financial services council limited · 2019. 10. 18. · financial services council limited...

FSC.0006.0001 .0866

Financial Services Council Limited

~ Fsc FINANCIAl SERVICES COUNCll


ABN 82 080 744 163

Financial Report for the Year Ended

30 June 201 8

Financial Services Council Limited Directors' report

30 June 2018

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The directors present their report, together with the financial statements, on the company for the year ended 30 June 2018.

Directors The following persons were directors of the company during the whole of the financial year and up to the date of this report, unless otherwise stated:

Name: Geoffrey Lloyd

Title: Chief Executive Officer - MLC

Qualifications: LLM, AMP (Harvard)

Experience: Geoff was appointed Chief Executive Officer of MLC in July 2018.

Geoff has over 20 years' experience in the financial services industry and has an extensive understanding of the industry and demonstrated leadership skills. In 2012 Geoff was appointed CEO and Managing Director of Perpetual Limited, one of Australia's largest independent and diversified financial services group. He was previously Group Executive of Private Wealth at Perpetual.

In 2012, Geoff and his senior leadership team rolled out Perpetual's Transformation 2015 strategy designed to simplify, refocus and grow Perpetual. Growth initiatives put in place as part of this strategy include the successful acquisition of The Trust Company in December 2013 and the launch of a new Global Equity capability in September 2014.

Before commencing at Perpetual Geoff held a number of senior roles at BT Financial Group and St George's Wealth Management business including General Manager, Advice and Private Banking and Chief Legal Counsel.

Special Chairman Responsibilit ies:

Chairman, Administration & Risk Board Committee

Chairman, Nominations Board Committee

Name: Bradley Cooper

Title: Chief Executive Officer - BT Financial Group

Qualifications MBA, Dip.BM

Experience: Brad was appointed Chief Executive Officer of BT Financial Group on 1 February 2010. Brad initially joined Westpac in April 2007 as Chief Executive, Westpac New Zealand Limited and after successfully leading a change program in that market moved to the role of Group Chief Transformation Officer leading The Westpac Group's St George merger implementation.

Prior to joining Westpac, Brad was Chairman of GE Capital Bank and Chief Executive Officer of GE Consumer Finance UK & Ireland. He drove GE's UK Six Sigma program and was certified as a Quality Leader (Black Belt) in December 2002. He was promoted to Chief Executive Officer of GE Consumer Finance UK in January 2003 and appointed Chairman of GE Capital Bank in April 2004.

Special Deputy Chair Responsibilit ies:

Deputy Chair, Administration & Risk Board Committee

Deputy-Chair, Nominations Board Committee

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Brian Benari

Directors' report 30 June 2018

Managing Director and Chief Executive Officer - Challenger Limited

B Bus, CA

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Brian joined Challenger in 2003 and was Chief Executive, Mortgage Management until 2008 and then Group CFO/COO, before becoming CEO in February 2012.

Prior to joining Challenger Brian held executive roles at: Zurich Capital Markets Asia Limited as CFO/COO; Macquarie Bank Limited as Division Director - Financial Operations Division; Bankers Trust Australia Limited as Vice President - Financial Management and Risk Analysis Group; and JP Morgan (London) where he was Head of Financial Control for Global Technology and Operations (Europe).

Brian originally trained as a Chartered Accountant with Andersen's.

Deputy Chair

Deputy Chair, Administration & Risk Board Committee

\//~·;./ Deputy-Chair, Nominations Board Committee / /

David Bryant

Chief Executive Officer - Australian Unity, Wealth and Chief Investment Officer, Australian Unity Group

FAICD, F Fin, FAIM

David is Chief Executive Officer for Australian Unity, Wealth and Chief Investment Officer, Australian Unity Group. In this role he is responsible for Australian Unity's financial services, investment and banking activit ies in Australia and Hong Kong . He is a board member of many of its operating entit ies.

Prior to joining Australian Unity in 2004, David was Chief Operating Officer at Perpetual Personal Financial Services, and has held senior roles in financial services, asset consulting, and banking, for both Australian and international organisations. His various roles have encompassed responsibilities for businesses across the Asia Pacific region.

David commenced his career in 1982 in what was then Australia's fledgling financial services industry, and has remained involved continuously since that time.

