HUB24 LIMITED - Annual Report 2014

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ANNUAL REPORT 2014

CORPORATE DIRECTORY

DIRECTORS

Bruce Higgins (Chairman) Appointed 19 October 2012

Ian Litster Appointed 26 September 2012

COMPANY SECRETARY

Matthew Haes Appointed 10 September 2012

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

Level 8 20 Bridge St Sydney NSW 2000 Tel: (02) 8274 6000

Hugh Robertson Appointed 20 April 2011

Vaughan Webber Appointed 19 October 2012

SHARE REGISTRY

Boardroom Pty Limited

Level 7 207 Kent Street Sydney NSW 2000 HUB24 Limited shares are listed on the Australian Securities Exchange (ASX: HUB)

AUDITORS

BDO East Coast Partnership

SOLICITORS

Minter Ellison

Rialto Towers 525 Collins Street Melbourne VIC 3000

Minter Ellison

Aurora Place 88 Phillip Street Sydney NSW 2000

INTERNET ADDRESS

www.hub24.com.au

BANKERS

Australia and New Zealand Banking Group Limited 20 Martin Place Sydney NSW 2000

Level 10 1 Margaret Street Sydney NSW 2000

RESULTS FOR ANNOUNCEMENT TO THE MARKET (APPENDIX 4E)

AUDITOR’S INDEPENDENCE DECLARATION

INDEPENDENT AUDITOR’S REPORT

3 CHAIRMAN AND CEO REPORT

31 CORPORATE GOVERNANCE

ASX ADDITIONAL INFORMATION

8 BUSINESS OVERVIEW

41 FINANCIAL STATEMENTS

12 DIRECTORS’ REPORT

DIRECTORS’ DECLARATION

HUB24 ANNUAL REPORT 2014 CONTENTS

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

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Year ended Year ended
30 June 2014 30 June 2013
$’000 $’000 % change
From continuing operations
Revenue from ordinary activities 3,745 From 1,806 Increase 107%
Net loss for the year attributable to members (7,743) From (5,798) Increase 33%
From discontinued operations
Revenue from ordinary activities - From 5,278 Decrease -100%
Net loss for the year attributable to members (680) From (3,985) Decrease -83%
From continuing and discontinued operations
Revenue from ordinary activities 3,745 From 7,084 Decrease -47%
Net loss for the year attributable to members (8,423) From (9,783) Decrease -14%
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DIVIDENDS

The directors have not declared a final dividend for the year ended 30 June 2014 (2013: Nil).

AUDITOR REVIEW

The report is based on accounts that have been audited by the company’s auditors, BDO East Coast Partnership.

ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD

HUB24 Limited has not gained control over any entity during the reporting period.

HUB24 Limited has lost control over the following entities during the period:

Aequs Capital Ltd

Date control lost: 27 June 2014

EXPLANATION OF RESULT

Alert Trader Pty Ltd

Date control lost: 3 July 2013

Refer to the attached Directors’ Report and review of operations for further explanation.

Net tangible assets per fully paid ordinary share 30 June 2014	$0.279
Net tangible assets per fully paid	$0.255
ordinary share 30 June 2013

Alert Trader Publishing Pty Ltd Date control lost: 22 August 2013

Alert Trader Securities Pty Ltd Date control lost: 22 August 2013

These entities have not made a material contribution to the consolidated entity’s profit/(loss) before income tax during the current or previous period.

HUB24 ANNUAL REPORT 2014 RESULTS FOR ANNOUNCEMENT TO THE MARKET

CHAIRMAN AND CEO REPORT

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BRUCE HIGGINS

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ANDREW ALCOCK

Dear Shareholders,

On behalf of the directors we are pleased to announce the results for HUB24 for the year ended 30 June 2014.

The financial year ended 30 June 2014 was a significant period for the company with rapid growth and consolidation of the business to focus on the HUB24 platform as well as continued investment in platform improvements which have resulted in very strong growth momentum. We are also pleased to advise that this momentum has continued into the new financial year.

The commercialisation of our HUB24 platform business is now well on track with inflows gaining momentum on the back of consecutive record quarters in the second half of FY2014. The operations and technology of our systems are proving to be highly scalable. Our maiden gross profit was achieved in March 2014 and direct operating expenses continue to grow at a lower rate than our top line revenues.

We continue to invest in our core business of the HUB24 platform and its technology to remain at the forefront of the market and ensure that our business continues to prove highly scalable with the growing momentum of inflows.

Recently we announced the transaction (subject to conditions precedent) to acquire the independently owned financial planning licensee Paragem Pty Ltd ( Paragem ). Paragem is a leading boutique dealer group, founded by Ian Knox and Charlie Haynes that has grown strongly to license 20 high quality financial advisory practices across

Australia, which advise on more than $2.5 billion of client funds. HUB24 and Paragem are highly complementary with minimal overlap and share a common goal to create strong financial advice practices and a platform group not aligned to product manufacturers.

Both HUB24 and Paragem will retain their existing brands and will continue to operate independently. Paragem will retain its open architecture approach to approved products and platforms. HUB24 will support the growth and business of Paragem licensee advisers and their clients and continue to focus on our core business providing white labels to financial planning groups, accountants and stockbrokers.

CORPORATE

During the year there have been changes in the executive team as announced to the market. Andrew Alcock commenced as CEO in July 2013 and Jason Entwistle, previously Acting CEO, was appointed Director, Strategic Developments.

The Directors also wish to announce the appointment of Andrew Alcock to the board of the company and the position of Managing Director effective today.

Shareholders have continued to be supportive of the company with the capital raising completed in December 2013 raising $10.6 million. As at 30 June 2014 we had $13.8 million in cash and cash equivalents, our net tangible assets were $19.4 million representing 28 cents per share.

HUB24 ANNUAL REPORT 2014 CHAIRMAN AND CEO REPORT

CHAIRMAN AND CEO REPORT

Continued

COMPANY SUCCESSES

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FUA growth of 155% to

$991m

as at 28 August 2014.

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Growth in active advisers of 109 to

345

serving 52 financial planning groups with 3 new white label agreements.

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Cash and cash equivalents of

$13.8m

and no corporate debt. $10.6m raised in a placement at $1.30.

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Increase in platform revenue of

161%

achieved through growing Funds Under Administration with consistent gross profit margins.

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Launched in June 2012

Super

now represents more than half of all client accounts.

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HUB24 awarded

3rd

in the Product category by market researcher Investment Trends, in December 2013 Platform Report covering 25 leading platforms. Now ranked ahead of many mainstream and traditional industry leaders.

188

Managed Portfolios offered with FUA in these increasing 170%.

HUB24 ANNUAL REPORT 2014 CHAIRMAN AND CEO REPORT

CHAIRMAN AND CEO REPORT Continued

FINANCIAL PERFORMANCE

Revenue increased to $3.2 million for the financial year, an increase of 161% over the prior corresponding period (PCP) driven by an increase in Funds Under Administration (FUA) of 122% to $854 million. Revenue during the year was at an average 52 basis points of FUA (48 basis point PCP) driven by increasing transaction activity across platform trading, managed funds and insurance.

Direct platform costs increased by 33.3% driven by increased transaction volumes from platform trading and insurance. Direct costs during the year were at an average of 56 basis points of FUA declining from 103 basis points for the prior corresponding period demonstrating that scale benefits are accelerating with growing FUA and revenues.

Operating expenses increased by 12.5% due to an increase in headcount, the accrual of FY14 performance incentives and share based payment expenses arising from the issue of options to staff and Chairman. Nonheadcount related operating expenses decreased by 4.7% during the financial year.

Operating expenses during the year were at an average of 60 basis points of FUA declining from 131 basis points for the prior corresponding period.

GROSS PROFIT EMERGES WITH INCREASING SCALE $ PER MONTH

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400,000
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March
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Gross profits
achieved
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Revenue Direct FTE costs
Total Direct Expenses (including FTE Costs)
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The business carefully manages the timing and extent of further investment in resources to provide a stable platform for continued rapid growth. This management includes ongoing review of platform administration, client service and transition functions for further efficiencies to underpin future operating margins.

We define investment expenses as those expenses which are expected to result in increased inflow of FUA and are across development, product, sales and client transition areas. These expenses increased by $1.8 million in FY14 and included fewer headcount costs capitalised during the period, accrual of performance incentives and share based payment expenses arising from the issue of options to staff and executives within that cost centre.

The increase in investment resources has assisted HUB24 in accelerating the transition of FUA to reach its first month of gross profit in March 2014. Continued investment to both maintain and increase FUA growth and financial performance will accelerate HUB24 along its pathway to profitability.

GROWTH

The company has succeeded in further commercialising the HUB24 platform with FUA as at 30 June 2014 reaching $854 million, representing an increase of 122% since 30 June 2013 and servicing over 345 financial advisers. Further growth in fund inflows since the end of the period has further increased FUA at 28 August 2014 to $991 million.

Monthly average net inflows* by financial years to date are as follows:

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FY12 $ 5.4m
FY13 $19.0m
FY14 $32.8m
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*Excludes market movements

**$41.7m March to June

Significant investment was made in FY12 for HUB24’s superannuation and insurance development products for which the company received a Research and Development incentive from the ATO of $1.1m. Superannuation client accounts are now more than half of all client accounts on the platform.

This growth accelerated during FY14 thanks to a stable board, investment in the business teams, growth from existing clients and three new white labels.

HUB24 ANNUAL REPORT 2014 CHAIRMAN AND CEO REPORT

CHAIRMAN AND CEO REPORT Continued

FUA BALANCE $M

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FUA AND INFLOWS

HUB24 has recorded consecutive quarters of record gross and net inflows during the second half of the 2014 financial year.

During the financial year HUB24 increased the number of client accounts administered per adviser by 58.1% as well as overall FUA by adviser while introducing a number of new clients. This indicates increasing engagement by both current and new advisers during the year.

The number of advisers using the platform has increased by 46.2% over the financial year. Given that many of the advisers are relatively new to using the HUB24 platform, we expect significant upside in both the penetration of the platform into the advisers’ businesses, increasing average FUA per adviser, and the recruitment of new advisers, continuing the increased momentum in FUA growth.

HUB24 offers an open architecture model whereby it is able to offer a diverse range of investment products. HUB24 currently offers the most extensive range of managed portfolios within a full service wrap in the Australian market today. It is not only the breadth of the offering but also the depth of model portfolio tools available that has underpinned fund flows into HUB24’s managed portfolios (increase of 169.8%) in excess of overall FUA growth over the financial year.

ACQUISITIONS

During the financial year HUB24 has devoted significant resources to reviewing the market for suitable synergistic acquisitions that could provide opportunity to deliver scale to the business.

No acquisitions were made during the financial year, however progress was made and a transaction to acquire Paragem Pty Ltd was announced to the market on 21 August 2014. Subject to completion we believe the acquisition and strategy in developing the Paragem business for independently minded financial advisers will deliver considerable earnings growth for the company in the coming years.

The acquisition of Paragem is consistent with HUB24’s strategy to pursue significant growth by partnering with quality independently minded financial advisers (IFAs). We will be working together with Paragem and HUB24’s existing highly valued advice licensees with the company continuing to develop solutions for the benefit of the IFA market and consumers. Together we will provide a compelling home for like-minded financial advisers who value choice and the ability to freely run their own business, while working with HUB24 to develop better, more cost effective client outcomes.

Both HUB24 and Paragem will retain their existing business and brands and will continue to operate independently. Importantly, Paragem will retain its open architecture approach to approved products and platforms and HUB24 will maintain its focus on supporting the growth and prosperity

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Platform statistics [1] Jun ‘14 Mar ‘14 Dec ‘13 Sep ‘13 Jun ‘13 TTM
FUA – total $853.8m $730.2m $618.9m $527.5m $384.6m 122.0%
Net fund inflows (Qtr) $117.7m $108.7m $60.8m $106.5m $56.7m 107.6%
Gross inflows (Qtr) $166.8m $126.6m $80.0m $120.5m $69.6m 139.7%
Number of active Advisers 345 314 307 278 236 46.2%
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Statistics are approximate, have been rounded and are not audited. Inflows do not include any market movement.
% variance of Trailing Twelve Months.

** A one-off, non-recurring outflow of $20m in June contributed to the variance between gross inflows and netflows for the June ’14 quarter.

HUB24 ANNUAL REPORT 2014 CHAIRMAN AND CEO REPORT

CHAIRMAN AND CEO REPORT Continued

of its existing licensee clients and pursuing new client opportunities with its market-leading platform solution.

This acquisition is consistent with HUB24’s core proposition of providing high value services to licensees and advisers. This entry into the advice space is expected to result in a further enhancement of HUB24’s rapid growth, diversification of the company’s revenue streams and continued improvements to platform functionality, which will be highly valued by the broader IFA market. In addition to providing our HUB24 retail products to advisers, we will continue to focus on our core business providing white labels to financial planning groups, accountants and stockbrokers whilst also developing and supporting the Paragem business.

HUB24’s platform will enhance Paragem advisers’ ability to act in the best interests of their clients. We will offer a pathway to a broad investment universe, free of product issuer conflict, utilising direct securities, managed accounts, traditional managed funds as well as multiple term deposit and insurance providers. Our competitive advantage is that we are not aligned with product manufacturers and therefore not constrained in the products we offer.

staff required to service FUA. In February we commenced development of significant enhancements to the HUB24 capability that will broaden our market appeal to a wider range of clients and these will be announced in the coming months as they are released.

CORPORATE GOVERNANCE

The Board of HUB24 is committed to achieving and demonstrating standards of corporate governance that are best practice and compliant with the Australian Stock Exchange (ASX) regulations of good corporate governance. Our goal is to ensure that we protect the rights and interests of shareholders and ensure the company is properly managed through the implementation of sound strategies and action plans. We achieve this through the management team of our company and by supervising an integrated framework of controls over the company’s resources to ensure our commitment to high standards of ethical behaviour.

Our remuneration report is enclosed in the annual report and outlines the group remuneration policies, Board performance and the senior executive remuneration policies and compensation.

OPERATIONS

In August the Shareholders approved the change of company name to HUB24 Limited to align our name with our business.

In November we relocated the office to the ASX building in Bridge St Sydney and in the process improved our security within our building while reducing our tenancy expenses.

During the financial year HUB24 reviewed platform administration fees to improve competitive market positioning and attract higher account balances and transaction fees to improve margins from increasing scale. These changes have been implemented during the second half of the financial year.

HUB24 has undertaken substantial effort to incorporate the introduction of significant new regulatory requirements during the financial year including Stronger Super, RG148 for Investor Directed Portfolio Services (IDPS) and the implementation of short form Product Disclosure (PDS) disclosure documents. We have also confirmed regulatory NTA requirements for the company at 0.5% of IDPS assets from 1 July 2014. The implementation of these requirements, while delivering significant FUA growth, is testament to the quality and dedication of the HUB24 team.

Platform developments during the financial year have focussed upon specific client requests and projects to ensure operational scalability by decreasing administration

OUTLOOK

Our strategy is to position HUB24 as the independent platform of choice for financial advisers, stockbrokers and accountants while building a profitable, scalable business.

We see opportunity in a changing market where HUB24 is able to take advantage of new regulations, adviser and clients’ needs for compliance to deliver state of the art reporting and investment products.

We will continue to invest in platform development and operational efficiency, with the objective of accelerating FUA to the platform.

On behalf of the Directors, we wish to thank our management team and all employees for their commitment and customer service focus during the year. We would also like to thank our customers and shareholders for their continuing support for HUB24.

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Bruce Higgins Chairman of Directors 29 August 2014

Andrew Alcock Chief Executive Officer

HUB24 ANNUAL REPORT 2014 CHAIRMAN AND CEO REPORT

BUSINESS OVERVIEW

OUR INDUSTRY

ABOUT HUB24

Australia’s investment fund pool was estimated to be the third largest in the world at 30 June 2013 at $1,553bn, underpinned by employer Superannuation Guarantee (SG) contributions, which are progressively rising from 9.5% to 12% commencing from 1 July 2014. Much of this growth is in the SMSF sector where investment platforms, especially those that offer a broad choice of investment and insurance options, are well positioned to participate in this growth.

HUB24 operates in a sector fuelled by legislated growth via superannuation, growth in the trend towards directly held assets and growth in managed portfolios. ‘Wrap platforms, including separately managed accounts and model portfolio products, will be the fastest growing segment’ according to the Rice Warner ‘Personal Investments Market Projections Report 2013’.

Against this industry expansion Australia has been through a period of unprecedented regulatory change including reforms to superannuation and financial advice laws. While many platforms have been diverting significant resources to changing legacy systems to comply with new regulations, the HUB24 platform has been able to focus on the continued development of its inhouse proprietary technology and addressing client needs. This nimble responsiveness has underpinned HUB24’s FUA increase during 2014.

HUB24 Limited is a financial services company focussed on the delivery of the HUB24 platform which supports superior superannuation and investment outcomes for investors by offering choice, flexibility and transparency. HUB24 provides a next-generation service with state-ofthe-art portfolio management, transaction and reporting solutions for licensees, financial advisers, accountants, stockbrokers, and investment managers.

HUB24 was established by a team with extensive experience in building leading technology solutions for the financial services industry. As specialists in proprietary platform technology, we are able to rapidly respond to demand and provide customised solutions for clients including the delivery of white label solutions for our larger corporate customers.

HUB24 operates independently of product manufacturers and is not owned by, or aligned to any bank, fund manager or insurance institution.

OUR GROWTH

Over the financial year, HUB24 grew funds under administration to $854m as at 30 June 2014, representing an increase of 122% over the year. With consecutive quarters of record inflows during the second half of the 2014 financial year, growth momentum is continuing into FY15 with funds under administration standing at $991m as at 28 August 2014.

PROJECTED SUPERANNUATION ASSETS (2012 TO 2033)

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8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Pre-retirement assets Post-retirement assets
Source: Deloitte Actuaries & Consultants, 2013
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
$ billions
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HUB24 ANNUAL REPORT 2014 BUSINESS OVERVIEW

BUSINESS OVERVIEW Continued

KEY PLATFORM STATISTICS

FUA BALANCE $M

INFLOWS – QUARTERLY $M

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Net Inflows Gross Inflows
Sep '11Dec '11Mar '12Jun '12Sep '12Dec '12Mar '13Jun ' 13Sep '13Dec '13Mar '14Jun '14 Sep '11Dec '11Mar '12Jun '12Sep '12Dec '12Mar '13Jun ' 13Sep '13Dec '13Mar '14Jun '14
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YEAR ON YEAR INCREASES (FY14 OVER FY13)

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Active advisers
Gross inflows
Net inflows
0% 10% 20% 30% 40% 50% 60% 70% 80%
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FUA per active advisers

The number of advisers using the platform has increased by 46.2% over the financial year, with average FUA per adviser increasing by 71.7% over that time. Given that many of the advisers are relatively new to using the HUB24 platform,

we expect significant upside in both the penetration of the platform into the advisers’ businesses, increasing average FUA per adviser, and the recruitment of new advisers, continuing the increased momentum in FUA growth.

HUB24 ANNUAL REPORT 2014 BUSINESS OVERVIEW

BUSINESS OVERVIEW Continued

INDUSTRY RECOGNITION[1]

HUB24 ranked very well in the Investment Trends Report 2013 improving our overall position following our first place award for Most New Developments in 2012. Key highlights for HUB24 include:

Ranking 3[rd] for Product Offering with a significantly improved score due to the leading capabilities of the platform
Improvement in overall ranking from 7[th] to 5[th] place, moving ahead of two major institutionally-owned wrap providers
The only platform that ranked in the top 10 in all 7 categories
Ranked 1[st] in 9 out of 41 sub-categories amongst 25 respondents.

KEY STRENGTHS

MANAGED PORTFOLIOS

HUB24’s market-leading managed portfolio capability enables licensees to offer advisers and their clients fully implemented Separately Managed Accounts (SMAs) and managed portfolios comprising a range of asset types and classes. This implementation model enables dealer groups to participate in the value chain as a product manufacturer as well as proving a very efficient tool of adviser practices. Investors using managed portfolios are able to benefit from professional investment management in a structure with potentially lower fees and taxes, transparency of underlying holdings and online tax optimisation tools.

HUB24’s managed portfolios offer significant advantages over traditional managed funds as a vehicle to access professional investment management services.

Advantages include:

Tax effectiveness, as no inheritance of underlying capital gains
Beneficial ownership of underlying investments
Potential benefit of netting transactions within an account, saving trading costs and taxes
Flexibility with online capital gains modelling tools that can assist in decision making.

The increasing popularity of managed portfolios is underlined by the Investment Trends Platform Report 2013 which found that 17% of advisers were planning to start using SMAs within the next 12 months, up from 10% the year before.

HUB24 currently administers over 188 managed portfolios, the most of any full service wrap platform in the market, underlining the scalability of the HUB24 solution. These portfolios are managed by professional fund managers, licensees and asset consultants. The popularity amongst advisers of the managed portfolio functionality is evidenced by the 170% growth in managed portfolios funds under administration during the year. Managed portfolios represented 42% of HUB24 platform FUA at 30 June 2014, up from 31% a year earlier.

FUA BY INVESTMENT TYPE $M

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Direct Managed Managed Cash & Term
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Transparency

INDEPENDENCE

No buy/sell differential charged on entry
Investment Trends December 2013 Platform Benchmarking Report, based on extensive analyst reviews of 25 platforms across 454 functional points.

Our independence from product manufacturers ensures we are able to objectively offer the best choice of service providers for advisers and investors. This includes a

HUB24 ANNUAL REPORT 2014 10 BUSINESS OVERVIEW

BUSINESS OVERVIEW Continued

range of term deposit, margin lending and insurance providers. Our non-reliance on in-house products to generate revenue is a key differentiation point compared to institutionally owned platforms where ‘house’ brand investment, banking and insurance products are widely promoted.

The Future of Financial Advice (FoFA) reforms have created a new regulatory environment that is removing conflicted remuneration and hidden fees. HUB24 is at the forefront of platforms in delivering a compliant technology solution that enables licensees to deliver more comprehensive services to clients and be rewarded for those services by participating more widely in the value chain should they wish to do so.

TECHNOLOGY

HUB24 has purpose-built a proprietary technology platform in-house which allows us to have full control over development priorities and provide tailored solutions for our clients. We are not constrained by external vendors, and are recognised for delivering platform enhancements at a more rapid rate than most, if not all, of our competitors, providing a significant competitive advantage.

Our clients, including advisers, fund managers and investors enjoy real-time access to investment and account information through 24/7 web and mobile access. Our technology incorporates electronic account opening, trading, reports, statements and communications, which

enable HUB24 to deliver efficient and cost-effective services to all clients.

A key channel opportunity for HUB24 is the ability to brand or ‘white label’ our platform for licensees with enough scale who want to tailor their platform solution. This is a streamlined process for HUB24, and already accounts for more than 50% of total FUA with expectation for strong growth in coming years.

We will continue to deliver significant technology and product enhancements for financial advisers, stockbrokers and accountants that value open architecture, flexibility and transparency. We are not constrained in what we offer through vertical integration with product manufacturers. This independence is highly valued by our customers as they can freely access a wide choice of options in the best interests of their clients.

R&D INCENTIVES CONTINUE

HUB24 received an R&D tax incentive payment from AusIndustry of $1.1 million in July 2013 for the 2012 financial year and $0.4 million in March 2014 for the 2013 financial year. These incentives related to the significant investment made in the ongoing development of the HUB24 investment and superannuation platform. The company continues to invest in the development of new features and will apply for further payments based on eligibility in the coming year.

HUB24 ANNUAL REPORT 2014 11 BUSINESS OVERVIEW

DIRECTORS’ REPORT

Your Directors present their report together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’ or ‘HUB24 consolidated entity’) consisting of HUB24 Limited (referred to hereafter as the ‘company’) and the entities it controlled for the year ended 30 June 2014. The names and details of the company’s Directors in office during the financial year and until the date of this report are as follows.

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BRUCE HIGGINS

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VAUGHAN WEBBER

BRUCE HIGGINS B ENG CP ENG, MBA, FAICD CHAIRMAN AND NON-EXECUTIVE DIRECTOR

Bruce Higgins has extensive experience as a company director and chief executive both within Australia and internationally and has mentored and directed profitable rapid growth businesses for the past 25 years. Bruce has previous roles relevant to the activities of the company as director of technology and software solutions businesses with both software engineering and e-learning businesses, start-up and successful restructure and commercialisation of listed companies. Bruce has prior experience as Chairman and Non-Executive Director on a variety of listed companies over the past 13 years.

