Fiducian Group
Annual Report 2024

Plain-text annual report

2024 ANNUAL REPORT CONTENTS Annual Report 2024 1 Contents Financial Highlights 2 Five Year Financial Summary 4 Executive Chairman’s Report 5 Directors’ Report 12 Auditor’s Independence Declaration 24 Consolidated Statement of Comprehensive Income 26 Consolidated Statement of Financial Position 27 Consolidated Statement of Changes in Equity 28 Consolidated Statement of Cash Flows 29 Consolidated Entity Disclosure Statement 30 Notes to the Financial Statements 31 Directors’ Declaration 73 Independent Auditor’s Report to the Members 74 Shareholder Information 79 Corporate Directory 81 Financial Adviser Office Locations 82 * (UEBITDA) – Underlying Earnings Before Interest Tax Depreciation Amortisation, no AASB 16 adjustment on lease rent and interest on lease liability (UNPAT) – Underlying Net Profit After Tax, no AASB 16 adjustment on lease rent and interest on lease liability (FUMAA) – Funds Under Management, Administration and Advice Flagship funds performance ranking for one, three, five, seven and ten years to 30 June 2024 against all funds in the Zenith Research Fund Rankings. 1 yr 3 yrs 5 yrs 7 yrs 10 yrs Fiducian Capital Stable Fund 18/42 23/40 12/35 8/35 4/30 Fiducian Balanced Fund 18/121 57/113 6/107 5/100 2/85 Fiducian Growth Fund 51/163 98/154 18/144 9/138 4/126 Fiducian Ultra Growth Fund 33/91 81/82 42/75 33/70 7/64 Fund Performance Aligned Advisers & Associates Financial Advisers 80 Offices across Australia Offices 48 UEBITDA* $24.4m Statutory NPAT $15.0m UNPAT* $17.7m Net Inflows* $281m Financial Highlights For 2024 Revenue $80.8m Dividends 39.30c per share FUMAA* $13.5b 10% increase from $12.3b at 30 June 2023 Annual Report 2024 3 2020 2021 2022 2023 2024 Revenue ($ million) 80.8 54.9 58.8 69.5 73.3 Underlying EBITDA ($ million) 2020 2021 2022 2023 2024 24.4 17.5 19.2 21.8 20.9 Underlying NPAT ($ million) 2020 2021 2022 2023 2024 17.7 12.7 14.1 15.7 15.1 2020 2021 2022 2023 2024 Dividends (cents) 39.3 23.0 26.9 29.7 30.3 2020 2021 2022 2023 2024 Share Price - 30 June Closing ($) 7.45 5.00 6.70 7.29 5.82 2020 2021 2022 2023 2024 EPS based on UNPAT (cents) 56.3 40.5 44.9 49.9 48.0 FINANCIAL SUMMARY 4 Fiducian Group Ltd Five Year Financial Summary For the years 2020 to 2024 Financial History 2020 2021 2022 2023 2024 $’000 $’000 $’000 $’000 $’000 Financial Performance Gross Revenue 54,904 58,839 69,539 73,311 80,798 Underlying EBITDA (UEBITDA) 17,499 19,218 21,791 20,856 24,399 Underlying Net Profit After Tax (UNPAT) 12,725 14,131 15,697 15,110 17,730 Statutory Net Profit After Tax (NPAT) 10,463 12,179 13,317 12,319 15,040 Cost To Income Ratio (CTI) - ex amortisation % 55% 53% 55% 60% 58% Financial Position Total Assets 54,653 58,595 70,691 69,147 71,404 Total Equity 38,123 42,869 47,132 50,905 54,614 Cash 13,961 19,316 17,484 19,648 26,604 Performance over the Last Five Years Annualised UNPAT Growth 8% Annualised EPS Growth 8% Annualised Gross Revenue Growth 10% Annualised Dividend Growth 12% Annualised Share Price Growth 8% Annual Report 2024 5 Dear Shareholders, As Executive Chairman and on behalf of the directors, I am pleased to present this report on the consolidated operating performance of Fiducian Group Limited and its controlled operating entities for the year ended 30 June 2024. Highlights Unlike 2022-23, we had steadily rising financial markets in the 2023-24 financial year despite uncertainty about sticky inflation and potential rate cuts by Central Banks and as well, consistent positive net inflows, from our financial adviser network. Compared with the previous year, net revenue increased by 11%, Underlying Net Profit After Tax (UNPAT) our cash generation capability grew by 17% and Statutory Net Profit After Tax (NPAT) grew by 22%. The underlying earnings per share increased 17% from 48.0 cents in 2023 to 56.3 cents in the current year. The Board’s mandate to management to operate a stable business that aims to deliver steady growth based on the principles of People, Profit and Planet is being delivered. Financial Information Results for the year Executive Chairman’s Report Financial highlights Year Ending 30 June 2024 2023 $ Change % Change Funds Under Management, Advice and Administration (FUMAA) 13.51 Billion 12.34 Billion 1.3 Billion 10% $’000 $’000 Operating Revenue 80,798 73,311 7.5 Million 10% Fees and Charges paid (20,210) (18,849) Net Revenue 60,588 54,462 6.1 Million 11% Gross Margin 75% 74% EBITDA 26,056 22,442 3.6 Million 16% Add back rent and deduct interest on lease liabilities (1,657) (1,587) Underlying EBITDA 24,399 20,855 3.5 Million 17% Depreciation (307) (388) Tax on underlying earnings (6,362) (5,357) Underlying NPAT (UNPAT) 17,730 15,110 2.6 Million 17% Amortisation (2,769) (2,772) AASB 16 Leases adjustment impacts - Office Lease 79 (19) Statutory NPAT 15,040 12,319 2.7 Million 22% Basic EPS based on UNPAT (in cents) 56.3 48.0 17% Basic EPS based on NPAT (in cents) 47.9 39.1 The Table titled Financial Highlights below, describes the changes in dollars and percentages for various financial measures during the financial year. EXECUTIVE CHAIRMAN’S REPORT 6 Fiducian Group Ltd Capital Management A key feature of the company is that it continues to maintain a clean Balance Sheet and remains debt free with a positive working capital and cash flow position. However, if circumstances dictate, a capital raising or debt funding may be considered where suitable acquisitions or business growth opportunities present themselves. Final Dividend The Board remains prudent, but is confident that the future of the business is positive and likely to continue to strengthen through organic growth and acquisitions of client bases that can benefit from the Fiducian process. As a result, a fully franked final dividend of 21.1 cents per share has been declared for the recent half year, which will bring the total fully franked dividend declared for the 2024 financial year to 39.3 cents (2023: 30.3 cents), an increase of 30% over the previous financial year. The full year dividend represents 70% of the Underlying NPAT (cash profit) for the year. The final dividend will be paid on 12th September 2024 on issued shares held on the 29th of August 2024. On Market Buy-Back During the year, no shares were bought back on market leaving 31.44 million shares on issue at year end. Cash Flow Net operating cash flows increased from $14.2 million in 2023 to $19.5 million in 2024. Further, dividends of $11.4 million were paid during the period and 1 million relating to lease principal payment. As a result, net cash and cash equivalents increased by $7 million (2023: increase $2.2 million). Cash at year-end was therefore $26.6 million compared to $19.6 million at the end of 2023. Staff and Chairman Options In accordance with the terms and conditions of the approved Employee and Director Share Option Plan, 85,000 options will be issued to the Executive Chairman with respect to the year ended 30 June 2024 (Subject to Shareholder approval). The options can be exercised by him within five years on payment of $7.26 a share. Financial Planning During the year, Funds under Advice grew from $4.6 billion in June 2023 to $4.8 billion in June 2024. Internal training programs have intensified face to face. They differentiate our financial planners from the marketplace and enable them to deliver superior quality advice in a compliant manner. As a consequence, client retention remains high. During this financial year several financial advisers retired and new ones joined, the total number of financial advisers remained steady. Growth in Funds Under Management Administration and Advice (FUMAA) (in $ billion) +83% - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 FUA FUM FUAdm Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Dec 23 Jun 24 7.40 8.20 8.03 9.33 10.44 11.51 10.94 11.85 12.34 12.91 13.51 EXECUTIVE CHAIRMAN’S REPORT Annual Report 2024 7 Fiducian expects the highest level of compliance and client service from its financial planning network. It is possible, that we may have one of the highest supervisory management to financial adviser ratios in Australia, but we feel this is necessary. The Group provided loan funding of $1.6 million to assist several franchisees to acquire financial planning practices. The acquisition of two client bases is in the process of being finalised for absorption into our Melbourne office, these clients will be advised by existing financial advisers. Net inflows of $281 million were received during the year. Practice Managers are focussing on helping our financial advisers lift their revenue, attract more clients and build their businesses. Our focus will remain on generating inflows through organic and inorganic growth, while further acquisitions of client bases that we believe can be quickly assimilated, continue to be negotiated. Salaried and Franchised Offices Company owned offices with salaried financial planners are now based in New South Wales, Victoria, Western Australia, South Australia, Queensland, Northern Territory and Tasmania and continue to contribute to overall results. Salaried offices now comprise over 50% of Funds under Advice. We now have 38 salaried advisers. Franchised offices now comprise around 50% of our Funds under Advice. We have 42 franchised financial planners nationally. Platform Administration Platform Administration offers portfolio wrap administration for superannuation and investment services to financial planners and as well, Separately Managed Accounts (SMAs) which offer investors direct access to a small number of shares and funds that are managed separately for them. Therefore, Fiducian labelled platforms for Fiducian financial advisers are now complemented by badged platforms and Auxilium, which deals only with the external independent financial adviser (IFA) market. We have proven the capability of our administration system which is comfortably coping with the different requirements of external IFAs. Auxilium platforms for superannuation and non-superannuation IFA business are successfully competing against established players. Funds under administration for badges and Auxilium is gathering momentum. The first step of demonstrating the capability of FasTrack our administration system is progressing in full earnest and so far 72 external financial advisers have registered with us to begin using Auxilium. We believe that Auxilium could become an important revenue earner for us. Funds under administration on our Fiducian labelled platforms stood at $3.55 billion on 30 June 2024. Overall growth in Net Funds under administration is driven by new inflows and market growth. Funds under Administration for IFAs is around 11% of total Funds under Administration. Efforts are underway to build new relationships and increase net inflows from non- aligned financial planner groups, in particular, through SMA administration services and Auxilium. Superannuation The Superannuation Trustee Board established for Fiducian Superannuation Service, our public offer superannuation wrap fund in March 2015 with a majority of independent directors, operates professionally and with independence. The Trustee Board is functioning well and carrying out its duties diligently. The Board is supported by the Office of Superannuation Trustee. It outsources key operational processes to specialist Net Funds Inflows - Six monthly (in $ million) 0 20 40 60 80 100 120 140 160 180 200 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Dec 23 Jun 24 EXECUTIVE CHAIRMAN’S REPORT 8 Fiducian Group Ltd service providers and in particular to ensure accuracy in reporting, has recently engaged a big four accounting firm to review data to be continuously reported to the Regulator. During the year, Fiducian diversified funds were converted to Separately Managed Accounts. This is the rising trend in retail financial services. It gives investors the flexibility and control to alter their portfolios by themselves or with the help of their financial advisers, without being restricted by benchmark driven Trustee products that were introduced by us in 1997. This conversion allowed us to reduce our administration fees, which are getting closer to competing with Industry Fund fees and also against leading retail platforms that offer SMAs in the main. The fee reduction introduced on 01 June 2024 is around $1 million, which we intend to make up through higher inflows and funds under administration over the coming year. Funds Management Our in-house Manage-the-Manager system of investment continues to attract the majority of retail funds placed with us. Fiducian Funds have performed well over the medium to long-term in their respective categories as we diversify their assets through a range of underlying fund managers to reduce risk and volatility. Information Technology The Fiducian Information Technology development team has been busily working from both home and head office to provide system enhancements that deliver efficiency and wide-ranging functionality to FORCe our financial planning system and to ‘FasTrack’, our platform administration system. The improvements provide integration with our on-line reporting tools and give us an edge when competing for administration related business for Auxilium and as well scope to distribute FORCe on a standalone basis. Human Resources Management and Staff At Fiducian we have always acknowledged staff as our most important and valuable asset and we continue to nurture and help them grow personally and into positions of responsibility. Our strategy to view our staff as a large Fiducian family standing alongside each other in difficult times has held us in good stead as staff have reciprocated with a show of superior performance and loyalty in volatile times. Management has taken a hybrid approach to working, with teams splitting their working days between the office and home while continuing to discharge their duties, meet regulatory obligations and remain connected with their colleagues and clients. This is a worldwide transformation of the work environment, which we have accommodated. We also understand the pressures posed by the cost-of- living crisis our employees are facing and have provided increases in salaries and bonuses to help them cope. Fiducian has and will always be an equal opportunity employer. Our diversity policy encourages persons of different race, gender, sexual preferences, religion, national or ethnic origin, age or disability and skills to participate and receive recognition, reward and management responsibility commensurate with their performance. Employees are from over 28 countries of origin, 22% over 55 years, and 46% female with 30% in senior roles. Advisers council The Advisers Council is drawn from our supporting financial advisers and has again made a significant contribution to the Company during the past year. It continues to fulfil its role as a sounding board for the Company’s management and Boards and is a valuable resource and forum to alert us on financial planning issues, FORCe enhancements and FasTrack changes that lift client care and operational efficiency. Board of Directors The Board of Directors and Management has worked together cohesively as a team with respect and candour for each other but with a clear mutual understanding of each other’s roles and responsibilities in achieving optimal performance. Mrs Kerry Skellern who has operational experience and is also a consultant to other company directors joined the Board last year. Her appointment was ratified at the 2023 AGM and the skills she brings assist the board in its decisions. Community Support Fiducian has continued providing support to community organisations and sporting teams linked to our financial planning network. We currently sponsor 18 teams across Australia. For the last three years we have supported the junior development program for coaching at Avondale Golf Club in Sydney. While our contribution is modest, we are proud that a couple of young lady golfers qualified last year for the USLPGA, while others are representing Australia as amateurs or turning professional. Vision Beyond AUS (VBA), a charity supported by the Fiducian Group, has continued its services in hospitals in India, Myanmar, Nepal and Cambodia. More than 55,901 men, women and children who live in abject poverty have EXECUTIVE CHAIRMAN’S REPORT Annual Report 2024 9 had their eyesight restored. In addition, surgical equipment has been donated to overseas hospitals. 