Brett Clark

Group Chief Executive Officer and Managing Director of the T AL Group

BCom, FIAA

Brett is the Group Chief Executive Officer and Managing Director of the T AL Group and prior to that was responsible for running several of T Al's businesses - T AL Life Australia and TAL Retail Life.

Brett holds a number of directorships in addition to his FSC role, including T AL Dai-ichi Life Australia Pty Limited, T AL Life Limited and T AL Superannuation Limited.

Over his career of more than 20 years, Brett has deep financial services experience across life insurance, wealth management and consulting. Before joining TAL, Brett held senior positions with American International Assurance (AIA) Australia and Watson Wyatt.

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Gregory Cooper


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Chief Executive of Schroder lnvesment Management (Australia) Limited and Global Head of Institutional Business

BEc, FIAA, FIA

Greg commenced his investment career in 1992 in Sydney as an Actuarial Analyst.

Prior to joining Schroders he was the Head of the actuarial and asset consulting practice for Towers Perrin in Asia, based in Hong Kong.

He began his career with Schroders in London in 2000 as a Japanese Equities Product Manager and has held the position of Head of Distribution, Australia 2001 -2004, Head of Product, Asia Pacific in Singapore 2004-2006 and his current role as CEO, Australia from 2006 to present.

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Lochiel Crafter (resigned 18 April 2018) ~ ...

Head of Asia Pacific - State Street Global Advisors

CFA, MA, MBA, BSc

Lochiel is Executive Vice President and Head of Asia Pacific for State Street Global Advisors (SSGA), the investment management arm of State Street Corporation. Lochiel oversees SSGA's business across the Asia Pacific region. Prior to this appointment in 2013 Lochiel was Head of Investments for Asia Pacific. Lochiel is a member of SSGA's Executive Management Group and is a board member of a number of SSGA operating entities.

Before joining SSGA in 2010, Lochiel was CEO of the Australian Reward Investment Alliance. Prior to this he was also with SSGA for seven years as regional CIO for the Asia-Pacific region and has held other roles in the investment management industry.

Alexis George

Deputy Chief Executive Officer and Group Executive Wealth Australia - ANZ

BCom, GAICD, FCA

During her 20 year career in financial services, Alexis has held a number of senior roles across superannuation, funds management and insurance in Australia, Europe and Asia.

Prior to joining ANZ in 2013 as Managing Director, Insurance, Alexis spent ten years with ING Group in senior roles which included CEO Czech Republic and Slovakia, responsible for banking, insurance and funds management and Regional COO, Asia responsible for Product, Marketing, IT and Operations.

Alexis is a Chartered Accountant and worked in that field for ten years before joining the financial services industry. She is a passionate about helping Australians grow and protect their wealth and is a strong advocate for advice and improving the customer experience.

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Brett Jollie


Managing Director - Australasia, Aberdeen Standard Investments

BEc, F Fin

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Brett is the Managing Director of Aberdeen Standards lnvesments in Australasia. In this role he oversees the corporate direction of the business and is responsible for ensuring all business functions work effectively and cohesively in achieving the Group's strategic goals. Prior to Aberdeen's merger with Standard Life in August 2017, Brett was Managing Director of Aberdeen Asset Management in Australia.

Brett has over 20 years of experience in the financial services industry. He joined Aberdeen in 2000 and has held roles in operations, product management, sales and marketing in Australia and the UK. Before joining Aberdeen, he worked for Equitilink, Chase Manhattan Bank and Permanent Trustee Limited.

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Matthew Lawrance

Chief Executive Officer, MLC Super and Executive General Manager, Wealth, NAB

BCom,CA, MBA

Matthew was appointed Chief Executive Officer of MLC Super and Executive General Manager, NAB Wealth in April 2017.

Matthew has occupied senior positions in finance and banking over 20 years. Since he joined NAB in 2005, Matthew has led large operational and transformational teams across Wealth, Finance, Technology and Operations, most recently on the NAB Executive Leadership Team as Chief Technology and Operations Officer (Acting).

In 2015-16, Matthew led one of the largest consolidations in the Wealth sector; the streamlining of NAB's superannuation businesses, to create Australia's largest retail superannuation fund.

Prior to joining NAB, Matthew held senior finance and transformation roles at Woolworths (2002-2005) and Qantas (1996-2001 ), after having started his career as a Chartered Accountant with Ernst & Young.

