TOLHURST GROUP LIMITED AND CONTROLLED ENTITIES (formerly Tolhurst Noall Group Ltd) ABN APPENDIX 4E PRELIMINARY FINAL REPORT

Transcription

1 ABN APPENDIX 4E PRELIMINARY FINAL REPORT 30 JUNE 2007 given to ASX under listing rule 4.3A 1

2 RESULTS FOR ANNOUNCEMENT TO THE MARKET YEAR ENDED 30 JUNE 2007 $A'000 $A'000 Revenues from ordinary activities up 15,586 33% to 62,743 Profit from ordinary activities before tax attributable to members up % to 6,042 Profit from ordinary activities after tax attributable to members up % to 4,292 Net profit for the period attributable to members up % to 4,292 Dividends paid Amount per security % Franked Final dividend paid in respect of the financial year ended 30 June 2006, paid on 26 October 2006 Interim dividend paid in respect of the financial year ended 30 June 2007, paid on 26 April cent 100% 1.25 cents 100% Dividend proposed Final dividend proposed in respect of the financial year ended 30 June date the dividend is payable - record date for determining entitlement to dividends 1.30 cents 100% 25 October October 2007 The Group operates a Dividend Reinvestment Plan (DRP) under which shareholders can receive shares in Tolhurst Group Limited in lieu of cash on participating DRP shares. In repect of the proposed dividend, the last date for receipt of election notices for the DRP is 18 October Earnings per share (cents per share) Basic earnings per share (cents) Diluted earnings per share (cents) Brief explanation of results Refer to the Highlights Summary on the following page. 2

3 Highlights Summary Selected financial information Full year 2007 Full year 2006 % change Revenue $ 62,742,551 47,156,706 33% Profit before tax $ 6,041,784 5,216,228 16% Profit after tax $ 4,292,105 3,724,953 15% Diluted earnings per share cents % Dividend paid & proposed per share cents % Profit before tax excluding specific transactions * $ 5,381,784 4,041,228 33% * Specific transactions are: $660,000 profit achieved on private equity transaction $1,000,000 profit on sale and related dividends received of $175,000 on disposal of Carroll, Pike and Piercy Performance overview The Board are pleased to announce that Tolhurst Group Limited has achieved a record result for the year ended 30 June Revenue increased by 33% to $62.74 million; profit before tax increased by 16% to $6.04 million and profit after tax increased by 15% to $4.29 million. Excluding the specific transactions noted in the table above, profit before tax increased by 33% over the previous year. As a result of the strong financial result, the Company proposes to pay a fully franked final dividend of 1.30 cents per share, bringing total dividends for the year ended 30 June 2007 to a record level of 2.55 cents per share, a 28% increase over the corresponding previous period. The growth of the business and current year performance can be appreciated when compared to the 2005 result. Over the two year period, revenue has increased by 71% and profit before tax has increased by 123%. This increase is a reflection of continued favorable market conditions, the careful expansion of the traditional transactional business and the development on new income streams and business opportunities. As stated previously, Tolhurst continues to develop its Investment Advisory strategy with an emphasis on Research, Institutional, Corporate Advisory and Wealth Management capabilities. The 2007 financial year saw many exciting developments for Tolhurst. The company celebrated 150 years in business, coinciding with the launch of an exciting new brand and renewed commitment for the business to continue to meet the expectations of current and future clients. During the year, the Company launched full service branches in Cairns, Geraldton and Gladstone. It also announced the acquisition of InterFinancial, a long-established and independent investment bank and advisory group that specialises in mergers and acquisitions, capital raising and strategic advice to small and medium-sized organisations in the ASXlisted, unlisted and public sectors. The acquisition was finalised in July 2007 and allows Tolhurst to further expand its geographic presence on the east coast of Australia and strengthen the capabilities of its corporate division in M&A, equity capital markets and structured finance. As previously announced to the market, as part of the commitment to expand wealth management opportunities, Tolhurst continues to progress with the proposed acquisition of the long-established independent financial planning group, Community & Corporate Services Pty Ltd. 3

