800,000 ordinary shares in Fiducian Portfolio Services Limited.
I Singh CFP, BTech, MComm (Bus), ASIA, ASFA, Dip. FP. Managing Director.
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 25 years.
Other current directorships
None
Former directorships in the last 3 years
None
Special responsibilities
Managing Director, Member of Investment and Internal and External Compliance Committees.
Interest in shares and options
10,162,512 ordinary shares in Fiducian Portfolio Services Limited.
140,000 options for ordinary shares in Fiducian Portfolio Services Limited.
F Khouri B Bus, FCPA, FTIA Independent non-executive director.
Experience and expertise
Appointed to the Board 6 July 2007. Public accountant, registered company auditor, financial planner 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
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KEY MANAG E ME NT PE R SONNEL DIS C LO SUR ES C O N TIN UED
(b) Information on directors (continued)
Special responsibilities
Chairman of the Board Audit Committee and member of Remuneration Committee.
Interest in shares and options
251,373 ordinary shares in Fiducian Portfolio Services Limited.
C Stone B Comm/LLB, LLM, CA, ACIS Independent non-executive director.
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 24 years experience. Currently Head of Compliance of State Street Australia
Limited, and has 9 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
Chairman of the Remuneration Committee and member of the Board Audit Committee and the Internal and External
Compliance Committees.
Interest in shares and options
23,700 ordinary shares in Fiducian Portfolio Services Limited.
(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 2014, and the numbers of meetings attended by each director were:-
FULL MEETINGS OF DIRECTIORS
Corporate
Trustee*
Audit
A
12
12
12
12
B
12
12
12
12
A
12
12
12
12
B
12
12
12
12
A
5
5
5
5
B
5
5
5
5
R Bucknell
I Singh
F Khouri
C Stone
MEETING OF COMMITTEES
External Compliance & Risk
Committee
Financial Serv
Super
Invest-
ment
Remun-
ration
A
B
A
B
A
B
***
***
*** *** *** ***
A
1
B
1
5
5
**
**
12
12 *** ***
Internal
Comp-
liance
A
2
2
B
2
2
*** ***
***
***
*** *** *** ***
2
2
5
5
5
5
*** ***
1
1
1
1
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.
** = I Singh attended 5 of the 5 meetings held with the two independent members of the External Compliance & Risk Committee.
*** = Not a member of the relevant committee at the time of meeting.
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
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(e) Other key management personnel
Mr I Singh as Managing Director of Fiducian Portfolio Services Limited, had authority for and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, during the financial year ended 30 June 2014.
This authority and responsibility is unchanged from the previous year.
(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 Australian
Accounting Standard 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 - 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 seeks to ensure
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 August 2013. 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 business
placed with the Group may also receive remuneration as financial planners). 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.
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A - Principles used to determine the nature and the amount of remuneration (continued)
(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 2017
• 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 complementary to the
reward strategy of the organisation. Their most recent review was in August 2013.
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 $0.2 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 the entitlement that was 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
annual profit in excess of 15% or 5,000 options for each one percent increase in the 30 day average for June
market value for ordinary shares in the Company whichever is higher and only after approval by shareholders in the
Company.
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A - Principles used to determine the nature and the amount of remuneration (continued)
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
The key management personnel of the Group were the following executive and non-executive directors during the year:
I Singh – Managing Director & Company Secretary
• R Bucknell – Chairman
•
• F Khouri – Non-executive Director
• C Stone – Non-executive Director
Amounts of remuneration
Details of the remuneration of the key management personnel are set out in the following table :-
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B - Details of remuneration (continued)
Key management personnel of Fiducian Portfolio Services Limited and the Group
2014
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
TOTAL
Non-executive
directors1
R Bucknell2,3
(Chairman)
F Khouri4
C Stone
Executive director
I Singh5
Totals
$
164,850
61,760
68,823
449,667
745,099
$
-
-
-
-
-
$
$
$
$
$
-
-
-
-
4,966
8,002
15,318
15,318
17,775
30,743
-
-
-
-
-
-
164,850
-
-
66,726
76,824
18,981
18,981
501,741
810,141
(1) Non-executive directors fees have increased during the current year due to new APRA prudential standards and
other requirements introduced from 1 July 2013.
(2) Excludes GST if paid to another firm.
(3) Including amounts paid to the director’s company only in respect to director’s duties.
(4) This excludes fees of $209,142 for financial planning services paid to companies in which Mr Khouri has an interest
in his capacity as a financial planner.
(5) Subject to shareholder approval 100,000 options will be issued to Mr I Singh in respect of 2014 financial year.
2013
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
TOTAL
Non-executive
directors
R Bucknell1,2
(Chairman)
F Khouri3,4
C Stone
Executive director
I Singh5
Totals
$
137,700
55,585
52,746
442,433
688,464
$
-
-
-
-
-
$
$
$
$
$
-
-
-
-
-
-
5,003
4,739
20,613
30,355
-
-
-
-
-
-
137,700
-
-
-
-
60,588
57,485
463,046
718,819
(1) Excludes GST if paid to another firm.
(2) Including amounts paid to the director’s company only in respect to director’s duties.
(3) This excludes fees of $213,712 for financial planning services paid to companies in which Mr Khouri has an interest.
(4) No Adviser Options were issued during the year to a company, in which Mr Khouri is a shareholder and director in
his capacity as a financial planner.
(5) Subject to shareholders approval 100,000 options will be issued to Mr I Singh in respect of the 2013 financial year.
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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 them to understand Fiducian’s charters, policies, procedures, culture and ethical
values to enable new directors to carry out their 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:-
2014
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
55,000
-
100,000
(15,000)
140,000
40,000
3,500 Adviser options, issued in prior years, held by an entity in which F Khouri has an interest have lapsed during the year.
2013
NAME
I Singh
F Khouri*
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
155,000
-
-
-
-
-
(100,000)
55,000
55,000
-
-
-
* 3,500 Adviser options, issued in prior years, 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.
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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.
2014
NAME
I Singh
R Bucknell
F Khouri
C Stone
2013
NAME
I Singh
R Bucknell
F Khouri
C Stone
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
10,113,012
900,000
226,373
20,000
-
-
-
-
49,500
(100,000)
25,000
3,700
10,162,512
800,000
251,373
23,700
BALANCE AT THE
START OF THE YEAR
RECEIVED DURING
THE YEAR ON THE
EXERCISE OF OPTIONS
10,012,415
900,000
226,373
-
-
-
-
-
OTHER CHANGES
DURING THE YEAR
BALANCE AT THE END
OF THE YEAR
100,597
10,113,012
-
-
20,000
900,000
226,373
20,000
Shares provided on exercise of options
No ordinary shares in the company were provided as a result of the exercise of remuneration options to a director of
Fiducian Portfolio Services Limited and other key management personnel of the Group during the period (2013: 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. Other than a small increase of $9,000 in August 2013, there has
been no other increases in base salary of the Managing Director. Cash bonuses and entitlements have not been granted
or paid in the past 5 financial years and the grant of options entitlements have been only in accordance with the
incentive programs being 100,000 options in respect of the 2014 financial year (2013: 100,000 options).
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E - Additional information (continued)
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 (2013: Nil).
Other transactions with key management personnel
A director, Mr R 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 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 remuneration from the
company for financial planning services. 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
Financial planning remuneration paid and payable
CONSOLIDATED
2014
$
2013
$
308,400
209,142
517,542
255,773
213,712
469,485
Shares under option
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 2014 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.
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KEY MANAG EME N T PE R SON NEL D IS CL OSURES C O NT IN UED
E - Additional information (continued)
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 current and previous directors: R E Bucknell,
I Singh, F Khouri, C Stone, other officers of Fiducian Portfolio Services Limited and independent members of the external
Compliance and Investment Committees, J Evans, B Lacey and M Devlin.
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.
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D I R E C T O R S ’ R E P O R T C O N T I N U E D
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.
The fees paid or payable for services provided during the year 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 auditors’ 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,
26 August 2014
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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
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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 ASX Good Corporate Principles and Recommendations read with the 2010 Amendments,
except where noted. The Board notes that the ASX Corporate Governance Council’s Corporate Governanace Principles and
Recommendations (Third Edition) takes effect for a listed entity’s first full financial year commencing on or after 1 July 2014.
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:-
• Contributing to the development and approval of corporate strategy, including setting performance objectives and
approval levels for management.
• Reviewing and approving business plans, the annual budgets and financial matters, including available resources and
major capital expenditure, acquistions and divestiture initiatives.
• Monitoring corporate and organisational performance and the implementation of the Fiducian Group’s strategies,
policies and objectives, compliance with the Groups’s code of conduct and the progress of major capital expenditure
and other significant corporate projects, including any acqusitions or divestments.
• Monitoring and reviewing management’s existing processes aimed at ensuring the integrity of financial performance
and other reporting, including the approval of annual and half yearly financial reports to shareholders and the
Australian Securities Exchange (ASX) and liaison with the Group’s auditors.
•
Selecting, appointing and appraising the performance of, determining the remuneration of, and if necessary
determining the removal of, the Managing Director, and ensuring there are adequate plans and procedures in place for
succession planning.
• Reviewing procedures for the appointment and /or removal of senior employees of the Group, including management
team members, and monitoring their performance.
•
Ensuring there are adequate policies in relation to risk identification and management, and that internal controls
and procedures are in place regarding the same. In summary, these policies are designed to ensure that strategic,
operational, legal reputational and financial risks are identified, assessed, addressed, adequately controlled and
monitored to allow acheivement of Group business objectives, with adequate accountability and reporting mechanisms
in place.
•
Ensuring there is a disaster recovery plan and a business continuity plan in place which detail the recovery procedures
to be followed in the event of a disaster or damaging event affecting the Fiducian 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. The Board charter was
reviewed in May 2014.
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
F Khouri
C Stone
Details of each director’s experience, expertise and qualifications are set out each year in the Directors’ Report section of
the Annual Report to Shareholders under the heading ‘Information on Directors’.
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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 executive and non-executive directors, with a minimum of three directors. The majority
of directors must be non-executive 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 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 complementary skills and
experience.
the Board is required to undertake 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 irrespective of gender 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.
Non executive Directors’ independence
Non executive 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 director 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.
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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 has served on the Board since inception of the Group, being for more than fifteen years. He brings a depth
of experience and independent judgement to his role as director and remains vital to the growth of the Group.
• Mr Khouri has business dealings with the Group as disclosed in the Annual Report at the end of each financial year.
However, these are not of such a value or significance that adversely affect the director’s independence. He has declared
his interests in those dealings with the company and takes no part in decisions relating to them.