Damien Mu

Chief Executive Officer & Director - AIA Australia Limited

BBus Ac, AICD

Damien has more than 18 years' experience in the Australian financial services industry, with management experience spanning operations, claims and underwriting, superannuation, investments, distribution, product, pricing and marketing.

Damien's career at AIA Australia began in April 2007. Over that time he has held various roles including Head of Group Insurance, Chief Distribution and Marketing Officer and General Manager - Life Insurance.

On 1 August 2014, Damien was appointed to the role of Chief Executive Officer and in July 2016, AIA New Zealand was added to his responsibilit ies.

Damien is also a director of AIA Australia, AIA Financial Services Lim ited and Advisory Board member of the Shared Value Project. In June 2017, Damien was appointed a Board Member of MO Health Pty Ltd.

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30 June 2018

Marianne Perkov ic (appointed 14 February 2018)

Executive General Manager, Commonwealth Private Bank

BEc, MBA, GAICD

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With more than 20 years' experience in financial services, Marianne has held a number of impressive leadership roles. Prior to joining Commonwealth Private Bank in 2010, she was Managing Director and CEO of Count Financial Limited.

Marianne has an MBA from the Macquarie Graduate School of Management and her insights, advocacy positions and industry views are regularly sought in media, conferences, and public forums.

She was also an FSC Industry Excellence Awards recipient of Industry Contribution Award in 2017, and was a Money Management's Female of the Year finalist in 2013.

Jack Regan

Group Executive, Advice and New Zealand, AMP Limited

B.Ed., Grad Dip Mktg

Jack has been with AMP in Australia and New Zealand for the past 18 years. He was appointed Group Executive, Advice and New Zealand from 1 January 2017. In this position he is responsible for AMP's Advice and Direct businesses in Australia and AMP's operations in New Zealand. Jack was Managing Director of AMP in New Zealand for 10 years.

Jack has spent more than 30 years in financial services in executive, distribution, marketing and operational roles. He has worked at companies including St. George Bank, IOOF and GIO, where he was an Authorised Representative, before joining AMP's Hillross Advice.

Jack has been the Responsible Officer for ASIC and APRA licensed entities as well as New Zealand's Reserve Bank and Financial Markets Authority. Jack is currently a Director of AMP Advice Holdings Pty Ltd and a Board member of ipac Securities Limited and ipac Group Services Pty Ltd.

Paul Rohan

Head of Wealth Management and CEO, Sandhurst Trustees, Bendigo and Adelaide Bank

DipSM, BSc, MBA (Exec), GAICD

Paul is Head of Wealth Management and CEO Sandhurst Trustees, Bendigo and Adelaide Bank.

Paul is a financial services professional with experience exceeding twenty five years. Paul's career commenced in a superannuation operational role and for 15 years he worked in management and IT consultancy roles with a focus on strategy formulation, process improvement project/program management and systems integration.

During this time Paul worked across multiple geographies including Australia, New Zealand, China, Indonesia, Korea, Japan and Thailand. More recently Paul held senior management roles with IOOF and TAL in Melbourne.

Paul joined the Bendigo and Adelaide Bank in February 2011, taking up the CEO of Sandhurst Trustees role which involved moving to Bendigo. In January 2016, Paul was appointed as the Head of Wealth Management covering the group's Superannuation, Funds Management, Financial Advice, Life Insurance and Trustee Services activities.

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Company Secretary


30 June 2018

Annabel Spring (resigned 22 January 2018)

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Formerly Group Executive, Wealth Management - Commonwealth Bank of Australia

BEc (Hons), LLB (Hons), MBA, GAICD

Annabel Spring was the Group Executive of the Wealth Management Division of the Commonwealth Bank of Australia (CBA) from October 2011 to December 2017.

She was responsible for Colonial First State, Colonial First State Global Asset Management, Wealth Management Advice and Comm Insure, and is a member of the Group Executive Committee.

Annabel joined CBA in 2009 as Group Head of Strategy where she was responsible for strategy, mergers and acquisitions, and government relations.

Before joining CBA, Annabel was Managing Director and Global Head of Firm Strategy and Execution at Morgan Stanley in New York. Annabel has worked in the USA, Asia and Australia.