Bruce is currently Chairman and Non-Executive Director of Legend Corporation Limited and Chairman and NonExecutive Director of Q Technology Limited. Bruce was awarded the Ernst & Young Entrepreneur of the Year award in Southern California in 2005 and has a Bachelor Degree in Electronic Engineering and an MBA in Technology Management. He is a Chartered Professional Engineer and Fellow of the Australian Institute of Company Directors.

VAUGHAN WEBBER B EC NON-EXECUTIVE DIRECTOR

Vaughan Webber is an experienced finance professional with a background in chartered accounting at a major international accountancy firm. Recently, Vaughan has had extensive financial public markets experience, having spent 11 years in corporate finance at a leading Australian stockbroker focussing on creating, funding and executing strategies for mid to small cap ASX listed companies. Vaughan also has experience as a director with ASX listed public companies and is currently Non-Executive Chairman of Money3 Corporation Limited and NonExecutive Director of Anchor Resources Limited. Vaughan has a Bachelor Degree in Economics.

Vaughan was appointed to the company’s Board on 19 October 2012 and is the Chairman of the Audit, Risk and Compliance Committee.

Previous listed company directorships held in the last three years:

Wentworth Holdings Limited (resigned 21 November 2013).

Bruce was appointed as Chairman of the Board on 19 October 2012.

Previous listed company directorships held in the last three years:

Feore Limited (appointed August 2011, resigned August 2013).

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

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HUGH ROBERTSON

HUGH ROBERTSON NON-EXECUTIVE DIRECTOR

Hugh Robertson has over 25 years experience in the financial services industry, commencing his stockbroking career in 1983. During that time he has been involved in a number of successful stockbroking and equity capital markets businesses, including Falkiners Stockbroking and most recently Bell Potter Securities.

Hugh is currently a Non-Executive Director at Oncard International Limited. Previously, Hugh has also held directorships with NSX Ltd, OAMPS Ltd, Catalyst Recruitment Ltd and Bell Potter Ltd (pre-IPO).

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IAN LITSTER

IAN LITSTER B SC (HONS) NON-EXECUTIVE DIRECTOR

Ian Litster has over 10 years experience in designing and developing software for the financial services industries, particularly in the area of financial planning. He has been the founder of the companies behind the VisiPlan and COIN software packages, two of the leading financial planning systems in Australia. His main areas of expertise are the management of information technology organisations and software development. Ian has a Bachelor Degree in Science (Honours in Mathematics).

Ian was appointed to the Board on 25 September 2012 and is Chair of the Remuneration and Nomination Committee.

Hugh was appointed to the Board on 20 April 2011.

Previous listed company directorships held in the last three years:

There were no other directors holding office during the financial year.

• Wentworth Holdings Limited (resigned 3 September 2013).

HUB24 ANNUAL REPORT 2014 13 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

COMPANY SECRETARY

The name and details of the Company Secretary in office during the financial year and at the date of this report is as follows:

MATTHEW HAES B Ec (Syd) ACA AGIA

Matthew Haes is the Chief Financial Officer and Company Secretary for HUB24 Limited.

Matthew’s financial services experience spans over 18 years in senior finance roles, covering wealth management, securitisation, capital markets, stockbroking and funds management. He spent eight years as Finance Manager and Company Secretary at Centric Wealth Limited where he developed the finance function and integrated businesses resulting from the company’s merger and acquisition activities. Matthew is a Director of the HUB24 Group’s subsidiary companies, a member of the executive committee and serves the committees of the Board. Outside HUB24 he is a non-executive director and chairman of the Audit & Risk committee of an APRAregulated Authorised Deposit-taking Institution (ADI).

Matthew has a Bachelor of Economics, and is a Chartered Accountant and Chartered Secretary.

Matthew was appointed Company Secretary on 10 September 2012.

DIRECTORS’ INTERESTS

As at the date of this report, the interests of the Directors in the shares of the company were:

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Number of
Director ordinary shares
Bruce Higgins 510,000
Hugh Robertson 86,500
Ian Litster 3,588,751
Vaughan Webber Nil
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CONSOLIDATED ENTITY OVERVIEW

The consolidated entity operates the HUB24 investment and superannuation platform.

The HUB24 investment and superannuation platform is recognised as a leading independent portfolio administration service that provides financial advisers with the capability to offer their clients access to a wide range of investment options including market leading managed portfolio functionality, efficient and cost effective trading, and comprehensive reporting, for all types of investors – individuals, companies, trusts or self-managed super funds.

The company was established in 2007 by a team with a very strong track record of delivering market leading solutions in the financial services industry.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the year were the provision of investment and superannuation portfolio administration services.

CAPITAL RAISING

The company conducted a capital raising during the year ended 30 June 2014 to meet the capital expenditure requirements of the HUB24 platform and meet ASIC regulatory capital requirements for IDPS Operators and providers of custodial services.

$10.6 million in capital was raised from a placement of 5,837,020 ordinary shares at $1.30 on 11 October 2013 and 2,307,692 ordinary shares at $1.30 on 3 December 2013. The second tranche of the capital raising was completed following approval by shareholders at the Annual General Meeting held on 27 November 2013.

REVIEW OF FINANCIAL RESULTS

The consolidated entity recorded a net loss after income tax for the year ended 30 June 2014 of $8.4 million (2013: $9.8 million).

The loss after income tax from the continuing operations (HUB24 Platform) for the year ended 30 June 2014 was $7.7 million or $6.7 million when adjusted for depreciation, amortisation and impairment expenses (2013: $5.8 million, or $4.8 million when adjusted for depreciation, amortisation and impairment expenses).

This negative variance in the loss after income tax to the prior year was contributed to by:

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

Reduction in R&D incentive of $0.8 million
Fewer headcount costs capitalised during FY14 of $0.6 million

The loss after income tax from the discontinued operation (Stockbroking) for the year ended 30 June 2014 was $0.7 million (2013: $4.0 million).

An increase in share based payment expenses of $0.4 million.

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Key financial results Year ended 30 June 2014 Year ended 30 June 2013 % change
FUA (million) 854 384 122.4%
INCOME $ $
Revenue 3,209,190 1,228,366 161.3%
Platform direct costs (3,461,416) (2,597,463) (33.3%)
Gross Profit (252,226) (1,369,097) 81.6%
Gross Profit margin (7.9%) (111.5%)
Operating expenses (3,724,652) (3,309,439) (12.5%)
EBITDA (Pre-investment) (3,976,878) (4,678,536) 15.0%
EBITDA (Pre-investment) margin (123.9%) (145.8%)
Investment (3,686,922) (1,841,703)
EBITDA (post investment) (7,663,800) (6,520,239) (17.5%)
EBITDA (Post-investment) margin (238.8%) (203.2%)
Depreciation & amortisation (1,028,915) (1,029,775)
EBIT (8,692,715) (7,550,014) (15.1%)
EBIT Margin (270.9%) (235.3%)
Interest 535,391 577,771
NPBT (8,157,324) (6,972,243) (17.0%)
NPBT Margin (254.2%) (217.3%)
Tax 414,137 1,173,832
NPAT (7,743,187) (5,798,411) (33.5%)
NPAT Margin (241.3%) (180.7%)
Discontinued operations (679,825) (3,984,560)
NPAT (post Discontinued Operations) (8,423,012) (9,782,971) 13.9%
NPAT (post Discontinued Operations) Margin (262.5%) (304.8%)
Capitalised development costs 327,773 927,617
Cashflow
Operating cashflow (including capitalised costs) (5,986,701) (10,211,364)
Key financial results 30 June 2014 30 June 2013 % change
FINANCIAL POSITION
Net assets 19,440,417 17,322,128 12.2%
Cash & cash equivalents 13,779,844 9,542,846 44.4%
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HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

The result for Continuing Operations contained the following significant items:

GROSS PROFIT

An increase in operational revenue from $1.2 million to $3.2 million driven by an increase in client FUA from $384.6 million to $853.8 million over the Financial Year to 30 June 2014
Gross Profit for the full year was a loss of $0.3 million an improvement of 82% on the prior year. A positive Gross Profit of $0.06 million was generated in the second half of the financial year and we expect this trend to continue
The increase in direct costs, driven by increased transaction volumes in platform trading and insurance, was 33.2% while revenues increased by 161%.

The following chart shows the quarterly movement in FUA (including market movement) which has driven the 161% increase in revenue during the financial year.

FUA BALANCE $M

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Sep '11Dec '11Mar '12Jun '12Sep '12Dec '12Mar '13Jun ' 13Sep '13Dec '13Mar '14Jun '14
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EBITDA (PRE-INVESTMENT)

The Directors are of the view that an important measure of the company’s progress is the EBITDA

(pre-investment) which is the company’s representation of the EBITDA result HUB24 would record if the company were to service only the current amount of FUA and associated client accounts – it assumes no resource expense invested to bring additional FUA onto the platform. During the year this improved from a loss of $4.7 million to a loss of $3.9 million an improvement of 15%.

GROSS PROFIT & EBITDA (PRE-INVESTMENT) TREND $M

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Gross Profit EBITDA (Pre-investment)
1H FY12 2H FY12 1H FY13 2H FY13 1H FY14 2H FY14
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EBITDA (POST-INVESTMENT)

EBITDA (Post investment) for the year ended 30 June 2014 has declined by 17.5% over the previous corresponding period. This result reflects the decision by the Board to invest in the business to accelerate FUA to the platform while furthering platform development and enhanced services to advisers and their clients. Sustaining this rate of investment to transition FUA onto the platform will continue to accelerate the improved financial performance of the company.

In February we commenced development of significant enhancements to the HUB24 capability that will broaden our market appeal to a wider range of clients and these will be announced in the coming months as they are released.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

OTHER ITEMS

Other significant items included in the result for Continuing Operations were:

Amortisation of $1.0 million associated with the platform intangible asset and depreciation of $0.05 million associated with office equipment
The capitalisation of platform development costs of $0.3 million ($0.9 million: prior corresponding period) for product features to support additional revenue streams
Share based payments expense of $0.4 million relating to the issue of options to staff, executives and a director in August 2013
An R&D incentive of $0.4 million (credit to income tax expense) relating to the ongoing investment in platform development.

The result for Discontinued Operations contained the following significant items:

Insurance premiums of $0.4 million associated with runoff cover for the discontinued stockbroking business
General claims provision expense of $0.2 million associated with an increase in the estimate of future general claim payments relating to former stockbroking activities.

REVIEW OF OPERATIONS

During the financial year the Board invested in the business teams in order to accelerate the growth of the company and funds onto the platform including the commencement of Andrew Alcock as Chief Executive Officer and appointment of Jason Entwistle as Director, Strategic Developments effective 29 July 2013. The continued investment in technology, FUA transition and operational efficiency has begun to bring results as evidenced by:

GROWTH

FUA has grown to $991 million as at the date of this report
The number of superannuation client accounts on the platform now exceeds those of IDPS accounts with HUBSuper only having commenced in June 2012
188 managed portfolios are now offered through the platform with FUA growth in this investment type exceeding overall FUA growth
Advisers now actively using the platform has increased by 109 to 345 during the financial year
Revenue has increased by 161%.

FINANCIAL RESOURCES

HUB24 has a strong balance sheet with cash and cash equivalents of $13.8 million
The company is able to take advantage of its listed status and strong financial position in order to position itself for growth by acquisition.

PLATFORM DEVELOPMENT

HUB24 now ranks in the top 5 platforms in the market in terms of overall functionality[1]
The company has further strengthened the platform development team throughout the year.

The company held an Extraordinary General Meeting on 7 August 2013 whereupon the name of the company was approved and changed to HUB24 Limited from Investorfirst Ltd. This was an important step to reflect the single focus of the business and align our company name with our product and brand.

1,440,000 share options were issued to executives, 1,010,000 share options were issued to staff together with a share issue (tax exempt plan) so that all qualifying employees are now shareholders of the company.

New white label agreements were announced and delivered during the year ended 30 June 2014 for Interprac, Premium and Total Financial Solutions. It is the first time HUB24 has accomplished the launch of white label offerings simultaneously which is testament to HUB24’s white labelling capability. These white labels have contributed to the accelerated FUA growth experienced in the second half of the year.

In November we relocated the Sydney office to the ASX building in Bridge St Sydney and in the process improved our security, while reducing our tenancy expenses.

Investment Trends December 2013 Platform Benchmarking Report, based on extensive analyst reviews of 25 platforms across 454 functional points.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes in the nature or state of affairs of the consolidated entity.

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

Since 30 June 2014 HUB24 Limited has agreed to acquire 100% of the issued shares in Paragem Pty Ltd, a boutique AFSL provider, for upfront cash consideration of $1.0 million, deferred cash consideration of up to a further $1.0 million and capped earnout consideration of up to $6.0 million subject to financial performance measured over 3 years and paid in HUB24 ordinary shares no later than 30 September 2017. The acquisition is subject to conditions precedent in favour of HUB24 Limited.

Paragem is a leading boutique dealer group, founded by Ian Knox and Charlie Haynes that has grown strongly to license 20 high quality financial advisory practices across Australia, which advise on more than $2.5 billion of client funds.

of HUB24’s rapid growth, diversification of the company’s revenue streams and continued improvements to platform functionality, which will be highly valued by the broader IFA market. In addition to providing our HUB24 retail products to advisers, we will continue to focus on our core business providing white labels to financial planning groups, accountants and stockbrokers whilst also developing and supporting the Paragem business.

HUB24’s platform will enable Paragem advisers to act in the best interests of their clients. We will offer a pathway to a broad investment universe, free of product issuer conflict, utilising direct securities, managed accounts, traditional managed funds as well as multiple term deposit and insurance providers. Our competitive advantage is that we are not aligned with product manufacturers and therefore not constrained in the products we offer.

The Directors also wish to announce the appointment of Andrew Alcock to the Board of the company and the position of Managing Director effective today.

No other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Rapid growth in FUA to the investment and superannuation platform and significant platform development over the past two years see the company approaching the significant milestone of $1billion in FUA. The company’s operations have coped well with this rapid growth and the benefits of scale have begun to emerge during the financial year.

Subject to the completion of the acquisition of Paragem Pty Ltd, the company will commence transitioning this entity during September 2014 and anticipates that it will contribute to earnings growth within the first 12 months.

Management and the Board are confident the prospects of the company will continue to improve into the foreseeable future.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

ENVIRONMENTAL REGULATION AND PERFORMANCE

The consolidated entity’s operations are not subject to significant environmental regulations under Australian legislation in relation to the conduct of its operations.

DIRECTORS INDEMNITY

arrangements for the consolidated entity, in accordance with the requirements of Section 300A of the Corporations Act 2001 and its Regulations.

The remuneration report is set out under the following main headings:

A – Principles used to determine the nature and amount of remuneration

B – Details of remuneration

During the 2014 financial year the consolidated entity paid a premium in respect of a contract, insuring all the Directors and officers against liability, except wilful breach of duty, of a nature that is required to be disclosed under section 300(8) of the Corporations Act 2001. In accordance with commercial practice, the amount of the premium has not been disclosed.

C – Service agreements

D – Share based compensation

E – Additional information

F – Additional disclosures relating to key management personnel

ROUNDING OF AMOUNTS

The company is of a kind referred to in Class Order 98/100, issued by the ASIC, relating to the ‘rounding off’ of amounts in the Directors’ and financial reports. Amounts in these reports have been rounded off in accordance with that Class Order to the nearest dollar, or in certain cases to the nearest thousand dollars.

MEETINGS OF DIRECTORS

The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as per the table below.

REMUNERATION REPORT – AUDITED

This remuneration report, which has been audited, outlines the key management personnel remuneration

A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

For the purposes of this report Key Management Personnel (KMP) of the consolidated entity are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the company and the consolidated entity, directly or indirectly, including any Director (whether executive or otherwise) of the company.

Remuneration Philosophy

The performance of the consolidated entity depends upon the quality of its Directors and Executives (collectively hereafter Key Management Personnel). To prosper, the consolidated entity must attract, motivate and retain highly skilled Key Management Personnel. To this end, the consolidated entity embodies the following principles in its remuneration framework:

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Board Audit, Risk & Compliance Remuneration & Nomination
Meetings Committee Meetings Committee
Director Attended Held Attended Held Attended Held
Bruce Higgins 10 10 2 2 1 1
Ian Litster 10 10 2 2 1 1
Hugh Robertson 8 10 - - - -
Vaughan Webber 10 10 2 2 1 1
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*Number of meetings held during the time the Director held office or was a member of the committee.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

Focus on sustained growth in shareholder wealth, consisting of share price growth
Provide competitive rewards to attract high calibre individuals
Focus the executive on key drivers of value.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee is responsible for making recommendations to the Board on the remuneration arrangements for Non-Executive Directors and management. The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration on a periodic basis by reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing Director and management team.

The current members of the Remuneration and Nomination Committee are Ian Litster (Chair), Bruce Higgins and Vaughan Webber. Their qualifications and experience are set out earlier in this report.

In reviewing performance, the Remuneration and Nomination Committee conducts an evaluation based on specific criteria, including the consolidated entity’s business performance, whether strategic objectives are being achieved and the development and performance of management and personnel.

executive remuneration may not exceed the amount fixed by the company in General Meeting for that purpose (currently fixed at a maximum of $400,000 per annum as approved by shareholders at the Annual General Meeting held on 26 November 2010).

The Remuneration and Nomination Committee may from time to time receive advice from independent remuneration consultants to ensure Non-Executive Directors’ fees and payments are appropriate and in line with market. The Chairman’s fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market.

No additional fees are paid for each Board committee on which a Director sits, however Directors are also entitled to be reimbursed for reasonable travel, accommodation and other expenses incurred as a consequence of their attendance at Board meetings and otherwise in the execution of their duties as Directors.

The remuneration of Non-Executive Directors for the financial years ending 30 June 2014 and 30 June 2013 respectively are detailed in the Remuneration of Key Management Personnel section of this Remuneration Report.

Directors’ compensation on a monthly basis increased by 2.75% per month in the last 5 months of the financial year and on a full year basis was less than the average staff increase.

Executive Remuneration

Remuneration Structure

Objective

In accordance with best practice corporate governance, the structure of Non-Executive Director and other Key Management Personnel remuneration is separate and distinct.

Non-Executive Director Remuneration

The consolidated entity aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities to:

Align the interests of executives with those of shareholders

Objective and Structure

The Board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Link reward with the strategic goals and performance of
the consolidated entity
Ensure total remuneration is competitive by market standards.

Structure

The amount of fixed remuneration is established for individual Non-Executive Directors by resolution of the full Board, at its discretion. The annual aggregate non-

The Remuneration and Nomination Committee may from time to time receive advice from independent

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

remuneration consultants to ensure executive remuneration is appropriate and in line with market.

Remuneration may consist of the following key elements:

Fixed salary
Short term incentives (STIs)
Long term Incentives (LTIs)
Share based incentives.

Fixed Salary

Objective and Structure

The level of fixed remuneration is set in order to provide a base level of remuneration, which is both appropriate to the position and is competitive in the market.

Fixed salaries are reviewed annually by the Board of Directors and the process consists of a review of companywide business unit and individual performances, relevant comparative remuneration in the market and internal (where appropriate), external advice on policies and practices. Key Management Personnel receive their fixed remuneration in cash.

Short term incentives (STIs)

Objective and Structure

The objective of STIs is to reward executives who are remunerated with fixed remuneration in a manner that focusses them on achieving personal and business goals which contribute to the creation of sustained shareholder value.

STI payments are granted to executives based upon specific annual financial and business plan targets being achieved as determined by the Board.

The STI facilitates annual cash/equity opportunities that reflect performance. Details of the STI bonuses earned for each executive are detailed in Part C of this report.

Long term incentives (LTIs)

Objective and Structure

Key Management Personnel may be eligible to participate as recipients in the Employee Share Option Plan (ESOP) of

the company, which was established at the Annual General Meeting of the company on 28 November 2011 for the purposes of issuing options over ordinary shares. Additionally, the Board of Directors may, at their discretion and with the approval of shareholders, (as required) elect to remunerate Key Management Personnel through the issue of share options outside of this plan.

The terms of the options issued are structured so that sales restrictions are in force over the options or shares for two or more years as well as vesting structures that incorporate share price performance hurdles and continuing service obligations ensuring alignment with shareholder value creation.

Share Based Incentives

Objective

The objective of share based remuneration is to reward Key Management Personnel and staff (where applicable) in a manner that aligns this element of remuneration with the creation of shareholder value. As such, ordinary share and share option grants may be made to executive Key Management Personnel who are able to influence the generation of shareholder wealth and thus have an impact on the company’s performance.

Structure

Share based remuneration to Key Management Personnel may be delivered in the form of shares, partly-paid shares, or grants under the Employee Share Plan or as share option grants, as the Board recommends in its discretion, on a case by case basis. Recipients of share based remuneration may be required to meet vesting or issue conditions, including length-of-service, and market and non-market performance based criteria, including sustained share price targets.

HUB24 Performance and Link to Remuneration

Remuneration of certain executives is directly linked to performance of the consolidated entity. 50% of the amount potentially payable under the STI is based on the performance of the executive against KPIs relating to the Company’s business plan, while 50% of the amount potentially payable under the STI is based on the performance of the executive against KPIs relating to stretch objectives associated with profitability and margin objectives.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

Use of Remuneration Consultants

During the financial year ended 30 June 2014 the company did not use the services of remuneration consultants.

Voting and Comments Made at the Company’s 2013 Annual General Meeting

At the 2013 AGM, 98.91% of votes received supported the adoption of the remuneration report for the year ended 30 June 2013. The company did not receive any specific feedback at the AGM regarding its remuneration practices.

B. DETAILS OF REMUNERATION

Summary of Key Terms of Chief Executive Officer’s Employment Agreement

Andrew Alcock was appointed to the role of Chief Executive Officer of the company on 7 May 2014, and commenced with the company on 29 July 2014. The details of Mr Alcock’s service agreement are set out in Part C of this report.

Remuneration of Key Management Personnel

Details of the nature and amount of each element of the emolument of Key Management Personnel of the consolidated entity for the financial year are set out in Part C of this report. Key Management Personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly, including any Director (whether executive or otherwise).

All executives have rolling agreements. The company may generally terminate the executive’s employment agreement by providing between one and six months’ written notice depending on the agreement or providing payment in lieu of the notice period (based on the fixed component of the executive’s remuneration).

The company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the executive is only entitled to that portion of remuneration that is fixed, and only up to the date of termination. On termination with cause, any unvested options will immediately be forfeited.

Executives have the opportunity to earn an annual STI if predefined targets are achieved. The CEO has a target STI opportunity of 100% of fixed remuneration and other members of the executive team have an STI opportunity ranging from 0% to 100% of fixed remuneration. 50% of the STI is for meeting base case objectives, while 50% is for meeting stretch case objectives. 50% of the STI may be paid in cash and 50% by way of issue of shares in HUB.

STI awards for the executive team in the 2014 financial year were based upon scorecard measures and weightings as disclosed below. These targets were set by the Remuneration and Nomination Committee at the beginning of the financial year and align to the Company’s strategic and business objectives.

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Base Stretch
Performance case case
category Metrics weighting weighting
Financial Net profit after 30%
tax
Growth FUA, development 45% 60%
targets
Strategy Deliver strategic 40%
opportunities
Compliance Client transition 25%
& and system
operations improvements
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For each STI the percentage of the available bonus that was awarded in relation to the 2014 financial year and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below.