• Mr Stone has no business dealings with the Group either independently or through his employer.
All three non executive directors are considered by the Board to be independent.
Independent professional advice
Directors and members of Board committees have the right to obtain independent professional advice at the expense of the
Group on matters arising in the course of their 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 will shortly be carried out in accordance with this
process.
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. With the exception
of the Audit committee which is comprised of all non executive directors, the committees 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. To address regulatory requirements the name and function of various Board committees
may be changed.
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 summary 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.
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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)
Remuneration Committee
The Remuneration Committee is comprised of the non-executive Chairman and two other non-executive directors. The
Committee ensures a formal performance evaluation is in place for the Managing Director and senior management personnel
using established company objecives, key performance indicators and other criteria such as business performance and
prevailing market conditions. Performance evaluation takes place annually. External advice on remuneration levels is obtained
when deemed appropriate, but at a minimum of three year intervals. The Board has delegated to the Managing Director
responsibility and authority for employee remuneration.
Compliance committees
(a) The Internal Compliance Committee is comprised of the non-executive Chairman, one other non-executive Director,
and the Managing Director. The Committee reviews disclosure documents required to be given under statute. The
compliance officer attends and participates at the meetings.
(b) The External Compliance and Risk Committee (Financial Services) is comprised of independent members, a non-
executive Director, and the Managing Director. The Commitee monitors compliance of systems, procedures, policies and
programs established to ensure disclosure and reporting relating to compliance with obligations imposed by the
Corporations Law, and that the interests of fund members are protected. The compliance officer attends and participates at
the meetings.
(c) The External Compliance and Risk Committee (Superannuation) is comprised of two independent members, and
one other non-executive Director. The Commitee 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 officer attends and
participates at the meetings.
Audit committee
The Audit Committee is comprised of the non-executive Chairman, and two other non-executive Directors. The Managing
Director, the Chief Financial Officer 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 required. 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 Managing Director has no appointments as a director outside the Group, other than to his own family companies.
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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
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.
Diversity policy
Fiducian is an equal opportunity employer and does not discriminate on gender, age, cultural background or country of origin.
Our training programs are aimed at developing the full potential of each director and staff member.
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 made available 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:-
F Khouri (Chairman)
R Bucknell
C Stone
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 F Khouri is a partner in a public accounting practice and a registered
company auditor. Mr R Bucknell, has relevant qualifications and experience by virtue of being a former partner in a major
accounting firm. Mr C Stone is a chartered accountant with experience in taxation and superannuation matters as well as a
practising lawyer.
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
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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)
• 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
• 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. Further information on director’s attendance at audit committee meetings can be found in the
“Directors’ Report“ section of the Annual report.
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 2014 .
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 of the financial statements.
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 at www.asx.com.au.
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
Chief Financial Officer.
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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
Principles 5 and 6: Make timely and balanced disclosures and respect the rights of Shareholders (continued)
Fiducian provides electronic reports and other communication to shareholders, who provide their email address. Hard copies
are 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 that strategic, operational, legal, reputational and financial risks are identified, assessed effectively and
efficiently managed and monitored to achieve the Group’s objectives.
A detailed Risk Management Framework is in place 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 General Counsel. 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 Committees, which then report 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 work health and safety (WH&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 (all of whom are independent):-
C Stone (Chairman)
R Bucknell
F Khouri
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.
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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 8: Remunerate fairly and responsibly (continued)
The Committee ensures a formal performance evaluation is in place for the Managing Director using established company
objecives, key performance indicators and other criteria such as business performance and prevailing market conditions.
External advice on remuneration levels is obtained when deemed appropriate, but at a minimum of three year intervals.
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.
Further information on director’s attendance at the remuneration committee meetings can be found in the “Directors’
Report“ section of the Annual report.
The Managing Director is responsible for the remuneration of all other senior managers and staff.
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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 18 August 2014
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
-
-
-
-
-
1
1
102
359
115
150
28
24
778
There were no holders of a less than marketable parcel of ordinary shares.
B. EQUITY SEC UR I TY H OLD E R S
Twenty largest quoted equity security holders.
The names of the twenty largest registered shareholders of quoted equity securities as at 18 August 2014, are listed below.
NAME
NUMBER HELD
PERCENTAGE OF ISSUED SHARES
Indyshri Singh Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Shrind Investments Pty Ltd (Indyshri Super Fund A/C)
JP Morgan Nominees Australia Limited
London City Equities Limited
Norcad Investment Pty Ltd
Hunter Place Services Pty Ltd
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
Citicorp Nominees Pty Limited
D R Smith Holdings Pty Ltd
Mr Victor John Plummer
Bond Street Custodians Limited (Ganes Value Growth A/C)
Garrett Smythe Limited
BNP Paribas Noms (NZ)Ltd
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16 Mr Ivan Tanner + Mrs Felicity Tanner (The Supernatural S/F A/C)
17
18
19 Mrs Jennifer Margaret Leeson
20
H F R Pty Ltd (F & M Khouri S/Fund A/C)
Dendrinos Nominees Pty Ltd (Bayside Taxi Staff S/F A/C)
Forsyth Barr Custodians Ltd (Forsyth Barr Ltd-Nominee A/C)
8,655,932
1,985,540
1,956,771
1,506,580
1,480,021
1,213,666
1,003,000
800,000
692,293
673,369
593,689
500,000
387,268
339,000
254,000
251,820
199,187
150,000
138,847
126,950
22,907,933
28.14%
6.46%
6.36%
4.90%
4.81%
3.95%
3.26%
2.60%
2.25%
2.19%
1.93%
1.63%
1.26%
1.10%
0.83%
0.82%
0.65%
0.49%
0.45%
0.41%
74.49%
Unquoted equity securities
As at 18 August 2014:
TYPE OF SECURITY
Options – Managing Director
NUMBER ON ISSUE
NUMBER OF HOLDERS
140,000
140,000
1
1
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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 SH AR E H OLD E R S
Substantial shareholders and associates as at 18 August 2014 (more than 5% of a class of shares) in the company are
set out below:-
NAME
Indyshri Singh Pty Limited and associates
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
NUMBER HELD
PERCENTAGE
10,162,512
1,985,540
1,956,771
33.04%
6.46%
6.36%
D. VO TING R IGHT S
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 one vote and upon a poll one vote for each share held.
Options
No voting rights.
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A N N U A L R E P O R T 2 0 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 P A G E 3 3
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 S
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 5
3 6
3 7
3 9
4 0
8 7
8 8
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 9 - 21, both of which are not part of this financial report.
The financial report was authorised for issue by the directors on 26 August 2014. 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.
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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 4
NOTES
CONSOLIDATED
PARENT ENTITY
Revenue from ordinary activities
Other Income
Payments to advisers and related costs
Employee benefits expense
Depreciation and amortisation expense
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
Other comprehensive income for
the full year, net of tax
4
5
6(a)
6(b)
7
24
2014
$’000
RESTATED
2013
$’000
2014
$’000
RESTATED
2013
$’000
22,537
21,752
18,283
17,933
337
(4,908)
(9,812)
(682)
354
(4,575)
(9,344)
(582)
(1,396)
(2,842)
6,075
(2,092)
4,763
(1,371)
301
(8,247)
(6,314)
(141)
136
4,019
(1,311)
324
(5,508)
(6,060)
(150)
(1,696)
4,843
(1,409)
3,983
3,392
2,708
3,434
-
-
-
-
Total comprehensive income for the year
3,983
3,392
2,708
3,434
Profit is attributible to:
Owners of Fiducian Portfolio Services Limited
3,983
3,392
2,708
3,434
3,983
3,392
2,708
3,434
Earnings per share
32
Earnings per share from profit from continuing operations
attributable to the ordinary equity holders of the company:
RESTATED
Basic earnings per share (in cents)
Diluted earnings per share (in cents)
12.81 cents 10.33 cents
12.75 cents 10.24 cents
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
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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 4
NOTES
CONSOLIDATED
PARENT ENTITY
2014
$’000
RESTATED
2013
$’000
2014
$’000
RESTATED
2013
$’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
11,194
2,855
14,049
2,084
-
106
524
816
9,600
13,130
27,179
4,118
1,173
5,292
276
1,313
947
2,536
7,828
9,440
2,749
12,189
2,141
-
155
598
950
7,712
11,556
23,745
2,888
292
3,180
110
897
836
1,843
5,023
19,351
18,722
8,046
5,924
7,536
5,982
13,970
13,518
2,084
3,875
2,141
3,875
106
149
665
151
155
184
694
194
7,030
21,000
7,243
20,761
2,737
390
3,127
-
-
717
717
2,074
277
2,351
-
9
598
607
3,843
17,157
2,958
17,803
6,236
26
13,089
19,351
7,145
75
11,502
18,722
6,236
26
10,895
17,157
7,145
75
10,583
17,803
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.
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 4
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
A S AT 3 0 J U N E 2 0 1 4
NOTES
CONTRIBUTED
EQUITY $’000
RESERVES
$’000
TOTAL $’000
RETAINED
EARNINGS
$’000
Consolidated
Balance as at 30 June 2012 (Restated)
7,395
219
Profit for the year (Restated)
Other comprehensive income
Total comprehensive income for the year
(Restated)
Transactions with equity holders in their
capacity as equity holders
Transaction costs
Buy back of shares
Dividends provided for or paid
Share options lapsed
Foreign Exchange transactions
Total transactions with equity holders
22
22
8
23
23
-
-
-
-
(250)
-
-
-
(250)
-
-
-
-
-
-
(142)
(2)
(144)
9,980
3,392
-
3,392
-
-
(1,870)
-
-
17,594
3,392
-
3,392
-
(250)
(1,870)
(142)
(2)
(1,870)
(2,264)
Balance as at 30 June 2013 (Restated)
7,145
75
11,502
18,722
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their
capacity as equity holders
Buy back of shares
Dividends provided for or paid
Share options lapsed
Foreign Exchange transactions
Total transactions with equity holders
22
8
23
23
-
-
-
(909)
-
-
-
(909)
-
-
-
-
-
(49)
-
(49)
3,983
-
3,983
-
(2,396)
-
-
3,983
-
3,983
(909)
(2,396)
(49)
-
(2,396)
(3,354)
Balance as at 30 June 2014
6,236
26
13,089
19,351
A N N U A L R E P O R T 2 0 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 P A G E 3 7
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
A S AT 3 0 J U N E 2 0 1 4
NOTES
CONTRIBUTED
EQUITY $’000
RESERVES
$’000
TOTAL $’000
RETAINED
EARNINGS
$’000
Parent
Balance as at 30 June 2012 (Restated)
7,395
217
Profit for the year (Restated)
Other comprehensive income
Total comprehensive income for the year
(Restated)
Transactions with equity holders in their
capacity as equity holders
Buy back of shares
Dividends provided for or paid
Share options lapsed
Total transactions with equity holders
22
8
23
-
-
-
(250)
-
-
(250)
-
-
-
-
-
(142)
(142)
9,019
3,434
-
3,434
-
(1,870)
-
(1,870)
16,631
3,434
-
3,434
(250)
(1,870)
(142)
(2,264)
Balance as at 30 June 2013 (Restated)
7,145
75
10,583
17,803
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their
capacity as equity holders
Buy back of shares
Dividends provided for or paid
Share options lapsed
Total transactions with equity holders
22
8
23
-
-
-
(909)
-
-
(909)
-
-
-
-
-
(49)
(49)
2,708
-
2,708
-
(2,396)
-
(2,396)
2,708
-
2,708
(909)
(2,396)
(49)
(3,354)
Balance as at 30 June 2014
6,236
26
10,895
17,158
The above statements of changes in quity should read in conjunction with the accompanying notes.