18,000 children have been screened for eye disabilities in rural areas of Nepal. Fiducian staff voluntarily provide accounting, administration and marketing support to VBA to ensure that every single dollar contributed by generous donors goes towards eliminating visual impairment in the world. Current Economic and Market Environment The Australian economy grew 0.1% in the March quarter and 1.1% for the full year, sustained by consumption spending by households on essential items and by government on social benefits especially Medicare and energy rebates. However, household discretionary spending fell and the household saving ratio declined further. In per capita terms, the economy contracted for the fourth quarter in a row putting us in a per capita recession. High levels of immigration, a shortage of housing and relatively high interest rates are making home ownership an unattainable dream for young Australians. Many small businesses are struggling too and could close. Clearly the “cost of living crisis” is impacting ordinary Australians. Domestic Interest rates (‘RBA cash rate’), remains at 4.35%. While inflation has come down from its peak of 7.8% to around 4% now, the RBA would like more evidence of further declines before a rate cut is introduced. Unfortunately, Government spending and higher wages are not supportive of the Reserve Bank’s efforts to lower inflation and slow the economy. So, while there is talk of a rate cut, we believe it is likely to be higher rates for longer before visible signs of a slowing economy emerge. The global economy has been growing at just under its longer-term trend rate, despite inflation fighting high interest policies of most of the world’s major central banks. As the International Monetary Fund (IMF) noted ‘while inflation trends are encouraging, we are not there yet’. Inflation rates could potentially have come down more had fiscal policy (government spending) not been as loose as it has been in many jurisdictions. Ongoing large deficits in many economies have added to total debt interest payments. However, the forecast is for average inflation to decline in the advanced economies to 2.4% in the December quarter. The objective is to engineer a soft landing, which is lower inflation and a slower economy, but with positive GDP growth. The IMF is forecasting global growth of only 3.2% this year and again in 2025 largely on the back of developing economies; and a mere 1.7% this year and 1.8% in 2025 for the advanced economies taken together. In anticipation of future interest rate cuts to come, most major share markets have been strengthening since 2023. Indeed, through the first half of 2024, market movements have delivered high single digit to double digit increases. (18% for the NASDAQ). So, across the board, client portfolios have risen in value. This year could also bring positive results for clients, assuming that interest rates begin to decline and earnings rise. If the inflationary outlook improves, yields on fixed interest securities (bonds), could decline and deliver capital growth. The risk is that interest rates do not decline as expected because inflation remains sticky. Consequently, investors get disillusioned and sell out causing share markets to fall sharply. An indicator of such uncertainty is the bond market, which began to rally in the last quarter of 2023, but then fell back again this year, with the indices for international (hedged) and Australian fixed interest down by 0.6% and up by only 0.2% respectively for the first half of this year. Research forecasts we are receiving for 2024-25, suggest single to double digit positive earnings growth from companies represented on global share indexes. However, in the current environment, we are approaching the coming year cautiously, but with a touch of optimism. Growth assets in our diversified portfolios remain marginally above benchmark, while our fixed interest exposure has been raised and is close to its benchmark. This represents a neutral strategy as we continue to observe the decisions of central banks and global financial institutions. As always, we recommend that investors should consult a Fiducian financial adviser to develop financial plans with the aim of achieving diversified investment strategies that over time could help investors realise their financial goals. Outlook Consistent with our strategy over the last 28 years our focus remains the establishment of a business with a rock-solid foundation and growth strategies to enable upscaling on existing capacity and leveraging our controlled, relatively low fixed cost base. This strategy has benefited us in difficult and uncertain times with increasing revenues and growing profits. The Board’s aim remains to build scale and deliver consistent double-digit earnings growth over the long term and Management is determined to stay committed and focused in this difficult climate, to try and achieve this goal. On behalf of the Board, I would like to thank all participants for their individual contributions to the growth and success of Fiducian. Inderjit (Indy) Singh OAM Executive Chairman Sydney, 15 August 2024 EXECUTIVE CHAIRMAN’S REPORT 10 Fiducian Group Ltd Sunbury Tiffany Thorogood, Financial Adviser from our Sunbury office in Victoria spent the day with Loki’s Lodge during a recent event. Loki’s Lodge is a local registered not-for-profit organisation dedicated to animal welfare. Their focus is finding homes for surrendered rural animals. South Perth Our South Perth team took a different approach to team building by spending their day with Ronald McDonald House Charities Australia (RMHC) to cook a meal and spend some time with families who are living at Ronald McDonald House. RMHC creates, finds and supports programs that directly impact the health and well-being of children and their families, including offering housing for families of serious ill children who have to spend long amounts of time at hospital or who live far away from their required medical facilities. Fiducian in the Community EXECUTIVE CHAIRMAN’S REPORT Annual Report 2024 11 Vision Beyond Australia Ltd, a charity proudly supported by the Fiducian Group, received Public Benevolent Institution status effective from 1 January 2019. The charity remains a registered charitable fund since 2011 with tax deductible gift recipient status, but is now able to remit donations directly to its overseas projects. The charity which is dedicated to restoring eyesight for people living in poverty, operates in India, Myanmar, Nepal and Cambodia through 5 hospitals and has restored eyesight for over 55,901 men, women and children. We estimate that around 200,000 persons would have received medical attention during the process. Fiducian Supported Charity Vision Beyond AUS (Public Benevolent Institution) IMAGE: Operation room sponsored by Vision Beyond Aus Vision Beyond AUS DIRECTORS’ REPORT 12 Fiducian Group Ltd Your directors present their report on the Fiducian Group Limited (“the Company”) and its wholly owned operating entities (referred to hereafter as “the Group”) for the year ended 30 June 2024. Directors The following persons were directors of Fiducian Group Limited during the financial year and up to the date of this report: • I Singh • F Khouri • S Hallab • K Skellern • R Bucknell - Retired 19 October 2023 Principal activities During the year the principal continuing activities of the Group consisted of: a. Operating an Investor Directed Portfolio Service through its wholly owned subsidiary, Fiducian Investment Management Services Limited; b. Acting as the Responsible Entity of Fiducian Funds and Separately Managed Accounts service through its wholly owned subsidiary, Fiducian Investment Management Services Limited; c. Acting as the Trustee of Fiducian Superannuation Service through its wholly owned subsidiary, Fiducian Portfolio Services Limited; d. Providing specialist financial planning services through its wholly owned operating subsidiary, Fiducian Financial Services Pty Limited; e. Providing client account administration platforms to clients and corporate services to other entities within the Group through its wholly owned subsidiary, Fiducian Services Pty Limited; f. Development of IT software systems for financial planning and wrap platform administration through its wholly owned subsidiary, Fiducian Services Pty Limited; and g. Distribution of the products and service offerings of the Group companies through its wholly owned operating subsidiary, Fiducian Business Services Pty Limited. Dividends Dividends paid to members during the financial year were as follows: Dividends 2024 2023 $’000 $’000 Final ordinary fully franked dividend for the year ended 30 June 2023 of 18.00 cents (2022: Fully franked 14.90 cents) per share paid on 11 September 2023. 5,666 4,690 Interim ordinary fully franked dividend for the year ended 30 June 2024 of 18.20 cents (2023: Fully franked 12.30 cents) per share paid on 11 March 2024. 5,729 3,872 Total dividends paid during the year 11,395 8,562 Subsequent to the end of the financial year, the directors of the parent entity, Fiducian Group Limited have declared a final fully franked dividend for the year ended 30 June 2024 of 21.1 cents per ordinary share held on 29 August 2024 and payable on 12 September 2024. Directors’ Report DIRECTORS’ REPORT Annual Report 2024 13 Review of operations A summary of consolidated revenues and results by significant industry segments is set out below: Segment Revenues Segment Results 2024 2023 2024 2023 $’000 $’000 $’000 $’000 Funds Management 22,074 19,835 14,309 13,141 Financial Planning 27,695 27,555 3,889 3,693 Platform Administration 15,973 14,738 13,841 12,601 Corporate Services 15,056 11,183 (5,983) (6,992) Total 80,798 73,311 26,056 22,443 Depreciation and amortisation (4,618) (4,775) Income tax expenses (6,398) (5,349) Net profit attributable to members of Fiducian Group Limited 15,040 12,319 Comments on operations and results Comments on the operations, business strategies, prospects and financial position are contained in the report of the Executive Chairman. Shareholder returns The Executive Chairman has outlined in his report to the shareholders how the Group delivered a solid result despite challenging market conditions brought on by the continuing conflicts in Ukraine and the Middle East, the volatility in global energy markets and the uncertainty about the prospects of inflation and its impacts on interest rates. After consideration of the economic environment and the strength of the company’s debt-free balance sheet, the directors have decided on a dividend distribution of 21.1 cents per share for the second half, bringing the full year dividend to 39.3 cents per share (2023: 30.30 cents). Matters subsequent to the end of the financial year 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 Group, to impact the results of those operations or the state of affairs of the Group in subsequent years. Likely developments and expected results of operations The Executive Chairman has commented on expected results of operations in his Executive Chairman’s Report. Other than this, there are no likely developments that may have significant impact on the expected results or operations of the Group. 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 countries of origin. We recognize that diversity includes, but is not limited to gender, age, ethnicity and cultural backgrounds. Our diversity policy encourages persons of different gender, ethnic backgrounds, ages and skills to participate and receive recognition, reward and authority commensurate with their performance. Employees are from over 28 countries of origin, 22% over 55 years, and 46% female with 30% in senior roles. The Group’s current gender diversity report is available to be viewed on the Group website. DIRECTORS’ REPORT 14 Fiducian Group Ltd Key management personnel disclosures 1. Information on current Directors I Singh OAM, BTech, MComm (Bus), ASIA, ASFA, DipFP, CFP Executive Chairman Experience and expertise Founder and Managing Director of the Company since 1996 and Executive Chairman since 25 October 2018. General Management and hands-on experience in funds management and superannuation funds over the past 35 years. Other current directorships in listed entities None Former directorships in the last 3 years None Special responsibilities Executive Chairman of the Group. Interest in shares and options 10,949,228 ordinary shares in Fiducian Group Limited. F G Khouri BBus, FCPA Independent non-executive director Experience and expertise Appointed to the Board 6 July 2007. Financial adviser and business adviser since 1976 to small and medium enterprises. Other current directorships in listed entities None Former directorships in the last 3 years None Special responsibilities Director of Fiducian Portfolio Services Limited (Subsidiary) until his retirement from the board on 1 July 2022 after having served for 15 years. Chairman of the Group Remuneration Committee and member of the Audit Risk and Compliance Committee for Fiducian Group Limited and subsidiary entities, Fiducian Investment Management Services Ltd and Fiducian Financial Services Pty Limited. Interest in shares and options 268,323 ordinary shares in Fiducian Group Limited. S Hallab BEc (Accnt & Law), CA, GAICD Independent non-executive director Experience and expertise Board member since 12 August 2016. Chartered Accountant and registered tax agent. Has over 41 years of experience in finance and superannuation. Other current directorships in listed entities None Former directorships in the last 3 years Director of Ensurance Limited (ASX code: ENA) till his resignation on 30 November 2022. Special responsibilities Director of Fiducian Portfolio Services Limited (Trustee Subsidiary). Chairman of the Audit Risk and Compliance Committees for Fiducian Group Limited and the subsidiary entities, Fiducian Investment Management Services Ltd and Fiducian Financial Services Pty Limited and a member of the Group Remuneration Committee. Member of the Trustee Subsidiary Audit Risk and Compliance Committee and Remuneration and Nominations Committee in respect of the Fiducian Superannuation Service. Interest in shares and options 127,027 ordinary shares in Fiducian Group Limited. DIRECTORS’ REPORT Annual Report 2024 15 K Skellern OAM, BE (Chem, Hons), BSc, GradDip (Bus Admin), FAICD Independent non-executive director Experience and expertise Appointed as a director of Fiducian Group Limited on 1 June 2023. Has held non-executive director and chair roles in the building, infrastructure and aged care sectors, with extensive experience in strategic sales, marketing and R&D at senior executive levels. Other current directorships in listed entities None Former directorships in the last 3 years None Special responsibilities Member of the Group Remuneration Committee and member of the Audit Risk and Compliance Committee for Fiducian Group Limited and the subsidiary entities, Fiducian Investment Management Services Limited and Fiducian Financial Services Pty Limited. Interest in shares and options 8,000 ordinary shares in Fiducian Group Limited. 2. Company secretary P Gubecka LLB, LLM, BCom, CPA, FGIA, FCG (CS, CGP) Company Secretary Experience and expertise Mr. P Gubecka is the Company secretary and the General Counsel of the Group. Mr. Gubecka is an Australian legal practitioner and CPA with over 17 years experience in financial services and superannuation. 3. Meetings of directors The number of meetings of the company’s Board of Directors and of each board committee held during the year ended 30 June 2024, and the number of meetings attended by each director were: Meetings of directors Meetings of committees Board Audit Risk & Compliance Remuneration A B A B A B I Singh 5 5 - - - - F Khouri 5 5 6 6 1 1 S Hallab 5 5 6 6 1 1 K Skellern 5 5 5 5 - - R Bucknell* 2 2 3 3 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. * Mr. R Bucknell retired on 19 October 2023 DIRECTORS’ REPORT 16 Fiducian Group Ltd 4. Other Mr. I Singh as Executive Chairman of Fiducian Group 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 2024. This authority and responsibility is unchanged from the previous year. 5. 