4 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 Note $ $ Revenue 2 62,742,551 47,156,706 Dealers rebates (23,286,289) (19,024,024) Sub-underwriting expense (3,884,161) (2,399,252) Administration costs (7,036,345) (5,758,809) Depreciation and amortisation expense (642,731) (495,595) Finance costs (270,690) (402,143) Employee benefits expense (17,823,042) (10,982,668) Occupancy costs (1,888,163) (1,531,714) Communication costs (1,945,500) (1,344,026) Share of net profits of associates accounted for using the equity method Net unrealised gain / (loss) from investments 8 55,403 94,606 20,751 (96,853) Profit before income tax expense 6,041,784 5,216,228 Income tax expense 1,749,679 1,491,275 Profit after income tax expense 4,292,105 3,724,953 Profit attributable to members of the parent entity 4,292,105 3,724,953 Earnings per share (cents per share) Basic earnings per share (cents) Diluted earnings per share (cents)

5 TOLHURST GROUP LIMTED AND CONTROLLED ENTITIES BALANCE SHEET AS AT 30 JUNE 2007 Note $ $ CURRENT ASSETS Cash and cash equivalents 14 24,049,819 28,258,710 Trade and other receivables 4 74,811,013 40,121,739 Other current assets 5 445, ,327 Financial assets 6 3,732, ,489 TOTAL CURRENT ASSETS 103,039,684 68,839,265 NON-CURRENT ASSETS Financial assets 6 842, ,000 Investments accounted for using the equity method 8 56, ,706 Property, plant and equipment 9 1,922,546 1,112,313 Intangible assets 10 1,845,817 - Deferred tax assets 746, ,584 Other non-current assets 5 136,836 - TOTAL NON-CURRENT ASSETS 5,549,929 3,048,603 TOTAL ASSETS 108,589,613 71,887,868 CURRENT LIABILITIES Trade and other payables 11 80,118,469 51,763,164 Financial liabilities 12 2,260,300 1,755,592 Current tax liabilities 1,169,210 1,231,788 TOTAL CURRENT LIABILITIES 83,547,979 54,750,544 NON-CURRENT LIABILITIES Financial liabilities 12 1,093,622 1,186,614 Deferred tax liabilities 247, ,139 Long-term provisions , ,652 TOTAL NON-CURRENT LIABILITIES 1,837,729 2,085,405 TOTAL LIABILITIES 85,385,708 56,835,949 NET ASSETS 23,203,905 15,051,919 EQUITY Issued capital 29,334,238 23,209,817 Accumulated losses (7,075,720) (8,879,101) Reserves 945, ,203 TOTAL EQUITY 23,203,905 15,051,919 5

6 CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 60,337,043 48,877,367 Payments to suppliers and employees (58,682,971) (41,443,842) Dividends received 26, ,693 Interest received 1,614,172 1,265,902 Finance costs (270,690) (402,143) Income tax paid (1,844,001) (1,308,415) 1,180,308 7,331,562 Net Trust bank account movements (3,173,903) 3,889,057 Net cash (used in) / provided by operating activities 14 b (1,993,595) 11,220,619 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 220,595 2,364,035 Purchase of investments (3,756,680) (319,553) Net overdraft acquired from purchase of subsidiary (21,313) - Proceeds from sale of property, plant & equipment Purchase of property, plant & equipment Net cash (used in) / provided by investing activities (1,438,311) (474,066) (4,995,709) 1,571,116 CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings (110,343) (453,832) Dividends paid by parent entity (2,488,724) (2,126,069) Proceeds from share issues 5,487, ,340 Net cash provided by / (used in) financing activities 2,888,354 (1,962,561) Net (decrease) / increase in cash held (4,100,950) 10,829,174 Cash at beginning of the year 28,113,514 17,284,340 Cash at the end of the year 14 a 24,012,564 28,113,514 6

7 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007 Financial Issued Retained Option assets Total capital earnings reserve reserve equity $ $ $ $ $ Balance at 1 July ,044,878 (10,477,985) 123, ,059 11,415,872 Profit attributable to members of the parent entity - 3,724, ,724,953 Dividends paid - (2,126,069) - - (2,126,069) Option reserve on recognition of bonus element of options , ,624 Revaluation of financial assets , ,600 Disposal of financial assets (700,000) (700,000) Options exercised 617, ,340 Share capital issued on acquisition of associate entity 318, ,599 Conversion of loans and subordinated debt to issued capital 1,229, ,229,000 Balance at 30 June ,209,817 (8,879,101) 270, ,659 15,051,919 Profit attributable to members of the parent entity - 4,292, ,292,105 Dividends paid - (2,488,724) - - (2,488,724) Option reserve on recognition of bonus element of options ,184-98,184 Revaluation of financial assets , ,000 Options exercised 808, ,761 Share capital issued on acquisition of entities 637, ,000 Share capital issued as a result of the dividend reinvestment plan 68, ,842 Rights Issue share capital 4,609, ,609,818 Balance at 30 June ,334,238 (7,075,720) 368, ,659 23,203,905 7