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Paul Callaghan, BA, LI B (Hons), (Old); LIM (Hons) (Syd) has over 30 years' legal experience and is a member of the Law Society of New South Wales. He is also a Notary Public.

David McGlynn FGIA BCom/LLB (UNSW); LLM (Syd) has over 25 years of in-house corporate legal and secretarial experience. He is a member of the Law Society of New Wales and a Fellow of the Governance Institute of Australia.

Review of operations The profit of the company for the financial year after providing for income tax amounted to $273,211 (2017: profit $687,081 ).

The company's primary source of income remains members' fees. The company's budgeted income reflects current market conditions with respect to the funds under management and industry trends in terms of the number and size of financial services organisations. The budgeted income is expected to enable the company to achieve its advocacy and strategic objectives.

Princ ipal Activities The principal activity of the company is to represent the interests of its members, its members' cl ients and customers, all investors and superannuation fund members, life insurance policy holders, users of financial advice and licensed trustee services.

No significant change in the nature of this activity occurred during the financial year.

Short and long term objectives The company and its members - Australia's leading wealth managers - exist to achieve three outcomes for Australians in the short and long term:

1. To increase their wealth;

2. To protect their lives; and

3. To provide them with a comfortable retirement.

Strategies


30 June 2018

To achieve its objectives the company has adopted the following strategies:

FSC.0006.0001 .0873

(i) to act as a body representative of retai l and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies;

(ii) to provide effective leadership and support to members so that members may effectively meet the needs of investors and policyholders;

(iii) to provide a channel of communications between representatives of the industry and other interested parties on matters of mutual concern;

(iv) to undertake activities aimed at stimulating growth of national savings, investment, and life insurance;

(v) to develop professional standards and codes of practice where appropriate; and

(vi) to liaise with members of Parliament, government officials and regulators to seek to achieve effective and efficient financial services laws.

Key Performance Measures The company measures its own performance through the use of both quantitative and qualitative measures. These measures are used by the directors to assess the financial sustainability of the company and whether the company's objectives are being achieved.

Meetings of directors The number of meetings of the company's Board of Directors ("the Board") and of each Board committee held during the year ended 30 June 2018, and the number of meetings attended by each director were:

Board of Directors Administration & Risk Nominations Name Board Committee Committee

Held Attended Held Attended Held Attended

Brian Benari _.,· 10 6 2 1 - -David Bryant

.• 10 7

Brett Clark .· ·, __ 10 9

Bradley Cooper ~ 10 7 8 8 2 2 Gregory Cooper "' 10 7 Lochiel Crafter (resigned 18 April 2018) 7 6

Alexis George 10 8

Brett Jollie \, 10 9 Matthew Lawrance \ 10 9

Geoffrey Lloyd 10 10 8 6 1 2 ....

Damien Mu 10 9 Marianne Perkovic (appointed 14 February 2018) 6 5 Jack Regan 10 7 Paul Rohan 10 10

Annabel Spring (resigned 22 January 2018) 5 2 4 4 1 1

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.


30 June 2018

The company is incorporated under the Corporations Act 2001 and is a company limited by guarantee.

Rounding of amounts to nearest dollar

FSC.0006.0001 .087 4

In accordance with ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, the amounts in the Directors' report and in the financial report have been rounded to the nearest dollar.

Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001 .

On behatf of the directors

Geoffrey Lloyd , Chairman

17 September 2018

Sydney


Auditors independence declaration

Financial report 30 June 2018

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Financial report

Financial report 30 June 2018

Statement of profit or loss and other comprehensive income

Statement of financial posit ion

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Directors' declaration

Independent auditor's report

General information

FSC.0006.0001 .0876

Page Number

12

13

14

15

16

26

27

The financial report covers Financial Services Council Limited as an individual entity. The financial report is presented in Australian dollars, which is Financial Services Council Limited's functional and presentation currency.

The financial report consists of the financial statements, notes to the financial statements and the directors' declaration.

Financial Services Council Limited is a company limited by guarantee.

The financial report was authorised for issue, in accordance with a resolution of directors, on 17 September 2018. The directors do not have the power to amend and reissue the financial report.