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Current Year STI entitlement
Name Awarded Forfeited
A. Alcock 59.4% 40.6%
J. Entwistle 52.5% 47.5%
W. Gillett 41.0% 59.0%
M. Ballinger 30.3% 69.7%
J. Gioffre 8.5% -
M. Haes 14.6% -
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HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

REMUNERATION OF KEY MANAGEMENT PERSONNEL

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2014 Short Post Long
Term Employment Term Share Based
Benefits Benefits Benefits Payments
$ Long
Salary Non- Super- Service Performance
and Fees Bonus monetary annuation Leave Shares Options Total Related %
Non-Executive Directors
Bruce Higgins 101,724 - - - - - 76,289 178,013 0%
Vaughan Webber 58,300 - - - - - - 58,300 0%
Ian Litster 58,300 - - - - - - 58,300 0%
Hugh Robertson [1] 58,300 - - - - - - 58,300 0%
Sub-total Non-Executive 276,624 - - - - - 76,289 352,913 -
Directors
Key management personnel
Andrew Alcock [2] – 351,293 219,688 - 16,294 636 1,000 80,404 669,315 33%
Chief Executive Officer
Jason Entwistle [3] – 294,204 157,500 - 16,294 491 1,000 64,323 533,811 29%
Head of Strategic Developments
Wes Gillett – 249,167 102,800 - 18,062 949 1,000 48,242 420,220 24%
Head of Product and Distribution
Mark Ballinger [4] – 158,923 20,000 - 13,340 312 - - 192,575 10%
Head of Business Development
Joseph Gioffre – 210,748 19,040 - 17,874 825 1,000 11,599 261,086 7%
Head of Operations
Matthew Haes – 216,949 33,000 - 17,888 669 1,000 16,674 286,180 11%
CFO and Company Secretary
Sub-total 1,481,284 552,028 - 99,752 3,882 5,000 221,242 2,363,188 -
key management personnel
Total 1,757,908 552,028 - 99,752 3,882 5,000 297,531 2,716,101 -
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Hugh Robertson currently acts in a Non-Executive Director capacity, however, was classified as an Exective Director as at 30 June 2013
Andrew Alcock was appointed Chief Executive Officer on 31 July 2013
Jason Entwistle resigned as Acting Chief Exective Officer and was appointed Head of Strategic Development on 1 August 2013
Mark Ballinger was appointed Head of Business Programs on 16 August 2013

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

REMUNERATION OF KEY MANAGEMENT PERSONNEL

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2013 Short Post
Term Employment Share Based
Benefits Benefits Payments
$ Salary Cash Termination Super- Performance
and Fees Bonus Payment annuation Shares Options Total Related %
Non-Executive Directors
Bruce Higgins [1] 70,560 - - - - - 70,560 0%
Vaughan Webber [2] 40,376 - - - - - 40,376 0%
Jason Entwistle [3] 19,383 - - - - - 19,383 0%
Robert Bishop [4] 3,058 - - 275 - - 3,333 0%
Darren Pettiona [5] 9,534 - - - - - 9,534 0%
Robert Spano [6] 20,000 - - - - - 20,000 0%
Ian Litster [7] 64,259 - - - - - 64,259 0%
Sub-total Non-Executive Directors 227,170 - - 275 - - 227,445 -
Executive Directors
Hugh Robertson [8] 778,124 - - - - 453,540 1,231,664 100%
Otto Buttula [9] 6,815 - - - - - 6,815 0%
David Spessot [10] 74,529 - 62,500 12,332 - - 149,361 0%
Sub-total Executive Directors 859,468 - 62,500 12,332 - 453,540 1,387,840 -
Key management personnel
Jason Entwistle [3] – Acting Chief 207,581 60,000 - - - - 267,581 22%
Executive Officer
Wes Gillett [11] – Head of Product and 44,705 - - 4,007 - - 48,712 0%
Distribution
Joseph Gioffre – Head of Operations 200,000 10,000 - 18,000 - - 228,000 0%
Matthew Haes – CFO and Company 205,262 15,000 - 18,473 - - 238,735 0%
Secretary
Neil Sheather [12] – Head of Stockbroking 126,519 - - 9,298 - 13,668 149,485 0%
Andrea Steele [13] – Company Secretary 72,348 - - 4,510 - - 76,858 0%
Sub-total key management personnel 856,415 85,000 - 54,288 - 13,668 1,009,371
Total 1,943,053 85,000 62,500 66,895 - 467,208 2,624,656
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*2013 remuneration does not include Annual Leave or Long Service Leave.
Bruce Higgins appointed 19 October 2012
Vaughan Webber appointe 19 October 2012
Jason Entwistle resigned as Non-Executive Director and appointed Acting Chief Exective Officer 26 September 2012
Robert Bishop resigned from the Board 25 July 2012
Darren Pettiona resigned from the Board 26 September 2012
Robert Spano resigned from the Board 19 October 2012
Ian Litster appointed 26 September 2012
Hugh Robertson currently acts in a Non-Executive Director capacity, however, is classified as an Executive Director as at 30 June 2013
Otto Buttula resigned from the Board 25 July 2012
David Spessot resigned from the Board 26 September 2012
Wes Gillett appointed 22 April 2013
Neil Sheather departed 6 March 2013
Andrea Steele departed 11 September 2012

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

The proportion of remuneration linked to performance and the fixed proportion are as follows:

	Fixed remuneration	Fixed remuneration	At risk – STI	At risk – STI	At risk – LTI	At risk – LTI
Name	2014	2013	2014	2013	2014	2013
Non-Executive Directors
Bruce Higgins	57%	100%	-	-	43%	-
Ian Litster	100%	100%	-	-	-	-
Hugh Robertson	100%	100%	-	-	-	-
Vaughan Webber	100%	100%	-	-	-	-
Other Key Management Personnel
Andrew Alcock	38%	n/a	38%	n/a	24%	n/a
Mark Ballinger	77%	n/a	23%	n/a	-	n/a
Jason Entwistle	38%	100%	38%	-	23%	-
Joseph Gioffre	88%	91%	-	9%	12%	-
Matthew Haes	84%	88%	-	12%	16%	-
Wes Gillett	39%	91%	39%	-	21%	-

C. SERVICE AGREEMENTS

Remuneration and other terms of employment for key management personnel are formalised in service agreements.

The major provisions of the agreements relating to remuneration are set out below. Salaries are for FY 2014 and are subject to review annually by the Remuneration and Nominations Committee. There are no termination payment benefits other than the contracted notice periods.

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Base Salary (inc. Term of Notice period
Name superannuation) STI LTI agreement – either party
Andrew Alcock – $370,000 Up to 100% of 600,000 Unspecified –commenced 6 months
Chief Executive Officer base salary [1] options [2] 29 July 2013
Jason Entwistle – $300,000 Up to 100% of 480,000 Unspecified – commenced 6 months
Director, Strategic Development base salary [1] options [2] 1 August 2013
Wesley Gillett – $250,700 Up to 100% of 360,000 Unspecified – commenced 6 months
Head of Product and Distribution base salary [1] options [2] 19 April 2013
Matthew Haes – Chief Financial $226,050 Nil 115,000 Unspecified – commenced 1 month
Officer and Company Secretary options [3] 26 June 2012
Joseph Gioffre – $223,995 Nil 80,000 Unspecified – commenced 1 month
Head of Operations options [3] 3 July 2012
Mark Ballinger – $220,000 Up to 30% of Nil Unspecified – commenced 3 months
Head of Business Program base salary 16 September 2013
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50% of STI payable upon achieving financial and business plan targets set by the Board. A further 50% payable upon the achievement of stretch targets set by the Board.
Options for Andrew Alcock, Jason Entwistle and Wesley Gillett have a two year sale restriction after vesting and exercise with vesting in three annual tranches no earlier than 12, 24 and 36 months upon achieving share price hurdles.
Options for Matthew Haes and Joseph Gioffre have a minimum two year sale restriction after vesting and exercise. Vesting no earlier than 12 months from date of issue subject to achieving share price hurdle.

Management personnel have no entitlement to termination payments in the event of removal for misconduct.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

D. SHARE BASED COMPENSATION

Options

The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:

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Grant Date Expiry Exercise Value per option Performance % Vested
Date Price at grant date achieved
7 August 2013 14 October 2017 $0.8424 $0.38 No Nil
8 August 2013 8 August 2017 $0.8438 $0.38 No Nil
8 August 2013 8 August 2017 $0.8438 $0.37 No Nil
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Options granted carry no dividends or voting rights.

Options granted 7 August 2013 under the HUB Employee Share Option Plan vest subject to the following share price hurdle:

The closing sale price of the Shares traded on the Australian Securities Exchange must have increased by at least 20% of the Exercise Price of the Options for each day in any 20 consecutive trading day period starting on or after the 1st anniversary of the date of issue of the Options. These options can be exercised, subject to satisfaction of vesting conditions, after the 2nd anniversary of the date of issue.

Options granted 8 August 2013 to executives vest subject to

the following:

One third of the Options subject to, and vesting on, performance of a hurdle of a 20% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 12 months after the date of issue of the Options and before the expiry of the term of the Options
A further one third of the Options subject to, and vesting on, a hurdle of a 40% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 24 months after the date of issue of the Options and before the expiry of the term of the Options
The remaining one third of the Options subject to, and vesting on, a hurdle of a 60% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 36 months after the date of issue of the Options and before the expiry of the term of the Options.

These options may be exercised upon vesting. Sale of shares are restricted for a period of 2 years after issue, with the exception that the sale of a portion of shares to fund taxation obligations directly arising from the exercise of the Options will be permitted, subject to compliance with legal obligations in respect of the sale of Company shares.

Options granted 8 August 2013 to the Chairman vest subject to the following:

One third of the Options subject to, and vesting on, performance of a hurdle of a 30% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 12 months after the date of issue of the Options and before the expiry of the term of the Options
A further one third of the Options subject to, and vesting on, a hurdle of a 60% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 24 months after the date of issue of the Options and before the expiry of the term of the Options
The remaining one third of the Options subject to, and vesting on, a hurdle of a 90% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 36 months after the date of issue of the Options and before the expiry of the term of the Options.

HUB24 ANNUAL REPORT 2014 26 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

Details of options over ordinary shares in the company provided as remuneration to key management personnel are shown below. When exercisable, each option is convertible into one ordinary share of HUB24 Limited between either 1 October to 14 October or 1 April to 14 April. The vesting conditions are set out above.

The exercise price of options is based upon the volume weighted average price of the company’s shares traded on the ASX during the 20 days prior to date of grant.

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Financial Financial Years Number Value of Number of Number of options
Year of in which options of options options at options vested lapsed/forfeited
Name grant may vest granted grant date during the year during the year
Bruce Higgins 2014 2017 510,000 $188,700 Nil Nil
2016
2015
Hugh Robertson 2011 2013 750,000 $393,000 Nil Nil
Andrew Alcock 2014 2017 600,000 $228,000 Nil Nil
2016
2015
Jason Entwistle 2014 2017 480,000 $182,400 Nil Nil
2016
2015
Wes Gillett 2014 2017 360,000 $136,800 Nil Nil
2016
2015
Matthew Haes 2014 2015 115,000 $43,700 Nil Nil
Joseph Gioffre 2014 2015 80,000 $30,400 Nil Nil
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*Options vested in February 2013 with an exercise price of $5.20 and expiry date of 31 January 2015.

The assessed fair value at grant date of the options granted to individuals is allocated equally over the period from grant date to expected vesting date and the amount is included in the remuneration tables in Part C. Fair values at grant date are independently determined using a Black Scholes option pricing model that takes into account the exercise price, term of the option, share price at grant date, expected price volatility of the underlying share price and the risk free rate for the term of the option.

No options have been exercised during the financial year ended 30 June 2014.

E. ADDITIONAL INFORMATION

The earnings of the consolidated entity for the five years ended 30 June 2014 are summarised below:

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2014 2013 2012 2011 2010
$’000 $’000 $’000 $’000 $’000
EBITDA (8,344) (10,504) (12,677) (3,464) (1,901)
EBIT (9,373) (11,534) (29,847) (5,235) (2,204)
Profit/(Loss) after income tax (8,423) (9,783) (30,516) (4,451) (1,068)
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HUB24 ANNUAL REPORT 2014 27 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

The factors that are considered to affect shareholder value are summarised below:

	2014 $’000	2013 $’000	2012 $’000	2011 $’000	2010 $’000
Shareprice at financialyear end	$0.82	$0.75	$0.95	$2.78	$1.58
Basic earningsper share	(0.197)	(0.320)	(1.760)	(0.360)	(0.200)

F. ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL

The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

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Balance at start Received due Tax Exempt Other changes Balance at end
Name of the year share plan issue during the year of the year
Bruce Higgins 410,000 - 100,000 510,000
Hugh Robertson 173,000 - (86,500) 86,500
Ian Litster 3,588,751 - - 3,588,751
Andrew Alcock - 1,187 20,000 21,187
Jason Entwistle 937,715 1,187 - 938,902
Wes Gillett - 1,187 - 1,187
Matthew Haes 12,896 1,187 6,825 20,908
Joseph Gioffre 8,010 1,187 2,356 11,553
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Options

The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

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Balance at start Expired/ Balance at end
Name of the year Granted Exercised forfeited/other of the year
Bruce Higgins - 510,000 - - 510,000
Andrew Alcock - 600,000 - - 600,000
Jason Entwistle - 480,000 - - 480,000
Wes Gillett - 360,000 - - 360,000
Matthew Haes - 115,000 - - 115,000
Joseph Gioffre - 80,000 - - 80,000
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This concludes the remuneration report which has been audited.

HUB24 ANNUAL REPORT 2014 DIRECTORS’ REPORT

DIRECTORS’ REPORT Continued

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the company support and have substantially adhered to the principles of corporate governance. The company’s corporate governance statement is contained in the following section of this Annual Report.

NON-AUDIT SERVICES

Tax, compliance and consulting services of $64,802 were paid to BDO (2013: $81,000). The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors as set out in APES 110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the consolidated entity, acting as an advocate for the consolidated entity or jointly sharing rights and rewards.

Refer to Note 25: Auditors Remuneration of the financial statements for details of the remuneration that the auditors received or are due to receive for the provision of audit and other services.

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.

AUDITOR INDEPENDENCE

The Directors received an Independence Declaration from the auditors of the company as required under Section 307C of the Corporations Act 2001 that follows on the next page.

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Bruce Higgins Chairman Sydney, 29 August 2014

HUB24 ANNUAL REPORT 2014 29 DIRECTORS’ REPORT

AUDITOR’S INDEPENDENCE DECLARATION

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HUB24 ANNUAL REPORT 2014 AUDITOR’S INDEPENDENCE DECLARATION

CORPORATE GOVERNANCE

The Board of Directors of the company is responsible for establishing the corporate governance framework of the consolidated entity having regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance principles and recommendations. The Board guides and monitors the business and affairs of the company on behalf of the shareholders by whom they are elected and to whom they are accountable. The table below summarises the company’s compliance with the CGS’s recommendations:

Recommendation	Recommendation	Comply Yes/No
Principle 1 – Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.	Yes
1.2	Companies should disclose theprocess for evaluatingtheperformance of senior executives.	Yes
1.3	Companies shouldprovide the information indicated in theguide to reportingon Principle 1.	Yes
Principle 2 – Structure the Board to add value
2.1	A majority of the Board should be independent Directors. As a result of the restructure of the Board in October 2012, the Board is currently comprised of two independent non-executive directors and two non-independent non-executive directors.	No
2.2	The Chair should be an independent Director.	Yes
2.3	The roles of Chair and Chief Executive Officer should not be exercised bythe same individual.	Yes
2.4	The Board should establish a nomination committee.	Yes
2.5	Companies should disclose the process for evaluating the performance of the Board, its committees and individual Directors.	Yes
2.6	Companies shouldprovide the information indicated in theguide to reportingon Principle 2.	Yes
Principle 3 – Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the code as to:	Yes
	• The practices necessary to maintain confidence in the company’s integrity
	• The practices necessary to take into account their legal obligations and the reasonable
	expectations of their stakeholders
	• The responsibility and accountability of individuals for reporting and investigating reports of
	unethicalpractices.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of	No
	that policy. The policy should include requirements for the board to establish measurable objectives
	for achieving gender diversity for the board to assess annually both the objectives and progress in
	achieving them.
	The Company has not established a policy concerning diversity and disclosed the policy or a summary
	of that policy. It is the intention of the Company to comply with this principle at a time when the size of
	the Companyand its activities warrant establishment of apolicy.
3.3	Companies should disclose in each annual report the measurable objectives for achieving gender	No
	diversity set by the Board in accordance with the diversity policy and progress towards achieving them.
	(Refer to 3.2)

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

Recommendation	Recommendation	Comply Yes/No
3.4	Companies should disclose in each annual report the proportion of women employees in the whole	Yes
	organisation, women in senior executive positions and women on the Board.
	Proportion of women in the whole organisation: 30% (9.8 of 39.8), women in senior executive
	positions: 0% (0 of 6), women on Board: Nil
3.5	Companies shouldprovide the information indicated in the Guide to reportingon Principle 3.	Yes
Principle 4 – Safeguard integrity in financial reporting
4.1	The Board should establish an audit committee.	Yes
4.2	The audit committee should be structured so that it: • Consists only of Non-Executive Directors • Consists of a majority of independent Directors • Is chaired by an independent chair, who is not Chair of the Board • Has at least three members. The ARCC comprises two members which the Board considers to be sufficient given the overall size of the Board. (The Chair of the Board is a regular invitee to committee meetings)	Yes Yes Yes No
4.3	The audit committee should have a formal charter	Yes
4.4	Companies should provide the information indicated in the Guide to reporting on Principle 4.	Yes
Principle 5 – Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX listing rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose thosepolicies or a summaryof thosepolicies.	Yes
5.2	Companies shouldprovide the information indicated in theguide to reportingon Principle 5.	Yes
Principle 6 – Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summaryof thatpolicy.	Yes
6.2	Companies shouldprovide the information indicated in theguide to reportingon Principle 6.	Yes
Principle 7 – Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks	Yes
	and disclose a summaryof thosepolicies.
7.2	The Board should require management to design and implement the risk management and internal	Yes
	control system to manage the company’s material business risks and report to it on whether those
	risks are being managed effectively. The Board should disclose that management has reported to it as
	to the effectiveness of the company’s management of its material business risks.
7.3	The Board should disclose whether it has received assurance from the Chief Executive Officer (or	Yes
	equivalent) and the Chief Financial Officer [or equivalent] that the declaration provided in accordance
	with section 295A of the Corporations Act 2001 is founded on a sound system of risk management
	and internal control and that the system is operating effectively in all material respects in relation to
	financial reporting risks.
7.4	Companies shouldprovide the information indicated in theguide to reportingon Principle 7.	Yes

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

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Comply
Recommendation
Yes/No
----- End of picture text -----

Principle 8 – Remunerate fairly and responsibly	Principle 8 – Remunerate fairly and responsibly
8.1	The Board should establish a remuneration committee.	Yes
8.2	The remuneration committee should be structured so that it:
	• Consists of a majority of independent Directors	Yes
	• Is chaired by an independent Chair	No
	The Remuneration and Nomination Committee is chaired by a non-executive Director who is
	defined as non-independent by reason of having a substantial shareholding in the company.
	• Has at least three members	Yes
8.3	Companies should clearly distinguish the structure of Non-Executive Directors remuneration from	Yes
	that of Executive Directors and senior executives.
8.4	Companies shouldprovide the information indicated in the Guide to reportingon Principle 8	Yes

BOARD FUNCTIONS

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of Directors and for the operation of the Board. The responsibility for the operation and administration of the consolidated entity is delegated, by the Board, to the Chief Executive Officer and the executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the Chief Executive Officer and the executive management team.

Committee, chaired by Ian Litster, a Non-Executive Director.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risk identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved including:

Board approval of a strategic plan designed to meet stakeholders’ needs and manage business risk
Ongoing development of the strategic plan and approving initiatives and strategies designed to ensure the continued growth and success of the company
Development of budgets by management and monitoring progress against budget - via the establishment and reporting of both financial and nonfinancial key performance indicators.

Other functions reserved to the Board include:

Whilst at all times the Board retains full responsibility for guiding and monitoring the consolidated entity, in discharging its stewardship it makes use of subcommittees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the Board.

Approval of the annual and half-yearly financial reports
Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures

To this end the Board has established an Audit, Risk and Compliance Committee, chaired by Vaughan Webber, an independent Director and a Remuneration and Nomination

Ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Continued

Reporting to shareholders
Determining board size and composition
Determining terms of reference and scope of Board committees
Approving the terms and conditions of the appointment of the CEO
Reviewing the annual performance and progress of HUB24 and the Board in meeting the mission and objectives of HUB24
Entering into borrowing arrangements.

STRUCTURE OF THE BOARD

The skills, experience and expertise relevant to the position of Director held by each Director in office at the date of the annual report are included in the Directors’ Report. Directors of the company are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with (or could reasonably be perceived to materially interfere with), the exercise of their unfettered and independent judgement.

In the context of Director independence, ‘materiality’ is considered from both the consolidated entity and individual Director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount.

Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the Director in question to shape the direction of the consolidated entity. In accordance with the definition of independence above, and the materiality thresholds set, the following Directors of HUB24 are all considered to be independent:

BRUCE HIGGINS

Non-Executive Director and Chairman (appointed 19 October 2012)

VAUGHAN WEBBER Non-Executive Director (appointed 19 October 2012)

There are procedures in place, agreed by the Board, to enable Directors in furtherance of their duties to seek independent professional advice at the company’s expense.

PERFORMANCE

The performance of the Board and key executives is reviewed regularly against both measurable and qualitative indicators. The Board will conduct self-performance evaluations that involve an assessment of each Board member’s and key executive’s performance against specific and measurable qualitative and quantitative performance criteria.

The performance criteria against which Directors and executives are assessed are aligned with the financial and non-financial objectives of the company.

A review of the performance of the Board and its committees was undertaken during the financial year ended 30 June 2014. The board has considered the outcomes of the review and where appropriate will undertake measures to improve the performance of directors and the board as a whole.

The annual review of the performance of the executive team is scheduled to take place during August 2014.

REMUNERATION AND NOMINATION COMMITTEE

The primary function of the Remuneration and Nomination Committee is to assist the Board of Directors of HUB24 Limited in fulfilling its oversight responsibilities to shareholders by:

Assisting the Board to develop a remuneration strategy and policy that:
Attracts and retains talent
Motivates the CEO and direct reports
Links remuneration with performance and the creation of value for shareholders
Is appropriate compared to the market practice.

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

Recommending the appropriate size and composition of the Board
Developing an appropriate criteria for Board membership
Making proposals on the remuneration framework for non-executive Directors
Making recommendations on the levels of remuneration for the CEO and CEO’s direct reports
Overseeing the design of equity based incentive plans

MEETINGS AND QUORUM

The Remuneration and Nomination Committee will meet at least once per year and at such other times as required. In general, the CEO, Company Secretary and CFO are invited to attend the Remuneration Committee meetings. A quorum of any meeting will be two members.

Minutes of meetings shall be taken by the Company Secretary or their delegate. The agenda and supporting documentation will be circulated to the Remuneration Committee members within a reasonable period in advance of each meeting.

Reviewing annual incentives of the CEO and direct reports
Reviewing the company’s objectives in achieving its diversity objectives
Overseeing compliance with applicable legal and regulatory requirements associated with remuneration matters
Considering the circumstances in which external remuneration consultants may be sought
The company is committed to the principle that its Remuneration and Nomination Committee should be of sufficient size, independence and technical expertise to discharge its mandate effectively.

The Committee shall be comprised of:

At least three members
All members of the Committee shall be non-executive Directors
A majority of independent Non-Executive Directors. ‘Independence’ for these purposes will be assessed by reference to criteria approved by the Board.

The Chairperson of the Remuneration and Nomination Committee will be appointed by the Board. The Chairperson must be a Non-Executive Director and may not hold the position of the Chairperson of the Board.

The Chairperson of the Committee shall be appointed annually.

Should the Chairperson of the Remuneration and Nomination Committee be absent from a meeting and no acting Chairperson has been appointed, the members of the Committee present at the meeting have authority to choose one of their number to be Chairperson for that particular meeting.

REPORTING REQUIREMENTS

The Remuneration and Nominations Committee is responsible for:

Reviewing and recommending to the Board for approval the remuneration report to be included in the company’s annual report and overseeing the process in support of its preparation
Reporting to the Board, including recommendations on any specific decisions or actions the board should consider
Ensuring that shareholder approval is sought for remuneration matters which require it eg shares to executive Directors.

CHARTER AND PERFORMANCE REVIEW

The Remuneration and Nomination Committee Charter is reviewed and updated at least annually and changes required should be recommended to the Board and Remuneration and Nomination Committee for approval. The Committee reviews its own performance annually in conjunction with the review of the performance of the Board.