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S T A T E M E N T S O F C A S H F L O W 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 4
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 from
operating activities
Cash flows from investing activities
Loans to related parties
(associates, planners and staff)
Investment in subsidiary/Trusts
Payments in relation to acquisitions
Repayment of loans by associates & planners
Payments for property, plant and equipment
Net cash (outflow)/inflow from
investing activities
Cash flows from financing activities
Payments for shares bought back
Dividends paid
Net cash (outflow/inflow) from
financing activities
NOTES
CONSOLIDATED
PARENT ENTITY
2014
2014
$’000 $’000 $’000
2013
2013
$’000
24,575
24,428
19,841
20,594
(17,814)
(18,821)
(15,255)
(16,587)
6,761
322
(1,219)
5,607
357
(1,159)
4,587
310
(1,178)
4,007
322
(1,124)
31
5,863
4,805
3,719
3,205
-
64
(874)
95
(89)
(359)
87
(689)
446
(404)
(804)
(919)
-
64
-
95
(62)
97
(359)
87
-
446
(34)
140
(909)
(250)
(909)
(250)
(2,396)
(1,870)
(2,396)
(1,870)
(3,305)
(2,120)
(3,305)
(2,120)
Net increase in cash held
1,754
1,766
510
1,225
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents
at the end of year
9,440
7,674
7,536
6,311
9
11,194
9,440
8,046
7,536
The above statements of cash flow should be read in conjunction with the accompanying notes.
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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 4
1 SUMM ARY OF SI GN IFI CA NT A CC OUN TI N G PO LI C IES
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. Fiducian Portfolio Services Limited is a for-profit entity for the purpose of preparing the financial
statements.
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.
Critical accounting estimates
The preparation of financial reports 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.
Restatement relating to deferred tax in connection with business combinations
Following a review of the accounting treatment applied to business combinations Management has determined that the
deferred tax liability had not been properly recognised in the books of account in relation to the client portfolio intangibles.
Retrospective recognition was made during the current year and the comparative figures at 30 June 2013 and at 1 July
2012 have been restated to reflect this. Further details and the impact on the financial statements have been provided
separately in Note 36.
(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 2014 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 entities (including structured entities) over which the Group has control. The group controls an entity
when the group is exposed, to or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. 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. Investments in
subsidiaries are accounted for at cost in the parent company’s financial report.
The acquistion method of accounting is used to account for the business combinations by the Group.
Operating segments are reported in a manner consistent with the internal reporting provided to the managing director.
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.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive
income.
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4
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1 SUMMARY O F SI GNI FI CANT A CC OUNT I N G PO LI C IES c o n t i n u e d
(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 Fees, payments to advisers and related costs
Revenues comprising trustee and management fees are recognised on an accruals basis. Fees, payments to advisers
and costs related to this revenue is recognised at the same time and on the same 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.
(v) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is Fiducian Portfolio Services Limited’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet
• income and expenses for each statement of comprehensive income are translated at the closing rate at the end
of the month, and
• all resulting exchange differences are recognised in other comprehensice expenses.
(d) Income tax
The income tax expense or benefit 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.
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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 4
1 SUMM ARY OF SI GN IFI CA NT A CC OUN TI N G PO LI C IES c o n t i n u e d
(d) Income tax continue (continued)
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.
(f) Trustee company and Responsible Entity
The company acts as a Trustee of Fiducian Superannuation Service and Responsible Entity of Fiducian Funds (“the trusts”).
The accounting policies adopted by the company in the preparation of the financial reports for the year ended 30 June
2014 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
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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 4
1 SUMMARY O F SI GNI FI CANT A CC OUNT I N G PO LI C IES c o n t i n u e d
(i) Trade receivables (continued)
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) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The purchase consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the acquirer.
The purchase consideration transferred also includes the fair value of any asset or liability resulting from a contingent
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition
date.
The excess of the purchase consideration transferred, and the acquisition-date fair value over the fair value of the group’s
share of the net identifiable assets acquired, is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is
recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(k) 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.
(i) Financial assets at fair value through profit or loss
Financial assets are classfied as held for trading if 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.
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4
1 SUMM ARY OF SI GN IFI CA NT A CC OUN TI N G PO LI C IES c o n t i n u e d
(I) 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.
(m) 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.
(n) 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 events or changes in circumstances that indicate that they may be impaired,
and are carried at cost less accumulated amortisation and impairment losses.
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 where deemed appropriate. 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.
Capitalised expenditure are tested for events or changes in circumstances that indicate that they may be impaired and
whether they exceed their recoverable amount.
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4
1 SUMMARY OF SI GNI FIC AN T A C CO UN T IN G POL IC I ES c o n t i n u e d
(o) 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.
(p) 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.
(q) 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. Personal/carers 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 financial planners via the two share option
plans. Information relating to these schemes is set out in Note 26.
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 no consideration 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, the expected price volatility of
the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
(r) 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 along
with the consideration paid is deducted from equity and the shares are regarded as treasury shares until they are cancelled.
A N N U A L R E P O R T 2 0 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 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 4
1 SUMM ARY OF SI GN IFI CA NT A CC OUN TI N G PO LI C IES c o n t i n u e d
(r) Contributed equity (continued)
No gain or loss is recognised in the profit or loss and the the consideration paid including any directly incremental costs (net
of income taxes) is recognised directly in equity. Treasury shares are bought with the intention of cancellation and are not
reissued.
(s) 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.
(t) 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.
(u) 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.
(v) 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.
Rounded components presented throughout the financial report may not add up precisely to the rounded sum as a result
of rounding to the nearest thousand dollars in various sections of the report.
(w) New and amended accounting standards adopted by the Company
Certain new accounting standards and interpretations have become mandatory for 30 June 2014 and these have been
applied in the preparation of the these financial statements where applicable. The mandatory standards are:-
AASB 10 Consolidated Financial Statements
AASB 10 replaces the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements.
The standard introduces a single definition of control applicable to all entities. Control exists when the investor can use
their power to affect the amount of its returns. The Group has reviewed its investments in other entites to assess whether
the conclusion to consolidate would be different under this new standard. No differences were found and therefore no
adjustments are required to the carrying amounts in the financial statements as a result of adoption.
AASB 11 Joint Arrangements
AASB 11 introduces a principles based approach to accounting for joint arrangements. It switches the focus from the legal
structure of joint arrangements to the sharing of rights and obligations of the parties under the joint arrangement. The Group
does not particiapte in any joint arrangement and therefore this standard does not impact its financial statements.
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 4
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 4
1 SUMM ARY OF SI GN IFI CA NT A CC OUN TI N G PO LI C IES c o n t i n u e d
(w) New and amended accounting standards adopted by the Company (continued)
AASB 12 Disclosure of Interests in Other Entities
AASB 12 sets out the required disclosure for the entities reporting under the new standards AASB10 and AASB 11 and
replaces the disclosures requirements currently found in AASB 127 and AASB 128. Adoption of this standard does not affect
the amounts recognised in the financial statements but has impacted the disclosures made in these financial statements.
AASB 13 Fair Value Measurement
AASB 13 does not extend the use of fair value accounting but clarifies how to measure fair value and aims to enhance fair
value disclosure. The Group has determined that its current measurement techniques will not change as a result of the new
guidance but additional disclosure required by this standard have been made in these financial statements.
(x) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2014 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 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 (effective from 1 January 2017)
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and financial liabilites and
rules for hedge accounting and is likely to impact the Group’s accounting of its financial assets and liabilites. The standard
is applicable to the Group’s financial statements from 1 July 2017 but is available for early adoption. Management does
not expect this to have a significant impact on the Group’s financial statements and is in the midst of performing a detailed
analysis on the impacts of the new standard.
2 CRITI CAL ACCOU NT ING E ST IMA TES A N D A SS UM PT I ONS
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, by comparing its current amount with its
recoverable amount in accordance with the accounting policy stated in Note 1(n). 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 assesses at the end of each reporting period whether there is any indication that the investment or accounting
portfolios may be impaired in accordance with the accounting policy stated in Note 1(n). If any such indication exists, the
Group shall estimate the recoverable amount of the asset. 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.
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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 4
3 SEGMENT INFO RM AT I ON
(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.
Business Services
The company provides accountancy resource services through its subsidiary, Fiducian Business Services Pty Ltd. Although this
segment does not meet the quantitative thresholds required by AASB 8, management has concluded that this segment should be
reported as it is closely monitored by managment for its potential growth opportunities.
Geographical segments
The Group operates in the following geographical segments - in Australia and in India. The Indian operations are not
considered material for a sperate geographical segment disclosure during the financial year 2014.