FSC.0006.0001 .0877

Financial Services Council Limited Statement of profit or loss and other comprehensive Income

For the year ended 30 June 2018

Revenue

Expenses

Employee benefits expense

Premises expense

Depreciation and amortisation expense

Note

3(a)

Other expenses 3(b)

Surplus before income tax expense

Income tax expense 4

Surplus after income tax expense for the year

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

2018 $

8,785,073

(4,672,314)

(759,556)

(34,561)

(3,045,431)

273,211

273,211

273,211

The accompanying notes form part of these financial statements. 12

2017 $

8,734,528

(4,622,847)

(573,685)

(21,063)

(2,829,852)

687,081

687,081

687,081

Financial Services Council Limited Statement of financial position

As at 30 June 2018

2018 Note $

Assets

Current assets

Cash and cash equivalents 6 2,542,826

Term deposits 4,042,419

Trade and other receivables 7 6,319,325

Other 8 855,956

Total current assets 13,760,526

Non-current assets

Property, plant and equipment 9 4,075

Intangibles 10 84,288

Total non-current assets 88,363

Total assets 13,848,889

Liabilities

Current liabilities

Trade and other payables 11 1,796,936

Provisions 12 163,614

Unearned income 5,923,509 Lease incentives

Total current liabilities 7,884,059

Non-current liabilities

Non-current provisions 13 195,455

Total non-current liabilities 195,455

Total liabilities 8,079,514

Net assets 5,769,375

Equity

Contributed equity 14 240,000

Retained earnings 5,529,375

Total equity 5,769,375


FSC.0006.0001 .0878

2017 $

1,025,697

4,588,495

6,916,219

995,170

13,525,581

8,824 114, 100

122,924

13,648,505

1,201 ,904

240,811

6,493,098 10,864

7,946,677

205,664

205,664

8,152,341

5,496,164

240,000

5,256,164

5,496,164

Financial Services Council Limited Statement of changes in equity


Contributed Retained equity earnings

$ $

Balance at 1 July 2016 240,000 4,569,083

Surplus after income tax expense for the year 687,081


Total comprehensive income for the year 687,081

Balance at 30 June 2017 240,000 5,256,164

Balance at 1 July 2017 240,000 5,256,164

Surplus after income tax expense for the year 273,211


Total comprehensive income for the year

Balance at 30 June 2018 240,000 5,529,375


FSC.0006.0001 .0879

Total

$

4,809,083

687,081

687,081

5,496,164

5,496,164

273,211

5,769,375

Financial Services Council Limited Statement of cash flows


2018 Note $

Cash f lows f rom operating activ it ies

Receipts from members, sponsors and other sources (inclusive of GST) 9,307,224

Payments to suppliers and employees (inclusive of GST) (8,194,005)

Interest received 128,627

Net cash from operating activities 1,241 ,846

Cash f lows f rom investing activities

Payments for property, plant and equipment and Intangible assets

Payments into term deposits (14,590,000) Proceeds from expired term deposits 15,090,000

Payments into security deposit (576,640)

Proceeds from expired security deposit 351,923

Net cash used in investing activities 275,283

Cash flows f rom financing activ it ies

Net increase/(decrease) in cash and cash equivalents 1,517,129 Cash and cash equivalents at the beginning of the financial year 1,025,697

Cash and cash equivalents at the end of the financial year 6 2,542,826


FSC.0006.0001 .0880

2017 $

9,719,094

(9,645,332)

95,822

169,584

(70,065)

(8,500,000)

8,000,000

(8,488)

(578,553)

(408,969)

1,434,666

1,025,697

Financial Services Council Limited Notes to the financial statements

30 June 2018

1. Summary of significant accounting policies

FSC.0006.0001 .0881

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted The company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB") that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company.

The following Accounting Standards and Interpretations are most relevant to the company:

• AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities

• AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets

• AASB 2014-1 Amendments to Australian Accounting Standards (Parts A to C)

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and Interpretations issued by the Australian Accounting Standards Board ('AASB') and associated regulations and the Corporations Act 2001, as appropriate for not-for-profit oriented entities.

Historical cost convention

The financial statements have been prepared under the historical cost convention .

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

(a) Revenue

Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

The unearned income relating to membership fees received in advance is brought to account on a straight-line basis over the period to which the fees relate.

All income and expenditure in relation to conferences, regardless of when it is incurred, is deferred and carried forward to the year in which the conference is held.