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 and induction process D - Share-based compensation E - Additional information F - Director’s superannuation G - Loans to directors H - Other transactions with key management personnel The information provided under headings A - E include remuneration disclosures that are required under Australian Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been included in the Directors’ Report and have 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 to 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 not entitled to options under the Employee and Director Share Option Plan. Directors’ fees The current base remuneration was last reviewed in July 2024. The non-executive directors are paid a fixed fee for participation in Board and Committee meetings plus a fee based on time spent on any additional matters as approved by the Board. Directors who are financial advisers, may have received remuneration from placing their financial planning business with the Group. Non-executive directors’ fees for the Company are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum pool is $450,000 per annum, which was previously approved by shareholders at the Annual General Meeting on 20 October 2016. Retirement allowance for directors There are no retirement allowances for non-executive directors other than superannuation accumulation arising from any compulsory superannuation guarantee contributions made on their behalf. (b) Executive Chairman Remuneration and other terms of employment for the Executive Chairman are formalised in a service agreement. The Executive Chairman’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, Executive Chairman • Term of agreement - until 30 June 2027 • Base salary, inclusive of superannuation, annual and long service leave and salary sacrifice benefits • Short-term performance incentives • Long-term incentives through the Fiducian Group Limited Employee and Director Share Option Plan (ESOP) • Retirement benefits, and • The employment agreement may be terminated by either party with six-month notice The combination of these comprises the executive’s total remuneration package. An external remuneration consultant advises the Remuneration Committee, at least every 3 years, to ensure that the Group has structured an executive remuneration package that is market competitive and complimentary to the reward strategy of the organisation. Their most recent review was in July 2024. DIRECTORS’ REPORT Annual Report 2024 17 Base salary Mr. I 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 Group Remuneration Committee at the commencement of each financial year. There are no guaranteed base pay increases fixed in the executive’s contract. Short-term incentives (STI) The STI aims to provide an incentive to the Executive Chairman to act in the best interests of the Company, its shareholders, clients, staff and all stakeholders, such that the Company achieves and possibly exceeds its targets for the financial year. In setting or paying a STI or bonus, the Remuneration Committee ensures that a bonus does not encourage undue risk taking that would be detrimental to any part of the Company or its clients. Board policy dictates that the Executive Chairman’s performance for a financial year is reviewed and evaluated by the Remuneration Committee. The cornerstone to assessing the performance of the Executive Chairman is the fulfilment of three broad objectives namely: a) Activities that ensure delivery of quality output to standards and timeliness which ensure compliance with statutory guidelines and as well, enhance client and stakeholder relationships; b) Production of results and growth outcomes that enable Business Plan objectives to be achieved; and c) Leadership, management of staff, strengthening good corporate culture and managing risks. Key Performance Indicators (KPIs) of the Executive Chairman are set by the Remuneration Committee. The Remuneration Committee uses both objective and subjective measures in its evaluation and on the basis of the methodology below, the Executive Chairman achieved 81% of the KPIs set for the financial year. The business and operating areas considered are Financial Planning, Funds Management, Business Development and Distribution, and Fiducian Services comprising of Platform Administration, Risk Management, Legal, Information Technology, Marketing and Finance. Each business area’s Executive Leader has a number of underlying KPIs that lie within the broad objectives a), b), and c) outlined above. The underlying KPIs of each Executive Leader may differ and depend on their roles and responsibilities. The Executive Chairman sets the underlying KPIs for each Executive Leader and so each business area has a number of performance measures required to be delivered during the year. Achievement by Executive Leaders of all the KPIs identified for them would satisfy the Board that sufficient personal exertion has been contributed towards achievement of the targets set in the Business Plan for the year, which is approved by the Board. A failure to achieve or deliver on any KPI item within the three broad objectives by any business area stated above is therefore considered a failure by the Executive Chairman to achieve all his KPIs. The employment contract with the Executive Chairman stipulates that a maximum of 20% of that year’s fixed remuneration should be paid to the Executive Chairman if all KPIs are satisfied. The Executive Chairman was therefore entitled to a STI of $97,200 as bonus payment for FY 2024. Long-term incentives Mr. I 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 Company’s underlying net profit after tax or • The 30-day average of June market value for ordinary shares in the company Group Performance and Shareholder returns 2024 2023 2022 2021 2020 Underlying Net Profit After Tax (UNPAT) (in ‘000) 17,750 15,110 15,697 14,131 12,725 Statutory Net Profit After Tax (NPAT) (in ‘000) 15,040 12,319 13,317 12,179 10,463 EPS based on UNPAT (in cents) 56.3 48.0 49.9 44.9 40.5 EPS based on NPAT (in cents) 47.9 39.1 42.3 38.7 33.3 Dividends (in cents) 39.3 30.3 29.7 26.9 23.0 Share Price - 30 June closing (in $) 7.45 5.82 7.29 6.70 5.00 DIRECTORS’ REPORT 18 Fiducian Group Ltd The options are issued under the company’s ESOP at the rate of 5,000 options for each 1% increase in annual profit in excess of 15% or 5,000 options for each 1% increase in the 30-day average for June market value for ordinary shares in the Company, whichever is higher, and only after approval by the shareholders of the Company. For the year ended 30 June 2024, Mr. I Singh is entitled to 85,000 options. Retirement and termination benefits Retirement benefits are delivered under the Fiducian Superannuation Service. This fund provides accumulation benefits based on the superannuation guarantee charge contributions made on behalf of 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 Executive Chairman or by mutual consent is equal to 6 months of the gross annual remuneration. B - Details of remuneration Details of the remuneration of the key management personnel are set out in the following table: 2024 Short-Term Employee Benefits Post- Employment Benefits Share- Based Payment Name Cash salary & fees Cash bonus Annual & long service leave Super- annuation Options Total $ $ $ $ $ $ Executive Chairman I Singh 1 572,501 20,000 12,888 27,500 63,932 696,821 Non-executive directors F Khouri 2 54,424 - - 5,987 - 60,411 S Hallab 114,414 - - 12,586 - 127,000 K Skellern 36,704 - - 4,038 - 40,742 R Bucknell 3 26,611 - - 2,927 - 29,538 Totals 804,654 20,000 12,888 53,038 63,932 954,512 1 Mr. I Singh is entitled to 85,000 options in respect of the year ended 30 June 2024 (subject to shareholder approval at the AGM). In accordance with the accounting standards the value of these options will be expensed over the vesting period. The amount shown in the table above relates to this option value expensed in the current period. 2 Excludes $336,654 of financial planning and other services fees paid to companies in which Mr. F Khouri has an interest in his capacity as a financial adviser. 3 Mr. R Bucknell retired as director on 19 October 2023. DIRECTORS’ REPORT Annual Report 2024 19 2023 Short-Term Employee Benefits Post- Employment Benefits Share- Based Payment Name Cash salary & fees Cash bonus Annual & long service leave Super- annuation Options Total $ $ $ $ $ $ Executive Chairman I Singh 1 572,501 18,100 37,077 27,499 16,329 671,506 Non-executive directors R Bucknell 86,878 - - 9,122 - 96,000 F Khouri 2 50,488 - - 5,301 - 55,789 S Hallab 104,816 - - 11,006 - 115,822 K Skellern 3 3,469 - - 364 - 3,833 Totals 818,152 18,100 37,077 53,292 16,329 942,950 1 Mr. I Singh was not entitled to any options in respect of the year ended 30 June 2023. The amount shown as options payment relates to the options issued for the year ended 30 June 2021 and represents the remaining value of those options expensed over the remainder vesting period in accordance with the accounting standards. 2 This excludes fees of $339,332 for financial planning and other services paid to companies in which Mr. F Khouri has an interest in his capacity as a financial adviser. 3 Ms. K Skellern was appointed on 1 June 2023. C - Service agreements and induction process The service agreement of the Executive Chairman 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. DIRECTORS’ REPORT 20 Fiducian Group Ltd D - Share-based compensation (i) Options compensation and holdings Options over shares in Fiducian Group 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 24. The number of options for ordinary shares in the Company held directly by the Executive Chairman of Fiducian Group 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. 2024 Name Balance at the start of the year Exercised Granted during the year as remuneration1 Lapsed during the year Balance at the end of the year Vested and exercisable I Singh 1 90,000 - - - 90,000 90,000 1 Under the terms of his employment Mr. I Singh is entitled to 85,000 options relating to the year ended 30 June 2024, subject to shareholder approval at the annual general meeting on 17 October 2024. These options have not been included in the table above. 2023 Name Balance at the start of the year Exercised Granted during the year as remuneration1 Lapsed during the year Balance at the end of the year Vested and exercisable I Singh 1 90,000 - - - 90,000 90,000 1 Under the terms of his employment Mr. I Singh was not entitled to any options relating to the year ended 30 June 2023. The options granted related to the year ended 30 June 2021 and approved at the annual general meeting on 21 October 2021 and hence included above. DIRECTORS’ REPORT Annual Report 2024 21 (ii) Share holdings The numbers of shares in the Company held by current directors of Fiducian Group Limited, including their personally related and associated entities, are set out below. No shares were granted during the period as compensation. 2024 Name 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 I Singh 10,942,685 - 6,543 10,949,228 F Khouri 268,323 - - 268,323 S Hallab 107,527 - 19,500 127,027 K Skellern - - 8,000 8,000 2023 Name 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 I Singh 10,907,061 - 35,624 10,942,685 R Bucknell 500,000 - - 500,000 F Khouri 268,323 - - 268,323 S Hallab 78,527 - 29,000 107,527 K Skellern - - - - Shares provided on exercise of options During the year the Group did not issue any ordinary share (2023: 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 previous year. For the current year ended 30 June 2024 base salary of the Executive Chairman increased to $624,600 inclusive of superannuation while the cash bonus granted is $97,200 and the grant of options entitlements have been only in accordance with the incentive programs. The Executive Chairman is entitled to 85,000 options in respect of the current year ended 30 June 2024, subject to shareholder approval at the annual general meeting on 17 October 2024. (2023: Nil). F - Directors’ superannuation Directors may have superannuation monies invested in Fiducian Superannuation Service. These monies are invested subject to the normal terms and conditions applying to this superannuation fund. G - Loans to directors No loans were made to directors during the financial year (2023: Nil). DIRECTORS’ REPORT 22 Fiducian Group Ltd H - Other transactions with key management personnel A director, Mr. F Khouri, is an authorised representative under the Fiducian Financial Services Pty Ltd Australian Financial Services License 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 payments from the Company for financial planning services. All transactions are on normal commercial terms and conditions. Mr. R Bucknell, Mr. S Hallab and Ms. K Skellern were paid director’s fees for their contribution as directors serving on the Board. Aggregate amounts of each of the above types of other transactions with directors of Fiducian Group Limited are as follows: Consolidated 2024 2023 $ $ Directors’ fees and committee fees * 257,691 271,445 Financial planning fees paid or payable 336,654 339,332 Total payments relating to other transactions with key management personnel 594,345 610,777 * Details of these fees have been provided in the Remuneration report included in the Directors’ Report. Shares under option Unissued ordinary shares of Fiducian Group Limited under option at the date of this report are disclosed in Note 24 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 Group Limited issued if any, during the year on the exercise of options granted under the Fiducian Group Limited Employee & Director Share Option Plan are disclosed under Note 24 to the Financial Report. Indemnification and insurance of officers Under the terms of its constitution, Fiducian indemnifies all past and present directors of Fiducian and its wholly-owned subsidiaries against certain liabilities and costs incurred by them in their respective capacities. The Constitution of Fiducian Group Limited provides the following indemnification of officers: • To indemnify officers of the Company and related bodies corporate to the maximum extent permitted by law. • To allow the Company to pay a premium for a contract insuring directors, the secretary and executive officers of Fiducian Group 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 Group 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. DIRECTORS’ REPORT Annual Report 2024 23 Proceedings on behalf of the company No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Non-audit services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or Group are important. The Board of Directors is satisfied that the provision of non- audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed by the Audit Risk and Compliance 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 to the auditor (KPMG) of the parent entity, its related practices and non-related audit firms, are shown in Note 25 to the consolidated financial report. Auditors’ independence declaration A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 24. KPMG remains the external auditor in accordance with section 327 of the Corporations Act 2001. Rounding of amounts The Company is of a kind referred to in Instrument 2016/191, 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. Corporate governance A description of the Group’s current corporate governance practices is available on the Group’s website and can be viewed at https://www.fiducian.com.au/about/corporate- governance/ This report is made in accordance with a resolution of the directors. Inderjit (Indy) Singh OAM Executive Chairman Sydney, 15 August 2024 24 Fiducian Group Ltd AUDITOR’S INDEPENDENCE DECLARATION Auditor’s Independence Declaration KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Fiducian Group Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Fiducian Group Limited for the financial year ended 30 June 2024 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG Andrew Reeves Partner Sydney 15 August 2024 DIRECTORS’ DECLARATION 73 Annual Report 2024 25 Fiducian Group Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Fiducian Group Limited Level 4, 1 York Street, Sydney, NSW 2000. These financial statements were authorised for issue by the directors on 15 August 2024. The directors have the power to amend and reissue the financial statements. Financial Statements Consolidated Statement of Comprehensive Income 26 Consolidated Statement of Financial Position 27 Consolidated Statement of Changes in Equity 28 Consolidated Statement of Cash Flows 29 Consolidated Entity Disclosure Statement 30 Notes to the Financial Statements 31 Directors’ Declaration 73 FINANCIAL STATEMENTS 26 Fiducian Group Ltd Consolidated Statement of Comprehensive Income For the year ended 30 June 2024 Notes Consolidated 2024 2023 $’000 $’000 Revenue from ordinary activities 3, 4 79,302 72,358 Other income 5 1,496 953 Payments to Financial Advisers, Investment Managers and other service providers 6(a) (20,210) (18,849) Employee benefits expense (25,220) (24,999) Amortisation and depreciation expense 6(b) (4,618) (4,775) Other expenses 6(c) (9,312) (7,020) Profit before income tax expense 21,438 17,668 Income tax expense 7 (6,398) (5,349) Profit for the year 15,040 12,319 Other comprehensive income for the full year, net of tax - - Total comprehensive income for the year 15,040 12,319 Profit attributable to: Owners of Fiducian Group Limited 15,040 12,319 Earnings per share 30 Earnings per share from profit from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share (in cents) 47.87 39.13 Diluted earnings per share (in cents) 47.74 39.03 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. Financial Statements FINANCIAL STATEMENTS Annual Report 2024 27 Consolidated Statement of Financial Position As at 30 June 2024 Notes Consolidated 2024 2023 $’000 $’000 ASSETS Current assets Cash and cash equivalents 9 26,604 19,648 Trade and other receivables 10 8,247 9,548 Total Current Assets 34,851 29,196 Non-current assets Loan receivables 11 7,839 7,079 Property, plant and equipment 13 652 874 Right-of-use assets 35 2,349 3,488 Intangible assets 15 25,713 28,510 Total Non-Current Assets 36,553 39,951 Total assets 71,404 69,147 LIABILITIES Current liabilities Trade and other payables 16 10,561 9,655 Lease liabilities 35 1,701 1,171 Current tax liabilities 17 701 959 Total Current Liabilities 12,963 11,785 Non-current liabilities Net deferred tax liabilities 18 1,854 2,788 Lease liabilities 35 1,284 3,068 Provisions 19 689 601 Total Non-Current Liabilities 3,827 6,457 Total liabilities 16,790 18,242 Net assets 54,614 50,905 EQUITY Contributed equity 20 7,788 7,788 Reserves 21 178 114 Retained profits 22 46,648 43,003 Total equity 54,614 50,905 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. FINANCIAL STATEMENTS 