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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 4
3 SEGMENT INFO RM AT I ON CON TIN UE D
(b) Primary reporting – business segments
FUNDS
MANAGEMENT AND
ADMINISTRATION
FINANCIAL
PLANNING
BUSINESS
SERVICES
INTERSEGMENT
ELIMINATIONS
CONSOLIDATED
$’000
$’000
$’000
$’000
$’000
2014
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
Acquisitions of plant and equipment,
intangibles and other non-current
segment assets
Depreciation, amortisation and
impairment
Net cash inflow from operating
activities
18,283
-
18,283
301
18,584
3,247
7,121
10,368
24
10,392
1,006
96
1,102
12
1,114
-
(7,217)
(7,217)
-
(7,217)
4,022
2,065
(12)
-
21,000
11,300
2,801
3,843
5,208
2,815
(7,922)
(4,039)
63
2,212
221
141
425
116
3,719
1,340
805
-
-
-
22,537
-
22,537
337
22,873
6,075
(2,092)
3,983
27,179
7,827
2,496
682
5,863
A N N U A L R E P O R T 2 0 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 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 4
3 SEGMENT INFO RM AT I ON CON TIN UE D
(b) Primary reporting – business segments (continued)
FUNDS
MANAGEMENT AND
ADMINISTRATION
FINANCIAL
PLANNING
BUSINESS
SERVICES
INTERSEGMENT
ELIMINATIONS
CONSOLIDATED
$’000
$’000
$’000
$’000
$’000
2013
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
17,933
-
17,933
324
18,257
3,069
4,620
7,689
26
7,715
4,843
(3)
750
96
846
4
850
(77)
Segment assets (Restated)
20,720
9,158
2,059
Segment liabilities (Restated)
2,959
4,347
2,051
Acquisitions of plant and equipment,
intangibles and other non-current
segment assets
Depreciation, amortisation and
impairment
Net cash inflow from operating
activities
69
520
441
150
345
87
3,205
1,009
591
-
(4,716)
(4,716)
-
(4,716)
-
(8,192)
(4,334)
-
-
-
21,752
-
21,752
354
22,106
4,763
(1,371)
3,392
23,745
5,023
1,030
582
4,805
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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 4
3 SEGMENT INFO RM AT I ON CON TIN UE D
(c) Other segment information
(i) Segment revenue
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
2014
$’000
2013
$’000
29,753
(7,217)
22,537
26,468
(4,716)
21,752
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $22,537,000
(2013: $21,752,000).
(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
Intersegment eliminations
Finance costs
Depreciation
Amortisation
Profit before income tax from continuing operations
(iii) Segment assets
CONSOLIDATED
2014
$’000
2013
$’000
6,758
5,353
-
(2)
(164)
(518)
6,075
(1)
(7)
(133)
(449)
4,763
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 and in India (which are not material).
(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.
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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 4
4 REV ENUE FR OM O RD I NAR Y A CT I VI TI ES
NOTES
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
22,078
21,369
17,935
17,518
458
383
348
415
22,537
21,752
18,283
17,933
From continuing operations
Sales revenue
Fees received
Other
Revenue from ordinary activities
5 OTHER I NC OM E
Interest received/receivable
Distributions from related trusts
Fair value (losses)/gains on financial assets
at fair value through profit or loss
13
6 EXP ENSES
Profit before income tax includes the following specific expenses:
(a) Depreciation, and amortisation
Depreciation
Furniture, office equipment and computers
Leasehold improvements
Total depreciation
Amortisation
Capitalised computer software
Client portfolio acquisition costs
Total amortisation
Total depreciation, amortisation and impairment
(b) 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
Expense Recovery
27
346
-
(9)
337
112
52
164
13
504
518
682
464
807
909
192
480
116
442
6
357
21
(24)
354
109
24
133
11
438
449
582
443
823
943
287
531
179
429
-
310
-
(9)
301
94
3
97
13
31
44
327
21
(24)
324
94
4
98
10
42
52
141
150
370
343
427
105
290
69
424
-
363
650
465
190
353
134
426
-
1,175
1,142
1,028
1,050
(3,193)
(1,935)
(3,193)
(1,935)
1,396
2,842
(136)
1,696
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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 4
6 EXPENSES CONTINUED
Fiducian Portfolio Services Limited, as trustee for the Fiducian Superannuation Service, is entitled to the reimbursement of
expenses incurred by it in the operation of the service. Effective from 1 July 2012 Fiducian will, for a three year period,
recover an amount up to 75% of the balance of any unrecovered operational expenses incurred by it subject to available
reserves. Thereafter, it will recover up to 100% of any unrecovered operational expenses subject to available reserves.
Expense recoveries will vary year on year depending on the nature of the expenses incurred by the trustee. Notwithstanding
this, the current reserves are sufficient to sustain the current level of reimbursable expenses for the next financial year.
7
INCO ME TAX E X PE NS E
NOTES
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’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
1,991
(9)
110
2,092
134
(143)
(9)
1,517
(108)
(37)
1,371
13
(121)
(108)
1,215
1,427
20
76
(5)
(13)
1,311
1,409
29
(9)
20
7
(12)
(5)
6,075
4,763
4,019
4,843
Tax at the Australian tax rate of 30%
1,823
1,429
1,206
1,453
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Entertainment
Tax offset for amortisation
Sundry items
Under/(over) provision in prior years
Income tax expense
(c) Tax consolidation legislation
18
(142)
283
1,982
110
2,092
13
(122)
88
1,408
(37)
1,371
13
-
16
1,235
76
1,311
10
(12)
(29)
1,422
(13)
1,409
Fiducian Portfolio Services Limited and its Australian wholly-owned operating entities have not formed a tax consolidated group.
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4
8 DI VI DENDS
Ordinary shares
Final ordinary fully franked dividend for the year ended 30 June 2013 of 3.60 cents
(2012: Fully franked 2.50 cents) per share paid on 20 September 2013.
Interim ordinary fully franked dividend for the year ended 30 June 2014 of 4.10 cents
(2013: Fully franked 3.40 cents) per share paid on 26 March 2014.
Total dividends paid in cash
PARENT ENTITY
2014
$’000
2013
$’000
1,131
794
1,265
1,076
2,396
1,870
The Directors have declared the payment of a final fully franked dividend for the year ended 30 June 2014 in the amount
of 5.00 cents per ordinary share to be paid on shares registered on 5 September 2014 and payable on 19 September 2014.
Franked dividends
The franked portions of the final dividends recommended after 30 June 2014 will be franked out of existing franking
credits.
Franking credits available for subsequent financial years
based on a tax rate of 30%
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
7,632
6,715
5,657
5,538
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 $659,000 (2013: $487,000).
9
CURRENT AS SE TS – CASH AN D CA S H E QUI V A LEN T S
Cash at bank and in hand
Deposits securing bank guarantees
Deposits - other
CONSOLIDATED
PARENT ENTITY
2014
$’000
6,161
34
5,000
11,194
2013
$’000
5,408
32
4,000
9,440
2014
$’000
3,046
-
5,000
8,046
2013
$’000
3,536
-
4,000
7,536
The Group’s and the parent entity’s exposure to interest rate risk is discussed in Note 34.
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4
10 CURRENT ASS E T S – T R ADE , O THE R R EC EI VAB L ES A ND PR EP AYM ENTS
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 the year
Written off against provision
Balance at end of the year
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
-
-
1,710
1,449
181
3
721
270
2,885
(30)
2,855
213
11
765
341
2,779
(30)
2,749
3,519
1,660
181
3
336
229
5,928
(4)
5,924
3,937
1,423
213
11
198
204
5,986
(4)
5,982
(30)
-
(30)
(111)
81
(30)
(4)
-
(4)
(9)
5
(4)
At 30 June 2014, 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 34.
11 NON- CURR E NT AS SE T S – R EC EIV A B L ES
Business development loans*
Loans to staff*
Less: Provision for impairment of receivables
CONSOLIDATED
PARENT ENTITY
2014
$’000
2,055
29
2,084
-
2013
$’000
2,089
52
2,141
-
2014
$’000
2,055
29
2,084
-
2013
$’000
2,089
52
2,141
-
2,084
2,141
2,084
2,141
*Refer to Note 10 for the current portion of these receivables.
(a) Impaired receivables and receivables past due
No amount has been provided against non-current receivables in the current year (2013: Nil).
A N N U A L R E P O R T 2 0 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 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 4
11 NON -CUR RE NT ASSE T S – R EC EI V A B L ES c o n t i n u e d
(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
2014
2013
CARRYING
AMOUNT
FAIR VALUE
CARRYING
AMOUNT
FAIR VALUE
$’000
$’000
$’000
$’000
2,055
29
2,084
2,055
29
2,084
2,089
52
2,141
2,089
52
2,141
(c) Risk exposure
Information about the Group’s and the parent entity’s exposure to credit and interest rate risk is provided in Note 34. The
maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.
12 NO N-CU RR E NT AS SE T S – OTH ER F I NA NC I A L A S SETS
NAME OF ENTITY
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
EQUITY
HOLDING
COST OF PARENT
ENTITY’S INVESTMENT
Fiducian Financial Services Pty Ltd*
Australia
Ordinary
Fiducian Business Services Pty Ltd**
Australia
Ordinary
Harold Bodinnar & Associates Pty Ltd***
Australia
Ordinary
Money & Advice Pty Ltd***
Australia
Ordinary
100
100
100
100
2014
$’000
3,763
10
97
5
2013
$’000
3,763
10
97
5
Total investment by parent entity
3,875
3,875
*= The principal activity of the Company is the development of a specialist financial planning services network.
**= The principal activity of this Company is to provide bookkeeping, accounting and tax processing services.
***= These companies are currently dormant as their operations have been transferred to Fiducian Financial Services Pty Ltd.
In addition to the above subsidiaries, Fiducian Business Services has a 90% equity investment in Fiducian Resourcing
Services Pvt Ltd, a company incoporated in India, providing accounting and tax processing services to the group.The
operations of the Company are in its initial stages and are not considered material to the Group in 2014.
13 NON- CURR E NT AS SE T S – O TH ER F IN A N CI A L A SSET S A T F A IR V A LUE
THRO UG H PROF IT OR L OSS
Investment in unlisted unit trust
At beginning of the year
Capital distribution
Revaluation - fair value (losses)
At end of the year
Investment in related trust
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
155
(40)
(9)
106
106
275
(96)
(24)
155
155
155
(40)
(9)
106
106
275
(96)
(24)
155
155
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 4
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 4
13 NON -CUR RE NT ASSE TS – OTH ER F IN AN CIA L ASSE T S AT F AIR VA LUE
THROUGH PROF IT O R L OSS c o n t i n u e d
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 remained frozen. Unit prices continue to be issued by the respective managers
of the underlying unlisted unit trusts but as there has been no trading following the redemption freeze, an estimation is
required in order to determine fair value. Refer to the assumptions in Note 2(iii) for further details.
Changes in fair values of these financial assets at fair value through profit and loss are recorded in Other Income in the
statement of comprehensive income. Refer to Note 5.
Investments in other financial assets 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. These investments are
valued at current published prices at 30 June 2014.
Risk exposure
Information about the Group’s and the parent entity’s exposure to credit and price risk is provided in Note 34.