AUDIT, RISK AND COMPLIANCE COMMITTEE (ARCC)

PURPOSE

The primary function of the ARCC is to assist the Board of Directors of the company in fulfilling its oversight responsibilities to shareholders by reviewing the:

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

Integrity of the financial statements of the consolidated entity, including:
Reviewing and reporting to the Board on the half yearly and annual reports and financial statements of the company and associated entities
Monitoring and reviewing the reliability of financial reporting
Monitoring and reviewing mandatory statutory requirements
External auditor’s qualifications, performance and independence, including:
Nominating the external auditor
Reviewing the adequacy, scope and quality of the annual statutory audit and half yearly statutory review
Management of financial and operational risk, including a review of the:
Effectiveness of the consolidated entity’s internal control systems
Business Continuity and Risk Plan and Disaster Recovery Plan
Consolidated entity’s insurance policy and coverage
Consolidated entity’s compliance with legal and regulatory requirements:
Work, Health and Safety
AFS Licence conditions.

COMPOSITION

The company is committed to the principle that its ARCC should be of sufficient size, independence and technical expertise to discharge its mandate effectively.

The ARCC shall be comprised of two or more Directors, whom shall be Non-Executive Directors, free from any business or other relationship that would materially interfere with their exercise of duties as a member of the ARCC. The Chairman of the ARCC will be an independent Director and not the Chairman of the main holding entity, HUB24 Limited.

All members of the ARCC shall have a working familiarity with basic finance and accounting practices, and at least one member must have financial expertise or at a minimum considerable financial experience. The members of the ARCC are expected to have an understanding of the industries in which the company operates. Where the member does not have the requisite expertise upon initial appointment, financial literacy should be attained within a reasonable period of time after his or her appointment.

Membership should be periodically assessed to ensure the skills and experience are present to undertake the committee’s duties and if necessary rotated to ensure the injection of new ideas. ARCC members should not serve on the audit committees of more than two other public companies unless the Board determines that such service does not impair the member’s ability to serve on the committee.

The ARCC should be given the necessary power and resources to meet its charter. This will include rights of access to management and to auditors (external and internal) without management present and rights to seek explanations and additional information.

MEETINGS

The ARCC meetings take place as often as required to undertake its role effectively. In general, the Chief Executive Officer, Company Secretary and CFO are invited to attend the ARCC meetings. A quorum of any meeting will be two members.

The ARCC meets at least twice per year with the external auditor, including at least one meeting without management present to discuss any matters that may be unresolved with management. The ARCC must report, follow up and resolve any differences of view between the internal auditors and management.

Minutes of meetings shall be taken by the Company Secretary or their delegate. The agenda and supporting documentation will be circulated to the ARCC members within a reasonable period in advance of each meeting. The minutes shall be circulated and approved by the ARCC members, and included in the papers for the next full Board meeting after each ARCC meeting.

ENSURING THE EFFECTIVENESS OF THE ARCC

In order to ensure that the ARCC is able to effectively carry out its duties, the ARCC shall:

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

Have unlimited access to both internal and external auditors and to all senior management and all employees
Have available to it resources sufficient to engage outside expertise if needed i.e., legal and technical consultants
Be provided with a status report for all recommendations provided by the auditors for which agreed action is required, which reports include accountable officers and implementation dates.

LIMITATION OF AUDIT, RISK AND COMPLIANCE COMMITTEE’S ROLE

Providing direction to management and staff on strategic and policy matters
Identifying and evaluating new business opportunities.

RISK

Risk is inherent in all of the day-to-day activities of the HUB24 Limited consolidated entity.

ASIC RG 104 states that a risk management framework will depend on the nature, scale and complexity of the business and risk profile. The risk management framework will need to adapt as the business develops.

The purpose of HUB24’s risk management framework is to:

While the Audit, Risk and Compliance Committee has the responsibilities and powers set out in its Charter, it is not the duty of the Audit, Risk and Compliance Committee to plan or conduct audits or to determine that the consolidated entity’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations.

These are the responsibilities of management and the external auditor.

CHARTER AND PERFORMANCE REVIEW

The Charter will be reviewed and updated at least annually and changes required will be recommended to the Board for approval. The Committee annually reviews its own performance in conjunction with the review of the performance of the Board.

The current members of the ARCC are Vaughan Webber and Ian Litster. Their qualifications and experience are set out earlier in this report.

Affirm the company’s commitment to the management of risk
Integrate risk management practices across the company
Foster a culture where staff assume responsibility for managing risk
Define the approach to risk management against regulatory and industry standards, and how these apply to the company.

A structured risk management program will provide a number of beneficial outcomes by:

Enhancing strategic planning through the identification of threats to the company
Encouraging a proactive approach to issues likely to impact on the company’s strategic and operational objectives
Improving the quality of decision-making by providing structured methods for the exploration of threats, opportunities and resource allocation.

EXECUTIVE COMMITTEE

The HUB24 Executive Committee meets monthly, and its main functions include:

Ensuring the company is managed in a commercial and legal manner
Ensuring the company adopts, maintains and applies appropriate business policies and procedures

The company has adopted a methodology consistent with Risk Management Standard ISO 31000:2009 for identifying, assessing and managing risks. This standard is now considered to be the acceptable standard for all Australian Financial Service licence holders. This methodology provides a structure for:

Communicating, mitigating and escalating major risk issues

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Continued

Incorporating risk management principles and objectives into strategic, operational and resource planning activities.

RISK MANAGEMENT FRAMEWORK

Board delegation

The company Board sets the organisational appetite for risk and has delegated oversight of the company’s risk management function to the ARCC.

Design of framework for managing risk

Risks within HUB24 are entered into the risk register and allocated relevant risk classifications. Risks are measured against operational, HR, financial, strategic and regulatory categories.

the release of the half year results (end of February) and the full year results (the end of August). There is also an information ‘blackout’ period for briefings with institutional investors, individual investors or stockbroking analysts to discuss financial information concerning the HUB24 consolidated entity.

During the ‘blackout’ period, approval will not be given to trade in HUB24 securities unless there is an exceptional circumstance or in compliance with the staff trading policy. An application may be made to the Chairman who may, in their absolute discretion, reject an application to trade during a blackout period. Approval to trade during the blackout period may be allowed, for example, where earnings guidance has been released to the market and the company is satisfied that the market is sufficiently informed.

STAFF TRADING APPROVAL REQUIRED FOR ALL STAFF

Monitoring and review of the framework

Once implemented, the framework must be continually monitored to ensure it remains appropriate for the company. In the absence of any required changes throughout the year, an annual review will be undertaken to ensure the currency of the framework, as well as the internal compliance with the framework.

Continual improvement of the framework

There is an expectation that the framework will develop over time, particularly as the organisation changes size and direction.

TRADING POLICY

All Staff, including Directors and designated Staff, must obtain approval prior to trading in securities of the company. In addition, the company encourages any Staff and Directors who hold company securities to be long term holders, and therefore, short-term trading is discouraged.

TRADING DURING BLACKOUT PERIOD

All Directors and Staff are prohibited from trading in the company’s securities in the eight week period prior to

All Staff, including Directors and Designated Staff, must complete a Staff Trading Approval Form prior to dealing in HUB24 securities. Directors and Staff must not deal in HUB24 securities before a Staff Trading Approval Form is approved or where authorisation is not given.

The Staff Trading Approval Form must be authorised by any one of the following officers: In the first instance by the Chief Executive Officer or Chief Financial Officer; if neither are available, the Chairman of HUB24 Limited. It is the preference that such approvals be given by the Chief Executive Officer or Chief Financial Officer in the first instance.

CONTINUOUS DISCLOSURE POLICY

GUIDING PRINCIPLE

HUB24 must immediately notify the market via an announcement to the ASX of any market sensitive information (ie. information concerning HUB24 that a reasonable person would expect to have a material effect on the price or value of HUB24’s securities).

EXCEPTION TO THE GUIDING PRINCIPLE

Disclosure is not required where one or more of the following requirements apply (LR 3.1A.1):

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

It would be a breach of a law to disclose the information
The information concerns an incomplete proposal or negotiation
The information comprises matters of supposition or is insufficiently definite to warrant disclosure
The information is generated for the internal management purposes of the entity.
The information is a trade secret, and:
The information is confidential and the ASX has not formed the view that the information has ceased to be confidential
A reasonable person would not expect the information to be disclosed.

Where an announcement is delayed or information has leaked to the market ahead of the announcement a trading halt may need to be considered.

WHAT IS ‘MARKET SENSITIVE’ INFORMATION?

HUB24’s Market Disclosure Committee is responsible for making decisions about what information will be disclosed. The following is the test to be applied:

Information is market sensitive if there is a substantial likelihood that the information would influence investors in deciding whether to buy, hold or sell HUB24’s securities
Market sensitivity is assessed considering HUB24’s circumstances, externally available public information and previous information supplied to the market.

COMMUNICATION OF DISCLOSABLE INFORMATION

All information disclosed to the ASX in compliance with this policy will be released onto the ASX market platform first and then will be promptly placed on the company’s website following receipt of confirmation from the ASX in accordance with this policy. The announcements are located in the Investor Relations section of the HUB24 corporate website, located at www.HUB24.com.au. A summary of this policy has been placed in the Corporate Governance section of the HUB24 website.

TRADING HALTS

It may be necessary to request a trading halt from the ASX to ensure that orderly trading in the company’s securities is maintained and to manage disclosure issues. The company’s Market Disclosure Committee will make all decisions in relation to trading halts. No HUB24 employee is authorised to seek a trading halt except with the approval of the company’s Market Disclosure Committee or the Chairman or the Chief Executive Officer.

MARKET COMMUNICATION

THE COMPANY’S CONTACT WITH THE MARKET

Throughout the year, the company follows a calendar of regular disclosures to the market on its financial and operational results. At all times when interacting with external individuals, investors, stockbroking analysts and market participants, the company adheres to the guiding principle set out in this policy.

COMMUNICATION ‘BLACKOUT’ PERIODS

ASX Guidance Note 8 is to be consulted for further information on the application of LR 3.1 and the information which is required to be disclosed to the ASX.

MANAGING MARKET SPECULATION AND RUMOURS

Market speculation and rumours, whether substantiated or not, have a potential to impact HUB24. Speculation may also result in the ASX formally requesting disclosure by HUB24 on the matter. Speculation may also contain factual errors that could materially affect the company.

To protect against inadvertent disclosure of market sensitive information, the company imposes communication blackout periods between the end of its financial reporting periods (31 December and 30 June) and announcement of results to the market.

The blackout periods in place are:

1 January to 28 February each year (half yearly reporting period)
1 July to market release of full year results (31 August each year) (full year reporting period)

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Continued

Any period announced by the company, which may include briefings with Institutional investors, individual investors or analysts to discuss financial information concerning the consolidated entity or in the event of any other corporate activity deemed to require a blackout period be put in place.

SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

The consolidated entity has established an Audit, Risk and Compliance Committee. It has a formal charter which outlines the primary responsibilities of the committee.

In the blackout periods the company will not hold:

One on one briefings with institutional investors, individual investors or stockbroking analysts to discuss financial information concerning the company
Open briefings other than to deal with matters which are the subject of an announcement via the ASX.

The Market Communication Policy assists in maintaining communication with shareholders.

CEO AND CFO CERTIFICATION

In accordance with section 295A of the Corporations Act 2001, the Chief Executive Officer and Chief Financial Officer, as defined under sections 295A(4) and 295A(6) have provided a written statement to the Board that:

Their view provided on the company’s financial report is founded on a sound system of risk management
Internal compliance and control which implements the financial policies adopted by the Board
The company’s risk management and internal compliance and control system is operating effectively in all material respects.

The Board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures.

The Audit, Risk and Compliance Committee is composed of Vaughan Webber (Independent Chairman) and Ian Litster.

MAKE TIMELY AND BALANCED DISCLOSURE AND RESPECT THE RIGHTS OF SHAREHOLDERS

The Board strives to ensure that shareholders are provided with sufficient information to assess the performance of the consolidated entity and to make well-informed investment decisions.

Information is communicated to shareholders through:

Annual and half-yearly financial reports
Annual and other general meetings convened for shareholder review and approval of Board proposals
Continuous disclosure of material changes to ASX for open access to the public
A website where all ASX announcements, notices and financial reports can be accessed.

The consolidated entity has adopted formal policies and procedures with regard to the ASX Listing Rules disclosure requirements.

The auditor will be requested to attend the Annual General Meeting of shareholders. Shareholders may ask questions of the auditor about the conduct of the audit and the preparation and content of the audit report.

HUB24 ANNUAL REPORT 2014 CORPORATE GOVERNANCE

FINANCIAL STATEMENTS

STATEMENT OF PROFIT STATEMENT OF STATEMENT OR LOSS AND OTHER FINANCIAL OF CHANGES COMPREHENSIVE POSITION IN EQUITY INCOME

STATEMENT NOTES TO THE OF CASH FLOWS FINANCIAL STATEMENTS

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2014

Note	CONSOLIDATED 2014 2013 $ $
Revenue from continuing operations Revenue 6(a) Interest and other income Expenses Platform and custody fees Employee benefits expenses 6(b) Property and occupancy costs 6(c) Depreciation, amortisation and impairment 6(d) Administrative expenses 6(e) Profit before income tax expense from continuing operations Income tax benefit 7 Loss after income tax from continuing operations Loss after income tax from discontinued operations 8 Loss after income tax for the year Other comprehensive income Total comprehensive loss for the year Total comprehensive loss for the year attributable to ordinary equity members of HUB24 Limited Earnings per share from continuing operations, attributable to ordinary equity members of HUB24 Limited Basic earnings per share Diluted earnings per share Earnings per share from discontinued operations, attributable to ordinary equity members of HUB24 Limited Basic earnings per share Diluted earnings per share Earnings per share for profit attributable to ordinary equity members of HUB24 Limited Basic earnings per share Diluted earnings per share	3,209,190 1,228,366 535,391 577,771
	3,744,581 1,806,137
	(1,383,665) (838,661) (6,896,617) (4,374,859) (372,666) (354,115) (1,028,915) (1,029,775) (2,220,042) (2,180,967)
	(11,901,905) (8,778,377)
	(8,157,324) (6,972,240) 414,137 1,173,832
	(7,743,187) (5,798,408) (679,825) (3,984,560)
	(8,423,012) (9,782,968) - - (8,423,012) (9,782,968)
	(8,423,012) (9,782,968)
	Cents Cents (18.10) (18.65) (18.10) (18.65) (1.59) (12.82) (1.59) (12.82) (19.69) (31.47) (19.69) (31.47)

The
above
Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income
should
be
read
in
conjunction
with
the accompanying
notes.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2014

Note	CONSOLIDATED 2014 2013 $ $
ASSETS Current Assets Cash and cash equivalents 20(b) Trade and other receivables 9 Other current assets 10 Total Current Assets Non-Current Assets Office equipment 11 Intangible assets 12 Other non-current assets 13 Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 14 Provisions 15 Total Current Liabilities Non-Current Liabilities Provisions 16 Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Issued capital 17 Reserves 18 Accumulated losses Total Equity	13,779,844 9,542,846 405,986 1,383,130 419,044 343,868
	14,604,874 11,269,844
	93,561 54,929 6,322,423 7,409,144 656,096 460,339
	7,072,080 7,924,412
	21,676,954 19,194,256
	662,230 741,399 1,389,653 1,068,411
	2,051,883 1,809,810
	184,654 62,318
	184,654 62,318
	2,236,537 1,872,128
	19,440,417 17,322,128
	76,988,017 66,843,612 2,275,332 1,878,436 (59,822,932) (51,399,920)
	19,440,417 17,322,128

The
above
Statement
of
Financial
Position
should
be
read
in
conjunction
with
the
accompanying
notes.

HUB24 ANNUAL REPORT 2014 43 FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2014

CONSOLIDATED	Issued Capital Reserves Accumulated Losses Total $ $ $ $
	66,843,612 1,878,436 (51,399,920) 17,322,128
As at 1 July 2013
Total comprehensive loss for the year	- - (8,423,012) (8,423,012)
Transactions with equity members in their capacity as equity members
Capital raising	10,113,405 - - 10,113,405
Employee and Chairman options granted	- 396,896 - 396,896
Employee share issue	31,000 - - 31,000
As at 30 June 2014	76,988,017 2,275,332 (59,822,932) 19,440,417
As at 1 July 2012 Total comprehensive loss for the year Transactions with equity members in their capacity as equity members Capital raising Employee options granted As at 30 June 2013	54,151,655 907,352 (41,616,952) 13,442,055 - - (9,782,968) (9,782,968) 12,691,957 - - 12,691,957 - 971,084 - 971,084
	66,843,612 1,878,436 (51,399,920) 17,322,128

The
above
Statement
of
Changes
in
Equity
should
be
read
in
conjunction
with
the
accompanying
notes.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2014

Note	CONSOLIDATED 2014 2013 $ $
Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Receipt from research and development incentive Net movement from client and dealer balances Net cash inflow/(outflow) from operating activities 20(a) Cash flows from investing activities Receipts from return of security deposits Receipts from sale of intangible asset Payments for office equipment Payments for intangible assets Payments for security deposits Net cash inflow/(outflow) from investing activities Cash flows from financing activities Proceeds from capital raising Payments for capital raising costs Net cash inflow/(outflow) from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 20(b)	3,530,109 7,056,326 (11,255,535) (17,270,607) 478,200 362,860 1,588,298 - - 567,882
	(5,658,928) (9,283,539)
	330,403 - 122,500 - (92,349) - (360,726) (927,825) (217,307) -
	(217,479) (927,825)
	10,588,126 13,049,466 (474,721) (357,509)
	10,113,405 12,691,957
	4,236,998 2,480,592 9,542,846 7,062,254
	13,779,844 9,542,846

The
above
Statement
of
Cash
Flows
should
be
read
in
conjunction
with
the
accompanying
notes.

HUB24 ANNUAL REPORT 2014 45 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014

**1. CORPORATE

INFORMATION**

The
Annual
Report
of
HUB24
Limited
(the
company
or
parent
entity)
for
the
year
ended
30
June
2014
was
authorised for
issue
in
accordance
with
a
resolution
of
the
Directors
on
29
August
2014
and
covers
the
company
as
an
individual entity
as
well
as
the
consolidated
entity
consisting
of
the
company
and
its
subsidiaries
as
required
by
the Corporations Act
2001.

The
company
is
limited
by
shares
and
incorporated
and
domiciled
in
Australia
whose
shares
are
publicly
traded
on
the Australian
Securities
Exchange.

The
nature
of
the
operations
and
principal
activities
of
the
company
are
described
in
the
Directors
Report.

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES**

**Basis

of
preparation**

These
general
purpose
financial
statements
have
been
prepared
in
accordance
with
Australian
Accounting
Standards and
Interpretations
issued
by
the
Australian
Accounting
Standards
Board
(AASB)
and
the Corporations
Act
2001 ,
as appropriate
for
profit
oriented
entities.
The
financial
statements
have
also
been
prepared
under
the
historical
cost convention,
except
for,
where
applicable,
the
revaluation
of
certain
classes
of
assets
and
liabilities.
The
financial report
is
presented
in
Australian
dollars.

**Parent

entity
information**

In
accordance
with
the Corporations
Act
2001 ,
these
financial
statements
present
the
results
of
the
consolidated entity
only.
Supplementary
information
about
the
parent
entity
is
disclosed
in
Note
27.

**Compliance

with
IFRS**

The
financial
report
complies
with
Australian
Accounting
Standards
and
International
Financial
Reporting
Standards (IFRS)
as
issued
by
the
International
Accounting
Standards
Board.

**New

accounting
standards
and
interpretations**

The
consolidated
entity
has
adopted
all
of
the
new,
revised
or
amending
Accounting
Standards
and
Interpretations issued
by
the
Australian
Accounting
Standards
Board
(AASB)
that
are
mandatory
for
the
current
reporting
period.

Any
new,
revised
or
amended
Accounting
Standards
or
interpretations
that
are
not
yet
mandatory
have
not
been early
adopted.

Any
significant
impact
on
the
accounting
policies
of
the
consolidated
entity
from
the
adoption
of
these
Accounting Standards
and
Interpretations
are
disclosed
below.
The
adoption
of
these
Accounting
Standards
and
Interpretations did
not
have
any
significant
impact
on
the
financial
performance
or
position
of
the
consolidated
entity.

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

AASB
10
Consolidated
Financial
Statements

The
consolidated
entity
has
applied
AASB
10
from
1
July
2013,
which
has
a
new
definition
of
'control'.
Control
exists when
the
reporting
entity
is
exposed,
or
has
the
rights,
to
variable
returns
from
its
involvement
with
another
entity and
has
the
ability
to
affect
those
returns
through
its
'power'
over
that
other
entity.
A
reporting
entity
has
power when
it
has
rights
that
give
it
the
current
ability
to
direct
the
activities
that
significantly
affect
the
investee's
returns. The
consolidated
entity
not
only
has
to
consider
its
holdings
and
rights
but
also
the
holdings
and
rights
of
other shareholders
in
order
to
determine
whether
it
has
the
necessary
power
for
consolidation
purposes.

HUB24 ANNUAL REPORT 2014 46 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

AASB
13
Fair
Value
Measurement
and
AASB
2011-‐8
Amendments
to
Australian
Accounting
Standards
arising
from AASB
13 The
consolidated
entity
has
applied
AASB
13
and
its
consequential
amendments
from
1
July
2013.
The
standard provides
a
single
robust
measurement
framework,
with
clear
measurement
objectives,
for
measuring
fair
value
using the
'exit
price'
and
provides
guidance
on
measuring
fair
value
when
a
market
becomes
less
active.
The
'highest
and best
use'
approach
is
used
to
measure
non-‐financial
assets
whereas
liabilities
are
based
on
transfer
value.
The standard
requires
increased
disclosures
where
fair
value
is
used.

AASB
119
Employee
Benefits
(September
2011)
and
AASB
2011-‐10
Amendments
to
Australian
Accounting
Standards arising
from
AASB
119
(September
2011) The
consolidated
entity
has
applied
AASB
119
and
its
consequential
amendments
from
1
July
2013.
The
standard eliminates
the
corridor
approach
for
the
deferral
of
gains
and
losses;
streamlines
the
presentation
of
changes
in
assets and
liabilities
arising
from
defined
benefit
plans,
including
requiring
remeasurements
to
be
presented
in
other comprehensive
income;
and
enhances
the
disclosure
requirements
for
defined
benefit
plans.
The
standard
also changed
the
definition
of
short-‐term
employee
benefits,
from
'due
to'
to
'expected
to'
be
settled
within
12
months. Annual
leave
that
is
not
expected
to
be
wholly
settled
within
12
months
is
now
discounted
allowing
for
expected salary
levels
in
the
future
period
when
the
leave
is
expected
to
be
taken.

AASB
2012-‐5
Amendments
to
Australian
Accounting
Standards
arising
from
Annual
Improvements
2009-‐2011
Cycle The
consolidated
entity
has
applied
AASB
2012-‐5
from
1
July
2013.
The
amendments
affect
five
Australian
Accounting Standards
as
follows:
Confirmation
that
repeat
application
of
AASB
1
'First-‐time
Adoption
of
Australian
Accounting Standards'
is
permitted;
Clarification
of
borrowing
cost
exemption
in
AASB
1;
Clarification
of
the
comparative information
requirements
when
an
entity
provides
an
optional
third
column
or
is
required
to
present
a
third statement
of
financial
position
in
accordance
with
AASB
101
'Presentation
of
Financial
Statements';
Clarification
that servicing
of
equipment
is
covered
by
AASB
116
'Property,
Plant
and
Equipment',
if
such
equipment
is
used
for
more than
one
period;
clarification
that
the
tax
effect
of
distributions
to
holders
of
equity
instruments
and
equity transaction
costs
in
AASB
132
'Financial
Instruments:
Presentation'
should
be
accounted
for
in
accordance
with
AASB 112
'Income
Taxes';
and
clarification
of
the
financial
reporting
requirements
in
AASB
134
'Interim
Financial
Reporting' and
the
disclosure
requirements
of
segment
assets
and
liabilities.

AASB
2012-‐10
Amendments
to
Australian
Accounting
Standards
-‐
Transition
Guidance
and
Other
Amendments The
consolidated
entity
has
applied
AASB
2012-‐10
amendments
from
1
July
2013,
which
amends
AASB
10
and
related standards
for
the
transition
guidance
relevant
to
the
initial
application
of
those
standards.
The
amendments
clarify
the circumstances
in
which
adjustments
to
an
entity's
previous
accounting
for
its
involvement
with
other
entities
are required
and
the
timing
of
such
adjustments.