8 Note: 1 Statement of Significant Accounting Policies The financial report is a general purpose financial report prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act The financial report covers the consolidated group of Tolhurst Group Limited and controlled entities. Tolhurst Group Limited is a listed public Company, incorporated and domiciled in Australia. The financial report of Tolhurst Group Limited and controlled entities comply with all International Financial Reporting Standards (IFRS) in their entirety. The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Basis of Preparation The accounting policies set out below have been consistently applied to all years presented. Reporting basis and conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which fair value basis of accounting has been applied. Accounting Policies (a) Principles of Consolidation A controlled entity is any entity controlled by Tolhurst Group Limited whereby Tolhurst Group Limited has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities have entered or left the controlled group during the year, their operating results have been included / excluded from the date control was obtained or until the date control ceased. 8

9 Note: 1 Statement of significant accounting policies (continued) (b) Taxes Income Taxes The charge for current income tax expense is based on the profit for the period adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Tolhurst Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax Consolidation Regime from 1 July Under UIG Interpretation 1052, each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits assumed by the parent entity. The current tax liability of each entity is subsequently assumed by Tolhurst Group Limited. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. (c) Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. 9

10 Note: 1 Statement of significant accounting policies (continued) Depreciation is charged on a straight line or diminishing value on all property, plant and equipment. The depreciation rates used for each class of depreciable assets are: Class of fixed asset: Leasehold Improvements Plant and Equipment Motor Vehicles Depreciation period: years years 4 5 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (d) Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the economic entity are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the economic entity will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. (e) Financial instruments Recognition Financial instruments are initially measured at fair value on trade date, which includes transaction costs for financial assets and liabilities not at fair value through profit and loss, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Financial assets at fair value through profit and loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments These investments have fixed maturities, and it is the group s intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method. 10

11 Note: 1 Statement of significant accounting policies (continued) Available-for-sale financial assets Available-for-sale financial assets include any financial assets not included in the above categories. Availablefor-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Financial liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. (f) Impairment of assets At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset s fair value less costs to sell and value in use, is compared to the asset s carrying value. Any excess of the asset s carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. (g) Investment in Associates Investments in associate companies are recognised in the financial statements by applying the equity method of accounting where significant influence is exercised over an investee. Significant influence exists where the investor has the power to participate in the financial and operating policy decisions of the investees but does not have control or joint control over those policies. The equity method of accounting recognises the group s share of post acquisition reserves of its associates. (h) Intangibles Goodwill Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Client relationships Client relationships are recognised at cost of acquisition. Client relationships have a finite life and are carried at cost less any accumulated amortisation and any impairment loss. Client relationships are amortised over their useful life estimated at 7 years. 11

12 Note: 1 Statement of significant accounting policies (continued) (i) Employee benefits Provision is made for the company s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. (j) Provisions Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured. (k) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-borrowings in current liabilities on the balance sheet. The Cash Trust account is used for the retention of client funds and is subject to the regulations under the ASX Market Rules. Cash flows are presented in the cash flow statement on a gross basis, except for customer account transactions and the GST component of investing and financing activities, which are disclosed as operating cash flows. (l) Revenue recognition Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting. Revenue from share trading is recognised at the date an unconditional contract is entered into. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). (m) Finance costs Finance costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other finance costs are recognised in income in the period in which they are incurred. (n) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 12