14 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
Furniture, office equipment and computers
Less: Accumulated depreciation
CONSOLIDATED
PARENT ENTITY
2014
$’000
1,550
(1,027)
524
2013
$’000
1,461
(863)
598
2014
$’000
982
(833)
149
2013
$’000
921
(737)
184
A N N U A L R E P O R T 2 0 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 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 4
14 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT co nt inued
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 2012
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation/amortisation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Disposals
Depreciation/amortisation charge
Closing net book amount
At 30 June 2014
Cost
Accumulated depreciation
Net book amount
302
(228)
74
74
13
-
(14)
73
226
(153)
73
73
51
-
(22)
102
277
(175)
102
549
(298)
251
251
48
(4)
(95)
200
427
(227)
200
200
9
-
(92)
117
436
(319)
117
TOTAL
$’000
1,316
(984)
332
332
403
(4)
(133)
598
1,461
(863)
598
598
89
-
(162)
524
465
(458)
7
7
342
-
(24)
325
808
(483)
325
325
28
-
(48)
305
837
(532)
305
1,550
(1,026)
524
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 4
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 4
14 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT CONTINUED
Parent entity
At 1 July 2012
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation/amortisation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Disposals
Depreciation/amortisation charge
Closing net book amount
At 30 June 2014
Cost
Accumulated depreciation
Net book amount
FURNITURE
AND OFFICE
EQUIPMENT COMPUTERS
LEASEHOLD
IMPROVEMENTS
$’000
$’000
$’000
186
(168)
18
18
10
-
(9)
19
106
(87)
19
19
43
-
(16)
46
149
(103)
46
496
(265)
231
231
23
(6)
(85)
163
350
(187)
163
163
5
-
(82)
86
355
(269)
86
465
(459)
6
6
-
-
(4)
2
465
(463)
2
2
13
-
-
15
478
(463)
15
TOTAL
$’000
1,147
(892)
255
255
33
(6)
(98)
184
921
(737)
184
184
61
-
(96)
149
982
(833)
149
A N N U A L R E P O R T 2 0 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 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 4
15 NO N-CU RR E NT AS SE T S – DEF ER RED TA X A SSETS
NOTES
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’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
Taken to the Statement of Comprehensive Income
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
10
496
24
152
109
25
-
816
950
(134)
816
532
284
816
9
480
29
110
110
22
189
950
963
(13)
950
629
321
950
2
362
21
146
109
25
-
665
694
(29)
665
450
215
665
1
335
28
105
109
22
91
694
701
(7)
694
481
213
694
16 NO N-CU RR E NT AS SE T S – I N TA N G I B LE A SS ETS
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
4,999
(4,973)
26
6,436
(1,918)
4,518
5,521
(464)
5,057
9,600
RESTATED
4,999
(4,960)
39
4,994
(4,969)
25
RESTATED
4,994
(4,956)
38
4,588
(1,413)
3,175
4,962
(464)
4,498
7,712
418
(418)
-
125
-
125
151
418
(387)
31
125
-
125
194
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 4
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 4
16 N ON-CUR R E NT AS SE T S – IN TA N G I B LE A SS ETS C O N TIN UED
(a) Movements
Movements in each category are set out below:-
CONSOLIDATED
RESTATED
GOODWILL
ON
PORTFOLIOS ACQUISITION
ACQUISITION
OF CLIENT
CAPITALISED
COMPUTER
SOFTWARE*
$’000
$’000
$’000
At 1 July 2012
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals/write off
Impairment charge
Amortisation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions**
Disposals/write off
Impairment charge
Amortisation charge***
Closing net book amount
At 30 June 2014
Cost
Accumulated amortisation and impairment
Net book amount
4,075
(978)
3,097
3,097
591
(78)
-
(435)
3,175
4,588
(1,413)
3,175
3,175
1,848
-
-
(505)
4,518
6,436
(1,918)
4,518
4,785
(464)
4,321
4,321
177
-
-
-
4,498
4,962
(464)
4,498
4,498
559
-
-
-
5,057
5,521
(464)
5,057
RESTATED
TOTAL
$’000
14,223
(6,791)
7,432
7,432
804
(78)
-
(446)
7,712
5,363
(5,349)
14
14
36
-
-
(11)
39
4,999
(4,960)
39
14,549
(6,837)
7,712
39
-
-
-
(13)
26
7,712
2,407
-
-
(518)
9,600
4,999
(4,973)
26
16,956
(7,355)
9,600
* 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.
** Based on provisional accounting for the identifiable intangible assets acquired in the business combinations in the current year.
*** Amortisation of $518,000 (2013: $446,000) is included in depreciation, amortisation and impairment expense in the statement of
comprehensive income.
A N N U A L R E P O R T 2 0 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 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 4
16 N ON-CU RR E NT AS SE T S – I NT A N G I B LE A SS ETS C O N TIN UED
(b) Impairment tests for goodwill and client portfolios
Goodwill and client portfolios are 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
Changes in assumptions made in the assessment of impairment of goodwill relate to updating the earnings multiple used to
estimate sustainable revenues. These assumptions are compared to market each year and adjusted appropriately.
(d) Impairment charge
There has been no impairment charge recorded against goodwill during the financial year ended 30 June 2014 (2013: Nil).
(e) Business Acquisitions
Summary of acquisitions.
During the year the Group made the following acquisition:-
ACQUISITION
FINANCIAL PLANNING
FINANCIAL PLANNING
BUSINESS SERVICES
FIDUCIAN ENTITY
Date
Purchased
Vendor staff employed
by Group
Maximum purchase price
Paid by 30 June 2014
Deferred consideration at
30 June 2014
Value attributed on the
Statement of Financial
Position at 30 June 2014
Business combination or
asset only
FIDUCIAN FINANCIAL
SERVICES
PTY LTD
FIDUCIAN FINANCIAL
SERVICES
PTY LTD
FIDUCIAN BUSINESS
SERVICES
PTY LTD
31 March 2014
Client portfolio
1 April 2014
6 November 2013
Client portfolio
Accountancy practice
No
Yes
Yes
$381,469
$296,407
$85,062
$1,312,500
$443,750
$868,750
$169,100
$104,876
$64,224
100%
100%
100%
Business Combination
Business Combination
Business Combination
Provisional Fair value of assets recognised as a result of aquisition are as follows:-
Intangible assets
Deferred Tax liabilities
Net identifiable assets
acquired
Goodwill
Net Assets Acquired
$381,469
(114,441)
$267,028
$114,441
$381,469
$1,312,500
(393,750)
$918,750
$393,750
$1,312,500
$169,100
(50,730)
$118,370
$50,730
$169,100
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 4
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 4
16 N ON-CU RR E NT AS SE T S – I NT A N G I B LE A SS ETS C O NT IN UED
(e) Business Acquisitions (continued)
The acquired businesses did not contribute significantly to the group’s current year profits. However if the acquisitions
had taken place on 1 July 2013, management estimate a maximum revenue impact of $726,690 for the year ended 30
June 2014. It is not practicable to estimate the profit contribution given the significant change in the cost bases to the
operation of the business once within the Fiducian Group. The accounting for assets acquired in the business combinations
have not been finalised as at the end of the reporting period and have been accounted for in these financial statements
at provisional amounts. The accounting will be completed within the one year window allowed under AASB 3 Business
combinations.
(f) Sensitivity Analysis
The estimates and judgements included in the fair value calculations are based on historical experience and other factors,
including management’s and the Director’s expectations of future events that are believed to be reasonable under the
current circumstances. There have been no impairment recognised for the Fiducian Group CGUs in the impairment
assessment performed at 30 June 2014. Based on management’s current assessment, the recoverable amount of Fiducian’s
CGU exceeds the carrying amount by $5.2million. The Fiducian Group’s CGU recoverable amount is sensitive to reasonably
possible movements in key assumptions including changes to the earnings multiple of 3.1 used to determine the fair value
of the CGU. Management has modelled below the impact of changes in these key assumptions with the following result :-
• if earning multiple were to decrease to 2.7, the CGU’s recoverable amount would exceed carrying amount by $3.4million.
• if earning multiple were to decrease to 2.9, the CGU’s recoverable amount would exceed carrying amount by $4.3million.
17 CU RRENT LIABI LI TI E S – T RA D E A N D OT HER P A Y A B L ES
Trade payables
Other payables
Amounts due to related entities
Client portfolio deferred settlement
Annual leave entitlements accrued
CONSOLIDATED
PARENT ENTITY
2014
$’000
980
1,597
-
897
645
4,118
2013
$’000
690
1,443
-
94
661
2,888
2014
$’000
957
1,163
184
-
431
2013
$’000
547
909
168
-
450
2,736
2,074
Information about the Group’s and the parent entity’s exposure to credit and interest rate risk is shown in Note 34.
* Other payables includes retirement benefits payable to advisers covered under salary agreements with Fiducian Financial
Services Pty Ltd. Under the terms of the agreement with certain long serving salaried financial planners, those planners
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 payment is subject to further ongoing
conditions, including client retention, provision of support services to the entity to achieve this aim. The benefit is personal
to the planner, is not transferable, can be stopped by or repaid to Fiducian Financial Services 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. This
arrangement has been accounted for in accordance with AASB 119 Employee Benefits.
18 CU RRENT LIABI LI TI E S – C U R R EN T TA X L IA B I LI TI ES
CONSOLIDATED
2013
$’000
2014
$’000
PARENT ENTITY
2013
$’000
2014
$’000
Income tax
1,173
292
390
277
A N N U A L R E P O R T 2 0 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 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 4
19 NO N CUR RE NT LI ABIL I TI E S – TRA DE A ND OT H ER PA YA B LE S
Client portfolio deferred settlement
276
110
-
-
CONSOLIDATED
2013
$’000
2014
$’000
PARENT ENTITY
2013
$’000
2014
$’000
20 N ON-CU RR E NT LIA BI L IT I E S – DEF ER RED TA X LI A B IL I TI ES
CONSOLIDATED
2013
$’000
2014
$’000
PARENT ENTITY
2013
$’000
2014
$’000
The balance comprises temporary differences attributable to:-
Amounts recognised in profit and loss
Depreciation and amortisation 1,313
Net deferred tax liabilities
Movements:-
Opening balance 1 July
Taken to the statement of comprehensive income
Arising on Business combination
Closing balance 30 June
Deferred tax liabilities likely to be settled within 12 months
Deferred tax liabilities likely to be settled after 12 months
1,313
897
(143)
559
1,313
132
1,181
1,313
21 NO N-CU RR E NT L IA BI L ITI E S – PR OVI SION S
897
897
841
(121)
177
897
129
768
897
-
-
9
(9)
-
-
-
-
-
9
9
21
(12)
-
9
9
-
9
CONSOLIDATED
2013
$’000
2014
$’000
PARENT ENTITY
2013
$’000
2014
$’000
Employee benefits – long service leave
947
836
717
598
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.