AASB
2011-‐4
Amendments
to
Australian
Accounting
Standards
to
Remove
Individual
Key
Management
Personnel Disclosure
Requirement The
consolidated
entity
has
applied
2011-‐4
from
1
July
2013,
which
amends
AASB
124
'Related
Party
Disclosures'
by removing
the
disclosure
requirements
for
individual
key
management
personnel
('KMP').
Corporations
and
Related Legislation
Amendment
Regulations
2013
and
Corporations
and
Australian
Securities
and
Investments
Commission Amendment
Regulation
2013
(No.1)
now
specify
the
KMP
disclosure
requirements
to
be
included
within
the
directors' report.

**Going

concern**

The
financial
report
has
been
prepared
on
a
going
concern
basis.

The
consolidated
entity
has
raised
capital
in
the
current
and
prior
years
from
multiple
sources
for
acquisition, regulatory
capital
requirements,
investment
platform
development
and
working
capital
purposes.
Accordingly,
the directors
of
the
company
are
confident
of
sourcing
additional
capital
as
and
when
required.

HUB24 ANNUAL REPORT 2014 47 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

**Basis

of
consolidation**

The
consolidated
financial
statements
comprise
the
financial
statements
of
the
company
and
its
subsidiaries
(the consolidated
entity)
as
at
30
June
each
year.
There
are
no
interests
in
associates.

Subsidiaries
are
all
those
entities
over
which
the
consolidated
entity
has
the
power
to
govern
the
financial
and operating
policies
so
as
to
obtain
benefits
from
their
activities.
The
existence
and
effect
of
potential
voting
rights
that are
currently
exercisable
or
convertible
are
considered
when
assessing
whether
a
consolidated
entity
controls
another entity.

The
financial
statements
of
the
subsidiaries
are
prepared
for
the
same
reporting
period
as
the
parent
company,
using consistent
accounting
policies.

In
preparing
the
consolidated
financial
statements,
all
intercompany
balances
and
transactions,
income
and
expenses and
profit
and
losses
resulting
from
intra-‐consolidated
entity
transactions
have
been
eliminated
in
full.

Subsidiaries
are
fully
consolidated
from
the
date
on
which
control
is
obtained
by
the
consolidated
entity
and
cease
to be
consolidated
from
the
date
on
which
control
is
transferred
out
of
the
consolidated
entity.
There
were
no
transfers out
of
the
consolidated
entity
during
the
year.

Investments
in
subsidiaries
held
by
the
company
are
accounted
for
at
cost
in
the
separate
financial
statements
of
the parent
entity
less
any
impairment
charges.

The
acquisition
of
subsidiaries
is
accounted
for
using
the
acquisition
method
of
accounting.
The
acquisition
method
of accounting
involves
recognising
at
acquisition
date,
separately
from
goodwill,
the
identifiable
assets
acquired,
the liabilities
assumed
and
any
non-‐controlling
interest
in
the
acquiree.

The
identifiable
assets
acquired
and
liabilities assumed
are
measured
at
the
acquisition
date
fair
values.
The
difference
between
the
above
items
and
the
fair
value of
the
consideration
is
goodwill
or
a
discount
on
acquisition.

After
initial
recognition,
goodwill
is
measured
at
cost
less
any
accumulated
impairment
losses.

For
the
purpose
of impairment
testing,
goodwill
acquired
in
a
business
combination
is,
from
the
acquisition
date,
allocated
to
each
of
the consolidated
entity’s
cash-‐generating
units
that
are
expected
to
benefit
from
the
combination,
irrespective
of
whether other
assets
or
liabilities
of
the
acquiree
are
assigned
to
those
units.

Non-‐controlling
interests
are
allocated
their
share
of
net
profit
after
tax
in
the
statement
of
profit
or
loss
and
other comprehensive
income
and
are
presented
within
equity
in
the
consolidated
statement
of
financial
position,
separately from
the
equity
of
the
owners
of
the
parent.
Losses
are
attributed
to
the
non-‐controlling
interest
even
if
that
results in
a
deficit
balance.

**Foreign

currency
translation**

Functional
and
presentation
currency

Both
the
functional
and
presentation
currency
of
the
consolidated
entity
is
Australian
dollars.

**Revenue

and
income
recognition**

Revenue
is
measured
at
the
fair
value
of
the
consideration
received
or
receivable.
The
consolidated
entity
recognises revenue
when
the
amount
can
be
reliably
measured,
it
is
probable
that
future
economic
benefits
will
flow
to
the consolidated
entity
and
specific
criteria
have
been
met
for
each
of
the
activities.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

Revenue
is
recognised
for
the
major
business
activities
as
follows:

Platform
revenue

Portfolio
service
fee
revenue
is
recognised
and
measured
at
the
fair
value
of
the
consideration
received
or receivable
on
the
value
of
client
account
balances.
Cash
margin
is
recognised
and
measured
at
the
fair
value
of
the
interest
received
or
receivable
on
that
portion
of client
account
balances
held
in
cash.
Broking
revenue
is
recognised
and
measured
at
the
fair
value
of
the
consideration
received
or
receivable
on
the execution
of
trades.

_Finance

income_

Finance
income
comprises
interest
income
on
funds
invested.

Interest
income
is
recognised
as
it
accrues
in
profit using
the
effective
interest
method.

Leases

The
determination
of
whether
an
arrangement
is
or
contains
a
lease
is
based
on
the
substance
of
the
arrangement and
requires
an
assessment
of
whether
the
fulfilment
of
the
arrangement
is
dependent
on
the
use
of
a
specific
asset or
assets
and
the
arrangement
conveys
a
right
to
use
the
asset.

Finance
leases,
which
transfer
to
the
consolidated
entity
substantially
all
the
risks
and
benefits
incidental
to
ownership of
the
leased
item,
are
capitalised
at
the
inception
of
the
lease
at
the
fair
value
of
the
leased
asset
or,
if
lower,
at
the present
value
of
the
minimum
lease
payments.
Lease
payments
are
apportioned
between
the
finance
charges
and reduction
of
the
lease
liability
so
as
to
achieve
a
constant
rate
of
interest
on
the
remaining
balance
of
the
liability. Finance
charges
are
recognised
as
an
expense
in
the
income
statement.

Capitalised
leased
assets
are
depreciated
over
the
shorter
of
the
estimated
useful
life
of
the
asset
and
the
lease
term if
there
is
no
reasonable
certainty
that
the
consolidated
entity
will
obtain
ownership
by
the
end
of
the
lease
term.

Operating
lease
payments
are
recognised
as
an
expense
in
the
income
statement
on
a
straight-‐line
basis
over
the lease
term.

Operating
lease
incentives
are
recognised
as
a
liability
when
received
and
subsequently
reduced
by allocating
lease
payments
between
rental
expense
and
reduction
of
the
liability.

**Discontinued

operations**

A
discontinued
operation
is
a
component
of
the
consolidated
entity
that
has
been
disposed
of
or
is
classified
as
held for
sale
and
that
represents
a
separate
major
line
of
business
or
geographical
area
of
operations,
is
part
of
a
single
co-‐ ordinated
plan
to
dispose
of
such
a
line
of
business
or
area
of
operations,
or
is
a
subsidiary
acquired
exclusively
with
a view
to
resale.
The
results
of
discontinued
operations
are
presented
separately
on
the
face
of
the
statement
of
profit or
loss
or
other
comprehensive
income.

**Cash

and
cash
equivalents**

Cash
and
cash
equivalents
in
the
statement
of
financial
position
comprise
cash
at
bank
and
in
hand
and
short-‐term deposits
with
an
original
maturity
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.

For
the
purposes
of
the
statement
of
cash
flows,
cash
and
cash
equivalents
consist
of
cash
and
cash
equivalents
as defined
above,
net
of
outstanding
bank
overdrafts.

HUB24 ANNUAL REPORT 2014 49 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

**Trade

and
other
receivables**

Trade
receivables
are
recognised
initially
at
fair
value
and
subsequently
measured
at
amortised
cost
using
the effective
interest
method,
less
an
allowance
for
impairment.

**Trade

and
other
receivables**

Collectability
of
trade
receivables
is
reviewed
on
an
ongoing
basis
at
an
operating
unit
level.
Individual
debts
that
are known
to
be
uncollectible
are
written
off
when
identified.

An
impairment
provision
is
recognised
when
there
is objective
evidence
that
the
consolidated
entity
will
not
be
able
to
collect
the
receivable.
Financial
difficulties
of
the debtor,
default
payments
or
debts
more
than
30
days
overdue
are
considered
objective
evidence
of
impairment.
The amount
of
the
impairment
loss
is
the
receivable
carrying
amount
compared
to
the
present
value
of
estimated
future cash
flows,
discounted
at
the
original
effective
interest
rate.

**Income

taxes
and
other
taxes**

Current
tax
assets
and
liabilities
for
the
current
and
prior
years
are
measured
at
the
amount
expected
to
be
recovered from
or
paid
to
the
taxation
authorities
based
on
the
current
year's
taxable
income.
The
tax
rates
and
tax
laws
used to
compute
the
amount
are
those
that
are
enacted
or
substantively
enacted
by
the
reporting
date.

Deferred
income
tax
is
provided
on
all
temporary
differences
at
the
reporting
date
between
the
tax
bases
of
assets and
liabilities
and
their
carrying
amounts
for
financial
reporting
purposes.

Deferred
income
tax
liabilities
are recognised
for
all
taxable
temporary
differences
except:

When
the
deferred
income
tax
liability
arises
from
the
initial
recognition
of
goodwill
or
of
an
asset
or
liability
in
a transaction
that
is
not
a
business
combination
and
that,
at
the
time
of
the
transaction,
affects
neither
the accounting
profit
nor
taxable
profit
or
loss
When
the
taxable
temporary
difference
is
associated
with
investments
in
subsidiaries,
associates
or
interests
in joint
ventures,
and
the
timing
of
the
reversal
of
the
temporary
difference
can
be
controlled
and
it
is
probable that
the
temporary
difference
will
not
reverse
in
the
foreseeable
future.

Deferred
income
tax
assets
are
recognised
for
all
deductible
temporary
differences,
carry-‐forward
of
unused
tax credits
and
unused
tax
losses,
to
the
extent
that
it
is
probable
that
taxable
profit
will
be
available
against
which
the deductible
temporary
differences
and
the
carry-‐forward
of
unused
tax
credits
and
unused
tax
losses
can
be
utilised, except:

When
the
deferred
income
tax
asset
relating
to
the
deductible
temporary
difference
arises
from
the
initial recognition
of
an
asset
or
liability
in
a
transaction
that
is
not
a
business
combination
and,
at
the
time
of
the transaction,
affects
neither
the
accounting
profit
nor
taxable
profit
or
loss
When
the
deductible
temporary
difference
is
associated
with
investments
in
subsidiaries,
associates
or
interests in
joint
ventures,
in
which
case
a
deferred
tax
asset
is
only
recognised
to
the
extent
that
it
is
probable
that
the temporary
difference
will
reverse
in
the
foreseeable
future
and
taxable
profit
will
be
available
against
which
the temporary
difference
can
be
utilised.

The
carrying
amount
of
deferred
income
tax
assets
is
reviewed
at
each
reporting
date
and
reduced
to
the
extent
that it
is
no
longer
probable
that
sufficient
taxable
profit
will
be
available
to
allow
all
or
part
of
the
deferred
income
tax asset
to
be
utilised.

Unrecognised
deferred
income
tax
assets
are
reassessed
at
each
reporting
date
and
are
recognised
to
the
extent
that it
has
become
probable
that
future
taxable
profit
will
allow
the
deferred
tax
asset
to
be
recovered.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

Deferred
income
tax
assets
and
liabilities
are
measured
at
the
tax
rates
that
are
expected
to
apply
to
the
year
when the
asset
is
realised
or
the
liability
is
settled,
based
on
tax
rates
(and
tax
laws)
that
have
been
enacted
or
substantively enacted
at
the
reporting
date.

Deferred
tax
assets
and
deferred
tax
liabilities
are
offset
only
if
a
legally
enforceable
right
exists
to
set
off
current
tax assets
against
current
tax
liabilities
and
the
deferred
tax
assets
and
liabilities
relate
to
the
same
taxable
entity
and
the same
taxation
authority.

_Other

taxes_

Revenues,
expenses
and
assets
are
recognised
net
of
the
amount
of
GST
except:

When
the
GST
incurred
on
a
purchase
of
goods
and
services
is
not
recoverable
from
the
taxation
authority,
in which
case
the
GST
is
recognised
as
part
of
the
cost
of
acquisition
of
the
asset
or
as
part
of
the
expense
item
as applicable
Receivables
and
payables,
which
are
stated
with
the
amount
of
GST
included
(UIG
1031.8).
The
net
amount
of GST
recoverable
from,
or
payable
to,
the
taxation
authority
is
included
as
part
of
receivables
or
payables
in
the statement
of
financial
position
Cash
flows
are
included
in
the
statement
of
cash
flow
on
a
gross
basis
and
the
GST
component
of
cash
flows arising
from
investing
and
financing
activities,
which
is
recoverable
from,
or
payable
to,
the
taxation
authority
is classified
as
part
of
operating
cash
flows.

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

**Office

equipment**

Office
equipment
is
stated
at
historical
cost
less
accumulated
depreciation
and
any
accumulated
impairment
losses. Such
cost
includes
the
cost
of
replacing
parts
that
are
eligible
for
capitalisation
when
the
cost
of
replacing
the
parts
is incurred.

Similarly,
when
each
major
inspection
is
performed,
its
cost
is
recognised
in
the
carrying
amount
of
the office
equipment
as
a
replacement
only
if
it
is
eligible
for
capitalisation.

All
other
repairs
and
maintenance
are recognised
in
profit
or
loss
as
incurred.

The
assets'
residual
values,
useful
lives
and
amortisation
methods
are
reviewed,
and
adjusted
if
appropriate,
at
each reporting
date.

Depreciation
is
calculated
on
a
straight-‐line
basis
over
the
estimated
useful
life
of
the
specific
assets
as
follows:

Office
furniture
and
fittings
-‐
over
2.5
to
5
years
Computer
equipment
-‐
3
years
Leased
assets
-‐
over
the
term
of
the
lease

Impairment

The
carrying
values
of
office
equipment
are
reviewed
for
impairment
when
events
or
changes
in
circumstances indicate
the
carrying
value
may
not
be
recoverable.

For
an
asset
that
does
not
generate
largely
independent
cash inflows,
the
recoverable
amount
is
determined
for
the
cash
generating
unit
to
which
the
asset
belongs.
If
any
such indication
exists
and
where
the
carrying
values
exceed
the
estimated
recoverable
amount,
the
assets
or
cash generating
units
are
written
down
to
their
recoverable
amount.

HUB24 ANNUAL REPORT 2014 51 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

The
recoverable
amount
of
office
equipment
is
the
greater
of
fair
value
less
costs
to
sell
and
value
in
use.
In
assessing value
in
use,
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-‐tax
discount
rate
that reflects
current
market
assessments
of
the
time
value
of
money
and
risks
specific
to
the
asset.

_De-‐recognition

and
disposal_

An
item
of
office
equipment
is
derecognised
upon
disposal
or
when
no
further
future
economic
benefits
are
expected from
its
use.

**Financial

Instruments**

_Non-‐derivative

financial
instruments_

Non-‐derivative
financial
instruments
comprise
investments
in
equity,
trade
and
other
receivables,
cash
and
cash equivalents
and
trade
and
other
payables.

Non-‐derivative
financial
instruments
are
recognised
initially
at
fair
value
plus,
for
instruments
not
at
fair
value
through the
profit
or
loss,
any
directly
attributable
transaction
costs.
Subsequent
to
initial
recognition,
non-‐derivative
financial instruments
are
measured
as
described
below.

A
financial
instrument
is
recognised
if
the
consolidated
entity
becomes
a
party
to
the
contractual
provisions
of
the instrument.
Financial
assets
are
derecognised
if
the
consolidated
entity’s
contractual
rights
to
the
cash
flows
from
the financial
assets
expire
or
if
the
consolidated
entity
transfers
the
financial
asset
to
another
party
without
retaining control
or
substantially
all
risks
and
rewards
of
the
asset.

Regular
way
purchases
and
sales
of
financial
assets
are accounted
for
at
trade
date,
i.e.,
the
date
that
the
consolidated
entity
commits
itself
to
purchase
or
sell
the
asset. Financial
liabilities
are
derecognised
if
the
consolidated
entity’s
obligations
specified
in
the
contract
expire
or
are discharged
or
are
cancelled.

Cash
and
cash
equivalents
comprise
cash
balances
and
call
deposits.
Bank
overdrafts
that
are
repayable
on
demand and
form
an
integral
part
of
the
consolidated
entity’s
cash
management
are
included
as
a
component
of
cash
and
cash equivalents
for
the
purpose
of
the
statement
of
cash
flows.

_Held

to
maturity
investments_

If
the
consolidated
entity
has
the
positive
intent
and
ability
to
hold
debt
securities
to
maturity,
then
they
are
classified as
held-‐to-‐maturity.

Held-‐to-‐maturity
investments
are
measured
at
amortised
cost
using
the
effective
interest method,
less
any
impairment
losses.

Other

Other
non-‐derivative
financial
instruments
are
measured
at
amortised
cost
using
the
effective
interest
rate
method, less
any
impairment
losses.

The
fair
values
of
investments
that
are
actively
traded
in
organised
financial
markets
are
determined
by
reference
to quoted
market
bid
prices
at
the
close
of
business
on
the
reporting
date.
For
investments
with
no
active
market,
fair values
are
determined
using
valuation
techniques.

Such
techniques
include:
using
recent
arm’s
length
market transactions;
reference
to
the
current
market
value
of
another
instrument
that
is
substantially
the
same;
discounted cash
flow
analysis
and
option
pricing
models
making
as
much
use
of
available
and
supportable
market
data
as
possible and
keeping
judgemental
inputs
to
a
minimum.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

**Goodwill

and
Intangibles**

Goodwill

Goodwill
acquired
in
a
business
combination
is
initially
measured
at
cost
being
the
excess
of
the
cost
of
the
business combination
over
the
consolidated
entity's
interest
in
the
net
fair
value
of
the
acquirer’s
identifiable
assets,
liabilities and
contingent
liabilities.

Following
initial
recognition,
goodwill
is
measured
at
cost
less
any
accumulated
impairment
losses.

For
the
purpose
of
impairment
testing,
goodwill
acquired
in
a
business
combination
is,
from
the
acquisition
date, allocated
to
each
of
the
consolidated
entity's
cash-‐generating
units
that
are
expected
to
benefit
from
the
synergies
of the
combination,
irrespective
of
whether
other
assets
or
liabilities
of
the
consolidated
entity
are
assigned
to
those units.

When
the
recoverable
amount
of
the
cash-‐generating
unit
is
less
than
the
carrying
amount,
an
impairment
loss
is recognised.
When
goodwill
forms
part
of
a
cash-‐generating
unit
and
an
operation
within
that
unit
is
disposed
of,
the goodwill
associated
with
the
operation
disposed
of
is
included
in
the
carrying
amount
of
the
operation
when determining
the
gain
or
loss
on
disposal
of
the
operation.
Goodwill
disposed
of
in
this
manner
is
measured
based
on the
relative
values
of
the
operation
disposed
of
and
the
portion
of
the
cash-‐generating
unit
retained.
Impairment losses
recognised
for
goodwill
are
not
subsequently
reversed.

Intangibles

Intangible
assets
acquired
separately
or
in
a
business
combination
are
initially
measured
at
cost.

The
cost
of
an intangible
asset
acquired
in
a
business
combination
is
its
fair
value
as
at
the
date
of
acquisition.

Following
initial recognition,
intangible
assets
are
carried
at
cost
less
any
accumulated
amortisation
and
any
accumulated
impairment losses.

Internally
generated
intangible
assets,
excluding
capitalised
development
costs,
are
not
capitalised
and expenditure
is
recognised
in
profit
or
loss
in
the
year
in
which
the
expenditure
is
incurred.

The
useful
lives
of
intangible
assets
are
assessed
to
be
either
finite
or
indefinite.
Intangible
assets
with
finite
lives
are amortised
over
the
useful
life
and
tested
for
impairment
whenever
there
is
an
indication
that
the
intangible
asset
may be
impaired.
The
amortisation
period
and
the
amortisation
method
for
an
intangible
asset
with
a
finite
useful
life
is reviewed
at
least
at
each
reporting
date.
Changes
in
the
expected
useful
life
or
the
expected
pattern
of
consumption of
future
economic
benefits
embodied
in
the
asset
are
accounted
for
prospectively
by
changing
the
amortisation period
or
method,
as
appropriate,
which
is
a
change
in
accounting
estimate.
The
amortisation
expense
on
intangible assets
with
finite
lives
is
recognised
in
profit
or
loss
in
the
expense
category
consistent
with
the
function
of
the intangible
asset.

Intangible
assets
with
indefinite
useful
lives
are
tested
for
impairment
annually
either
individually
or
at
the
cash-‐ generating
unit
level
consistent
with
the
methodology
outlined
for
goodwill
above.

Such
intangibles
are
not amortised.
The
useful
life
of
an
intangible
asset
with
an
indefinite
life
is
reviewed
each
reporting
period
to
determine whether
indefinite
life
assessment
continues
to
be
supportable.
If
not,
the
change
in
the
useful
life
assessment
from indefinite
to
finite
is
accounted
for
as
a
change
in
an
accounting
estimate
and
is
thus
accounted
for
on
a
prospective basis.

**Trade

and
other
payables**

Trade
and
other
payables
are
carried
at
amortised
cost
and
represent
liabilities
for
goods
and
services
provided
to
the consolidated
entity
prior
to
the
end
of
the
financial
year
that
are
unpaid
and
arise
when
the
consolidated
entity becomes
obliged
to
make
future
payments
in
respect
of
the
purchase
of
these
goods
and
services.

HUB24 ANNUAL REPORT 2014 53 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

Provisions

Provisions
are
recognised
when
the
consolidated
entity
has
a
present
obligation
(legal
or
constructive)
as
a
result
of
a past
event,
it
is
probable
that
an
outflow
of
resources
embodying
economic
benefits
will
be
required
to
settle
the obligation
and
a
reliable
estimate
can
be
made
of
the
amount
of
the
obligation.

Provisions
are
measured
at
the
present
value
of
management’s
best
estimate
of
the
expenditure
required
to
settle
the present
obligation
at
the
reporting
date.
If
the
effect
of
the
time
value
of
money
is
material,
provisions
are
discounted using
a
current
pre-‐tax
rate
that
reflects
the
risks
specific
to
the
liability.
When
discounting
is
used,
the
increase
in
the provision
due
to
the
passage
of
time
is
recognised
as
a
borrowing
cost.

**Employee

benefits**

_Short-‐term

benefits_

Liabilities
for
wages
and
salaries,
including
non-‐monetary
benefits
and
annual
leave
expected
to
be
settled
within
12 months
of
the
reporting
date
are
recognised
in
respect
of
employees’
services
up
to
the
reporting
date.

They
are measured
at
the
amounts
expected
to
be
paid
when
the
liabilities
are
settled.

_Long-‐term

benefits_

The
liability
for
long
service
leave
is
recognised
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.

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
of
national
government
bonds
with
terms
to
maturity
and currencies
that
match,
as
closely
as
possible,
the
estimated
future
cash
outflows.

_Pensions

and
other
post
employment
benefits_

All
Australian
employees
are
entitled
to
varying
levels
of
benefits
on
retirement,
disability
or
death.

The superannuation
plans
provide
accumulated
benefits.

Employees
contribute
to
the
plans
at
various
percentages
of their
wages
and
salaries.

**Share-‐based

payment
transactions**

_Equity

settled
transactions:_

The
consolidated
entity
provides
benefits
to
employees
(including
Directors)
in
the
form
of
share-‐based
payments, whereby
services
are
rendered
in
exchange
for
shares
or
rights
over
shares
(equity
settled
transactions).

There
are
currently
two
plans
in
place
to
provide
these
benefits:

The
Employee
Share
Option
Plan
(ESOP);
and
The
Employee
Share
Plan
(ESP).