28 Fiducian Group Ltd Notes Contributed Equity Reserves Retained Profits Total $’000 $’000 $’000 $’000 Balance as at 30 June 2022 7,788 98 39,246 47,132 Profit for the year - - 12,319 12,319 Other comprehensive income - - - - Total comprehensive income for the year - - 12,319 12,319 Transactions with equity holders in their capacity as equity holders Dividends paid 8 - - (8,562) (8,562) Options expense 21 - 16 - 16 Total transactions with equity holders - 16 (8,562) (8,546) Balance as at 30 June 2023 7,788 114 43,003 50,905 Profit for the year - - 15,040 15,040 Other comprehensive income - - - - Total comprehensive income for the year - - 15,040 15,040 Transactions with equity holders in their capacity as equity holders Dividends paid 8 - - (11,395) (11,395) Options expense 21 - 64 - 64 Total transactions with equity holders - 64 (11,395) (11,331) Balance as at 30 June 2024 7,788 178 46,648 54,614 The above statement of changes in equity should be read in conjunction with the accompanying notes. Consolidated Statement of Changes in Equity As at 30 June 2024 FINANCIAL STATEMENTS Annual Report 2024 29 Notes Consolidated 2024 2023 $’000 $’000 Cash flows from operating activities Receipts from clients (inclusive of GST) 87,382 78,424 Payments to suppliers and employees (inclusive of GST) (61,707) (59,549) Cash generated from operating activities 25,675 18,875 Interest received 1,496 953 Income taxes paid (7,709) (5,551) Net cash inflow from operating activities 29 19,462 14,277 Cash flows from investing activities Payments in relation to business acquisitions - (2,236) Business development loans granted to advisers (1,648) (1,076) Repayment of business development loans by advisers 2,278 1,723 Payments for property, plant and equipment (84) (375) Net cash inflow/(outflow) from investing activities 546 (1,964) Cash flows from financing activities Lease principal payments (1,657) (1,587) Dividends paid (11,395) (8,562) Net cash outflow from financing activities (13,052) (10,149) Net increase in cash and cash equivalents held 6,956 2,164 Cash and cash equivalents at the beginning of the year 19,648 17,484 Cash and cash equivalents at the end of year 9 26,604 19,648 The above statement of cash flows should be read in conjunction with the accompanying notes. Consolidated Statement of Cash Flows For the year ended 30 June 2024 FINANCIAL STATEMENTS 30 Fiducian Group Ltd Name of Entity Entity Type Country of Incorporation Percentage of share capital held directly by the Parent Company in the Body Corporate Tax Residency Fiducian Group Ltd Body Corporate Australia Australian Fiducian Investment Management Services Ltd Body Corporate Australia 100 Australian Fiducian Portfolio Services Ltd Body Corporate Australia 100 Australian Fiducian Services Pty Ltd Body Corporate Australia 100 Australian Fiducian Financial Services Pty Ltd Body Corporate Australia 100 Australian Fiducian Business Services Pty Ltd Body Corporate Australia 100 Australian The above Consolidated Entity Disclosure Statement should be read in conjunction with the accompanying notes Consolidated Entity Disclosure Statement As at 30 June 2024 FINANCIAL STATEMENTS Annual Report 2024 31 1. Summary of material accounting policies 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 Fiducian Group 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 Group Limited is a for-profit entity for the purpose of preparing the financial statements. Compliance with IFRS The financial report of Fiducian Group 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 judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2. B. Principles of consolidation The consolidated financial report incorporates the assets and liabilities of all entities controlled by Fiducian Group Limited (Company or parent entity) as at 30 June 2024 and the results of all controlled entities for the year then ended. Fiducian Group Limited and its subsidiaries together are referred to in this financial report as the Group. Subsidiaries are all 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 entity’s financial report. The acquisition method of accounting is used to account for the business combinations by the Group. 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. Non- controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive income. C. Revenue recognition Revenue is recognised, using the five step approach prescribed by the accounting standards, upon satisfaction of the performance obligations, which occur when control of the goods or services is transferred to the customer. The key judgments in the recognition of revenue involves determining whether the contract is a single performance contract, whether the performance obligation is satisfied over time, as well as the timing and amount of variable consideration to be recognised. The primary revenue streams from contracts with customers for the Group are in the nature of management fee income earned from funds management, fees earned from offering platform services and fee income from offering advice to clients. Notes to the Financial Statements FINANCIAL STATEMENTS 32 Fiducian Group Ltd • Fees earned from the funds management services have been accounted for as single performance obligations to each fund satisfied over time. The fees received based on a fixed percentage on the assets under management are considered variable consideration but with the uncertainty in the variable element being resolved within the reporting period. Fund management services are held to be performed on an ongoing daily basis and therefore fees are accrued daily and paid monthly in arrears for the service provided. • Revenue streams earned from platform administration services are identified as separate single performance obligations to individual customers with customers exercising control over the funds transitioned onto the platform. Platform administration services are held to be performed on an ongoing daily basis and therefore fees are accrued daily and paid monthly in arrears for the service provided by the platform. • Fees earned from offering advice to financial planning clients are a combination of fees earned for ongoing service, and one off fees. Ongoing fees based on Funds under Advice are treated as single performance obligations satisfied over time. The fees received based on a fixed percentage on the Funds under Advice are considered variable consideration but with the uncertainty in the variable element being resolved within the reporting period. Advice service fees are therefore accrued daily and paid monthly in arrears for the service period, and therefore the revenue is attributed to services provided for within the period and accounted for as such. One off fees are identified as a single performance obligation with service performed at a point in time and revenue recognised in line with the service. 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 nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to use 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. Tax consolidation Fiducian Group Limited and its wholly owned subsidiaries have implemented the tax consolidation legislation with Fiducian Group Limited as the head entity of the tax consolidated group. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. The head entity has entered into a tax sharing agreement and a tax funding agreement with the members of the tax consolidated group. Under the tax funding agreement, the members of the Group are required to contribute to the head entity for their current tax liabilities. The assets and liabilities arising under the tax funding agreements are recognised as intercompany assets and liabilities at call. Members of the tax consolidated group via the tax sharing agreement may be called to provide for the income tax liabilities between the entities should the head entity default on its tax payment obligations. No amount has been recognised in respect of this component of the agreement as the outcome is considered remote. 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS Annual Report 2024 33 E. Operating leases The Group leases office space and equipment for which contracts are typically entered into for fixed periods and may include extension options. Leases are recognised as a right-of-use asset and a corresponding liability at the commencement date, being the date the leased asset is available for use by the Group. The accounting policy for the classification and accounting for leases has been explained in Note 1-O. F. Trustee company and Responsible Entity The Group acts as a Trustee of Fiducian Superannuation Service through a subsidiary, Fiducian Portfolio Services Ltd, and acts as the operator of an Investor Directed Portfolio Service, Fiducian Investment Service and the Responsible Entity of Fiducian Funds and Separately Managed Accounts (“the trusts”) through another subsidiary, Fiducian Investment Management Services Ltd. The accounting policies adopted by these companies in the preparation of their financial reports and that of the Group for the year ended 30 June 2024 reflect the fiduciary nature of these companies’ responsibilities and that of the Group 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 these companies or the Group. 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 these companies or the Group having to meet the liabilities of the trusts as 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. Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period greater than 120 days past due. 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. 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS 34 Fiducian Group Ltd Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, measured initially at their fair values at the acquisition date. The excess of the purchase consideration and the acquisition-date fair value over the 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 re-measured to fair value with changes in fair value recognised in profit or loss. K. Investments and other financial instruments 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. Business Development Loans Fiducian provides financial support in the form of business development loans to aligned financial adviser franchisees to enable them to grow their business organically or through acquisition. Management have assessed the business model for these loans to be ‘Hold and Collect’ and the cash flows of these loans to be Solely Payments of Principal and Interest (SPPI) and therefore the business development loans are classified as Amortised Cost. Interest income was determined with reference to the financial asset’s effective interest rate and the gross carrying amount of the asset. Impairment Credit impairments are based on Expected Credit Loss (ECL) approach where individual loans are categorized based on changes in the credit risk since origination. An unbiased and probability weighted ECL is then computed for the individual loan as the product of the Probability of Default (PD), the Loss Given Default (LGD) probability and the Exposure At the time of Default (EAD). The ECL is determined with reference to the following stages: Performing loans 12 month ECL At initial recognition and for financial assets for which credit risk was low, ECL was determined based on the PD over the next 12 months and the losses associated with such default, adjusted for forward looking information. Contractual loan repayments are recovered from the weekly and monthly revenue earnings of the advisers, which the dealer group collects from other platforms on behalf of the adviser. Due to the regularity of the revenue collections, the deferral of contractual payments for short periods of time has not been treated as an automatic indicator of Significant Increase in Credit Risk (SICR) by and of themselves. Non-performing loans: Lifetime ECL The Group assessed whether there had been a SICR of the loans since initial recognition, based on qualitative and quantitative factors, and reasonable forward looking information, which included significant management judgement. Qualitative factors included but were not limited to payment history, requests to modify contractual payments and compliance reviews. Quantitative analysis utilised an internally developed model based on loan to value ratios and forecasted cash flows, adjusted for forward looking indicators such as the level of the ASX 200 which impacts fees earned by the adviser. Where the Group’s modelling indicated a SICR, an ECL was determined with reference to the loan’s lifetime probability of default and the lifetime loss associated with that probability of default. Credit impaired loans: Lifetime ECL Where one or more events which have a detrimental impact on estimated future cash flows has occurred, the loans would be classified as credit impaired. Management have pre-defined some events that would objectively indicate credit impairment such as loan to value ratio increasing beyond a certain percentage and bankruptcy of the adviser. Lifetime ECL continues to be recognised but interest income is taken on a net of provision basis. As at 30 June 2024 the Group does not have any impaired business development loans. L. Fair value estimation Other than the business development loans discussed above, 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. 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS Annual Report 2024 35 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 – 10 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 estimated 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 amounts. These are included in the statement of comprehensive income. 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 or client portfolio at the date of acquisition. Goodwill on acquisitions 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. Client portfolios Unpaid consideration for the acquisition of client portfolios is shown as an outstanding liability while the full amount of client portfolios acquired is booked as an intangible asset and amortised on a straight-line basis over a period of 10 years. The period is based on management’s internal assessment of the average life of an acquired client portfolio and there is no indication that the amortization period is less than 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 is tested for events or changes in circumstances that indicate that they may be impaired and whether they exceed their recoverable amount. O. Right-of-use assets and lease liabilities The Group recognises a right-of-use asset offset with a corresponding lease liability in respect of its rented premises from the date at which the premises became available for use by the Group. The right-of-use assets initially measured at cost will comprise the following: • The amount of the initial measurement of the lease liabilities • Any lease payments made at/or before the commencement date less lease incentives • Any initial directs costs incurred by the group and • Restoration costs The lease liabilities as at the commencement date will include the net present value of the following lease payments: • Any fixed payments less any lease incentives receivable • Variable lease payments based on an index or rate, initially measured using that index or rate at commencement • Amount expected to be payable by the Group under a residual value guarantee • Payments of penalties for termination the lease, if the lease term reflects the group exercising the option to terminate the lease • Exercise price of a purchase option if the Group is reasonably certain to exercise that option 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS 36 Fiducian Group Ltd The right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset and the end of the lease term (including the extension option where applicable) on a straight-line basis. In determining the lease term, management has considered all facts and circumstances that create an economic incentive to exercise the extension option. If the Group is reasonably certain that it will exercise the option to renew the lease then the extended period has been taken into consideration for calculating the depreciation amount. The right-of-use assets held by the Group may be subsequently adjusted for any re-measurement of the lease liability to reflect any reassessment or lease modifications identified, or to reflect revised in-substance fixed lease payments. The lease payments are discounted using the interest rate implicit in the lease or, where that is not available, by using the lessee’s incremental borrowing rate payable to borrow funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Under the new standard the lease payments are allocated between the principal and finance cost. The operating expense in respect of lease payments in the profit and loss account has been replaced by the finance cost, calculated by applying the incremental borrowing rate on the remaining balance of the lease liability, and the depreciation cost for the right-of-use asset. This has typically resulted in higher expenses in earlier years and lower expenses in later years with flow on impacts to key metrics like EBITDA etc. The Finance cost component of the lease payment is treated as an operating cash outflow in the statement of cash flows while the principal payment has been treated as a financing cash outflow. Payments associated with short-term leases of equipment and premises with a lease term of less than 12 months continue to be recognised on a straight line basis as an expense in the profit and loss account. P. Trade and other payables These amounts represent liabilities for goods and services provided to the Group before the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Q. 