22 CO NTRIBU T E D E Q UI T Y
(a) Share capital
Ordinary shares – fully paid
Treasury shares
6,086
150
6,236
7,141
4
7,145
CONSOLIDATED
2013
$’000
2014
$’000
PARENT ENTITY
2013
$’000
2014
$’000
6,086
150
6,236
7,141
4
7,145
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 4
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 4
21 CO NTRIBU TE D E Q UI TY c o n t i n u e d
(b) Movements in ordinary share capital
DETAILS
NUMBER OF SHARES
AVERAGE PRICE
$’000
DATE
1 July 2012
Opening Balance
Shares bought back on-market and cancelled
31,805,231
(255,462)
Shares bought back on-market prior to 1 July 2012
but cancelled subsequent to that date
Treasury Shares
30 June 2013
Buy-back transaction costs
Balance
Shares bought back on-market and cancelled
Buy Back transaction costs
Treasury shares
30 June 2014
Balance
(c) Ordinary shares
(13,300)
(4,040)
31,532,429
(679,961)
-
(94,571)
30,757,897
-
$0.96
-
$1.12
-
$1.11
-
$1.58
7,395
(245)
-
(4)
(1)
7,145
(755)
(4)
(150)
6,236
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 2013 and June 2014 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 27 March 2014. During the
financial year the shares were acquired at an average price of $1.17 per share, with prices ranging from $1.01 to $1.63.
The net cost of $909,170 of transaction costs, was deducted from equity.
At 30 June 2014, 488,468 shares remained available to be repurchased under the most recently announced buy back
notice to the ASX.
(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, to continue to meet externally imposed capital requirements of APRA and ASIC under their Responsible
Superannuation Entity (RSE) Licence and their Australian Financial Services (AFS) Licence respectively, and to continue to
provide returns to shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders via an on-market share buy back, or issue new shares upon exercise of outstanding options.
There has been no borrowing to maintain capital adequacy.
The externally imposed requirements are:-
a.
Under its AFS Licence, the parent entity must be a body regulated by APRA.
b. Under its APRA RSE Licence, the RSE must maintain $100,000 cash at all times.
The requirement under the RSE licence is maintained by placing cash on deposit with an ADI. The requirement under the
AFS licence is monitored monthly when management accounts are prepared, and is reported to the Board monthly and the
External Compliance & Risk Committee at each meeting.
The average NTA margin throughout the year over the requirement of $5,000,000 is $2,510,000 (2013: $4,060,000).
A N N U A L R E P O R T 2 0 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 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 4
NOTES
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
23 RESERV ES
Movements
Share based payments reserve
Balance 1 July
Option expense
Option lapses
Transfer to share capital (options exercised)
Balance 30 June
The share based payments reserve is used to recognise the fair value of options issued but not exercised.
Foreign currency translation
Balance 1 July
Currency translation difference arising during the year
Balance 30 June
Total Reserves
-
-
-
26
2
(2)
-
75
75
19
(68)
-
26
217
-
(142)
-
75
75
19
(68)
-
26
-
-
-
26
217
-
(142)
-
75
-
-
-
75
24 RETAINE D PRO FIT S
Movements in retained profits were as follows:
Balance 1 July
Net profit for the year
Dividends paid
Balance 30 June
8
11,502
3,983
(2,396)
13,089
9,980
3,392
(1,870)
11,502
10,583
2,708
(2,396)
10,895
9,019
3,434
(1,870)
10,583
25 KEY MA NA GE M EN T PE R SON N EL DI SC LOS UR ES
(a) Key management personnel compensation
Short-term employee benefits
Post employment benefits
Post employment benefits
CONSOLIDATED
PARENT ENTITY
2014
$
2013
$
2014
$
2013
$
760,417
688,464
760,417
688,464
30,743
18,981
30,355
-
30,743
18,981
30,355
-
810,141
718,819
810,141
718,819
Detailed remuneration disclosures are provided in sections A-E of the Remuneration Report contained in the Directors’ Report.
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 4
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 4
25 KEY MA NA GE M EN T PE R SON N EL DI SC LOS UR ES c o n t i n u e d
(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. During the period
100,000 shares were granted to Mr I Singh as compensation in respect of the previous year.
2014
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
55,000
-
100,000
(15,000)
140,000
40,000
3,500 Adviser options issued in prior years are held by an entity in which F Khouri has an interest have lapsed during the year.
2013
NAME
I Singh
F Khouri*
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
155,000
-
-
-
-
-
(100,000)
55,000
55,000
-
-
-
* 3,500 Adviser options, issued in prior years, held by an entity in which F Khouri has an interest.
(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.
2014
NAME
I Singh
R Bucknell
F Khouri
C Stone
2013
NAME
I Singh
R Bucknell
F Khouri
C Stone
BALANCE AT THE
START OF THE YEAR
10,113,012
900,000
226,373
20,000
BALANCE AT THE
START OF THE YEAR
10,012,415
900,000
226,373
-
RECEIVED DURING
THE YEAR ON THE
EXERCISE OF
DIRECTOR OPTIONS
OTHER CHANGES
DURING THE YEAR
BALANCE AT THE END
OF THE YEAR
-
-
-
-
49,500
(100,000)
25,000
3,700
10,162,512
800,000
251,373
23,700
RECEIVED DURING
THE YEAR ON THE
EXERCISE OF
DIRECTOR OPTIONS
OTHER CHANGES
DURING THE YEAR
BALANCE AT THE END
OF THE YEAR
-
-
-
-
100,597
-
-
20,000
10,113,012
900,000
226,373
20,000
A N N U A L R E P O R T 2 0 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 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 4
25 KEY MA NA GE M EN T PE R SON N EL DI SC LOS UR ES c o n t i n u e d
(b) Equity instrument disclosures relating to key management personnel (continued)
Shares provided on exercise of options
No ordinary shares in the company were provided as a result of the exercise of remuneration options to the Managing
Director of Fiducian Portfolio Services Limited, as key management person of the Group, during the period (2013: Nil). No
entities with which directors have interests have exercised any Adviser options during the year (2013: Nil). No amounts are
unpaid on any shares issued on the exercise of options.
(c) Loans to directors
No loans were made to directors during the financial year (2013: Nil).
(d) Other transactions with key management personnel
A director, Mr R 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 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 financial planning
remuneration from the Group. All transactions are on normal commercial terms and conditions.
A director, Mr C Stone, was paid director’s fees for his personal contribution to the Board.
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*
Financial planning fees paid or payable
CONSOLIDATED
2014
$
2013
$
308,400
255,773
209,142
213,712
517,542
469,485
* Details of these fees and explanations for the increase have been provided in the Remuneration section in the Directors
report.
Shares under option
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 2014 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 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 4
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 4
25 KEY MANAGE ME NT P E RSONN EL DI SC LOS UR ES c o n t i n u e d
(e) Other transactions with key management personnel
Balance at the
start of the
year ($)
Interest paid
/ payable for
the year ($)
Balance at the
end of the
year ($)
Number of
KMP in this
aggregation
Aggregate details of business development and
staff loans made to Key management personnel
of the Group, including their close family
members and entities related to them
76,333
4,210
77,902
2
Business development and staff loans have been made at arm’s length and at the same terms and conditions provided to
other franchisees and staff.
26 SHARE B ASE D P AY 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 balance 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 shares are traded on
the Australian Securities Exchange during the month preceding the date the options are granted. Other than options issued
to the executive director as detailed in the paragraph below , during the year the directors determined not to issue any
options (2013: Nil) to staff , and 155,000 employee options expired (2013: 110,000) over the period.
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. Subject to this approval, the Directors have
resolved to issue 100,000 options at an exercise price of $1.63 (2013: 100,000 options at $1.05) to the executive director
in respect of the year ended 30 June 2014.
(b) Adviser share option plan (ASOP)
The parent entity established the ASOP to provide incentives to financial planning 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 ASOP has not been extended beyond June 2011. Options were granted for no consideration. The total Adviser options
issued since inception total 6,847,517. During the year 20,270 Adviser options lapsed leaving no further options on issue.
A N N U A L R E P O R T 2 0 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 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 4
26 SHARE B ASE D P AYME NT S C O N TIN UED
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 – 2014
ESOP – Managing Director – Note 26(a)
29 Oct 2008
29 Oct 2013
$2.30
27 Oct 2010
29 Oct 2015
$1.28
15,000
40,000
-
-
23 Oct 2013
23 Oct 2018
$1.05
-
100,000
55,000
100,000
ESOP – Staff – Note 26(a)
27 Aug 2008
27 Aug 2013
$2.30
ASOP – Advisers – Note 26(b)
30 Sept 2008
30 Sept 2013
$2.70
155,000
155,000
20,270
20,270
-
-
-
-
Total
230,270
100,000
-
-
-
-
-
-
-
-
-
(15,000)
-
-
-
-
40,000
40,000
100,000
-
(15,000)
140,000
40,000
(155,000)
(155,000)
(20,270
(20,270)
-
-
-
-
-
-
-
-
(190,270)
140,000
40,000
Weighted average exercise price
$2.16
$ 1.05
$ -
$2.34
$1.12
$1.28
The volume weighted average remaining contractual life of share options outstanding at the end of the period was 3.46 years
(2013 : 0.56 years).
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 4
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 4
26 S HARE BASE D PAY ME NT S C O N TIN UED
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
LAPSED 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 – 2013
ESOP – Managing Director – Note 26(a)
30 Oct 2007
30 Oct 2012
$2.65
100,000
29 Oct 2008
29 Oct 2013
$2.30
29 Oct 2010
29 Oct 2015
$1.28
ESOP – Staff – Note 26(a)
31 Jul 2007
31 Jul 2012
$2.65
27 Aug 2008
27 Aug 2013
$2.30
ASOP – Advisers – Note 26(b)
30 Sept 2007
30 Sept 2012
$3.45
30 Sept 2008
30 Sept 2013
$2.70
Total
15,000
40,000
155,000
110,000
155,000
265,000
22,042
20,270
42,312
462,312
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
-
-
-
15,000
40,000
(100,000)
55,000
-
15,000
40,000
55,000
(110,000)
-
-
-
155,000
155,000
(110,000)
155,000
155,000
(22,042)
-
-
20,270
(22,042)
20,270
-
20,270
20,270
(232,042)
230,270
230,270
Weighted average exercise price
$2.44
$ -
$ -
$2.73
$2.16
$2.16
Fair value of options granted
During the year ended 30 June 2014 100,000 options (2013: Nil) were issued to the Managing Director in respect of the
prior year. 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.
Options are granted for no consideration, have a five year life .