The
cost
of
these
equity-‐settled
transactions
with
employees
is
measured
by
reference
to
the
fair
value
of
the
equity instruments
at
the
date
at
which
they
are
granted.
The
fair
value
is
determined
by
reference
to
the
active
market
for the
shares
which
trade
on
the
Australian
Securities
Exchange,
at
grant
date.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

In
valuing
equity
settled
transactions,
no
account
is
taken
of
any
vesting
conditions,
other
than
(if
applicable):

Non-‐vesting
conditions
that
do
not
determine
whether
the
consolidated
entity
or
company
receives
services
that entitle
the
employee
to
receive
payment
in
equity
or
cash
Conditions
that
are
linked
to
the
price
of
the
shares
of
the
company

The
cost
of
equity-‐settled
transactions
is
recognised,
together
with
a
corresponding
increase
in
equity,
over
the
period in
which
the
performance
and/or
service
conditions
are
fulfilled,
ending
on
the
date
on
which
the
relevant
employees become
entitled
to
the
award
(the
vesting
period).
The
cumulative
expense
recognised
for
equity-‐settled
transactions at
each
reporting
date
until
the
vesting
date
reflects
the
extent
to
which
the
vesting
period
has
expired
and
the entity’s
best
estimate
of
the
number
of
equity
instruments
that
will
ultimately
vest.
The
income
statement
expense
or credit
for
a
period
is
recorded
in
Employee
Benefits
Expense
and
represents
the
movement
in
cumulative
expense recognised
as
at
the
beginning
and
end
of
that
period.

At
each
subsequent
reporting
date
until
vesting,
the
cumulative
charge
to
the
statement
of
profit
or
loss
and
other comprehensive
income
is
the
product
of:

The
grant
date
fair
value
of
the
award;
The
current
best
estimate
of
the
number
of
awards
that
will
vest,
taking
into
account
such
factors
as
the likelihood
of
employee
turnover
during
the
vesting
period
and
the
likelihood
of
non-‐market
performance conditions
being
met;
and
The
expired
portion
of
the
vesting
period.

The
charge
to
the
statement
of
profit
or
loss
and
other
comprehensive
income
for
the
period
is
the
cumulative
amount as
calculated
above
less
the
amounts
already
charged
in
previous
periods.
There
is
a
corresponding
entry
to
equity.

Equity
settled
awards
granted
by
the
company
to
employees
of
subsidiaries
are
recognised
in
the
parent’s
separate financial
statements
as
an
additional
investment
in
the
subsidiary
with
a
corresponding
credit
to
equity.
As
a
result, the
expense
recognised
by
the
company
in
relation
to
equity-‐settled
awards
only
represents
the
expense
associated with
grants
to
employees
of
the
parent.

The
expense
recognised
by
the
consolidated
entity
is
the
total
expense associated
with
all
such
awards.

Until
an
award
has
vested,
any
amounts
recorded
are
contingent
and
will
be
adjusted
if
more
or
fewer
awards
vest than
were
originally
anticipated
to
do
so.

Any
award
subject
to
a
market
condition
or
non-‐vesting
condition
is considered
to
vest
irrespective
of
whether
or
not
that
market
condition
or
non-‐vesting
is
fulfilled,
provided
that
all other
conditions
are
satisfied.

If
a
non-‐vesting
condition
is
within
the
control
of
the
consolidated
entity,
company
or
the
employee,
the
failure
to satisfy
the
condition
is
treated
as
a
cancellation.

If
a
non-‐vesting
condition
within
the
control
of
the
consolidated entity,
company
or
employee
is
not
satisfied
during
the
vesting
period,
any
expense
for
the
award
not
previously recognised
is
recognised
over
the
remaining
vesting
period,
unless
the
award
is
forfeited.

If
the
terms
of
an
equity-‐settled
award
are
modified,
as
a
minimum
an
expense
is
recognised
as
if
the
terms
had
not
been modified.
An
additional
expense
is
recognised
for
any
modification
that
increases
the
total
fair
value
of
the
share-‐based payment
arrangement,
or
is
otherwise
beneficial
to
the
employee,
as
measured
at
the
date
of
modification.

If
an
equity-‐settled
award
is
cancelled,
it
is
treated
as
if
it
had
vested
on
the
date
of
cancellation,
and
any
expense
not yet
recognised
for
the
award
is
recognised
immediately.

However,
if
a
new
award
is
substituted
for
the
cancelled award
and
designed
as
a
replacement
award
on
the
date
that
it
is
granted,
the
cancelled
and
new
award
are
treated as
if
they
were
a
modification
of
the
original
award,
as
described
in
the
previous
paragraph.

HUB24 ANNUAL REPORT 2014 55 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

The
dilutive
effect,
if
any,
of
outstanding
options
is
reflected
as
additional
share
dilution
in
the
computation
of
diluted earnings
per
share.

**Issued

Capital**

Ordinary
shares
are
classified
as
equity.
Incremental
costs
directly
attributable
to
the
issue
of
new
equity
instruments are
shown
in
equity
as
a
deduction,
net
of
GST,
from
the
proceeds.

**Earnings

Per
Share
(EPS)**

Basic
EPS is
calculated
by
dividing
the
result
attributable
to
members
of
the
company,
adjusted
for
the
after-‐tax
effect of
preference
dividends
on
preference
shares
classified
as
equity,
by
the
weighted
average
number
of
ordinary
shares outstanding
during
the
financial
year,
adjusted
for
bonus
elements
in
ordinary
shares
during
the
year.
The
weighted average
number
of
issued
shares
outstanding
during
the
financial
year
does
not
include
shares
issued
as
part
of
the Employee
Share
Loan
Plan
that
are
treated
as
in-‐substance
options.

Diluted
EPS is
calculated
by
adjusting
the
basic
earnings
by
the
after-‐tax
effect
of
dividends
and
interest
associated
with
dilutive potential
ordinary
shares.

The
weighted
average
number
of
shares
used
is
adjusted
for
the
weighted
average
number
of ordinary
shares
that
would
be
issued
on
the
conversion
of
all
the
dilutive
potential
ordinary
shares
into
ordinary
shares.

Comparatives

Where
required
by
the
Accounting
Standards
and
/
or
for
improved
presentation
purposes,
comparative
figures
have been
adjusted
to
conform
to
changes
in
presentation
for
the
current
year.

**New

Accounting
Standards
and
Interpretations
not
yet
Mandatory
or
Early
Adopted**

Australian
Accounting
Standards
and
Interpretations
that
have
recently
been
issued
or
amended
but
are
not
yet mandatory,
have
not
been
early
adopted
by
the
consolidated
entity
for
the
annual
reporting
period
ended
30
June 2014.
The
consolidated
entity's
assessment
of
the
impact
of
these
new
or
amended
Accounting
Standards
and Interpretations,
most
relevant
to
the
consolidated
entity,
are
set
out
below.

AASB
9
Financial
Instruments
and
its
consequential
amendments

This
standard
and
its
consequential
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1 January
2017
and
completes
phases
I
and
III
of
the
IASB's
project
to
replace
IAS
39
(AASB
139)
'Financial
Instruments: Recognition
and
Measurement'.
This
standard
introduces
new
classification
and
measurement
models
for
financial assets,
using
a
single
approach
to
determine
whether
a
financial
asset
is
measured
at
amortised
cost
or
fair
value.
The accounting
for
financial
liabilities
continues
to
be
classified
and
measured
in
accordance
with
AASB
139,
with
one exception,
being
that
the
portion
of
a
change
of
fair
value
relating
to
the
entity's
own
credit
risk
is
to
be
presented
in other
comprehensive
income
unless
it
would
create
an
accounting
mismatch.
Chapter
6
'Hedge
Accounting' supersedes
the
general
hedge
accounting
requirements
in
AASB
139
and
provides
a
new
simpler
approach
to
hedge accounting
that
is
intended
to
more
closely
align
with
risk
management
activities
undertaken
by
entities
when hedging
financial
and
non-‐financial
risks.
The
consolidated
entity
will
adopt
this
standard
and
the
amendments
from
1 July
2017
but
the
impact
of
its
adoption
is
yet
to
be
assessed
by
the
consolidated
entity.

AASB
2013-‐3
Amendments
to
AASB
136
-‐
Recoverable
Amount
Disclosures
for
Non-‐Financial
Assets These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2014.
The
disclosure requirements
of
AASB
136
'Impairment
of
Assets'
have
been
enhanced
to
require
additional
information
about
the
fair value
measurement
when
the
recoverable
amount
of
impaired
assets
is
based
on
fair
value
less
costs
of
disposals. Additionally,
if
measured
using
a
present
value
technique,
the
discount
rate
is
required
to
be
disclosed.
The
adoption of
these
amendments
from
1
July
2014
may
increase
the
disclosures
by
the
consolidated
entity.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**2. SUMMARY

OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)**

_Annual

Improvements
to
IFRSs
2010-‐2012
Cycle_

These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
July
2014
and
affects
several Accounting
Standards
as
follows:
Amends
the
definition
of
'vesting
conditions'
and
'market
condition'
and
adds definitions
for
'performance
condition'
and
'service
condition'
in
AASB
2
'Share-‐based
Payment';
Amends
AASB
3 'Business
Combinations'
to
clarify
that
contingent
consideration
that
is
classified
as
an
asset
or
liability
shall
be measured
at
fair
value
at
each
reporting
date;
Amends
AASB
8
'Operating
Segments'
to
require
entities
to
disclose
the judgements
made
by
management
in
applying
the
aggregation
criteria;
Clarifies
that
AASB
8
only
requires
a reconciliation
of
the
total
reportable
segments
assets
to
the
entity's
assets,
if
the
segment
assets
are
reported regularly;
Clarifies
that
the
issuance
of
AASB
13
'Fair
Value
Measurement'
and
the
amending
of
AASB
139
'Financial Instruments:
Recognition
and
Measurement'
and
AASB
9
'Financial
Instruments'
did
not
remove
the
ability
to
measure short-‐term
receivables
and
payables
with
no
stated
interest
rate
at
their
invoice
amount,
if
the
effect
of
discounting
is immaterial;
Clarifies
that
in
AASB
116
'Property,
Plant
and
Equipment'
and
AASB
138
'Intangible
Assets',
when
an
asset is
revalued
the
gross
carrying
amount
is
adjusted
in
a
manner
that
is
consistent
with
the
revaluation
of
the
carrying amount
(i.e.
proportional
restatement
of
accumulated
amortisation);
and
Amends
AASB
124
'Related
Party Disclosures'
to
clarify
that
an
entity
providing
key
management
personnel
services
to
the
reporting
entity
or
to
the parent
of
the
reporting
entity
is
a
'related
party'
of
the
reporting
entity.
The
adoption
of
these
amendments
from
1 July
2014
will
not
have
a
material
impact
on
the
consolidated
entity .

Annual
Improvements
to
IFRSs
2011-‐2013
Cycle

These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
July
2014
and
affects
four Accounting
Standards
as
follows:
Clarifies
the
'meaning
of
effective
IFRSs'
in
AASB
1
'First-‐time
Adoption
of
Australian Accounting
Standards';
Clarifies
that
AASB
3
'Business
Combination'
excludes
from
its
scope
the
accounting
for
the formation
of
a
joint
arrangement
in
the
financial
statements
of
the
joint
arrangement
itself;
Clarifies
that
the
scope
of the
portfolio
exemption
in
AASB
13
'Fair
Value
Measurement'
includes
all
contracts
accounted
for
within
the
scope
of AASB
139
'Financial
Instruments:
Recognition
and
Measurement'
or
AASB
9
'Financial
Instruments',
regardless
of whether
they
meet
the
definitions
of
financial
assets
or
financial
liabilities
as
defined
in
AASB
132
'Financial Instruments:
Presentation';
and
Clarifies
that
determining
whether
a
specific
transaction
meets
the
definition
of
both a
business
combination
as
defined
in
AASB
3
'Business
Combinations'
and
investment
property
as
defined
in
AASB
140 'Investment
Property'
requires
the
separate
application
of
both
standards
independently
of
each
other.
The
adoption of
these
amendments
from
1
July
2014
will
not
have
a
material
impact
on
the
consolidated
entity .

While
the
consolidated
entity
does
not
expect
the
new
standard
to
have
an
impact,
it
has
yet
to
perform
a
detailed analysis
of
the
new
guidance.

**3. FINANCIAL

RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES**

The
consolidated
entity’s
principal
financial
instruments
comprise
receivables,
payables,
finance
leases
and
cash
and cash
equivalents.

The
company
and
consolidated
entity
do
not
have
debt
facilities
and
do
not
trade
in
derivative instruments,
other
than
where
listed
and
unlisted
options
over
ordinary
shares
may
be
received
as
a
part consideration
for
corporate
fees
earned.

The
consolidated
entity
has
exposure
to
the
following
risks
from
its
use
of
financial
instruments:

Credit
risk
Liquidity
risk
Market
risk.

This
note
presents
information
about
the
company’s
and
the
consolidated
entity’s
exposure
to
each
of
the
above risks,
their
objectives,
policies
and
processes
for
measuring
and
managing
risk,
and
the
management
of
capital. Further
quantitative
disclosures
are
included
throughout
this
financial
report.

The
Board
of
Directors
has
overall responsibility
for
the
establishment
and
oversight
of
the
risk
management
framework.

HUB24 ANNUAL REPORT 2014 57 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**3. FINANCIAL

RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)**

Risk
management
policies
are
established
to
identify
and
analyse
the
risks
faced
by
the
company
and
the
consolidated entity,
to
set
appropriate
risk
limits
and
controls,
and
to
monitor
risks
and
adherence
to
limits.
Risk
management policies
and
systems
are
reviewed
regularly
to
reflect
changes
in
market
conditions
and
the
company’s
and consolidated
entity’s
activities.

The
company
and
consolidated
entity,
through
their
training
and
management standards
and
procedures,
aim
to
develop
a
disciplined
and
constructive
control
environment
in
which
all
employees and
consultants
understand
their
roles
and
obligations.

The
consolidated
entity
Audit,
Risk
and
Compliance
Committee
oversees
how
management
monitors
compliance
with the
company’s
and
the
consolidated
entity’s
risk
management
policies
and
procedures
and
reviews
the
adequacy
of the
risk
management
framework
in
relation
to
risks
faced.
The
Committee
is
assisted
by
external
professional
advisors from
time
to
time.

**Credit

risk**

Credit
risk
is
the
risk
of
financial
loss
to
the
consolidated
entity
if
a
customer
or
counterparty
to
a
financial
instrument
fails
to meet
its
contractual
obligations,
and
arises
from
the
financial
assets
of
the
consolidated
entity,
which
comprise
cash
and cash
equivalents
and
principally,
trade
receivables.
For
the
company
it
arises
from
receivables
due
from
subsidiaries. Exposure
at
reporting
date
is
addressed
at
each
particular
note.
The
consolidated
entity
does
not
hold
any
credit derivatives
to
offset
its
credit
exposure.

It
is
the
consolidated
entity's
policy
that
all
customers
who
wish
to
trade
on
credit
terms
are
subject
to
credit verification
procedures
including
an
assessment
of
their
independent
credit
worthiness,
financial
position,
past experience
and
industry
reputation.
Risk
limits
are
set
for
each
individual
customer
in
accordance
with
parameters
set by
the
Board.
These
risk
limits
are
regularly
monitored.

In
addition,
credit
risk
exposures
and
receivable
balances
are
monitored
on
an
ongoing
basis
with
the
intended
result that
the
consolidated
entity's
exposure
to
bad
debts
is
not
significant.

The
consolidated
entity
also
has
credit
risk
in
respect
of
its
corporate
income
debtors.
In
the
case
of
most
transactions involving
corporate
income,
revenue
is
generally
earned
over
a
period
of
several
months
due
to
the
complexity
and
size of
the
work
involved.

The
consolidated
entity
manages
this
risk
by
entering
into
contractual
agreements
with
its counterparties,
obtaining
external
legal
advice
where
necessary,
at
the
start
of
each
transaction.
The
Board
has
direct involvement
with
the
counterparties
during
the
engagement
phase
of
each
transaction
in
order
to
assess
their
suitability.

The
consolidated
entity
policy
is
to
provide
financial
guarantees
only
to
wholly-‐owned
subsidiaries.

**Liquidity

risk**

Liquidity
risk
is
the
risk
that
the
consolidated
entity
will
not
be
able
to
meet
its
financial
obligations
as
they
fall
due. The
consolidated
entity’s
approach
to
managing
liquidity
risk
is
to
ensure,
as
far
as
possible,
that
it
will
always
have sufficient
liquidity
to
meet
its
liabilities
when
due,
under
both
normal
and
stressed
conditions,
without
incurring unacceptable
losses
or
risking
damage
to
the
consolidated
entity’s
reputation.

The
consolidated
entity
typically
ensures
that
it
has
sufficient
cash
on
demand
to
meet
operational
expenses
for
a period
of
90
days,
excluding
the
potential
impact
of
extreme
circumstances
that
cannot
be
reasonably
predicted.
The consolidated
entity
has
no
debt
facilities
or
credit
lines.

Refer
to
Note
29:
Financial
Instruments
for
a
sensitivity
analysis
of
the
consolidated
entity’s
financial
assets
and liabilities
maturity.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**3. FINANCIAL

RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)**

**Market

risk**

Market
risk
is
the
risk
that
changes
in
market
prices
will
affect
the
consolidated
entity’s
income
and
include
price
risk. The
company
no
longer
carries
on
principal
trading
activities.

**Capital

management**

The
Board’s
policy
is
to
maintain
a
sufficient
capital
base
so
as
to
maintain
investor,
creditor
and
market
confidence and
to
sustain
future
development
of
the
business.

It
is
noted
that
the
company,
through
its
subsidiary
HUB24 Custodial
Services
Limited,
fully
complied
with
the
minimum
capital
requirements
of
the
ASX
and
ACH
Market
Rules
as a
market
participant
and
AFSL
base
level
financial
requirements
so
as
to
ensure
ongoing
capital
adequacy.

There
were
no
changes
in
the
consolidated
entity’s
approach
to
capital
management
during
the
year.

The
preparation
of
the
financial
statements
requires
management
to
make
judgments,
estimates
and
assumptions that
affect
the
reported
amounts
in
the
financial
statements.
Management
continually
evaluates
its
judgments
and estimates
in
relation
to
assets,
liabilities,
contingent
liabilities,
revenue
and
expenses.

Management
bases
its judgments
and
estimates
on
historical
experience
and
on
other
various
factors
it
believes
to
be
reasonable
under
the circumstances,
the
result
of
which
form
the
basis
of
the
carrying
values
of
assets
and
liabilities
that
are
not
readily apparent
from
other
sources.

Actual
results
may
differ
from
these
estimates
under
different
assumptions
and conditions.

Management
has
identified
the
following
critical
accounting
policies
for
which
significant
judgments,
estimates
and assumptions
are
made.

Actual
results
may
differ
from
these
estimates
under
different
assumptions
and
conditions and
may
materially
affect
financial
results
or
the
financial
position
reported
in
future
periods.
Further
details
of
the nature
of
these
assumptions
and
conditions
may
be
found
in
the
relevant
notes
to
the
financial
statements.

**4. SIGNIFICANT

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.

Recovery
of
deferred
tax
assets
and
Research
and
Development
claim

Deferred
tax
assets
are
recognised
for
carried
forward
income
tax
losses
and
deductible
temporary
differences
to
the extent
that
Directors
consider
that
it
is
probable
that
future
taxable
profits
will
be
available
to
utilise
those
temporary differences
and
tax
losses.

Judgement
is
required
in
determining
the
amount
of
income
tax
revenue
relating
to
the
research
and
development claim.

There
are
certain
transactions
and
calculations
undertaken
during
the
ordinary
course
of
business
for
which the
ultimate
tax
determination
may
be
subject
to
change.

The
consolidated
entity
calculates
its
research
and development
claim
based
on
the
consolidated
entity’s
understanding
of
the
tax
law.

Where
the
final
outcome
of these
matters
is
different
from
the
amounts
that
were
initially
recorded,
such
differences
will
impact
the
profit
or
loss in
the
year
in
which
such
determination
is
made.

HUB24 ANNUAL REPORT 2014 59 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**4. SIGNIFICANT

ACCOUNTING
JUDGEMENTS,
ESTIMATES
AND
ASSUMPTIONS
(CONT’D)**

Estimation
of
bad
debts
and
provisioning

Receivables
are
assessed
by
management
for
recoverability
based
on
days
past
due
or
pending
legal
actions
and
other counter
party
information.

_Intangible

assets_

The
carrying
value
of
intangible
assets
(including
goodwill)
is
assessed
for
indications
that
the
asset
has
been
impaired in
accordance
with
the
accounting
policy
under
the
heading
Goodwill
and
Intangibles.
The
recoverable
amounts
of cash
generating
units
have
been
determined
based
on
value-‐in-‐use
calculations.
These
calculations
require
the
use
of assumptions.
Refer
to
Note
12
for
details
of
these
assumptions
and
the
potential
impact
of
changes
to
these assumptions.

Share-‐based
payment
transactions

The
consolidated
entity
measures
the
cost
of
equity-‐settled
transactions
by
reference
to
the
fair
value
of
the
equity instruments
at
the
date
at
which
they
were
granted.
The
fair
value
is
determined
using
a
binomial method.
The
accounting
estimates
and
assumptions
relating
to
the
equity-‐settled
share-‐based
payments
would
have no
impact
on
the
carrying
amounts
of
assets
or
liabilities
within
the
next
annual
reporting
period
but
may
impact expenses
and
equity.

_Capitalisation

of
development
costs_

The
consolidated
entity
capitalises
project
development
costs
eligible
for
capitalisation.
The
capitalised
costs
are
all directly
attributable
costs
necessary
to
create,
produce,
and
prepare
the
asset
to
be
capable
of
operating
in
the manner
intended.
The
consolidated
entity
amortises
the
capitalised
project
costs
over
the
project’s
useful
life.

_Broking

Claim
Provision_

The
consolidated
entity
estimates
the
expected
potential
broking
claims
based
on
actual
claims
and
costs
incurred
to defend
claims
that
have
been
made
over
the
previous
5
year
period.
The
estimated
annual
average
over
this
period
is used
to
project
claims
from
the
discontinued
broking
operation
over
the
next
two
years.

**5. OPERATING

SEGMENTS**

**Identification

of
reportable
segments**

The
consolidated
entity
operates
in
the
single
operating
segment
of
its
investment
and
superannuation
platform.

The
HUB24
Portfolio
Service
is
a
single
platform
solution
that
enables
clients
to
benefit
from
cost
effective
executions and
management
of
trades
whilst
still
retaining
full
beneficial
ownership
of
securities
for
improved
tax
efficiencies. The
platform
offers
full
transaction
and
reporting
capability
on
wholesale
managed
funds,
listed
securities,
exchanged traded
funds,
managed
portfolios,
term
deposits,
bonds,
cash
and
margin
lending.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**6. REVENUE

AND
EXPENSES
FROM
CONTINUING
OPERATIONS**

Revenue (a) Sales revenue Portfolio service fees Cash margin Brokerage Other platform fees Expenses (b) Employee benefits expenses Wages and salaries (incl super and payroll tax) Share based payments expense Other employee benefits expenses (c) Property and occupancy costs Rent Other occupancy costs (d) Depreciation, impairment and amortisation Depreciation Amortisation of intangibles (e) Administrative expenses Corporate fees Professional and consultancy fees Information services and communication Travel and entertainment Other administrative expenses	CONSOLIDATED 2014 2013 $ $
	1,899,266 756,924
	434,553 203,678
	435,214 134,623
	440,157 133,141
	3,209,190 1,228,366
	6,394,861 4,084,416 427,895 27,761 73,861 262,683
	6,896,617 4,374,859
	312,971 335,405 59,695 18,710
	372,666 354,115
	53,718 111,094 975,197 918,681
	1,028,915 1,029,775
	246,131 371,561 599,213 682,006 363,911 494,908 227,495 259,406 783,292 373,086
	2,220,042 2,180,967

HUB24 ANNUAL REPORT 2014 61 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**7. INCOME

TAX**

**(a) Income

tax
expense/(benefit)**

7. INCOME TAX (a) Income tax expense/(benefit)
	CONSOLIDATED 2014 2013 $ $
Current tax Research and development claim Deferred tax Income tax expense/(benefit) Deferred tax included in income tax expense/(benefit) comprises: Decrease/(increase) in deferred tax assets (Decrease)/increase in deferred tax liabilities (b) Reconciliation of income tax expense/(benefit) to pre-tax accounting profit/(loss) Loss from continuing operations before income tax Loss from discontinued operations before income tax Prima facie income tax at 30% Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Deferred acquisition expenses Share based payments Entertainment Sundry items Under/(over) provision in prior years Research and development claim Adjustment to deferred tax asset Non-recognition of deferred tax asset Income tax expense/(benefit)
	- -
	(414,137) (1,173,832)
	- -
	(414,137) (1,173,832)



	- -
	- -
	- -



	(8,157,324) (6,972,240)
	(679,825) (3,984,559)
	(8,837,149) (10,956,799)

	(2,651,146) (3,287,040)



	- 103,860
	128,369 291,325
	4,247 4,766
	26,264 10,548
	158,880 410,499 - - (414,137) (1,173,832) 330,260 103,491 2,162,006 2,773,050
	2,078,129 1,702,709
	(414,137) (1,173,832)

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**7. INCOME

TAX
(CONT’D)**

7. INCOME TAX (CONT’D)
		CONSOLIDATED
		2014 2013
		$ $
(c) Deferred Tax Asset Deferred tax asset comprises temporary differences attributable to: Accrued expenses Provisions Intangibles Capital raising costs Carry forward tax losses Non-recognition of deferred tax asset Movements: Opening balance Credited/(charged) to profit or loss (Charged)/credited to equity Current tax losses Adjustment to prior year deferred tax asset Non-recognition of deferred tax asset Closing balance



		118,546 143,085
		472,293 339,219
		3,049,026 3,237,560
		(172,782) (85,801)
		11,177,160 8,848,174
		(14,644,243) (12,482,237)
		- -


		- -
		11,304 (279,729)
		(178,284) (21,450)
		2,659,246 3,177,720
		(330,260) (103,491)
		(2,162,006) (2,773,050)
		- -

**(d) Tax

consolidation**

(i) Members
of
the
tax
consolidated
entity
and
the
tax
sharing
arrangement

The
company
and
its
100%
owned
Australian
resident
subsidiaries
formed
a
tax
consolidated
entity.
The
company
is the
head
entity
of
the
tax
consolidated
entity.
Members
of
the
consolidated
entity
have
not
entered
into
a
tax
sharing agreement.