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. R. 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 and sick leave is brought to account as incurred. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit cost method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate 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 via the share option plans. Information relating to this scheme is set out in Note 24. Subsequent options issued to employees for no consideration have the fair value of options granted under the Fiducian Employee and 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. 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS Annual Report 2024 37 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. S. 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. No gain or loss is recognised in the profit or loss and 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 re-issued. T. 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. U. 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. V. 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 or other 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. W. Rounding of amounts The Company is of a kind referred to in Instrument 2016/191 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. X. New Australian Accounting Standards and amendments to Australian Accounting Standards and interpretations that are either effective in the current financial year or have been early adopted AASB 2023-2 amendments to Australian Accounting Standards – International Tax Reform Pillar Two Model Rules aims to ensure large multinational groups pay a minimum tax amount on income sourcing in each jurisdiction in which they operate. As the Group operates only in Australia the Pillar Two Model Rules do not apply to the Group. The amendments made to other existing standards that were mandatorily effective or have been early adopted for the annual reporting period beginning on 1 July 2023 did not result in a material impact on this Financial Report. 1. Summary of material accounting policies (continued) FINANCIAL STATEMENTS 38 Fiducian Group Ltd 1. Summary of material accounting policies (continued) Y. New Australian Accounting Standards and amendments to Australian Accounting Standards and Interpretations that are not yet effective for the financial year IFRS 18 Presentation and Disclosure in Financial Statements sets out requirements for the presentation and disclosure of information in general purpose financial statements. The standard is effective for reporting periods after 1 January 2027 but is required retrospective application. The Group will assess the impact after the release of the Australian equivalent of the standard later this year. Other than this, as at the date of this financial report, there are other amendments to accounting standards published by the Australian Accounting Standards Board for which the mandatory application dates fall after the end of this current reporting year. None of these standards have been early adopted and applied in the current reporting year. These changes are not expected to have a significant financial impact, but may result in additional disclosures in the future. The International Sustainability Standards Board (ISSB) has published the following sustainability reporting standards (a) IFRS S1 General Requirements for Disclosure of Sustainability, which sets out the overall requirements for sustainability-related financial disclosures; and (b) IFRS S2 Climate-related Disclosures, which will require disclosure of the reporting entity’s governance, strategy, risk management and targets in relation to climate related risks and opportunities. In Australia these proposed standards have been tabled in Parliament under the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 and in its present form will apply to reporting periods after 1 July 2027. The group acknowledges the importance of sustainability and climate related reporting obligations and will assess the impacts after the release of the Australian Standard. 2. Critical accounting estimates and judgements In preparing the Annual Report, the Group makes estimates and assumptions concerning the future which management believes are reasonable. However, outcomes may differ from management’s assumptions and estimates and may require adjustments to the carrying amounts of the assets and liabilities reported. These estimates and judgements 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. (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 client 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 earnings multiples requiring the use of sustainable revenue estimates and comparable market transactions. (iii) Estimated impairment of loans receivables The Group applies a three-stage approach to measuring the ECL based on changes in the business development loan’s underlying credit risk and includes forward-looking or macroeconomic information (FLI). The calculation of ECL requires judgement and the choice of inputs, estimates and assumptions around the product of the probability of default (PD), the loss given default (LGD) and the exposure of default (EAD). Outcomes within the next financial period that are different from management’s assumptions and estimates could result in changes to the timing and amount of ECL to be recognised. FINANCIAL STATEMENTS Annual Report 2024 39 3. Segment information A. Description of segments Business segments The business activities of the Group have been segregated into business segments based on legal entities and reviewed by management accordingly. The business segments are as follows: Funds Management The Group acts as Responsible Entity for managed investment schemes and separately managed accounts through its subsidiary Fiducian Investment Management Services Limited. Financial Planning The Group continues its specialist financial planning services through its subsidiary, Fiducian Financial Services Pty Ltd. Platform Administration The Group acts as an Registrable Superannuation Entity (RSE) of a public offer superannuation fund which is offered on its wrap platform through its subsidiary Fiducian Portfolio Services Ltd. The Group also acts as an Operator and Responsible entity of an Investor Directed Portfolio Service and the Fiducian Investment Service through another subsidiary Fiducian Investment Management Services Limited. Corporate Services This segment is an aggregation of the administration and professional services provided to the Group by a subsidiary, Fiducian Services Pty Ltd and Fiducian Business Services Pty Ltd, which provided distribution activities in the current period. Geographical segments The Group operates in the geographical segment of Australia. FINANCIAL STATEMENTS 40 Fiducian Group Ltd 3. Segment information (Continued) B. Primary reporting - Business segments Funds Management Financial Planning Platform Administration Corporate Services Segment Eliminations Consolidated $’000 $’000 $’000 $’000 $’000 $’000 2024 Revenue from external clients 29,180 28,799 21,323 - - 79,302 Inter-segment sales 1 (7,611) (1,800) (5,350) 14,761 - - Other revenue 506 695 - 295 - 1,496 Total segment revenue 22,075 27,694 15,973 15,056 - 80,798 Profit from ordinary activities before income tax, depreciation and amortisation 14,309 3,889 13,841 (5,983) - 26,056 Depreciation, amortisation and impairment 4,618 Profit from ordinary activities before income tax 21,438 Income tax expense (6,398) Profit from ordinary activities after income tax expense 15,040 Segment assets 16,712 38,150 3,509 101,184 (88,151) 71,404 Segment liabilities 8,190 35,770 - 48,255 (75,425) 16,790 Acquisitions of plant and equipment, intangible and other non-current segment assets - (27) - 84 - 57 1 Intersegment sales for the current period represents internal service charges from Administration entity to other business lines. FINANCIAL STATEMENTS Annual Report 2024 41 3. Segment information (Continued) B. Primary reporting - Business segments (Continued) Funds Management Financial Planning Platform Administration Corporate Services Segment Eliminations Consolidated $’000 $’000 $’000 $’000 $’000 $’000 2023 Revenue from external clients 1 25,896 27,324 19,138 - - 72,358 Inter-segment sales 2 (6,283) (320) (4,400) 11,003 - - Other revenue 222 551 - 180 - 953 Total segment revenue 19,835 27,555 14,738 11,183 - 73,311 Profit from ordinary activities before income tax, depreciation and amortisation 13,141 3,693 12,601 (6,992) - 22,443 Depreciation, amortisation and impairment (4,775) Profit from ordinary activities before income tax 17,668 Income tax expense (5,349) Profit from ordinary activities after income tax expense 12,319 Segment assets 11,995 45,712 3,273 100,345 (92,178) 69,147 Segment liabilities 3,482 44,963 - 49,250 (79,453) 18,242 Acquisitions of plant and equipment, intangible and other non-current segment assets - 234 - - - 234 1 $1,296,000 CMA revenue relating to cash on Fiducian platform was reclassified from Funds Management segment to Platform Administration segment for FY2023. 2 Intersegment sales for the current period represents internal service charges from the Corporate Services segments to other business segments. FINANCIAL STATEMENTS 42 Fiducian Group Ltd 3. Segment information (Continued) C. Other segment information (i) Segment revenue Sales between segments are eliminated on consolidation. The revenue from external parties in the statement of comprehensive income is reported in a manner consistent with the regular reporting provided to the board during the year. Segment revenue reconciles to total revenue from continuing operations as follows: Consolidated 2024 2023 $’000 $’000 Segment revenue 79,302 72,358 Total revenue from continuing operations (Note 4) 79,302 72,358 The Group is domiciled in Australia. The amount of its revenue from external clients in Australia is $79,302,000 (2023: $72,358,000). (ii) Segment assets Total assets are reported in a manner consistent with the regular reporting provided to the board during the year. These assets are allocated based on the operations of the segment and the physical location of the asset. All assets are located in Australia. (iii) Segment liabilities Total liabilities are reported in a manner consistent with the regular reporting provided to the board during the year. These liabilities are allocated based on the operations of the segment. 4. Revenue from ordinary activities Consolidated 2024 2023 $’000 $’000 From continuing operations Sales revenue from Funds Management 29,180 25,896 Platform Administration 1 21,323 19,138 Financial Planning 28,799 27,324 Revenue from ordinary activities 79,302 72,358 1 Includes expense recovery fee of $3,526,164 (2023: $2,700,000). For details refer the Note 6. 5. Other income Consolidated 2024 2023 $’000 $’000 Interest received/receivable 1,496 953 Other income 1,496 953 FINANCIAL STATEMENTS Annual Report 2024 43 6. Expenses and other payments Consolidated 2024 2023 $’000 $’000 Profit before income tax includes the following expenses: A. Payments to Financial Advisers, Investment Managers and other service providers Payments to Financial Advisers 12,466 11,978 Payments to Investment Managers 7,492 6,583 Payments to other service providers 252 288 Total Payments to Financial Advisers, Investment Managers and other service providers 20,210 18,849 B. Amortisation and depreciation expense Amortisation Capitalised computer software 1 5 Client portfolio intangibles 2,769 2,767 Total amortisation 2,770 2,772 Depreciation Furniture, office equipment and computers 197 330 Leasehold improvements 110 58 Right-of-use assets 1,541 1,615 Total depreciation 1,848 2,003 Total amortisation and depreciation expense 4,618 4,775 C. Other expenses Professional services 1,014 1,237 Sales, marketing and travel 2,679 2,001 Rental expense relating to operating leases 185 203 Premises and equipment 395 320 Communication and computing 1,358 1,243 Printing and stationery 99 23 Auditors’ remuneration (Note 25) 663 687 Regulatory fees 744 497 Administration and other 3,218 2,799 Expense Recovery 1 (1,043) (1,990) Total other expenses 9,312 7,020 1 Under the administration agreement entered into by the Trustee, Fiducian Portfolio Services Limited, on behalf of Fiducian Superannuation Service (FSS) with Fiducian Services Pty Ltd (‘the administrator”) the expenses of FSS are paid on the Trustee’s behalf by the administrator and are reimbursed by FSS by way of an Expense Recovery Fee. Additional out of pocket expense reimbursements of $589,943 (2023: $1,257,330) have been included in Expense Recovery in Note 6-C. For the current year the Expense Recovery Fee of $3,526,164 (2023: $2,700,000) has been included in Revenue from ordinary activities in Note 4 as part of Fees received. FINANCIAL STATEMENTS 44 Fiducian Group Ltd 7. Income tax expense Consolidated 2024 2023 $’000 $’000 A. Income tax expense Current tax 7,332 6,109 Deferred tax (934) (760) Income tax expense 6,398 5,349 Deferred income tax (revenue)/expense included in income tax expense comprises: (Increase)/decrease in deferred tax assets (Note 14) 470 404 (Decrease) in deferred tax liabilities (Note 18) (1,404) (1,164) Deferred tax (934) (760) B. Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense 21,438 17,668 Tax at the Australian tax rate of 30% (2023: 30%) 6,431 5,300 Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Entertainment 71 44 Sundry items 80 52 Income tax (over)/under provided in previous year (184) (47) Income tax expense 6,398 5,349 C. Tax consolidation legislation Fiducian Group Limited and its wholly owned subsidiaries have formed a tax consolidated group. As a consequence these financial statements have been prepared on a tax-consolidated basis where the head entity has assumed the tax liabilities initially recognised by the standalone taxpayers. FINANCIAL STATEMENTS Annual Report 2024 45 8. Dividends Consolidated 2024 2023 $’000 $’000 Final ordinary fully franked dividend for the year ended 30 June 2023 of 18.00 cents (2022: Fully franked 14.90 cents) per share paid on 11 September 2023. 5,666 4,690 Interim ordinary fully franked dividend for the year ended 30 June 2024 of 18.20 cents (2023: Fully franked 12.30 cents) per share paid on 11 March 2024. 5,729 3,872 Total dividends paid during the year 11,395 8,562 Subsequent to the end of the financial year, the directors of the parent entity, Fiducian Group Limited have declared a final fully franked dividend for the year ended 30 June 2024 of 21.1 cents per ordinary share held on 29 August 2024 and payable on 12 September 2024. Franked dividends The franked portions of the final dividends recommended after 30 June 2024 will be franked out of existing franking credits. Consolidated 2024 2023 $’000 $’000 Franking credits available for the subsequent financial year based on a tax rate of 30% 29,865 26,337 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 $2,846,476 (2023: $2,428,274). 