A N N U A L R E P O R T 2 0 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 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 4
26 SHARE B AS E D PA YME NT S CO N TIN UE D
The model inputs for options granted during the year ended 30 June 2014 included:-
ESOP - Director 2014
(a) exercise price
(b) grant date:
(c) expiry date
(d) share price at grant date:
(e) expected price volatility of the company’s shares:
(f) expected dividend yield:
(g) risk-free interest rate:
(h) lapse (exit) rate
1.05
23 Oct 2013
23 Oct 2018
1.15
35%
5.95%
2.50%
0%
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:
Options issued, net of lapses
27 REMUNE RAT I ON OF AUD I TOR S
CONSOLIDATED
PARENT ENTITY
2014
$
2013
$
2014
$
2013
$
(48,235)
(142,165)
-
(48,235)
-
(142,165)
-
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:
Audit Services
PricewaterhouseCoopers Australian firm:
CONSOLIDATED
PARENT ENTITY
2013
$
2012
$
2013
$
2012
$
Audit and review of financial reports
104,206
100,682
86,206
97,470
Other audit related work, including audit of
entities for which the parent entity is trustee,
manager or responsible entity (gross of any
amounts reimbursed)
337,590
328,168
337,590
328,168
Total remuneration
441,796
428,850
423,796
425,638
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.
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 4
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 4
28 CONTINGE NT LI ABI LI T I E S
The parent entity and Group had contingent liabilities at 30 June 2014 in respect of bank guarantees for property leases of
parent and group entities amounting to $438,000 (2013: $438,000).
29 COMMI TME NT S FO R E XP E N DI TURE
(a) Capital expenditure
Commitments payable within one year
-
-
-
-
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
(b) Operating leases
The Group leases various offices under non-cancellable
operating leases expiring within 12 months to four 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
1,030
4,670
5,700
539
5,934
6,473
856
4,380
5,236
472
5,587
6,059
30 RELATED P AR T Y T R ANSACT ION S
(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 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
i) Transactions between Fiducian Portfolio Services Limited and other entities in the wholly-owned group
a. Financial planning fees 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. Collection of fees by AFS licensed companies on behalf of other members of the group.
e. Dealer service fees paid by Fiducian Portfolio Services Limited
The above transactions were on normal commercial terms and conditions and at market rates.
(ii) Transactions with related parties of directors
a. Financial planning fees paid by Fiducian Financial Services Pty Limited to entities associated with the directors
b. Financial planning fees paid by Fiducian Financial Services Pty Limited to entities associated with relatives of the
directors
The above transactions were on normal commercial terms and conditions and at market rates.
A N N U A L R E P O R T 2 0 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 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 4
30 RELATED P AR T Y T R ANSACT ION S c o n t i n u e d
The following transactions occurred with related parties:-
OWNERSHIP
INTEREST1
2014
$
2013
$
2014
$
2013
$
CONSOLIDATED
PARENT ENTITY
Wholly owned group
Fiducian Financial Services Pty Ltd
Deal service fees paid
Financial planning fees paid
Expenses paid and systems costs recovered
Related trusts
Fiducian Investment Service
Operator fees income
Fiducian Superannuation Service
Trustee fees income
Expense recovery
Fiducian Funds
Responsible entity fees income
Expenses recovery
Director associated entities
Hawkesbury Financial Services Pty Ltd2
Financial planning fees paid
100%
Nil
Nil
Nil
Fiducian Financial Services Bondi Junction Pty Ltd3
Financial planning fees paid
-
-
-
-
-
-
2,214,000
4,987,900
-
-
4,540,590
198,574
2,746,796
3,267,050
2,746,796
3,267,050
8,373,323 11,160,514
1,935,071
2,923,670
8,373,323 11,160,514
1,935,071
1,935,071
3,566,835
270,000
3,142,321
-
3,566,835
270,000
3,142,321
-
209,142
213,712
130,354
141,173
-
-
-
-
1 “Ownership Interest” means the percentage of capital of the company held directly and/or indirectly through another
entity by Fiducian Portfolio Services Limited
2 Payments to Franchisee associated with a director, F Khouri in the normal course of business in arms length transactions.
3 Payments to Franchisee associated with James Bucknell, relative of R Bucknell, in the normal course of business in arms
length transactions.
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 4
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 4
30 RELATED P AR T Y T R ANSACT I ONS C O NT IN UED
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
2014
$
2013
$
3,506,280
3,937,630
1,660,045
1,663,141
5,166,325
5,600,771
184,217
168,047
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 REC ONC I LIATION OF PR OF IT OR L OSS A F T ER IN C OME TA X T O N ET
CAS H INF LOW FR OM O PE RA T I NG A CT I VI TI ES
CONSOLIDATED
PARENT ENTITY
Profit for the year
Non-cash employee (expense)/benefit
Dividend and investment income
Depreciation and amortisation
Net (gain) loss on sale of non-current assets
Changes in operating assets and liabilities:
Change in accounts receivable
Change in income tax payable
Change in other assets at fair value
Change in trade creditors
Change in other creditors
Change in related entities balance
Change in deferred income tax asset
Change in deferred income tax liability
Net cash inflow from operating activities
2014
$’000
3,983
45
-
682
(24)
(149)
881
9
290
154
-
134
(142)
5,864
2013
$’000
3,392
(426)
(21)
582
(5)
481
321
24
25
541
-
13
(122)
4,805
2014
$’000
2,708
50
-
141
(25)
(396)
113
9
410
254
435
29
(9)
2013
$’000
3,434
(340)
(21)
150
-
694
290
24
(49)
239
(1,211)
7
(12)
3,719
3,205
A N N U A L R E P O R T 2 0 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 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 4
32 EARNINGS PE R S HA RE
Earnings per share using weighted average number of ordinary shares
outstanding during the period:-
(a) Basic earnings per share (in cents)
Profit from continuing operations attributable to the ordinary equity
of the company
(b) Diluted earnings per share (in cents)
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
RESTATED
2013 2013
12.81
10.33
12.75
10.24
CONSOLIDATED
2014
NUMBER
2013
NUMBER
31,015,853 31,667,435
142,958
278,867
31,158,811 31,946,302
(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
2014
$’000
3,983
2013
$’000
3,392
(e) Information concerning the classification of securities
Options 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.
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 4
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 4
33 EVENTS O CC U RR I NG A FTE R B A LA N C E DA TE /R E POR T ING DAT E
Under the Rules of the Employee and Director Share Option Plan and subject to shareholder approval, the Directors have
offered 100,000 options to the Managing Director after year end (2013: 100,000). At the date of this report all employee
options have now lapsed (2013: 155,000).
To the date of this report, the Company has not bought back any shares on the market (2013: 81,000 shares at an average
price of $1.03).
34 FINANCIA L RI SK MANAGE M ENT
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 and parent entity hold the following financial instruments:-
CONSOLIDATED
PARENT ENTITY
2014
$’000
11,194
4,939
106
2013
$’000
9,440
4,890
155
2014
$’000
8,046
8,009
106
2013
$’000
7,536
8,123
155
16,239
14,485
16,161
15,814
4,394
2,998
2,736
2,074
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
(a) Market risk
(i) Foreign exchange risk
The Group has limited operations outside Australia and is not exposed to any material foreign exchange risk.
(ii) Price risk
The Group and parent entity are exposed to movements in financial markets. 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 planners. 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% (2013: - 10%) against actual market movements, with all other variables held constant
other than financial planning fees that are paid out of such income.
A N N U A L R E P O R T 2 0 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 P A G E 7 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 4
34 FINANCIA L R IS K MAN AG E MEN T C O N TIN UED
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
(11)
(16)
(11)
(16)
1,277
1,568
1,277
1,568
The Group’s main interest rate risk arises from deposits in Australian Dollars, and short term loans to staff and planners.
The group has no borrowings.
Cash at bank and on deposit
Staff & financial planner loans
30 JUNE 2014
30 JUNE 2013
Weighted average
interest rate
%
2.1%
5.3%
-
Balance
$’000
11,194
2,268
13,462
Weighted average
interest rate
%
2.8%
5.1%
-
Balance
$’000
9,440
2,365
11,805
Bank deposits are at call and staff and planner loans have terms extending between 1 and 7 years, and may be repayable
sooner in certain circumstances. Interest rates are reviewed and adjusted at least quarterly.
The Group’s main interest rate risk arises from cash and cash equivalents with variable interest rates. At 30 June 2014 if
interest rates change by +/- 100 basis points (2013: +/- 100 basis points) from the year end rates with all other variables
held constant, post-tax profit would have been $94,000 higher or lower (2013: $83,000).
(b) Credit risk
The Group and parent entity have negligible credit risk from receivables, as management fee and financial planning income
is received within one month of it falling due, and financial planning fees 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
AA-
BBB+
Investment in related trust
Unrated
Loans to staff and financial planners
Unrated
CONSOLIDATED
PARENT ENTITY
2014
$’000
2013
$’000
2014
$’000
2013
$’000
-
-
11,194
9,440
-
-
11,194
9,440
-
8,046
1,000
9,046
-
7,536
-
7,536
106
155
106
155
2,268
2,365
2,268
2,365
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised on
this page.
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 4
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 4
34 FINANCIA L R IS K MAN AG E MEN T C O N TIN UED
(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
CONSOLIDATED
PARENT ENTITY
2014
$’000
4,118
276
4,394
2013
$’000
2,888
110
2,998
2014
$’000
2,737
-
2,737
2013
$’000
2,074
-
2,074
The fair value of financial assets and financial liabilities must be estimated for recognition and measurements or for
disclosure purposes.
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 (level1)
(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)
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 2014.
Parent and Group - at 30 June 2014
Assets
Other financial assets at fair value through
profit or loss
Investment in related trust
Total assets
Parent and Group - at 30 June 2013
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
-
-
-
-
106
106
106
106
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
155
155
155
155
A N N U A L R E P O R T 2 0 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 P A G E 7 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 4
34 FINAN CIAL RI SK MANAGE M EN T C O N TIN UED
(d) Fair value estimation (continued)
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, this has been made difficult as a result of a redemption freeze. The Group has performed a review at
30 June 2014 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 34(a)
(ii).
The following table presents the changes in level 3 instruments for the year ended 30 June 2014:-
Parent and Group
Investment in related trust –
Opening balance
Transfers in to level 3
Capital distribution
Fair value(Loss) recognised in Statement of Comprehensive Income
2014
$’000
2013
$’000
155
-
(40)
(9)
106
275
-
(96)
(24)
155
The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term
financial liabilities for disclosure purposes is estimated by nature. The fair value of discounting the future contractual cash
flows at the current market interest rate that is available to the group for similar financial instruments.