(ii) Tax
effect
accounting
by
members
of
the
tax
consolidated
entity

The
head
entity
and
the
controlled
entities
in
the
tax
consolidated
entity
continue
to
account
for
their
own
current and
deferred
tax
amounts
as
per
UIG
1052
Tax
Consolidation
Accounting.

The
consolidated
entity
has
applied
the consolidated
entity
allocation
approach
in
determining
the
appropriate
amount
of
current
taxes
and
deferred
taxes
to allocate
to
members
of
the
tax
consolidated
entity.

The
current
and
deferred
tax
amounts
are
measured
in
a systematic
manner
that
is
consistent
with
the
broad
principles
in
AASB
112
Income
Taxes.

In
addition
to
its
own
current
and
deferred
tax
amounts,
the
head
entity
also
recognises
current
tax
liabilities
(or assets)
and
the
deferred
tax
assets
arising
from
unused
tax
losses
and
unused
tax
credits
(if
any)
assumed
from controlled
entities
in
the
tax
consolidated
entity.

HUB24 ANNUAL REPORT 2014 63 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**8. DISCONTINUED

OPERATIONS**

Description

On
February
8
2013,
the
consolidated
entity
disposed
of
the
Broking
business
to
Wilsons
for
consideration
of
$1.


Financial Performance	CONSOLIDATED
	2014 2013
	$ $
Revenue from discontinued operations
Revenue	- 5,215,849
Interest and other income	- 61,685
	- 5,277,535
Expenses from discontinued operations
Trading fees	- 3,914,995
Employee benefits expenses	- 1,810,161
Property and occupancy costs	- 450,838
Deferred acquisition expense	- 346,200
Insurance run-off cover	390,376 -
Loss on trading software disposal	57,544 -
Other expenses	231,905 538,749
	679,825 7,060,942

Loss before income tax expense from discontinued operations	(679,825) (1,783,408)
Income tax expense	- -
Loss after income tax	(679,825) (1,783,408)

Loss on disposal before income tax expense	- (2,201,152)
Income tax expense	- -
Loss on disposal after income tax expense	- (2,201,152)

Loss after income tax from discontinued operations	(679,825) (3,984,560)

Cash flow information	CONSOLIDATED
	2014 2013
	$ $
Net cash used in operating activities	(679,825) (3,638,360)
Net cash used in financingactivities	- -
Net decrease in cash and cash equivalents from discontinued operations	(679,825) (3,638,360)

	CONSOLIDATED
Carrying amounts of assets and liabilities	2014 2013
	$ $

Total assets	- -

Provisions	- 43,611
	- 43,611

Net assets	- (43,611)

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**9. CURRENT

ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES**

	CONSOLIDATED 2014 2013 $ $
Trade receivables Allowance for impairment loss (i) Other debtors	306,638 127,031 - -
	306,638 127,032 99,348 1,256,098
	405,986 1,383,130

**(i) Allowance

for
impairment
loss**

Trade
receivables
are
non-‐interest
bearing
and
are
generally
on
30
day
terms.
A
provision
for
impairment
loss
is recognised
when
there
is
objective
evidence
that
an
individual
trade
receivable
is
impaired.
Impairment
losses
on trade
and
client
debt
receivables
totalling
$Nil
(2013:
$Nil)
has
been
recognised
by
the
consolidated
entity
in
the current
year.
These
amounts
have
been
included
in
the
statement
of
comprehensive
income
as
an
administrative expense.

Movements
in
the
provision
for
impairment
loss
were
as
follows:

Opening balance Charge for the year Amounts written off Closing balance	- 84,306 - - - (84,306)
	- -

**(ii) Other

debtors**

The
tax
refund
claimed
for
platform
research
and
development
during
2013
was
received
during
the
current
financial year
($1,178,000).
The
current
year
tax
refund
for
research
and
development
was
$414,679
and
was
also
received during
the
year.

At
30
June,
the
ageing
analysis
of
receivables
is
as
follows:

At 30 June, the ageing analysis of receivables is as follows:
	0-30	31-60	61-90
	days	days	days
			PDNI *
2014 Consolidated	405,986	-	-
2013 Consolidated	1,383,130	-	-

PDNI
-‐
Past
due
not
impaired CI
-‐
Considered
impaired

Other
balances
within
trade
and
other
receivables
do
not
contain
impaired
assets
and
are
not
past
due.
It
is
expected that
these
other
balances
will
be
received
when
due.

**(iii)

Fair
value
and
credit
risk**

Due
to
the
short
term
nature
of
these
receivables,
their
carrying
value
is
assumed
to
approximate
their
fair
value.

HUB24 ANNUAL REPORT 2014 65 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**10.

CURRENT
ASSETS
–
OTHER
CURRENT
ASSETS**

10. CURRENT ASSETS – OTHER CURRENT ASSETS
		CONSOLIDATED 2014 2013 $ $


Prepayments Other assets 11. NON-CURRENT ASSETS – OFFICE EQUIPMENT		67,184 20,100 351,860 323,768


		419,044 343,868
		CONSOLIDATED 2014 2013 $ $
Computer Equipment At cost Accumulated depreciation Office Furniture and Fittings At cost Accumulated depreciation Total Plant and Equipment Cost Accumulated depreciation Total Net Carrying Amount		136,340 104,669 (96,340) (74,347)
		40,000 30,322
		69,153 229,497 (15,592) (204,890)
		53,561 24,607
		205,493 334,166 (111,932) (279,236)
		93,561 54,929

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**11.

NON-‐CURRENT
ASSETS
–
OFFICE
EQUIPMENT
(CONT’D)**

11. NON-CURRENT ASSETS – OFFICE EQUIPMENT (CONT’D)
	CONSOLIDATED 2014 2013 $ $
Reconciliations of the carrying amounts at the beginning and end of the financial year: *Computer Equipment* Carrying amount at beginning Other additions Disposals Depreciation expense Net Carrying Amount *Office Furniture and Fittings* Carrying amount at beginning Other additions Disposals Depreciation expense Net Carrying Amount *Leased Assets* Carrying amount at beginning Disposals Depreciation expense Net Carrying Amount Total Office Equipment Carrying amount at beginning Other additions Disposals Depreciation Net Carrying Amount	30,322 76,990 31,671 - - (24,506) (21,993) (22,162)
	40,000 30,322
	24,607 203,743 60,678 - (6,978) (91,806) (24,746) (87,330)
	53,561 24,607
	- (10,792) - (9,190) - (1,602)
	- -
	54,929 291,525 92,349 - (6,978) (125,502) (46,739) (111,094)
	93,561 54,929

HUB24 ANNUAL REPORT 2014 67 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**12.

NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS**

12. NON-CURRENT ASSETS – INTANGIBLE ASSETS
	CONSOLIDATED 2014 2013 $ $
Investment Platform At cost Accumulated amortisation and impairment Net carrying amount Software At cost Accumulated amortisation Net carrying amount Total Net Carrying Amount *Reconciliations of the carrying amount at* *the beginning and end of the financial year:* Investment Platform Opening carrying amount Other additions Other disposals Amortisation charge Closing carrying amount Software Opening carrying amount Other additions Amortisation charge Closing carrying amount (a) Impairment tests for intangible assets Investment Platform Software	25,820,885 25,493,112 (19,530,524) (18,083,968)
	6,290,361 7,409,144
	32,953 - (891) -
	32,062 -
	6,322,423 7,409,144
	7,409,144 7,400,000 327,773 927,825 (472,250) - (974,306) (918,681)
	6,290,361 7,409,144

	- -
	32,953 -
	(891) -
	32,062 -
	6,290,361 7,409,144 32,062 -
	6,322,423 7,409,144

Intangible
assets
are
allocated
to
the
consolidated
entity's
cash-‐generating
units
(CGUs)
identified
according
to operating
segment.

The
recoverable
amount
of
a
CGU
is
determined
based
on
value-‐in-‐use
calculations.
These
calculations
use
cash
flow projections
based
on
financial
budgets
reviewed
by
directors
covering
a
six
year
period.

Cash
flows
beyond
the
six year
period
are
extrapolated
using
a
terminal
value.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**12.

NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)**

**(b) Key

assumptions
used
for
value-‐in-‐use
calculations**

Growth
in
funds
under
administration
on
the
platform
-‐
Growth
in
the
number
of
client
accounts
and
hence funds
under
administration
on
the
platform
are
a
key
assumption
used
in
calculating
future
cashflows.
Given
the platform's
early
stage
of
development
and
relatively
low
base
of
existing
funds
under
administration,
assumed growth
rates
are
significant
in
the
next
two
to
three
years
in
percentage
terms.

Management
have
estimated future
funds
under
administration
on
the
platform
with
reference
to
current
client
transition
rates
and
pipeline monitoring.

Pre-‐tax
discount
rate
-‐
The
pre-‐tax
discount
rate
used
for
the
company's
value-‐in-‐use
calculations
is
18.5%.
Terminal
growth
rate
-‐
The
terminal
growth
rate
used
for
the
company's
value-‐in-‐use
calculations
is
2.5%.
Period
over
which
cashflows
have
been
discounted
-‐
Management
have
used
a
period
of
six
years
to
discount projected
cashflows
for
its
value-‐in-‐use
calculations.
This
period
is
considered
reasonable
given
the
early
stage of
development
of
the
platform
and
the
remaining
useful
life
over
which
the
intangible
assets
is
being
amortised (6.4
years
from
30
June
2014).

**(c) Impact

of
possible
changes
in
key
assumptions**

If
the
projected
earnings
on
client
account
balances
used
in
the
value-‐in-‐use
calculation
for
the
investment
platform CGU
are
2%
lower
than
management
estimates
over
the
period
of
the
value-‐in-‐use
calculation
there
would
be
no impairment
of
intangible
assets. If
the
pre-‐tax
discount
rate
for
this
CGU
had
been
2%
higher
than
management
estimates
(20.5%
instead
of
18.5%) there
would
be
no
impairment
of
intangible
assets.

**13.

NON-‐CURRENT
ASSETS
–
OTHER
NON-‐CURRENT
ASSETS**

	CONSOLIDATED 2014 2013 $ $
Security deposits and guarantees Other assets	547,307 460,339 108,789 -
	656,096 460,339

**14.

CURRENT
LIABILITIES
–
TRADE
AND
OTHER
PAYABLES**

14. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
	CONSOLIDATED 2014 2013 $ $
Trade creditors Sundry creditors	237,036 321,388 425,194 420,011
	662,230 741,399

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**15.

CURRENT
LIABILITIES
–
PROVISIONS**

15. CURRENT LIABILITIES – PROVISIONS
	CONSOLIDATED 2014 2013 $ $
Employee benefits - Annual leave Employee benefits - Short term incentive Broking closure Lease make good	324,686 292,532 599,240 - 445,727 687,479 20,000 88,400
	1,389,653 1,068,411

_Broking

closure_

The
provision
represents
the
estimated
costs
associated
with
exiting
the
stockbroking
business
including
$78,712 relating
to
onerous
rental
contracts
(FY13:
$473,001)
and
a
general
claims
provision
of
$367,015
(FY13:
$214,478).

_Lease

make
good_

The
provision
represents
the
present
value
of
the
estimated
costs
to
make
good
the
premises
leased
by
the consolidated
entity
at
the
end
of
the
respective
lease
term.

_Movements

in
provisions_

Movements
in
each
class
of
provision
during
the
financial
year,
other
than
employee
benefits,
are
set
out
below:

Consolidated - 2014	Broking Closure Lease make good $ $
Carrying amount at the start of the year Additional provisions recognised Amounts used Carrying amount at the end of the year	687,479 88,400 601,717 - (843,469) (68,400)
	445,727 20,000

**16.

NON-‐CURRENT
LIABILITIES
–
PROVISIONS**

16. NON-CURRENT LIABILITIES – PROVISIONS
	CONSOLIDATED 2014 2013 $ $
Employee benefits - Long service leave Lease Make good Lease liability	95,212 62,318 22,344 - 67,098 -
	184,654 62,318

_Lease

make
good_

The
provision
represents
the
present
value
of
the
estimated
costs
to
make
good
the
premises
leased
by
the consolidated
entity
at
the
end
of
the
respective
lease
term.

_Movements

in
provisions_

Movements
in
each
class
of
provision
during
the
financial
year,
other
than
employee
benefits,
are
set
out
below:

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**16.

NON-‐CURRENT
LIABILITIES
–
PROVISIONS
(CONT’D)**

16. NON-CURRENT LIABILITIES – PROVISIONS (CONT’D)
Consolidated - 2014	Lease liability Lease make good $ $
Carrying amount at the start of the year Additional provisions recognised Amounts used Carrying amount at the end of the year	- - 67,098 22,344 - -
	67,098 22,344

**17.

ISSUED
CAPITAL**

17. ISSUED CAPITAL
	CONSOLIDATED CONSOLIDATED 2014 2013 2014 2013 Number Number $ $
(a) Issued and paid up capital Ordinary shares, fully paid 47,058,181 38,913,469 77,107,017 66,993,612 (b) Other equity securities Treasury shares 185,111 221,908 (119,000) (150,000) Total Issued and paid up capital 47,243,292 39,135,377 76,988,017 66,843,612 *Movements in issued and paid up capital* Beginning of the financial year 38,913,469 686,544,268 66,993,612 54,301,655 Shares issued - 559,786,011 - 8,396,466 Total shares pre consolidation 38,913,469 1,246,330,279 Share consolidation (40 for 1) - 31,158,469 - - Shares issued 8,144,712 7,755,000 10,588,126 4,653,000 Capital raising costs - - (474,721) (357,509) End of the financial year 47,058,181 38,913,469 77,107,017 66,993,612 *Movement in other equity securities - treasury shares* Beginning of the financial year 221,908 8,876,274 150,000 150,000 Treasury share consolidation (40 for 1) - 221,908 - - Employee share issue (36,797) - (31,000) - End of the financial year 185,111 221,908 119,000 150,000	47,058,181 38,913,469 77,107,017 66,993,612 185,111 221,908 (119,000) (150,000)
	47,243,292 39,135,377 76,988,017 66,843,612
	38,913,469 686,544,268 66,993,612 54,301,655 - 559,786,011 - 8,396,466 38,913,469 1,246,330,279 - 31,158,469 - - 8,144,712 7,755,000 10,588,126 4,653,000 - - (474,721) (357,509)
	47,058,181 38,913,469 77,107,017 66,993,612

	221,908 8,876,274 150,000 150,000 - 221,908 - - (36,797) - (31,000) -
	185,111 221,908 119,000 150,000

_**Ordinary

shares**_

Fully
paid
ordinary
shares
carry
one
vote
per
share
and
carry
the
right
to
dividends. On
11
October
2013,
the
company
issued
5,837,020
ordinary
shares
at
$1.30
per
share
raising
$7,588,126. On
3
December
2013,
the
company
issued
a
further
2,307,692
shares
at
$1.30
per
share
raising
$3,000,000.

_**Treasury

shares**_

Treasury
shares
are
shares
in
HUB24
Limited
that
are
held
by
HUB24
Employee
Share
Ownership
Trust
(ESOT)
for
the purpose
of
issuing
shares
under
HUB24
Employee
Share
Ownership
Plan. On
7
August
2013,
the
company
assigned
36,797
shares
to
eligible
employees
under
the
HUB24
Employee
Share Ownership
Plan.

HUB24 ANNUAL REPORT 2014 71 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**18.

RESERVES**

18. RESERVES
	CONSOLIDATED 2014 2013 $ $
Share based payments share reserve	2,275,332 1,878,436

Represents
the
share
based
payments
expense
under
the
employee
share
and
option
plan.

**19.

DIVIDEND
FRANKING
ACCOUNT**

Franking
credits
available
to
shareholders
of
the
company
for
subsequent
financial
years
are
$445,120
(2013: $311,934).

These
available
amounts
are
based
on
the
balance
of
the
dividend
franking
account
at
year
end
adjusted
for:

(a) franking
credits
that
will
arise
from
the
payment
of
the
current
tax
liabilities;
(b) franking
debits
that
will
arise
from
the
payment
of
dividends
recognised
as
a
liability
at
year
end; (c) franking
credits
that
will
arise
from
the
receipt
of
dividends
recognised
as
receivables
by
the
tax
consolidated entity
at
the
year
end,
and
(d) franking
credits
that
may
be
prevented
from
being
distributed
in
subsequent
years.

The
ability
to
utilise
the
franking
credits
is
dependent
upon
there
being
sufficient
available
reserves
to
declare dividends.

In
accordance
with
the
tax
consolidation
legislation,
the
company
as
the
head
entity
in
the
tax-‐ consolidated
group
has
also
assumed
the
benefit
of
franking
credits.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**20.

RECONCILIATION
OF
CASHFLOWS**

20. RECONCILIATION OF CASHFLOWS
	CONSOLIDATED 2014 2013 $ $
(a) Reconciliation of the net loss after tax to cash flow from operations Net Loss after tax for the year Non-cash items: Bad and doubtful debts Depreciation and amortisation Disposal/write-off of office equipment Share based payments expense Changes in operating assets and liabilities: (Increase)/decrease in trade and other receivables (Increase)/decrease in other assets (Increase)/decrease in non current assets Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Net cash flow from operating activities (b) Reconciliation of cash and cash equivalents Cash and cash equivalents comprises: Cash on hand and at bank	(8,423,012) (9,782,968) - 70,450 1,028,915 1,029,775 30,204 125,502 427,895 971,084 977,144 14,165,916 135,580 (304,826) (200,063) 318,523 (79,169) (16,579,188) 443,578 702,193
	(5,658,928) (9,283,539)
	13,779,844 9,542,846
	13,779,844 9,542,846
	13,779,844 9,542,846

- Cash on hand and at bank
	13,779,844 9,542,846
(c) Terms and conditions

For
the
purposes
of
the
Statement
of
cash
flows,
cash
and
cash
equivalents
includes
cash
on
hand
and
at
bank, deposits
held
at
call
with
financial
institutions,
other
short
term,
highly
liquid
investments
with
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
and
bank
overdrafts.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**21.

COMMITMENTS
AND
CONTINGENCIES**

(a) Commitments

Future
minimum
rentals
payable
under
non-‐cancellable
operating
leases:

(a) Commitments Future minimum rentals payable under non-cancellable operating leases:
	CONSOLIDATED 2014 2013 $ $
Within 1 year After 1 year but not more than 5 years Total minimum lease payments	450,063 509,879 973,990 124,451
	1,424,053 634,330

**(b)

Contingencies**

HUB24
Custodial
Services
Ltd,
a
wholly
owned
subsidiary
and
operator
of
the
Investor
Directed
Portfolio
Service (IDPS),
has
requested
a
tax
ruling
from
the
ATO
regarding
the
separate
registration
of
the
IDPS
for
GST
purposes
and the
extent
to
which
HUB24
Custodial
Services
Ltd
can
claim
the
benefit
of
Reduced
Input
Tax
Credits
(RITC’s). If
successful,
HUB24
Custodial
Services
Ltd
will
be
eligible
to
receive
the
benefits
of
RITC’s
for
the
previous
4
years.
No asset
has
been
recognized
within
these
financial
statements.

If successful, HUB24 Custodial Services Ltd will be eligible to receive the benefits of asset has been recognized within these financial statements.	RITC’s for the previous 4 years. No
	CONSOLIDATED 2014 2013 $ $
Contingent assets and Liabilities Nil (2013 : Nil) Guarantees Australian Securities and Investments Commission Rental bond Level 8, 20 Bridge St, Sydney Rental bond Level 45, 1 Farrer Place, Sydney Rental bond Level 29, 55 Collins St, Melbourne Rental bond Level 13, 115 Pitt St, Sydney Trust Company security deposit	- - - 20,000 217,307 - - 270,347 116,600 116,600 - 40,056 330,000 330,000
	663,907 777,003

**22.

SHARE
BASED
PAYMENTS
PLAN**

(a) Recognised
share-‐based
payment
expenses The
expense
recognised
from
equity-‐settled
share-‐based
payment
transactions
during
the
year
is
$427,895
(2013: $971,085).

The
share-‐based
payment
plans
are
described
below.

(b)
Types
of
share-‐based
payment
plans

1. Share
based
payment
plans
issued
during
the
year
ended
30
June
2014

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**22.

SHARE
BASED
PAYMENTS
PLAN ( CONT’D)**

_**Share

Option
Plan
-‐
Employees**_

*Share Option Plan - Employees*
Number of Options Issued	1,010,000
Expiry Date	14 October 2017
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $0.8424 per Option.
Vesting Conditions for All Options	Employment - Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of the company other than by reason of being a Good Leaver; and Share Price Hurdle - The closing sale price of the Shares traded on the Australian Securities Exchange must have increased by at least 20% of the Exercise Price of the Options for each day in any 20 consecutive trading day period starting on or after the 1stanniversary of the date of issue of the Options.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
Specific Terms	Shares issued in consequence of the exercise of any Options must not be sold, transferred or otherwise disposed of, or mortgaged, charged or otherwise encumbered, during the period of 12 months from the date of issue of the Shares without the prior approval of the Board. 170,000 options have lapsed since issue while none have vested.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**22.

SHARE
BASED
PAYMENTS
PLAN ( CONT’D)**

_**Share

Option
Plan
-‐
Executives**_

*Share Option Plan - Executives*
Number of Options Issued	1,440,000
Expiry Date	8 August 2017
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $0.8438 per Option.
Vesting Conditions for All Options	Employment - Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of the company other than by reason of being a Good Leaver; and Share Price Hurdle - (i) one third of the Options subject to, and vesting on, performance of a hurdle of a 20% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 12 months after the date of issue of the Options and before the expiry of the term of the Options; (ii) a further one third of the Options subject to, and vesting on, a hurdle of a 40% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 24 months after the date of issue of the Options and before the expiry of the term of the Options; and (iii) the remaining one third of the Options subject to, and vesting on, a hurdle of a 60% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 36 months after the date of issue of the Options and before the expiry of the term of the Options.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
Specific Terms	Sale of the shares / Options will be restricted for a period of two years after their date of issue. However, the sale of a portion of shares to fund taxation obligations directly arising from the exercise of the Options will be permitted, subject to compliance with legal obligations in respect of the sale of Company shares. No options have lapsed since issue nor have any options vested.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN ( CONT’D)**

*Share Option Plan - Chairman*
Number of Options Issued	510,000
Expiry Date	8 August 2017
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise)is$0.8438per Option.
Vesting Conditions for All Options	Employment – The options will not be subject to forfeiture on Mr Higgins ceasing to be Chairman of the Company; and Share Price Hurdle - (i) one third of the Options subject to, and vesting on, performance of a hurdle of a 30% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 12 months after the date of issue of the Options and before the expiry of the term of the Options; (ii) a further one third of the Options subject to, and vesting on, a hurdle of a 60% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 24 months after the date of issue of the Options and before the expiry of the term of the Options; and (iii) the remaining one third of the Options subject to, and vesting on, a hurdle of a 90% share price increase (on the Exercise Price) in any consecutive 20 day period occurring at any time after the date that is 36 months after the date of issue of the Options and before the expiryof the term of the Options.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributionspaid to ordinaryshareholders.
Specific Terms	Sale of the shares / Options will be restricted for a period of two years after their date of issue. However, the sale of a portion of shares to fund taxation obligations directly arising from the exercise of the Options will be permitted, subject to compliance with legal obligations in respect of the sale of Company shares. No options have lapsed since issue nor have anyoptions vested.
*Tax Exempt Share Plan - Employees*
Number of Shares Issued	36,797
Expiry Date	Nil
Issue Price	Shares were issued at$0.8424
Vesting Conditions for All Shares	Interests held in the shares are not at risk of forfeiture. There is no condition or requirement that needs to be satisfied in order to acquire the shares.
Voting	Shareholders are entitled to vote.
Dividends	The shares provide entitlement to dividends or other distributions paid to ordinaryshareholders.
Specific Terms	The Shares must not be sold, transferred or otherwise disposed of, or mortgaged, charged or otherwise encumbered, on or before the 3rd anniversary of the date employees acquired the Shares or the date they cease to be employed,whichever occurs first.