13 Note: 1 Statement of significant accounting policies (continued) Adoption of new and revised Standards Financial guarantee contract liabilities Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the higher of: the amount of the obligation under the contract, as determined in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets; and the amount initially recognised less, where appropriate, cumulative amortisation. Change in Accounting Policy In the current year, Tolhurst Group Limited (the Group) has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 January The adoption of these new and revised Standards and Interpretations has resulted in changes to the Group s accounting policies in the following areas: financial guarantee contracts. The AASB has amended AASB 139: Financial Instruments: Recognition and Measurement to require certain financial guarantee contracts issued by the Group to be accounted for in accordance with that Standard. Financial guarantee contracts that are accounted for in accordance with AASB 139 are measured initially at their fair values, and subsequently at the higher of: the amount of the obligation under the contract, as determined in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets; and the amount initially recognised less, where appropriate, cumulative amortisation. The changes have been applied in accordance with the transitional provisions of AASB 139 with effect from the beginning of the comparative reporting period. As the financial guarantee exists within a wholly-owned group structure, the financial impact on the consolidated results for the year ended 30 June 2007 are $nil (2006:$nil). Critical Accounting Estimates and Judgements The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Key estimates earning multiple used for fair value calculation of unlisted financial assets Fair value for unlisted financial assets is determined by using a multiple of trail income in accordance with industry practice for the valuation of such investments. Key estimates - impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to the impairment of assets. When an impairment trigger exists, the recoverable amount of the asset is determined. No impairment has been recognised in respect of goodwill for the year ended 30 June Impairment of goodwill is considered by reference to the appropriate cash generating unit to which the goodwill relates. The fair value less cost to sell of the cash generating unit is measured using a multiple of trail income in accordance with industry practice for the valuation of such investments. 13

14 Note: 2 Revenue Note $ $ Broking and commission 43,045,683 34,388,064 Corporate advisory and capital raising 11,380,837 5,763,455 Share trading 6,148,721 4,264,128 Dividends 2a 26, ,693 Interest 1,661,303 1,265,902 Rental 25,424 76,909 Total 62,288,723 46,101,151 Other income Gain from sale of investments 453,828 1,055,555 Total 453,828 1,055,555 Total revenue 62,742,551 47,156,706 2a Dividend income from - other corporations 26, ,693 Total dividend income 26, ,693 Note: 3 Dividends Distributions paid 2006 fully franked ordinary dividend of 1 cent per share (2005: 1 cent) franked at the tax rate of 30% paid in Interim 2007 fully franked ordinary dividend of 1.25 cents per share (2006: 1 cent) franked at the tax rate of 30%. Distributions proposed Proposed final fully franked ordinary dividend of 1.30 cents per share (2006: 1 cent) franked at the tax rate of 30%. 1,087,057 1,047,262 1,401,667 1,078,807 2,488,724 2,126,069 1,723,847 1,079,037 14

15 Note: 4 Trade and other receivables $ $ Current Client and dealer balances receivable 72,645,328 38,805,148 Provision for impairment of receivables (432,177) (494,000) 72,213,151 38,311,148 Other receivables 2,807,159 1,877,659 Provision for impairment of receivables (287,842) (287,842) 2,519,317 1,589,817 Unsecured loans 28, ,177 Amounts receivable from: - associated companies 50, ,597 74,811,013 40,121,739 Note: 5 Other assets Current Prepayments 445, ,327 Non-Current Acquisition expenditure capitalised 136,836 - Note: 6 Financial assets Available-for-sale financial assets Current Listed investments at fair value 3,732, ,489 Non-Current Unlisted investments at fair value 842, ,000 Note: 7 Acquisition of controlled entity On 29 March 2007, the Group acquired the remaining 60% of Tolhurst Noall Financial Planning (Qld) Pty Ltd at which time it became a wholly owned subsidiary of the Tolhurst Group. 15

16 Note: 8 Investments accounted for using equity method $ $ Associated companies 56, ,706 Movements during the year in equity accounted investment in Associated Companies Balance at beginning of the financial year 559,706 75,668 Add: New investments during the year ,152 Less: Reduction in equity accounted investment during the year (27,874) - Add: Share of associated company's profit after income tax 55,403 94,606 Less: Equity accounted investment converted to full control (456,507) - Less: Dividend revenue from associated company (74,400) (3,720) 56, ,706 Equity accounted profits of associates are broken down as follows Share of associate's profit before income tax expense 75, ,544 Share of associate's income tax expense (19,836) (42,938) Share of associate's profit after income tax 55,403 94,606 Summarised presentation of aggregate assets, liabilities and performance of associates Current assets 78, ,077 Non-current assets 24, ,465 Total assets 103, ,542 Current liabilities 112, ,472 Non-current liabilities - 301,919 Total liabilities 112, ,391 Net assets (8,907) 283,151 Revenues 743, ,640 Profit after income tax of associates 55,403 94,606 Name & principle activities Country of incorp. Ownership interest (ordinary shares) Carry amount of investment $ $ Tolhurst Waverley & Staff Pty Ltd Australia 21% 32% 56, ,510 Provision of broking services Bentleys Advantage Pty Ltd Australia 50% Provision of financial planning services Tolhurst Noall Financial Planning (Qld) Pty Ltd ("TNFPQ") Australia 100% 40% - 443,196 Provision of funds management services Refer note 7 56, ,706 16