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 4
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 4
34 FINAN CI AL RIS K MANAGE MEN T C O NT IN UED
(e) Assets and liabilities not carried at fair value but for which fair value is disclosed
The following table analyses within the fair value hierachy the Group and parent company’s assets and liabilities not
measured at fair value at 30 June 2014 but for which fair value is disclosed:-
Group - at 30 June 2014
Assets
Cash and cash equivalents
Trade and other receivables (excluding loans)
Business development and staff loans
Total assets
Liabilities
Trade and other payables
Total Liabilites
Parent - at 30 June 2014
Assets
Cash and cash equivalents
Trade and other receivables (excluding loans)
Business development and staff loans
Total assets
Liabilities
Trade and other payables
Total Liabilites
Level 1
$’000
11,194
-
-
11,194
-
-
Level 2
$’000
Level 3
$’000
-
-
-
-
-
-
-
2,671
1,672
4,343
4,553
4,553
Level 1
$’000
Level 2
$’000
Level 3
$’000
8,046
-
-
8,046
-
-
-
-
-
-
-
-
-
5,728
1,672
7,400
2,801
2,801
Level 4
$’000
11,194
2,671
1,672
15,537
4,553
4,553
Level 4
$’000
8,046
5,728
1,672
15,446
2,801
2,801
Assets and liabilities included in this table are carried at amortised cost; their carrying value are a reasonable approximation
of fair value.
Cash and cash equivalents include cash in hand, deposits held with bank and other short term investments in an active
market. Trade receivables include the contractual amount for settlement of the trade debts due to the Group /Company .
The carrying amount of the trade receivables are assumed to approximate their fair values due to their short term nature.
Trade and other payables inlcude amounts due to creditors and accruals and represent the contractual amounts and
obligations due by the Company for expenses. The carrying amount of the trade and other payables are assumed to
approximate the fair value due to their short term nature.
Business development and staff loans represents contractual payments by advisers and staff over the period of loan. Loans
classified as current have not been discounted as the carrying values are a reasonable approximation of fair value due to
the short term nature. Non current loans have been valued at the present value of estimated future cash flows discounted
at the original effective interest rates of the loans.
A N N U A L R E P O R T 2 0 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 P A G E 8 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 4
35 UN CONSOL I D ATE D S TR U CT UR ED EN TI TI ES
A structured entity is an entity that has been designed so that the voting or similar rights are not the dominant factor in
deciding who controls the entity and the relevant activities are directed by means of contractual arrangements.
The Company acts as Responsible entity (“RE)” for the Fiducian funds and has significant influence over the funds due
to its power to participate in financial and operating policies of the investee through the powers vested in it by the
various contractual agreements. The Company considers all these funds to be structured entities. The Company receives
management fees and netting fees from the funds in its capacity as RE of the funds. Except as indicated in Note 13, the
Company does not invest in any of the funds it manages nor have any other forms of involvement such as the provision
of funding, liquidity support or providing guarantees. Despite this, the Company has determined that it has an interest
in the funds based on the variability of returns from management fees it receives linked to the net asset valuation of the
respective funds.
The funds’ objectives range from acheiving medium to long term capital growth and their investment strategy does not
include the use of leverage. The funds finance their operations by issuing redeemable units which are puttable at the
holder’s option and entitle the holder to a proportional stake in the respective fund’s net assets.
The nature and extent of the Company’s interest in the funds has been aggregated and is summarised below:-
Type of Fund
Australian Equity Funds
Global Equity Funds
Property Fund
Diversified Funds
Technology Fund
Structured Income Fund
Fixed Interest Fund
Accrued
Income*
$’000s
133
59
20
76
26
3
-
Financial
Assets**
$’000s
Maximum
Exposure to
Loss
$’000s
-
-
-
-
-
106
-
133
59
20
76
26
109
-
Fund Net Asset
Value
$’000s
326,974
210,226
62,152
454,426
20,210
11,885
72,620
Fund’s
Investment
Portfolio
$’000s
337,067
211,732
64,147
460,228
20,330
12,891
72,871
*= shown as Other receivables in the Current Assets line under trade and other receivables subheading in the Statement of
Financial Position.
**= shown as Non current assets - Other financial assets at fair value though profit and loss (refer to Note 13 for details).
Unless specified otherwise, the Company’s maximum exposure to loss is the total of its on-balance sheet position as at the
reporting date. There are no additional off balance sheet arrangements which would expose the Company to potential loss.
During the year the company earned management fees and netting fees from the structured entities.
The Company also acts as the trustee of the Fiducian Superannuation Service under the provisions of the Trust deed for
the fund. Due to its fiduciary and statutory obligations to manage the assets of the trust on behalf of the beneficiaries , the
Company exercises significant influence over the superannuation fund and therefore the superannuation fund is considered
a structured entity as defined above. For its service the Company receives a management fee for managing the investment
from the members of the fund. In addition to this the Company is entitled to reimbursement of expenses incurred by it in
the operation of the service (for details refer to note 6).
The nature and extent of the Company’s interest in the fund is summarised below :-
Type of Fund
Accrued
Income
Financial
Assets**
Maximum
Exposure
Fund Net Asset
Value
Fiducian Superannuation Service
$’000s
1,272
$’000s
-
$’000s
1,272
$’000s
782,272
Fund’s
Investment
Portfolio
$’000s
781,593
P A G E 8 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 4
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 4
36 RES TATE ME NT OF CO MPA R A TI VES
Following a review of the accounting for business combinations during the year, Management ascertained that the
deferrred tax liability component of acquisitions had not been properly recognised in the books of account in relation
to the client portfolio intangible. Impact of changing this accounting would result in the recognition of Goodwill and a
corresponding recognition of deferred income tax liability for each acquisition. Management has decided to retrospectively
restate 2013 comparatives and the opening balance sheet as at 1 July 2012 to reflect the change. The net impact on the
current year statement of comprehensive income has been a nominal reduction of tax expense to reflect the unwinding of
the deferred tax liability relating to taxable temporary differences.
The impact on the 2013 comparatives and the opening balance sheet as at 1 July 2012 has been summarised below:-
Consolidated
Adjustment
2013
$’000s
Published
2013
$’000s
Restated
2013
$’000s
Published
Parent
Adjustment
2013
$’000s
Restated
4,763
-
4,763
4,843
-
4,843
(1,493)
3,270
3,270
(122)
(122)
(122)
(1,371)
(1,421)
3,392
3,392
3,422
3,422
(12)
(12)
(12)
(1,409)
3,434
3,434
Statement of
Comprehensive Income
(relevant excerpts)
Profit before income tax
expense
Income tas expense
Profit for the year
Total comprehensive income
A N N U A L R E P O R T 2 0 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 P A G E 8 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 4
36 RESTATEME NT OF CO MPA R AT IV ES CO N TIN UE D
Consolidated
Adjustment
2013
$’000s
Published
2013
$’000s
Restated
2013
$’000s
Published
Parent
Adjustment
2013
$’000s
Restated
Statement of Financial
Position
(relevant excerpts)
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
2,141
-
155
598
950
6,413
10,257
-
-
-
-
-
2,141
-
155
598
950
1,299
1,299
7,712
11,556
2,141
3,875
155
184
694
69
7,118
Total assets
22,446
1,299
23,745
20,636
Non-current liabilities
Payables non current
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
Total liabilities
110
-
836
946
4,126
-
897
-
897
897
110
897
836
1,843
-
-
598
598
5,023
2,949
-
-
-
-
-
125
125
125
-
9
-
9
9
2,141
3,875
155
184
694
194
7,243
20,761
-
9
598
607
2,958
Net assets
18,320
402
18,722
17,687
116
17,803
Equity
Contributed equity
Reserves
Retained profits
Total equity
7,145
75
11,100
18,320
-
-
420
420
7,145
75
11,502
18,722
7,145
75
10,467
17,687
-
-
116
116
7,145
75
10,583
17,803
P A G E 8 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 4
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 4
36 RES TATE ME NT OF CO MPA R A TI VES CO N TIN UE D
Consolidated
Adjustment
2013
$’000s
Published
2013
$’000s
Restated
2013
$’000s
Published
Parent
Adjustment
2013
$’000s
Restated
Statement of Changes in
Equity
Retained Earnings
Balance as at 1 July 2012
Profit for the year
Total comprehensive income
for the year
Transactions with equity
holders in their capacity as
equity holders
Dividends provided for or paid
Total transactions with equity
holders
Total Non-current Assets
Note 3 Segment Information
Segment Assets
Funds Management
Financial Planning
Business Services
Intersegment eliminations
Segment Liabilities
Funds Management
Financial Planning
Business Services
Intersegment eliminations
9,700
3,270
3,270
(1,870)
(1,870)
11,100
20,595
8,291
1,752
(8,192)
22,446
2,950
3,723
1,787
(4,334)
4,126
280
122
122
9,980
3,392
3,392
8,915
3,422
3,422
104
12
12
9,019
3,434
3,434
-
-
(1,870)
(1,870)
(1,870)
(1,870)
-
-
(1,870)
(1,870)
402
11,502
10,467
116
10,583
125
867
307
-
1,299
9
624
264
-
897
20,720
9,158
2,059
(8,192)
23,745
2,959
4,347
2,051
(4,334)
5,023
A N N U A L R E P O R T 2 0 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 P A G E 8 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 4
36 RESTATE ME NT OF C O MPA R A TI V ES CO N TIN UE D
Consolidated
Adjustment
2013
$’000s
Published
2013
$’000s
Restated
2013
$’000s
Published
Parent
Adjustment
2013
$’000s
Restated
21
(12)
-
9
125
-
125
125
21
(12)
0
9
125
-
125
194
Note 20 Deferred tax
liabilities
Movements:
Opening balance 1 July 2012
Credited to the statement of
income
Arising on Business combination
Closing balance 30 June 2013
Note 16 Intangible assets
Goodwill
Goodwill on acquisition
Less: Accumulated amortisation
-
-
-
-
3,663
(464)
3,199
841
(121)
177
897
1,299
-
1,299
841
(121)
177
897
4,962
(464)
4,498
-
-
-
-
-
-
-
Total Intangible Assets
6,413
1,299
7,712
69
Consolidated
Adjustment
2013
Published
2013
Restated
Note 32 Earnings per share
Earnings per share (in cents)
(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
Net profit and earnings used calculating
basic and diluted earnings per share
10.08
0.25
10.33
10.07
3,270
0.25
122
10.24
3,392
P A G E 8 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 4
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 40 to 86 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 2014 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 Chief Financial Officer 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,
26 August 2014
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