9. Current assets – Cash and cash equivalents Consolidated 2024 2023 $’000 $’000 Cash at bank and in hand 26,604 19,648 Balance at end of the year 26,604 19,648 FINANCIAL STATEMENTS 46 Fiducian Group Ltd 10. Current assets – Trade and other receivables Consolidated 2024 2023 $’000 $’000 Amounts receivable from related entities: Related trusts 6,329 5,865 Business development loans * 961 1,753 Other 418 1,018 Prepayments 595 968 8,303 9,604 Less: provision for impairment of trade receivables - Other (56) (56) 8,247 9,548 * Refer to Note 11 for the non-current portion of these receivables. Movement in provision for impairment of trade receivables - Other Balance at beginning of the year ( 56) (308) Reduction/(Additional) provision during the year - 252 Balance at end of the year (56) (56) At 30 June 2024, a provision for impairment exists for trade receivables outstanding greater than 120 days where management considers that the receivable is impaired. There is no material loss expected, other than the provisions made. Information about the Group’s exposure to interest rate risk in relation to trade and other receivables is provided in Note 32-A and details on the credit risk associated with Business Development loans in Note 32-B. 11. Non-current assets – Loan receivables Consolidated 2024 2023 $’000 $’000 Business development loans * 8,160 7,400 Less: Expected Credit Loss (ECL) (321) (321) Balance at end of the year 7,839 7,079 * Refer to Note 10 for the current portion of these receivables. A. Impaired receivables and receivables past due The Group does not have any non-performing loans at the reporting date. However, to assess whether there has been a Significant Increase in Credit Risk (SICR), the Group has applied the methodology in Note 1-K. This allows the Group to identify underperforming loans. As at the reporting date, the Group has identified potential underperforming loans. A provision of $321,000 (2023: $321,000) is considered adequate. FINANCIAL STATEMENTS Annual Report 2024 47 Consolidated 2024 2023 $’000 $’000 Underperforming loans 1,887 1,865 Impaired receivables and receivables past due 1,887 1,865 Less: Expected Credit Loss (ECL) (321) (321) Net impaired receivables and receivables past due 1,566 1,544 The Group assessed semi-annually its business development loans and the related ECL to determine whether there has been a SICR. The review considered the macroeconomic outlook, adviser credit quality, the type of collateral held, exposure at default and the effect of payment deferral options, if any, as at the reporting date. The deferral of contractual payments for short periods of time is not been treated as an automatic indicator of SICR by and of themselves. The SICR methodology used in the review is a relative credit risk based approach which considers changes in an underlying exposure’s credit risk since origination. The Group used three downsides scenarios anchored to a deterioration in the ASX 200, broadly representing low, medium and significant downside to determine a SICR. There has been no increases in the quantum of exposures indicating there has been no increase in credit risk since origination. Security Under the terms of agreement for business development loans, the Group has a security deed over the all the assets of the franchisee’s business registered in Personal Property Security Register. This security may be called upon if the franchisee defaults under the terms of the agreement. B. Fair values The fair values and carrying values of non-current receivables of the Group are as follows: 2024 2023 Carrying amount Fair value Carrying amount Fair value $’000 $’000 $’000 $’000 Business development loans * 7,839 7,839 7,079 7,079 * Business development loans are carried at amortised cost; their carrying value is a reasonable approximation of fair value. 11. Non-current assets – Loan receivables (continued) FINANCIAL STATEMENTS 48 Fiducian Group Ltd 12. Investment in subsidiaries The Group’s subsidiaries as at 30 June 2024 are set out below: Name of Entity Country of Incorporation Class of Shares Equity Holding % Fiducian Investment Management Services Ltd (FIMS) 1 Australia Ordinary 100 Fiducian Portfolio Services Ltd (FPS) 2 Australia Ordinary 100 Fiducian Services Pty Ltd (FSL) 3 Australia Ordinary 100 Fiducian Financial Services Pty Ltd (FFS) 4 Australia Ordinary 100 Fiducian Business Services Pty Ltd (FBS) 5 Australia Ordinary 100 1 The Company acts as the Operator of Fiducian Investment Service and Responsible Entity for the Fiducian Funds and Separately Managed Account. 2 The Company acts as the Trustee for the Fiducian Superannuation Service. 3 The Company provides platform administration to clients and corporate services to other entities within the Group. 4 The principal activity of the Company is the provision of a specialist financial planning services network. 5 The Company is responsible for the distribution activities on behalf of the Group. 13. Non-current assets – Property, plant & equipment Consolidated 2024 2023 $’000 $’000 Plant and Equipment Cost 3,659 3,575 Less: accumulated depreciation (3,007) (2,701) Total plant and equipment 652 874 FINANCIAL STATEMENTS Annual Report 2024 49 Movements Reconciliation of the carrying amount of each class of property, plant and equipment are set out below: Furniture and Office Equipment Computers Leasehold Improvements Total $’000 $’000 $’000 $’000 Consolidated at 30 June 2022 Cost 316 1,935 949 3,200 Accumulated depreciation (306) (1,173) (834) (2,313) Net book amount 10 762 115 887 Year ended 30 June 2023 Opening net book amount 10 762 115 887 Additions 18 32 325 375 Disposals - - - - Depreciation (8) (322) (58) (388) Closing net book amount 20 472 382 874 At 30 June 2023 Cost 334 1,967 1,274 3,575 Accumulated depreciation (314) (1,495) (892) (2,701) Net book amount 20 472 382 874 Year ended 30 June 2024 Opening net book amount 20 472 382 874 Additions - 84 - 84 Disposals - - - - Depreciation (7) (190) (109) (306) Closing net book amount 13 366 273 652 At 30 June 2024 Cost 334 2,051 1,274 3,659 Accumulated depreciation (321) (1,685) (1,001) (3,007) Net book amount 13 366 273 652 13. Non-current assets – Property, plant & equipment (continued) FINANCIAL STATEMENTS 50 Fiducian Group Ltd 14. Non-current assets – Deferred tax assets Consolidated 2024 2023 $’000 $’000 The balance comprises temporary differences attributable to: Doubtful debts 17 17 Employee benefits 1,210 1,135 Accrued expenditure 561 573 Provision for audit and taxation services 140 189 Provision for FBT 25 11 AASB 16 lease adjustments 888 1,265 Deferred tax assets before set off 2,841 3,190 Set off against deferred tax liabilities (Note 18) (2,841) (3,190) Movements: Opening balance at 1 July 3,190 3,594 Addition during the year 121 - Taken to the statement of comprehensive income (470) (404) Deferred tax assets before set off 2,841 3,190 Set off against deferred tax liabilities (2,841) (3,190) FINANCIAL STATEMENTS Annual Report 2024 51 15. Non-current assets – Intangible assets Consolidated 2024 2023 $’000 $’000 Capitalised expenditure Capitalised expenditure – computer software 5,260 5,260 Less: Accumulated amortisation (5,060) (5,059) 200 201 Client portfolios Cost of acquisition of client portfolios 31,194 31,243 Less: Accumulated amortisation (18,169) (15,422) 13,025 15,821 Goodwill Goodwill on acquisition 13,242 13,242 Less: Impairment/amortisation (754) (754) 12,488 12,488 Total intangible assets 25,713 28,510 FINANCIAL STATEMENTS 52 Fiducian Group Ltd 15. Non-current assets – Intangible assets (Continued) A. Movements Movements in each category are set out below: Acquisition of Client Portfolios Goodwill on Acquisition Capitalised Computer Software Total $’000 $’000 $’000 $’000 Consolidated at 30 June 2022 Cost 31,997 13,380 5,259 50,636 Accumulated amortisation/impairment (12,655) (659) (5,053) (18,367) Net book amount 19,342 12,721 206 32,269 Year ended 30 June 2023 Opening net book amount 19,342 12,721 206 32,269 Additions 180 54 - 234 Sale of business/adj. to net book value (934) (287) - (1,221) Amortisation charge 1 (2,767) - (5) (2,772) Closing net book amount 15,821 12,488 201 28,510 At 30 June 2023 Cost 31,243 13,147 5,259 49,649 Accumulated amortisation/impairment (15,422) (659) (5,058) (21,139) Net book amount 15,821 12,488 201 28,510 Year ended 30 June 2024 Opening net book amount 15,821 12,488 201 28,510 Additions (27) - - (27) Sale of business/adj. to net book value - - - - Amortisation charge 1 (2,769) - (1) (2,770) Closing net book amount 13,025 12,488 200 25,713 At 30 June 2024 Cost 31,216 13,147 5,259 49,622 Accumulated amortisation/impairment (18,191) (659) (5,059) (23,909) Net book amount 13,025 12,488 200 25,713 1 Amortisation of $2,770,000 (2023: $2,772,000) is included in depreciation and amortisation expense in the statement of comprehensive income. FINANCIAL STATEMENTS Annual Report 2024 53 15. Non-current assets – Intangible assets (Continued) B. Impairment tests for goodwill and client portfolios Goodwill and client portfolios are allocated to the financial planning business reportable segment which has been identified as the applicable cash-generating unit (CGU). The CGU is the lowest level within the entity at which the goodwill and client portfolios are monitored for internal management purposes on an ongoing basis. The recoverable amount of the CGU is determined based on market value calculations. These calculations apply income multiples consistent with the market valuations of similar financial services businesses to recurring revenue from the CGU at the year end, less cost to sell. Management considers the income multiple approach most appropriate for the valuation of the recoverable amount of the CGU as it is consistent with the valuation used by management while performing the due diligence of potential acquisitions for its salaried and franchisee network. C. Impact of possible changes in key assumptions In the current year there has been considerable volatility in the economic environment, the global economic slowdown, the unrest in the Middle East and the ongoing impact of interest rate rises and inflation on the domestic economy. Management has carefully considered these impacts and the implications of lower economic activity on its operations. However management has not observed any disruption to its operations or significantly lower revenue as a result of the reduced economic activity, and therefore have seen no reason to reduce the estimates for operating cash flows for impairment testing purposes. The estimates and judgments included in the fair value calculations are based on historical experience, observed transactions in the market for similar financial services businesses and other factors, including management’s and the Directors’ expectations of future events that are believed to be reasonable under the current circumstances. There has been no impairment recognised for the Group’s CGUs in the impairment assessment performed at 30 June 2024. The key assumption made in the assessment of impairment of goodwill is the income multiple applied to recurring revenues. The income multiple assumption is compared to market each year and adjusted appropriately. In the current year, there has been considerable volatility in the securities markets as a result of the global economic slowdown, the Russian invasion of Ukraine and the ongoing impact of interest rate rises and inflation on the domestic economy. Based on management’s current assessment, the recoverable amount of the Group’s CGU exceeds the carrying amount. An 36% change in the current multiples of 2.2 used in the assumption would be required before the carrying value of the CGU would exceed the recoverable amount. To assess the accuracy of the market value calculation, management performed an alternative analysis using the value-in- use model which considers long term assumptions such as market growth rates, a terminal growth rate, inflation rates and a discount rate. Based on management’s value-in-use analysis, the recoverable amount of the Group’s CGU exceeds the carrying amount and is consistent with the outcome of the market value approach. D. Impairment charge During the year, no impairment charge was recorded in the books (2023: Nil). FINANCIAL STATEMENTS 54 Fiducian Group Ltd E. Business Combination The Group did not make any acquisitions during the current year. Details of the acquisition for the previous year are as follows: 30 Jun 2024 30 Jun 2023 Segment N/A Financial Planning Fiducian entity N/A Fiducian Financial Services Pty Ltd Acquisition Date 31 January 2023 Acquisition Description Client Portfolio Ownership acquired 100% Location Victoria Funds Under Advice on acquisition date $16,000,000 Annual recurring revenue on acquisition $102,857 Maximum purchase price payable on acquisition $180,000 Vendor staff employed by Group No Value attributed on the Statement of Financial Position as at reporting date 100% Business combination or asset only Business Combination Provisional Fair value of assets recognised as a result of acquisition as at 30 June 2024: Intangible assets $180,000 Deferred Tax Liabilities ($54,000) Net Identifiable intangible assets acquired $126,000 Goodwill on acquisition $54,000 Deferred consideration at reporting date $27,000 Net Assets Acquired $180,000 Funds Under Advice $16,000,000 While each acquisition is considered on its own merits, a number of synergies are expected to result to the Group once the business combination has been fully implemented and for which goodwill is recognised in the books. The synergy results from leveraging the existing scale Fiducian has from its infrastructure in Risk, Compliance, IT, Legal, Finance and other support functions, products and processes. Despite the synergies at Group level, the acquisitions of client portfolios and goodwill are recorded in the Financial planning business only and client intangibles are amortised over 10 years. The acquisitions are tested for impairment based on financial planning revenue as a standalone business unit and do not consider any revenue synergies generated in other entities from the acquisition. Due to realignment of individual clients within the unit, Financial planning as a whole is considered the appropriate CGU for impairment testing purposes. Under the terms of the agreement for the acquisitions the deferred consideration may be reduced in respect of any clients that have not transferred to the Group within the period specified in the agreements or should the recurring income be lower than contracted for. 15. Non-current assets – Intangible assets (Continued) FINANCIAL STATEMENTS Annual Report 2024 55 16. Current liabilities – Trade and other payables Consolidated 2024 2023 $’000 $’000 Trade payables 3,351 3,097 Other payables 3,868 3,347 Client portfolio deferred settlement - 27 Annual leave entitlements accrued 1,251 1,256 Long service leave entitlements accrued 2,091 1,928 Total trade and other payables 10,561 9,655 Information about the Group’s exposure to credit and interest rate risk is shown in Note 32. 17. Current liabilities – Current tax liabilities Consolidated 2024 2023 $’000 $’000 Income tax 701 959 Total current tax liabilities 701 959 FINANCIAL STATEMENTS 56 Fiducian Group Ltd 18. Non-current liabilities – Deferred tax liabilities Consolidated 2024 2023 $’000 $’000 The balance comprises temporary differences attributable to: Recognition and depreciation of ROU assets 342 484 Recognition and amortisation of client portfolios 4,353 5,494 Deferred tax liabilities before set off 4,695 5,978 Set off against deferred tax assets (2,841) (3,190) Net deferred tax liabilities 1,854 2,788 Movements: Opening balance at 1 July 5,978 7,368 Addition during the year/(adjustments to book value) 121 (226) Taken to the statement of comprehensive income (1,404) (1,164) Deferred tax liabilities at 30 June before set off 4,695 5,978 Set off against deferred tax assets (2,841) (3,190) Net deferred tax liabilities 1,854 2,788 Expiration of net deferred tax liabilities within 12 months 1,287 1,287 after 12 months 567 1,501 Total deferred tax liabilities 1,854 2,788 19. Non-current liabilities – Provisions Consolidated 2024 2023 $’000 $’000 Employee benefits - long service leave 689 601 Total provisions 689 601 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. FINANCIAL STATEMENTS Annual Report 2024 57 20. Contributed equity A. Share Capital Consolidated 2024 2023 $’000 $’000 Ordinary shares - fully paid 7,788 7,788 Total share capital 7,788 7,788 B. Movements in ordinary share capital Date Details Number of shares $’000 1 July 2022 Balance 31,477,623 7,788 Shares bought back on market and cancelled - - Shares issued on exercise of options - - 30 June 2023 Balance 31,477,623 7,788 Shares bought back on market and cancelled - - Shares issued on exercise of options - - 30 June 2024 Balance 31,477,623 7,788 C. Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amount 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 1 July 2023 and 30 June 2024, the Company did not purchase and cancel any ordinary shares on-market. At 30 June 2024, 478,255 shares remained available to be repurchased under the most recently announced buy back notice to the ASX. E. Options Information relating to Fiducian Group Employee & Director options issued, exercised and lapsed during the year is set out in Note 24. FINANCIAL STATEMENTS 58 Fiducian Group Ltd F. Capital risk management The Group’s objectives when managing capital of the wholly owned subsidiaries within the Group are to safeguard its ability to continue as a going concern, to individually continue to meet externally imposed capital requirements of APRA and ASIC under its Registrable Superannuation Entity (RSE) License, Responsible Entity (RE) Licence and their Australian Financial Services (AFS) Licence, and to continue to provide returns to shareholders and benefits to 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 ASIC RE Licence, the RE, Fiducian Investment Management Services Limited, must maintain $5,000,000 net tangible assets at all times during the financial year. b. The requirement under the AFS Licence and RE Licence are maintained by placing cash on deposit with an Authorised Deposit taking Institution. The requirement under the AFS Licence is reported to the Board quarterly at each meeting. 21. Reserves Consolidated 2024 2023 $’000 $’000 Movements Share-based payments reserve Balance at 1 July 114 98 Option expense 64 16 Balance at 30 June 178 114 The share-based payments reserve is used to recognise the fair value of options issued but not exercised. 