17 Note: 9 Property, plant and equipment $ $ Plant and equipment 5,640,203 4,193,522 Accumulated depreciation (3,952,274) (3,415,458) 1,687, ,064 Leased plant and equipment 491, ,449 Accumulated depreciation (256,832) (157,200) 234, ,249 1,922,546 1,112,313 Note: 10 Intangible assets Goodwill Cost 1,597,049 - Accumulated impaired losses - - Net carrying value 1,597,049 - Client relationships Cost 258,486 - Accumulated amortisation and impairment (9,718) - Net carrying value 248,768-1,845,817 - Note: 11 Trade and other payables Current Client and dealer balances payable 70,747,853 43,521,762 Other payables and accruals 9,112,310 7,951,401 Amounts payable to: - associated companies 258, ,001 80,118,469 51,763,164 Note: 12 Financial liabilities Current Bank overdraft - secured 37, ,196 Loans - secured 1,500,000 1,500,000 Bank loans - secured 630,000 - Lease liability - secured 93, ,396 2,260,300 1,755,592 Non-Current Subordinated loans - unsecured 857, ,284 Other loans - unsecured 161, ,000 Lease liability - secured 75, ,330 1,093,622 1,186,614 17

18 Note: 13 Provisions $ $ Non-Current Employee entitlements 69,968 66,652 Other - claims and penalties 427, , , ,652 Note: 14 Cash flow information (a) Reconciliation of cash For the purposes of this cash flow statement, cash includes cash on hand and at banks, including short term deposits, net of bank overdrafts. Cash at the end of the financial year is shown in the balance sheet as: Cash at bank 14,357,305 15,392,293 Trust account 9,692,514 12,866,417 24,049,819 28,258,710 Bank overdraft (37,255) (145,196) 24,012,564 28,113,514 (b) Reconciliation of cash flow from operations with operating profit after income tax Operating profit after income tax 4,292,105 3,724,953 Non-cash items Depreciation and amortisation 642, ,595 Net gain on equity accounting (55,403) (94,606) Net unrealised (gain) / loss in value of investments (20,751) 96,853 Net loss on disposal of property, plant & equipment Net profit on disposal of financial assets (453,828) (1,055,555) Share options expensed 98, ,624 Changes in assets and liabilities (Increase)/decrease in client & dealer balances & other receivables (6,824,811) 5,883,017 (Increase)/decrease in prepayments (197,782) (91,625) (Decrease)/increase in trade and other payables 828,968 2,086,192 (Decrease)/increase in income tax (62,565) 466,887 (Decrease)/increase in deferred taxes payable (31,758) (284,027) (Decrease)/increase in provisions (208,684) (154,111) Net cash flow from operating activities (1,993,595) 11,220,619 18

19 Note: 15 Segment reporting Business Segments 2007 Stock Funds & wealth broking management Corporate Consolidated $ $ $ $ Revenue Segment revenue 49,916,110 2,015,903 10,810,538 62,742,551 Result Segment result 4,760,856 (139,430) 1,364,955 5,986,381 Share of net profit of associates 42,152 13,251-55,403 4,803,008 (126,179) 1,364,955 6,041,784 Income tax expense (1,749,679) Profit after income tax 4,292, Stock Funds & wealth broking management Corporate Consolidated $ $ $ $ Revenue Segment revenue 40,381,667 1,140,498 5,634,541 47,156,706 Result Segment result 4,419,319 (406,842) 1,109,145 5,121,622 Share of net profit of associates 39,762 54,844-94,606 4,459,081 (351,998) 1,109,145 5,216,228 Income tax expense (1,491,275) Profit after income tax 3,724,953 Note: 16 Other information Net tangible asset backing Net tangible asset backing per ordinary share (cents) The Rights Issue proceeds have been excluded from 2007 net tangible assets on the basis that the related shares were not issued at year end. Audit statement This report is based on the accounts which are in the process of being audited. 19