Other revenue is recognised when it is received or when the right to receive payment is established.

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

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30 June 2018

1. Summary of significant accounting policies (cont'd)

(b) Current and non-current class ification

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Asset and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the company's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

(c) Cash and cash equivalents

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.

(d) Trade and other receivables

Accounts receivable and other debtors include amounts receivable from members as well as amounts receivable from customers for goods or services sold in the ordinary course of business. Trade and other receivables are included in current assets with the amounts normally receivable within 30 days of recognition of the asset.

Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost less any provision for impairment.

(e) Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Deprec iation

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows:

• • •

Leasehold improvements

Furniture

IT equipment

20%

12.5% - 25%

40%

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting period.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

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30 June 2018


(f) Impairment of non-financial assets

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Non-financial assets are reviewed 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.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

(g) Intangibles

Intangible assets are measured on the cost basis less accumulated amortisation and impairment losses.

The amortisation amount of all intangibles is amortised on a straight-line basis over the asset's useful lifeof four years to the company commencing from the time the asset is held ready for use. The estimated useful life is reviewed at the end of each annual reporting period, with any changes being accounted for on a prospective basis.

(h) Trade and other payables

These amounts represent liabilities for goods and services provided to the company to the end of the financial year and which are unpaid. Due to their short term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

(i) Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

U) Provisions

Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(k) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on straight-line basis over the lease term.

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30 June 2018


(I) Goods and services tax

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Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from , or payable to, the tax authority is included in other receivables or 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 tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

(m) Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

(n) Income tax

The company is limited by guarantee and operates for the mutual benefit of its members. It has been treated as a mutual such that it is not liable to income tax on subscriptions received from members, nor the related outgoings allowable as an income tax deduction. The company is liable for tax on income from non-members less any related outgoings. Other income is also apportioned between members and non-members for income tax purposes.

2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

19


30 June 2018

2. Critical accounting judgements, estimates and assumptions (cont'd)

Estimation of useful lives of assets

FSC.0006.0001 .0885

The company determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

The company assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Employee benefits provision

As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

20

FSC.0006.0001 .0886


30 June 2018

2018 2017 $ $

3. Surplus before income tax expense

(a) Revenue

Membership subscription income 6,445,565 6,577,554

Service fee income 100,000

Conference fees 1,003,057 960,449

Conference sponsorship income 377,500 287,227

1,380,557 1,247,676

Other non-interest revenue 787,905 623,713

8,614,027 8,548,943

Interest received 171 ,046 185,585

Total revenue 8,785,073 8,734,528

(b) Expenses

Employment costs 4,357,116 4,317,708

Employee termination benefits 18,124 19,724

Defined contribution superannuation expense 297,074 285,415

4,672,314 4,622,847

Premises expenses 759,556 573,685

Depreciation and amortisation expense 34,561 21,063

5,466,431 5,217,595

Conference expenses 861 ,620 768,737

Member function expenses 197,056 166,313

Travel expenses 208,372 180,071

Project expenses 227,770 325,109

Consultant expenses 407,984 249,966

Other operating expenses 1,142,629 1,139,656

Total other expenses 3,045,431 2,829,852

Total expenses 8,511 ,862 8,047,447

21


30 June 2018

2018 2017 $ $

4. Income tax expense The prima facie tax on surplus from ordinary activities before income tax is reconciled to the income tax as follows:

Prima facie tax payable on surplus from ordinary activities before income tax at 27.5% (2017: 27.5%)

Net non-taxable income from members

Tax return adjustment

Tax losses not brought to account as deferred tax assets

Income tax attributable to surplus

Tax losses not brought to account

5. Key management personnel disclosures

Compensation

75,133 188,947

(317,440) (398,597)

(565) (409)

242,872 210,059

2,818,016 2,575,144

The aggregate compensation made to directors and other members of key management personnel of the company is set out below:

Key management personnel compensation 1,366,650 1,635,341

6. Current assets - cash and cash equivalents

Cash at bank and in hand 2,542,826 1,025,697

7. Current assets - trade and other receivables

Trade receivables 334,530 581 ,250

Subscription invoices 5,981 ,077 6,293,661

Other 3,718 41 ,308

6,319,325 6,916,219

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FSC.0006.0001 .0887

FSC.0006.0001 .0888


30 June 2018

2018 2017 $ $

8. Current assets - other

Prepayments 279,316 643,247

Security deposit 576,640 351,923

855,956 995,170

9. Non-current assets - property, plant and equipment

At cost 320,063 320,063

Accumulated depreciation (315,988) (311,239)