22. Retained profits Consolidated 2024 2023 $’000 $’000 Movements Balance at 1 July 43,003 39,246 Net profit for the year 15,040 12,319 Dividends paid (Note 8) (11,395) (8,562) Balance at 30 June 46,648 43,003 20. Contributed equity (continued) FINANCIAL STATEMENTS Annual Report 2024 59 23. Key management personnel disclosures A. Payments to key management personnel Consolidated 2024 2023 $ $ Short-term employee benefits 837,542 873,329 Post-employment benefits 53,038 53,292 Share-based payment 63,932 16,329 Total payments to key management personnel 954,512 942,950 Detailed remuneration disclosures are provided in sections A-E of the Remuneration Report contained in the Directors’ Report. B. Equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options Together with terms and conditions of the options, can be found in section D of the Remuneration Report. (ii) Option holdings The number of options over ordinary shares in the Company held during the financial year by each director of Fiducian Group Limited, including their personally related and associated entities, are set out below. 2024 Name Balance at the start of the year Exercised Granted during the year as remuneration Lapsed during the year Balance at the end of the year Vested and exercisable I Singh 1 90,000 - - - 90,000 90,000 1 Under the terms of his employment Mr. I Singh is entitled to 85,000 options relating to the year ended 30 June 2024, subject to shareholder approval at the annual general meeting on 17 October 2024. These options have not been included in the table above. 2023 Name Balance at the start of the year Exercised Granted during the year as remuneration Lapsed during the year Balance at the end of the year Vested and exercisable I Singh 1 90,000 - - - 90,000 90,000 1 Under the terms of his employment Mr. I Singh was not entitled to any options relating to the year ended 30 June 2023. The options granted relate to the year ended 30 June 2021 and approved at the annual general meeting on 21 October 2021 and hence included above. FINANCIAL STATEMENTS 60 Fiducian Group Ltd (iii) Shareholdings The number of shares in the Company held during the financial year by each director of Fiducian Group Limited, including their personally related and associated entities, are set out below. There were no shares granted during the period as compensation. 2024 Name 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 I Singh 10,942,685 - 6,543 10,949,228 F Khouri 268,323 - - 268,323 S Hallab 107,527 - 19,500 127,027 K Skellern - - 8,000 8,000 Note: Mr. R Bucknell retired from the board on 19 October 2023 and hence has not been included in the table. 2023 Name 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 I Singh 10,907,061 - 35,624 10,942,685 R Bucknell 500,000 - - 500,000 F Khouri 268,323 - - 268,323 S Hallab 78,527 - 29,000 107,527 K Skellern - - - - Shares provided on exercise of options During the year no ordinary shares were issued as a result of the exercise of remuneration options to the Executive Chairman of Fiducian Group Limited (2023: 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 (2023: Nil). 23. Key management personnel disclosures (continued) FINANCIAL STATEMENTS Annual Report 2024 61 D. Other transactions with key management personnel A director, Mr. F Khouri, is an authorised representative under the Fiducian Financial Services Pty Ltd Australian Financial Services License 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 payments from the Group. All transactions are on normal commercial terms and conditions. Mr. R Bucknell, Mr. S Hallab and Ms. K Skellern were paid director’s fees for their contribution as directors serving on the Board. Aggregate amounts of each of the above types of other transactions with directors of Fiducian Group Limited: Consolidated 2024 2023 $ $ Directors’ fees and committee fees * 257,691 271,445 Financial planning fees paid or payable 336,654 339,332 Total payments relating to other transactions with key management personnel 594,345 610,777 * Details of these fees have been provided in the Remuneration report included in the Director’s report. Shares under option Unissued ordinary shares of Fiducian Group Limited under option at the date of this report are disclosed in Note 24 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 Group Limited issued during the year ended 30 June 2024 on the exercise of options granted under The Fiducian Group Limited Employee & Director Share Option Plan is disclosed under Note 24 to the financial report. 23. Key management personnel disclosures (continued) FINANCIAL STATEMENTS 62 Fiducian Group Ltd 24. Share based payments A. Employee and director share option plan (ESOP) The establishment of the Fiducian Group 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. 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 being met in accordance with his executive agreement. The Directors have resolved to issue 85,000 options (2023: Nil) to the Executive Chairman in respect of the year ended 30 June 2024. No employee options expired during the same period (2023: Nil). Set out below are summaries of options granted under last year’s option plan: Grant Date Expiry Date Exercise Price Balance at Start of the Year Granted During the Year Exercised During the Year Lapsed During the Year Balance at End of the Year Vested & Exercisable at the End of Year Consolidated 2023 Number Number Number Number Number Number ESOP-Executive Chairman 21 Oct 21 21 Oct 26 $6.47 90,000 - - - 90,000 90,000 90,000 - - - 90,000 90,000 Weighted average exercise price $6.47 $6.47 The volume of weighted average remaining contractual life of share options outstanding at the end of the period was 2.31 years (2023: 3.31 Years). FINANCIAL STATEMENTS Annual Report 2024 63 24. Share based payments (Continued) A. Employee and director share option plan (ESOP) (Continued) Grant Date Expiry Date Exercise Price Balance at Start of the Year Granted During the Year Exercised During the Year Lapsed During the Year Balance at End of the Year Vested & Exercisable at the End of Year Consolidated 2023 Number Number Number Number Number Number ESOP-Executive Chairman 21 Oct 21 21 Oct 26 $6.47 90,000 - - - 90,000 90,000 90,000 - - - 90,000 90,000 Weighted average exercise price $6.47 $6.47 The volume of weighted average remaining contractual life of share options outstanding at the end of the period was 3.31 years (2022: 4.32 Years). B. Expenses arising from share-based payment transactions $63,932 share options expense (2023: $16,329) arising from share-based payment transactions were recognised during the period as part of employee benefit expense. This expense is in respect of option entitlements relating to the year ended 30 June 2024 expensed over the term in accordance with the accounting standards. 25. Remuneration of the auditors KPMG remains the auditor of the parent entity and its related subsidiaries. The auditor remuneration in the table below was paid or payable for services provided by KPMG: Consolidated 2024 2023 $ $ Audit and review of financial reports Group 65,295 61,950 Controlled entities and joint operations 116,172 110,220 Funds 257,218 244,040 Total audit and review of financial reports 438,685 416,210 Other statutory assurance services 181,580 162,790 Other assurance services 41,595 91,000 Other services 880 17,410 Total auditor remuneration 662,740 687,410 FINANCIAL STATEMENTS 64 Fiducian Group Ltd 26. Contingent liabilities The parent entity and Group had contingent liabilities at 30 June 2024 in respect of bank guarantees for property leases of parent and group entities amounting to $810,697 (2023: $742,472). 27. Commitments Consolidated 2024 2023 $’000 $’000 Acquisition funding commitment payable within one year - 27 Other commitments The Group has also entered into a commitment to fund unindemnifiable liabilities of the Trustee / trustee directors of the Fiducian Superannuation Service. Details of this agreement have been provided in Note 28-F Related party transactions. 28. Related-party transactions A. Parent entity The parent entity within the Group is Fiducian Group Limited at year end. B. Subsidiaries Interests in subsidiaries are set out in Note 12. The consolidated financial report incorporates the assets, liabilities and results of the subsidiaries set out in Note 12 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 23. FINANCIAL STATEMENTS Annual Report 2024 65 D. Transactions with related parties (i) Transactions between the Group and other related entities include the following: a. Operator fee income received from related trusts b. Trustee fee income received from related trusts c. Recovery of group costs from related trusts d. Collection of fees by Responsible Entities from the related funds The above transactions were on normal commercial terms and conditions and at market rates. All transactions between Group entities are eliminated on consolidation. (ii) Transactions with related parties of directors include the following: 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. The following transactions occurred with related parties: Consolidated Ownership Interest 1 2024 2023 $ $ Related trusts Fiducian Investment Service Nil Operator fees income 9,899,519 7,928,704 Expense recovery 26,438 28,810 Fiducian Superannuation Service Nil Operator fees income 28,275,955 21,926,273 Expense recovery 4,497,274 3,957,330 Fiducian Funds Nil Operator fees income 29,190,337 25,780,062 Expense recovery 444,938 467,355 Entities associated with directors or their relatives Hawkesbury Financial Services Pty Ltd 2 Financial planning fees paid 336,654 339,332 1 “Ownership Interest” means the percentage of capital of the Company held directly and/or indirectly through another entity by Fiducian Group Limited. 2 Payments to Franchisee associated with director, F Khouri in the normal course of business in arm’s length transactions. 28. Related-party transactions (Continued) FINANCIAL STATEMENTS 66 Fiducian Group Ltd 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: Consolidated 2024 2023 $ $ Current receivables (income from related trusts) 6,301,195 5,865,295 Total current receivables 6,301,195 5,865,295 No Expected Credit Loss provisions for doubtful receivables have been raised in relation to any outstanding balances, and no expense is required to be recognised in respect of impaired receivables due from related parties. F. Commitment to fund unindemnifiable liabilities Fiducian Services Pty Ltd, a member of the Group, and the administrator of the superannuation service has entered into an agreement effective 30 June 2022 to fund Fiducian Portfolio Services Ltd, the Trustee of Fiducian Superannuation Service for unindemnifiable liabilities of up to an aggregate of $1,500,000. As at 30 June 2024, no events have arisen to create any unindemnifiable liability. 29. Reconciliation of profit or loss after income tax to net cash inflow from operating activities Consolidated 2024 2023 $’000 $’000 Profit for the year 15,040 12,319 Non-cash employee benefit 245 212 Amortisation and depreciation 4,618 4,775 Changes in operating assets and liabilities: Change in accounts receivable 136 (1,064) Change in income tax payable (378) 552 Change in trade creditors 904 384 Change in other creditors (169) (2,147) Change in deferred income tax liability (934) (754) Net cash inflow from operating activities 19,462 14,277 28. Related-party transactions (Continued) FINANCIAL STATEMENTS Annual Report 2024 67 30. Earnings per share Consolidated 2024 2023 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 47.87 39.13 B. Diluted earnings per share (in cents) Profit from continuing operations attributable to the ordinary equity and potential ordinary equity of the company 47.74 39.03 Consolidated 2024 2023 Number Number C. Weighted average number of shares used as denominator Weighted average number of ordinary shares used as denominator in calculating basic earnings per share 31,477,623 31,477,623 Adjustments for calculation of diluted earnings per share options 86,910 86,910 Weighted average number of ordinary shares and potential ordinary shares used as denominator in calculating diluted earnings per share 31,564,533 31,564,533 Consolidated 2024 2023 $’000 $’000 D. Reconciliation of earnings used in calculating basic and diluted earnings per share Net profit and earnings used to calculate basic and diluted earnings per share 15,040 12,319 E. Information concerning the classification of securities Options granted to employees under the Fiducian Group Limited Employee Share Option Plan (ESOP) 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 24. FINANCIAL STATEMENTS 68 Fiducian Group Ltd 31. Events occurring after balance date 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 Group, to affect significantly the operations of the Company, the results of those operations or the state of affairs of the Group in subsequent years. 32. Financial risk management The Group’s activities expose it to a variety of financial risks: market risk (including interest rate 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 holds the following financial instruments: Consolidated 2024 2023 $’000 $’000 Financial assets Cash and cash equivalents 26,604 19,648 Trade and other receivables 7,286 7,795 Business development loans 8,800 8,832 Total financial assets 42,690 36,275 Financial liabilities Trade and other payables 11,250 10,256 A. Market risk (i) Foreign exchange risk The Group has no operations outside Australia and is not exposed to any material foreign exchange risk. (ii) Interest rate risk The Group’s main interest rate risk arises from deposits in Australian dollars and loans to advisers. The Group has no borrowings. 30 June 2024 30 June 2023 Weighted Average Interest Rate Balance Weighted Average Interest Rate Balance % $’000 % $’000 Cash at bank and on deposit 4.39% 26,604 4.35% 19,648 Business development loans 6.66% 8,800 6.54% 8,832 35,404 28,480 Bank deposits are at call and adviser loans have terms ranging between 10 and 15 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 and loans with variable interest rates. At 30 June 2024 if interest rates change by +/- 100 basis points (2023: +/- 100 basis points) from the year end rates with all other variables held constant, post-tax profit would have been $247,827 higher or lower (2023: $201,608). FINANCIAL STATEMENTS Annual Report 2024 69 32. Financial risk management (Continued) B. Credit risk Credit risk for the Group arises from trade receivables, cash at bank and on deposits, business development and staff loans. Risk Management The Group has low credit risk from trade receivables, as management fee and financial planning income is received within one month of it falling due. Financial planning fees to the franchisees are only paid following the receipt of the related income, thereby mitigating credit risk. For cash at bank and on deposits, the credit quality assessed against external credit ratings and only parties with minimum rating as detailed below in the table are accepted. For business development and staff loans which are unrated management assess the credit quality of the borrower based on credit rating scorecard taking into account financial position, collateral to provide security for the loan and cultural alignment to the business. The compliance with credit limits are monitored regularly by line management. The credit quality of other financial assets can be assessed against external credit ratings as follows: Consolidated 2024 2023 $’000 $’000 Cash at bank and on deposit AA- 26,604 19,648 Business development loans Unrated 8,800 8,832 Business development loans have been categorised in line with the Group’s internal credit classification as follows: Consolidated 2024 2023 $’000 $’000 Performing 7,234 7,288 Under performing 1,887 1,865 Non performing - - Loans written off - - Total gross loan receivables 9,121 9,153 Less: Expected Credit Loss (ECL) (321) (321) Less: Write off - - Loan receivables net of expected credit losses 8,800 8,832 Security Under the terms of agreement for business development loans, the Group has a security deed over the all the assets of the franchisee’s business registered in Personal Property Security Register. This security may be called upon if the franchisee defaults under the terms of the agreement. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised on this page. FINANCIAL STATEMENTS 70 Fiducian Group Ltd 32. Financial risk management (Continued) C. Liquidity risk The Group maintains sufficient liquid reserves to meet all foreseeable working capital, investment and regulatory licensing requirements. D. Maturity of financial liabilities The table below analyses the group’s financial liabilities into relevant maturity groupings based on their contractual maturities. Contractual Cash Flows Carrying Amount 2024 2023 2024 2023 $’000 $’000 $’000 $’000 Trade and other payables and provisions Due in less than 1 year 10,561 9,655 10,561 9,655 Due in more than 1 year 689 602 689 602 Lease Liabilities Due in less than 1 year 1,865 1,896 1,701 1,171 Due in more than 1 year 1,306 2,633 1,284 3,068 Total financial liabilities 14,421 14,786 14,235 14,496 E. Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurements or for disclosure purposes. (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); (b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group did not have any assets or liabilities recognised at fair value as at 30 June 2024. F. Assets and liabilities not carried at fair value but for which fair value is disclosed Cash and cash equivalents include 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. The carrying amount of the trade receivables is assumed to approximate their fair values due to their short-term nature. Business development loans represent contractual payments by advisers 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 market interest rates for these type of loan. Trade and other payables include 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. FINANCIAL STATEMENTS Annual Report 2024 71 33. Parent entity financial information The stand-alone summarised financial statements of the Company is as follows: Parent Entity 2024 2023 $’000 $’000 A. Balance sheet Current Assets 42,952 41,031 Non-Current Assets 12,850 12,849 Total Assets 55,802 53,880 Current Liabilities - - Non-Current Liabilities 31 31 Total Liabilities 31 31 Net Assets 55,771 53,849 Equity Share capital 7,788 7,788 Reserves 178 114 Retained Earnings 47,805 45,947 Equity 55,771 53,849 B. Total comprehensive income Dividends from subsidiaries and other income 13,100 12,700 34. Deed of cross – guarantee The Company has in place a deed of cross-guarantee, substantially in the form of ASIC Pro Forma 24 with each wholly owned member of the Fiducian Group, with the exception of Fiducian Portfolio Services Ltd. This entity has been excluded from the Group deed of cross-guarantee following the release of an ASIC class order disallowing APRA regulated entities from being part of a closed group covered by a deed of cross-guarantee. Since the financial statement of this excluded entity are not material to the consolidated financial statements, management do not consider it necessary to disclose additional consolidation information related to the closed group excluding this entity. The effect of the deed of cross-guarantee is that each participating member has entered into the deed, guarantees to each creditor of any participating member of the Fiducian Group that has entered into the deed, payment in full of any debt owed to that creditor in the event of winding up of that relevant member of the Fiducian Group. FINANCIAL STATEMENTS 72 Fiducian Group Ltd 35. Lease assets and liabilities Consolidated 30 Jun 2024 30 Jun 2023 $’000 $’000 (i) Amount recognised in the Statement of Financial Position Right-of-use asset Property 2,349 3,417 Equipment - 71 2,349 3,488 Lease Liabilities Current 1,701 1,171 Non-Current 1,284 3,068 2,985 4,239 Deferred tax assets 888 1,265 Deferred tax liabilities 705 1,047 (ii) Amount recognised in the Statement of Comprehensive Income Depreciation relating to the Right-of-use assets 1,541 1,615 Interest Expense (Finance Cost) 220 290 Expense relating to short term leases 185 203 (iii) Total Cash outflows relating to operating leases Principal payments included under Financing activities 1,657 1,587 Interest payments included under operating activities 220 290 1,877 1,877 Financial Statements DIRECTORS’ DECLARATION Annual Report 2024 73 In the directors’ opinion: (a) the financial statements and notes set out on pages 26 to 72 and the Remuneration report in section 5 on pages 16 to 22 of the Director’s Report are in accordance with the Corporations Act 2001, including (i) complying with Australian 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 2024 and of their performance for the financial year ended on that date; and (iii) the Consolidated Entity Disclosure Statement as at 30 June 2024 set out on pg 30 is true and correct; 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. (c) at the date of this declaration, there are reasonable grounds to believe that the members of the wholly owned group identified in Note 12 will be able to meet any obligations or liabilities to which they are, or may become subject by virtue of the deed of cross-guarantee described in Note 34, pursuant to ASIC Corporations (Wholly Owned Companies) Instrument 2016/785. 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 Executive Chairman 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. Inderjit (Indy) Singh OAM Executive Chairman Sydney, 15 August 2024 Directors’ Declaration INDEPENDENT AUDITOR’S REPORT 74 Fiducian Group Ltd Independent Auditor’s Report to the Members KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders of Fiducian Group Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Fiducian Group Limited (the Company). In our opinion, the accompanying Financial Report of the Company gives a true and fair view, including of the Group’s financial position as at 30 June 2024 and of its financial performance for the year then ended, in accordance with the Corporations Act 2001, in compliance with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises:    Consolidated Statement of Financial Position as at 30 June 2024;  Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, and Consolidated Statement of Cash Flows for the year then ended;  Consolidated entity disclosure statement and accompanying basis of preparation as at 30 June 2024;  Notes, including material accounting policies; and  Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. INDEPENDENT AUDITOR’S REPORT Annual Report 2024 75 Key Audit Matters The Key Audit Matters we identified are: • Valuation of Goodwill; and • revenue recognition. Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of Goodwill – $12.4m Refer to Note 1N. Intangibles Assets and Note 15 Goodwill to the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s testing of goodwill for impairment, given the size of the balance (being 17% of total assets). At each year end, the Group performs an annual impairment test for goodwill. Due to recent volatility observed in the local economy, the Group assessed the valuation of goodwill using two methods being the value-in-use discounted cash flow model and the market multiple model. The key assumptions the Group applied in their annual impairment test for goodwill includes the following:  Market multiples used by the Group in determining the estimated fair value of the acquired financial planning businesses. The Financial Planning Industry Group’s market multiple model is sensitive to changes in the market multiple.  Forecast cash flows, growth rates and terminal growth rates. These rates can experience changes due to the movements in the economy. This increases the risk of inaccurate forecasts or a wider range of possible outcomes for us to consider. Working with our valuation specialists, our procedures included: • We considered the appropriateness of the methods applied by the Group to perform the annual test of goodwill impairment against the requirements of the accounting standards. • We assessed the integrity of the value in use model and the market multiple model used, including the accuracy of the underlying calculation formulas. • We compared the implied multiples from comparable market transactions to the implied multiple from the Group’s market multiple model. • We independently developed a discount rate range using publicly available data for comparable entities, adjusted by risk factors specific to the Group’s CGU and the industry they operate in. • We challenged the forecast cash flows, growth rates and terminal value contained in the value in use models against our understanding of the relevant CGU and externally sourced industry- based growth rates. We assessed the application of key forecast cash flow assumptions for consistency across the Group’s CGUs. • We assessed the accuracy of previous Group forecasts to inform our evaluation of forecasts incorporated in the value in use model. INDEPENDENT AUDITOR’S REPORT 76 Fiducian Group Ltd  A cash generating unit (“CGU”) specific discount rate incorporating the appropriate risks. These are complicated in nature and vary according to the conditions and environment the specific CGU is subject to from time to time. We focused on the key assumptions applied and involved our valuation specialists to supplement our senior audit team members in assessing this key audit matter. • We considered the sensitivity of the value in use model by varying key assumptions, such as forecast growth rates and discount rates, within a reasonably possible range. We considered key assumptions when performing the sensitivity analysis and what the Group consider to be reasonably possible. • We assessed the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the accounting standards. Revenue recognition - $79.3m Refer to Note 1C. Revenue Recognition and Note 4 Revenue to the Financial Report The key audit matter How the matter was addressed in our audit The Group generates revenue from multiple products and services, including fees earned from the funds management services, platform administrations services and fees earned from offering advice to customers. Revenue recognition is a key audit matter given the audit complexity associated with the number of different revenue streams, and the significance of revenue to the Group’s results. We focused on the: • Key revenue streams, each with varying fee rates and Product Disclosure Statements, which required significant audit effort to test the fees recognised. • Drivers of fee calculations, which include funds under management (FUM), funds under administration (FUAdm) and funds under advice (FUA). Information is sourced from the Group’s third-party service organisations which provide investment administration, custody and unit registry services. This required us to understand the key processes and assess the key controls of these service organisations relevant to the Group’s revenue recognition. members in assessing this key audit matter. Our procedures included: • We assessed the Group’s revenue recognition policy against the requirements of AASB 15 Revenue from Contracts with Customers. • We obtained an understanding of the key processes, evaluated the design and tested the operational effectiveness of key controls related to the Group’s recognition of revenue. • We obtained and read the GS007 (Guidance Statement 007 Audit Implications of the Use of Service Organisations for Investment Management Services) assurance reports and management’s assessment thereof to understand the processes and assess the controls relevant to the third-party service organisations. • We recalculated the fee calculation of the platform administration services and funds management services revenue streams. We used the fee rates stipulated in the Group’s publicly available Product Disclosure Statements, Investor Guide and Additional Information Booklet multiplied by FUM and FUAdm based on custodial records. • We checked a sample of revenue transactions from fees earned from offering advice to customers to the relevant statement of advice, record of advice, and client application forms agreed and signed by the customer. INDEPENDENT AUDITOR’S REPORT Annual Report 2024 77 • We checked a sample of fees earned from financial planning advice to external financial supplier statements and independent confirmations from external advisors. • We assessed the disclosures in the financial report using our understanding obtained from our testing, and against the requirements of the accounting standards. Other Information Other Information is financial and non-financial information in Fiducian Group Limited’s annual report which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for:  preparing the Financial Report in accordance with the Corporations Act 2001, including giving a true and fair view of the financial position and performance of the Group, and in compliance with Australian Accounting Standards and the Corporations Regulations 2001;  implementing necessary internal control to enable the preparation of a Financial Report in accordance with the Corporations Act 2001, including giving a true and fair view of the financial position and performance of the Group, and that is free from material misstatement, whether due to fraud or error; and  assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. INDEPENDENT AUDITOR’S REPORT 78 Fiducian Group Ltd Auditor’s responsibilities for the audit of the Financial Report Our objective is:  to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and  to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Fiducian Group Limited for the year ended 30 June 2024, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 16 to 22 of the Directors’ report for the year ended 30 June 2024. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Andrew Reeves Partner Sydney 15 August 2024 SHAREHOLDER INFORMATION Annual Report 2024 79 Shareholder Information A. Distribution of equity security holders by size of holding Analysis of number of equity security holders by size of holding as at 31 July 2024: Distribution Option holders Ordinary Share Holder 1 - 1,000 - 605 1,001 - 5,000 - 610 5,001 - 10,000 - 188 10,001 - 100,000 1 218 100,001 and over - 28 Total holders 1 1,649 There were 74 holders of a less than marketable parcel of ordinary shares. B. Equity security holders Twenty largest quoted equity security holders The names of the 20 largest registered shareholders of quoted equity securities as at 31 July 2024 are listed below: Name Number Held Percentage of Issued Shares 1 INDYSHRI SINGH PTY LIMITED 8,795,933 27.94 2 SHRIND INVESTMENTS PTY LTD 2,153,295 6.84 3 LONDON CITY EQUITIES LIMITED 2,079,843 6.61 4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 1,224,044 3.89 5 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 1,210,841 3.85 6 CITICORP NOMINEES PTY LIMITED 1,112,136 3.53 7 MR JOHN CHARLES PLUMMER 850,000 2.70 8 SUPERNATURAL SUPER PTY LTD 576,938 1.83 9 ASHCOL HOLDINGS PTY LTD 500,000 1.59 10 D R SMITH HOLDINGS PTY LTD 500,000 1.59 11 GARRETT SMYTHE LTD 365,999 1.16 12 BNP PARIBAS NOMS PTY LTD 360,767 1.15 13 ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD 310,490 0.99 14 BNP PARIBAS NOMINEES PTY LTD 238,352 0.76 15 MR GREGORY CHARLES ANDERSON + MRS KAREN ROSINA ANDERSON 225,000 0.71 16 HFR PTY LTD 216,137 0.69 17 BNP PARIBAS NOMINEES PTY LTD 208,697 0.66 18 VANWARD INVESTMENTS LIMITED 200,000 0.64 19 NATIONAL NOMINEES LIMITED 199,711 0.63 20 MR IAN HAROLD HOLLAND 165,000 0.52 21,493,183 68.28 SHAREHOLDER INFORMATION 80 Fiducian Group Ltd Unquoted equity securities As at 31 July 2024 Type of Security Number on Issue Number of Holders Options - Executive Chairman 90,000 1 C. Substantial shareholders Substantial shareholders and associates as at 31 July 2024 (more than 5% of a class of shares) in the company are set out below: Name Number Held Percentage INDYSHRI SINGH PTY LIMITED 8,795,933 27.94 SHRIND INVESTMENTS PTY LTD 2,153,295 6.84 LONDON CITY EQUITIES LIMITED 2,079,843 6.61 D. Voting rights 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 Shareholder Information (Continued) CORPORATE DIRECTORY Annual Report 2024 81 Directors I Singh OAM, BTech, MComm (Bus), ASIA, ASFA, DipFP, CFP Executive Chairman F Khouri BBus, FCPA S Hallab BEc (Accnt & Law), CA, GAICD K Skellern OAM, BE (Chem, Hons), BSc, GradDip (Bus Admin), FAICD R Bucknell FCA - Retired 19 October 2023 Company secretary P Gubecka LLB, LLM, BCom, CPA, FGIA, FCG (CS, CGP) Notice of Annual General Meeting The Annual General Meeting of Fiducian Group Limited Will be held: Online and in person at Level 4, 1 York Street Sydney 2000 Time: 10:00 am Date: Thursday, 17 October 2024 Principal registered office in Australia Level 4 1 York Street Sydney NSW 2000 (02) 8298 4600 Wholly owned operating entities • Fiducian Business Services Pty Limited • Fiducian Financial Services Pty Limited • Fiducian Investment Management Services Limited • Fiducian Portfolio Services Limited • Fiducian Services Pty Limited Share registry Computershare Investor Services Pty Limited Level 3, 60 Carrington Street Sydney NSW 2000 Auditor KPMG Chartered Accountants Tower Three, International Towers 300 Barangaroo Avenue, Sydney NSW 2000 Bankers National Australia Bank Limited 500 Bourke Street Melbourne VIC 3000 ANZ Banking Group 388 Collins Street Melbourne VIC 3000 Australian Securities Exchange Listing Fiducian Group Limited (ASX:FID) Website address www.fiducian.com.au Corporate Directory OFFICE LOCATIONS 82 Fiducian Group Ltd Financial Adviser Office Locations Australian Capital Territory Canberra New South Wales Albury Parramatta Caves Beach Penrith Coffs Coast Randwick Gosford Sutherland Hunter Sydney CBD Illawarra Tuggerah Kelso Ultimo Macarthur Windsor North Sydney Wynyard Nowra South Australia Adelaide Glenelg Blackwood North Adelaide & Norwood Queensland Bayside Sunshine Coast Buddina Toowoomba Caboolture Townsville Northern Territory Darwin Victoria Ballarat Mt Waverley Bendigo Ringwood Burwood Sale Cobden Sunbury Colac Surrey Hills Doncaster Traralgon Geelong Western Australia Osborne Park South Perth Tasmania Hobart Launceston Level 4, 1 York Street, Sydney NSW 2000 Australia GPO Box 4175, Sydney NSW 2001 Australia Telephone: +61 2 8298 4600 Fax: +61 2 8298 4611 www.fiducian.com.au FIDUCIAN GROUP LIMITED

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