Total 4,075 8,824

Reconciliation of property, plant and equipment

Carrying amount at 1 July 2017 8,824 24,742

Additions

Depreciation expense (4,749) (15,918)

Carrying amount at 30 June 2018 4,075 8,824

10. Intangible assets Cost 119,245 119,245

Accumulated amortisation expense (34,957) (5, 145)

Net carrying value 84,288 114,100

Reconciliation of intangible

Carrying amount at 1 July 2017 114,100 49,180

Additions 70,065

Amortisation expense (29,812) (5, 145)

Closing carrying amount at 30 June 2018 84,288 114,100

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11.

12.

FSC.0006.0001 .0889


30 June 2018

2018 $

Current liabilit ies • t rade and other payables

Trade payables 163,730

Sundry payables and accrued expenses 11 a 1,332,464

Funds held in trust 300,742

1,796,936

a. Sundry payables and accrued

Net GST payable 540,503

Australian Tax Office payroll liabilities 20,741

Employee accruals 597,722

Other accruals 173,498

1,332,464

Current liabilit ies • provisions

Employee benefits 163,614

2017 $

164,658

823,731

213,515

1,201,904

545,104

34,614

179,349

64,664

823,731

240,811

13. Non-current liabilit ies· provis ions

Employee benefits 30,455

165,000

25,994

179,670 Provision for leasehold rectification

Opening balance as at 1 July 2017

Provisions raised/reversed during the year

Balance at 30 June 2018

Provis ion for long-term employee benefits

Long- term employee benefits

25,994

4,461

30,455

195,455

Leasehold rectification

179,670

(14,670)

165,000

205,664

Tota l

205,664

(10,209)

195,455

A provision has been recognised for employee benefits relating to long service leave for employees. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria for employee benefits have been included in Note 1 (i).

14. Contributed equity

Members' funds The company is limited by guarantee and as a result has no share capital.

The company received start up contributions from foundation members.

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2018 $

240,000

2017 $

240,000

15.


30 June 2018

2018 $

Leases

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Payable - minimum lease payments:

- not later than 12 months 678,760

- between 12 months and five years 2,985,463

- five years and over 200,597

3,864,820

2017 $

635,424

170,389

805,813

FSC.0006.0001 .0890

The property lease is a non-cancellable lease with a one-year term ending 30 September 2018, with rent payable monthly in advance. The Company has signed a new five-year lease term ending 30 September 2023. The Company does not have an option to purchase the leased premises at the expiry of the rental period.

The company has $321,640 of bank guarantee outstanding at 30 June 2018 relating to the non-cancellable operating lease security deposit. This guarantee takes the form of a term deposit.

16. Contingent liabilities

The company had no contingent liabilities as at 30 June 2018 and 30 June 2017.

17. Related party transactions

18.

Key management personnel

Disclosures relating to key management personnel are set out in note 5.

Transactions with related parties

Some members of the company are related to the company by way of common directorship.

The company receives subscriptions and fees from its member companies, including director related companies, under normal commercial terms and conditions. Details of fees and subscriptions received from members for the year ended 30 June 2018 are disclosed in aggregate in note 3 to the financial statements.

Aggregate amounts receivable from members as at 30 June 2018 are disclosed as subscription invoices receivable in note 7 to the financial statements.

The names of directors who held office during or since the end of the financial year are listed in the Directors' report.

Loans to/from related parties

There were no loans to or from relates parties at the current or previous reporting date.

Directors' compensation and retirement benefits

No income was paid to any director of the company directly or indirectly in the current or previous financial year.

No matters or circumstances have arisen since 30 June 2018 that significantly affected, or may significantly affect the company's operations, the results of those operations or the company's state of affairs in future financial years.

25

FSC.0006.0001 .0891

Financial Services Council Limited Directors' declaration

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001 , the Australian Accounting Standards - Reduced Disclosure Requirements, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the company's financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and

• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

Geoffrey Lloyd

Chairman

17 September 2018

Sydney

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