HUB24 ANNUAL REPORT 2014 77 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN
(CONT’D)**

2. Share
based
payment
plans
issued
prior
to
1
July
2013

*Advisor Plan 1*
Number of Options Issued	625,000
Expiry Date	31 January 2016
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $4.00 per Option.
Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due to permanent disability, incapacity, illness, redundancy or death.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
Specific Terms for 625,000 Options	Performance-based Component (375,000 options):50% of the Performance based options became fully vested upon the divestment of the stockbroking business in February 2013 while the remaining 50% have lapsed. The full exercise price of $4.00 per option is payable upon exercise. Upfront Component (250,000 options):50% of the Upfront Component options are available to be exercised at any time after grant date being 29 May 2012, while the remaining 50% have lapsed. The full exercise price of $4.00 per option will be payable upon exercise.

There
are
no
cash-‐settlement
alternatives.

There are no cash-settlement alternatives.	price of $4.00 per option will be payable upon exercise.
*Advisor Plan 2*
Number of Options Issued	187,500
Expiry Date	1 January 2016
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $4.00 per Option.
Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due to permanent disability, incapacity, illness, redundancy or death.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
Specific Terms for 187,500 Options	Performance-based Options (187,500 options):50% of the Performance based options became fully vested upon the divestment of the stockbroking business in February 2013 while the remaining 50% have lapsed. The full exercise price of $4.00 per option is payable upon exercise.

There
are
no
cash-‐settlement
alternatives.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN
(CONT’D)**

*Advisor Plan 3*	*Advisor Plan 3*
	Number of Options Issued	1,500,006
	Expiry Date	31 January 2015
	Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $5.20 per Option.
	Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due to permanent disability, incapacity, illness, redundancy or death.
	Voting	Option holders are not entitled to vote.
	Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
	Specific Terms for 1,500,006 Options	Upfront Component (750,000 options): The Upfront Component options are available to be exercised at any time after grant date being 19 April 2011. The full exercise price of $5.20 will be payable upon exercise. Performance-based Component (750,006 options): All the Performance-based options became fully vested in February 2013 with the divestment of the stockbroking business.

There are no cash-settlement alternatives.	There are no cash-settlement alternatives.
*Advisor Plan 4*
	Number of Options Issued	150,000
	Expiry Date	31 January 2015
	Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $5.20 per Option.
	Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due to permanent disability, incapacity, illness, redundancy or death.
	Voting	Option holders are not entitled to vote.
	Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinary shareholders.
	Specific Terms for 150,000 Options	Upfront Component (75,000 options): The Upfront Component options are available to be exercised at the exercise price of $5.20 at any time after grant date being 1 June 2011. Performance-based Component (75,000 options): All the Performance-based options became fully vested in February 2013 with the divestment of the stockbroking business.

There
are
no
cash-‐settlement
alternatives.

HUB24 ANNUAL REPORT 2014 79 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN
(CONT’D)**

22. SHARE BASED PAYMENTS PLAN (CONT’D)	22. SHARE BASED PAYMENTS PLAN (CONT’D)
*Share Option Plan(‘SOP’) – SOP Plan 1*
Number of Options Issued	190,000
Expiry Date	5 December 2015
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $3.80per Option.
Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due topermanent disability,incapacity,illness,redundancyor death.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinaryshareholders.
Specific Terms for 190,000 Options	The options are available to be exercised at any time after grant date being 5 December 2011. The Upfront-based options will vest in tranches of 30% / 30% / 40% over the period as follows: a) Tranche 1 (57,000 options) - the date being the 12 month anniversary of 5 December 2011 (‘SOP Plan 1 Relevant Date’) b) Tranche 2 (57,000 options) - the date being the 24 month anniversary of the SOP Plan 1 Relevant Date c) Tranche 3 (76,000 options) - the date being the 36 month anniversary of the SOP Plan 1 Relevant Date. As at 30 June 2014, 98,750 options have lapsed, 65,750 have vested leaving 25,500 optionsyet to vest.

There
are
no
cash-‐settlement
alternatives.

There are no cash-settlement	alternatives.
*SOP Plan 2*
Number of Options Issued	75,000
Expiry Date	4 February2016
Exercise Price	The exercise price for each Option (which is payable immediately upon exercise) is $3.80per Option.
Vesting Conditions for All Options	Subject to a determination of the board of directors to the contrary, it is a condition of the exercise of an Option that the Option Holder is an employee of or engaged as a consultant to the company unless the Option Holder's employment or consultancy has ceased due topermanent disability,incapacity,illness,redundancyor death.
Voting	Option holders are not entitled to vote.
Dividends	The options do not provide any entitlement to dividends or other distributions paid to ordinaryshareholders.
Specific Terms for 75,000 Options	The options are available to be exercised at any time after grant date being 4 February 2012. The Upfront-based options will vest in tranches of 30% / 30% / 40% over the period as follows: a) Tranche 1 (22,500 options) - the date being the 12 month anniversary of 5 December 2011 (“SOP Plan 2 Relevant Date”); b) Tranche 2 (22,500 options) - the date being the 24 month anniversary of the SOP Plan 2 Relevant Date; c) Tranche 3 (30,000 options) - the date being the 36 month anniversary of the SOP Plan 2 Relevant Date. As at 30 June 2014, 53,125 options have lapsed, 21,875 have vested leaving 25,500 optionsyet to vest.

There
are
no
cash-‐settlement
alternatives.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN
(CONT’D)**

_**Other

Unlisted
Options**_

On
1
December
2010,
the
company
issued
312,500
options
to
Southern
Cross
Equities
Limited
as
a
component
of placement
fees
to
Southern
Cross
Equities
Limited
as
lead
manager
on
the
capital
raising
undertaken
in
December 2010.
These
options
expired
unexercised
on
1
December
2013.

There
are
no
cash-‐settlement
alternatives.

**(c) Summaries

of
options
granted**

The
following
table
illustrates
the
number
and
weighted
average
exercise
prices
(WAEP)
of,
and
movements
in,
share options
issued
during
the
year:

options issued during the year:
	2014 Number	2014 WAEP $	2013 Number	2013 WAEP $
Outstandingat the beginningof theyear	2,515,006	$4.88	3,022,500	$4.72
Granted duringtheyear	2,960,000	$0.84	-	-
Forfeited duringtheyear	173,125	$1.41	507,500	$3.96
Exercised duringtheyear	-	-	-	-
Expired duringtheyear	312,500	$4.80	-	-
Outstandingat end of theyear	4,959,381	-	2,515,006	-
Exercisable at the end of theyear	2,143,881	$4.92	2,435,381	$4.88

The
outstanding
balance
as
at
30
June
2014
is
represented
by:

1,650,006
options
over
ordinary
shares
with
an
exercise
price
of
$5.20
each,
fully
vested.
406,250
options
over
ordinary
shares
with
an
exercise
price
of
$5.20
each,
fully
vested.
113,125
options
over
ordinary
shares
with
an
exercise
price
of
$3.80
each,
65,750
of
which
are
fully
vested
while 25,500
remain
unvested.
840,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8424
each,
yet
to
vest.
1,950,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8438
each,
yet
to
vest.

**(d)

Range
of
exercise
price
and
remaining
contractual
life**

1,650,006
options
have
an
exercise
price
of
$5.20
per
share
and
an
expiry
date
of
31
January
91,250
options
have
an
exercise
price
of
$3.80
per
share
and
an
expiry
date
of
5
December
312,500
options
have
an
exercise
price
of
$4.00
per
share
and
an
expiry
date
of
31
January
21,875
options
have
an
exercise
price
of
$3.80
per
share
and
an
expiry
date
of
4
February
93,750
options
have
an
exercise
price
of
$4.00
per
share
and
an
expiry
date
of
1
January
1,950,000
options
have
an
exercise
price
of
$0.8438
per
share
and
an
expiry
date
of
8
August
840,000
options
have
an
exercise
price
of
$0.8424
per
share
and
an
expiry
date
of
14
October

**(e)

Option
pricing
model**

The
fair
value
of
all
equity-‐settled
options
is
estimated
as
at
the
date
of
grant
using
the
Black-‐Scholes-‐Merton
option formula.

HUB24 ANNUAL REPORT 2014 81 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**22.

SHARE
BASED
PAYMENTS
PLAN
(CONT’D)**

The
following
table
lists
the
inputs
to
the
models
used:

Share
based
payment
plans
issued
during
the
year
ended
30
June
2014

	SOP - Employees	SOP – Executives	SOP - Chairman
Dividend Yield(%)	-	-	-
Expected Volatility(%)	80	80	80
Risk-free Interest Rate(%)	2.4	2.4	2.4
Expected Life of Options(Months)	26	28	28
Option Exercise Price($)	$0.8424	$0.8438	$0.8438
Average Share Price at Measurement Date($)	$0.91	$0.91	$0.91
Model Used	Black-Scholes	Black-Scholes	Black-Scholes

Share
based
payment
plans
issued
prior
to
1
July
2013

	Advisor Plan 1	Advisor Plan 2	Advisor Plan 3	Advisor Plan 4	SOP Plan 1	SOP Plan 2
Dividend Yield(%)	-	-	-	-	-	-
Expected Volatility(%)	50	50	35	35	45	45
Risk-free Interest Rate(%)	2.49	2.76	5.02	5.02	3.35	3.27
Expected Life of Options (Months)	44	48	45	43	48	48
Option Exercise Price($)	4.00	4.00	5.20	5.20	3.80	3.80
Average Share Price at Measurement Date($)	2.04	2.36	4.40	4.00	3.04	3.04
Model Used	Black- Scholes	Black- Scholes	Black- Scholes	Black- Scholes	Black- Scholes	Black- Scholes

**23.

SIGNIFICANT
EVENTS
AFTER
THE
REPORTING
DATE**

Since
30
June
2014
HUB24
Limited
has
agreed
to
acquire
100%
of
the
issued
shares
in
Paragem
Pty
Ltd,
a
boutique AFSL
provider,
for
upfront
cash
consideration
of
$1.0
million,
deferred
cash
consideration
of
up
to
a
further
$1.0 million
and
capped
earnout
consideration
of
up
to
$6.0
million
subject
to
financial
performance
measured
over
3 years
and
paid
in
HUB24
ordinary
shares
no
later
than
30
September
2017. The
acquisition
is
subject
to
conditions precedent
in
favour
of
HUB24
Limited.

Paragem
is
a
leading
boutique
dealer
group,
founded
by
Ian
Knox
and
Charlie
Haynes
that
has
grown
strongly
to license
20
high
quality
financial
advisory
practices
across
Australia,
which
advise
on
more
than
$2.5
billion
of
client funds.

The
acquisition
of
Paragem
is
consistent
with
HUB24’s
strategy
to
pursue
significant
growth
by
partnering
with
quality independently
minded
financial
advisers
(IFAs).
We
will
be
working
together
with
Paragem
and
HUB24’s
existing highly
valued
advice
licensees
with
the
company
continuing
to
develop
solutions
for
the
benefit
of
the
IFA
market
and consumers.
Together
we
will
provide
a
compelling
home
for
like-‐minded
financial
advisers
who
value
choice
and
the ability
to
freely
run
their
own
business,
while
working
with
HUB24
to
develop
better,
more
cost
effective
client outcomes.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**23.

SIGNIFICANT
EVENTS
AFTER
THE
REPORTING
DATE
(CONT’D)**

Both
HUB24
and
Paragem
will
retain
their
existing
business
and
brands
and
will
continue
to
operate
independently. Importantly,
Paragem
will
retain
its
open
architecture
approach
to
approved
products
and
platforms
and
HUB24
will maintain
its
focus
on
supporting
the
growth
and
prosperity
of
its
existing
licensee
clients
and
pursuing
new
client opportunities
with
its
market-‐leading
platform
solution.

This
acquisition
is
consistent
with
HUB24’s
core
proposition
of
providing
high
value
services
to
licensees
and
advisers. This
entry
into
the
advice
space
is
expected
to
result
in
a
further
enhancement
of
HUB24’s
rapid
growth, diversification
of
the
company’s
revenue
streams
and
continued
improvements
to
platform
functionality,
which
will be
highly
valued
by
the
broader
IFA
market.
In
addition
to
providing
our
HUB24
retail
products
to
advisers,
we
will continue
to
focus
on
our
core
business
providing
white
labels
to
financial
planning
groups,
accountants
and stockbrokers
whilst
also
developing
and
supporting
the
Paragem
business.

HUB24’s
platform
will
enable
Paragem
advisers
to
act
in
the
best
interests
of
their
clients.
We
will
offer
a
pathway
to a
broad
investment
universe,
free
of
product
issuer
conflict,
utilising
direct
securities,
managed
accounts,
traditional managed
funds
as
well
as
multiple
term
deposit
and
insurance
providers.
Our
competitive
advantage
is
that
we
are not
aligned
with
product
manufacturers
and
therefore
not
constrained
in
the
products
we
offer.

The
Directors
also
wish
to
announce
the
appointment
of
Andrew
Alcock
to
the
board
of
the
company
and
the
position of
Managing
Director
effective
today.

No
other
matter
or
circumstance
has
arisen
since
30
June
2014
that
has
significantly
affected,
or
may
significantly affect
the
consolidated
entity’s
operations,
the
results
of
those
operations,
or
the
consolidated
entity’s
state
of
affairs in
future
financial
years.

HUB24 ANNUAL REPORT 2014 83 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**24.

LOSS
PER
SHARE**

The
following
reflects
the
income
and
share
data
used
in
the
calculations
of
basic
and
diluted
loss
per
share:

	CONSOLIDATED 2014 2013 $ $
Earnings per share from continuing operations Profit/(Loss) after income tax Profit /(Loss) after income tax attributable to the owners of HUB24 Ltd used in calculating basic and diluted earnings per share
	(7,743,187) (5,798,409)
	(7,743,187) (5,798,409)
	CONSOLIDATED 2014 2013 Number Number
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share Basic earnings per share Diluted earnings per share Earnings per share from discontinuing operations Profit/(Loss) after income tax Profit /(Loss) after income tax attributable to the owners of HUB24 Ltd used in calculating basic and diluted earnings per share	42,786,411 31,082,524 Cents Cents
	(18.10) (18.65)
	(18.10) (18.65)
	$ $
	(679,825) (3,984,559)
	(679,825) (3,984,559)
	Number Number
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share	42,786,411 31,082,524 Cents Cents
Basic earnings per share Diluted earnings per share Earningsper share for loss
	(1.59) (12.82)
	(1.59) (12.82)
	$ $
Profit/(Loss) after income tax Profit/(Loss) after income tax attributable to the owners of HUB24 Ltd used in calculating basic and diluted earnings per share
	(8,423,012) (9,782,968)
	(8,423,012) (9,782,968)

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**24.

LOSS
PER
SHARE
(CONT’D)**

24. LOSS PER SHARE (CONT’D)
	Number	Number
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share	42,786,411	31,082,524
	Cents	Cents
Basic earnings per share	(19.69)	(31.47)
Diluted earnings per share	(19.69)	(31.47)

There
are
no
instruments
(e.g.,
share
options)
excluded
from
the
calculation
of
diluted
earnings
per
share
that
could potentially
dilute
basic
earnings
per
share
in
the
future
because
they
are
anti-‐dilutive
for
either
of
the
periods
presented.

**25.

AUDITORS’
REMUNERATION**

25. AUDITORS’ REMUNERATION
	CONSOLIDATED 2014 2013 $ $
Amounts received or due and receivable by BDO: Audit and review of financial statements and other regulatory returns Tax and other services Total audit and other fees	92,500 120,000 64,802 81,000
	157,302 201,000

**26.

RELATED
PARTY
DISCLOSURES**

(a) Subsidiaries

The
consolidated
financial
statements
include
the
financial
statements
of
HUB24
Limited
and
the
Australian subsidiaries
listed
in
the
following
table.

Name	% Equity Interest 2014 2013	% Equity Interest 2014 2013
Hub24 Custodial Services Limited (formerly ANZIEX Ltd)	100	100
HUB24 International Nominees Pty Ltd (formerly ANZIEX Nominees Ltd)	100	100
Firstfunds Ltd HUB24 Management Services Pty Ltd Investorfirst Securities Ltd HUB24 Nominees Pty Ltd (formerly Kardinia Nominees Pty Ltd) Researchfirst Pty Ltd	100 100 100 100 100	100 100 100 100 100
Captain Starlight Nominees Pty Ltd Findlay & Co Stockbrokers Ltd Aequs Capital Ltd HUB24 Administration Pty Ltd HUB24 Services Pty Ltd Alert Trader Pty Ltd * Alert Trader Publishing Pty Ltd Alert Trader Securities Pty Ltd ** Marketsplus Holdings Pty Ltd Marketsplus Australia Pty Ltd	100 100 - 100 100 - - - 100 100	100 100 100 100 100 100 100 100 100 100

HUB24 ANNUAL REPORT 2014 85 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Continued

**26.

RELATED
PARTY
DISCLOSURES
(CONT’D)**

This
company
was
deregistered
on
3
July

**
These
companies
are
no
longer
trading
and
there
is
no
intention
that
they
will
resume
activities.
The
process
to
de-‐ register
these
entities
has
commenced.

**(b) Ultimate

parent**

HUB24
Limited
is
the
ultimate
parent
entity
of
the
consolidated
entity.

**27.

PARENT
ENTITY
FINANCIAL
INFORMATION**

Set
out
below
is
the
supplementary
information
about
the
parent
entity.

Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income

Statement of Profit or Loss and Other Comprehensive Income
	CONSOLIDATED
	2014 2013
	$ $

Profit/(Loss) after income tax	(9,947,544) (4,313,539)
Total comprehensive income	(9,947,544) (4,313,539)

Statement of Financial Position

Total current assets	139,054 1,449,263

Total assets	21,373,186 20,810,430
Total current liabilities	- -
Total liabilities	- -
Equity
Issued capital	77,107,342 66,993,937
Reserves	1,332,009 935,114
Accumulated losses	(57,066,165) (47,118,621)
Total equity	21,373,186 20,810,430

**Contingent

liabilities**

The
parent
entity
had
no
contingent
liabilities
as
at
30
June
2014
and
30
June
2013.

**Capital

commitments
-‐
Office
equipment**

The
parent
entity
had
no
capital
commitments
as
at
30
June
2014
and
30
June
2013.

**Significant

accounting
policies**

The
accounting
policies
of
the
parent
entity
are
consistent
with
those
of
the
consolidated
entity,
as
disclosed
in
Note 2,
except
for
investments
in
subsidiaries
which
are
accounted
for
at
cost,
less
any
impairment,
in
the
parent
entity.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**28.

KEY
MANAGEMENT
PERSONNEL**

**Key

management
personnel
compensation**

Key management personnel compensation
	CONSOLIDATED
	2014 2013
	$ $
Short term employment benefits	2,309,934 2,035,553
Post employment benefits	103,634 66,895
Share based payments	302,531 467,208
Total compensation
	2,716,099 2,569,656

**29.

FINANCIAL
INSTRUMENTS**

The
company’s
principal
financial
instruments
comprise
cash,
receivables,
and
payables.
For
the
year
ended
30
June 2014,
the
consolidated
entity
does
not
utilise
derivatives,
holds
no
debt
and
has
not
traded
in
financial
instruments including
derivatives
other
than
listed
and
unlisted
securities
and
options
over
listed
and
unlisted
securities,
where received
as
corporate
fee
income.
The
company
has
other
financial
assets
and
liabilities
such
as
trade
receivables
and trade
and
other
payables,
which
arise
directly
from
its
operations
and
are
non-‐interest
bearing.

_Interest

rate
risk_

The
consolidated
entity
is
not
materially
exposed
to
movements
in
short-‐term
variable
interest
rates
on
cash
and
cash equivalents.
All
other
financial
assets
and
liabilities
are
non-‐interest
bearing.
The
Directors
believe
a
50
basis
point decrease
is
a
reasonable
sensitivity
given
current
market
conditions.
A
100
basis
point
increase
and
a
50
basis
point decrease
in
interest
rates
would
increase/decrease
profit
and
loss
in
the
consolidated
entity
and
the
company
by:

	CONSOLIDATED 2014 2013 $ $
Cash and cash equivalents at end of period 100 basis points increase in interest rate 50 basis points decrease in interest rate Net impact on loss after tax Loss for the year 100 basis points increase in interest rate 50 basis points decrease in interest rate	13,779,844 9,542,846
	137,798 95,428 (68,899) (47,714) (8,423,012) (9,782,968)
	(8,285,214) (9,687,539)
	(8,491,911) (9,830,682)

_Liquidity

risk_

The
table
below
reflects
all
contractually
fixed
pay-‐offs
and
receivables
for
settlement,
resulting
from
recognised financial
assets
and
liabilities.
Cash
flows
are
undiscounted.
The
remaining
contractual
maturities
of
the
consolidated entity’s
and
parent
entity’s
financial
liabilities
are:

HUB24 ANNUAL REPORT 2014 87 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**29.

FINANCIAL
INSTRUMENTS
(CONT’D)**

29. FINANCIAL INSTRUMENTS (CONT’D)
	CONSOLIDATED 2014 2013 $ $
Not later than one month
	415,374 405,452
Later than 1 month not later than 3 months	229,271 333,947
Later than 3 months not later than 1 year	17,585 2,000
Later than 1year	- -
	662,230 741,399

_Maturity

Analysis
of
Financial
Assets
and
Liabilities_

The
risk
implied
from
the
values
shown
in
the
table
below
is
based
on
best
estimates
and
reflect
a
balanced
view
of cash
inflows
and
outflows.
Leasing
obligations,
trade
payables
and
other
financial
liabilities
mainly
originate
from
the financing
of
assets
used
in
our
ongoing
operations
such
as
office
equipment,
platform
development
and
investments in
working
capital
e.g.
receivables.
These
assets
are
considered
in
the
consolidated
entity’s
overall
liquidity
risk.

30 June 2014	0-1 month 1-3 months 4-12 months 1-5 years Total
Consolidated Financial assets:
Cash and cash equivalents	13,779,844 - - - 13,779,844
Trade and other receivables	184,093 111,672 110,221 - 405,986
	13,963,937 111,672 110,221 - 14,185,830
Consolidated Financial liabilities:
Trade and otherpayables	415,374 229,271 17,585 - 662,230
	415,374 229,271 17,585 - 662,230

Net maturity	13,548,563 (117,599) 92,636 - 13,523,600

30 June 2013
Consolidated Financial assets:
Cash and cash equivalents	9,542,846 - - - 9,542,846
Trade and other receivables	1,383,130 - - - 1,383,130
	10,925,976 - - - 10,925,976
Consolidated Financial liabilities:
Trade and otherpayables	405,452 333,947 2,000 - 741,399
	405,452 333,947 2,000 - 741,399

Net maturity	10,520,524 (333,947) (2,000) - 10,184,577

The
consolidated
entity
monitors
rolling
forecasts
of
liquidity
reserves
on
the
basis
of
expected
cash
flow
and
aims
to maintain
a
minimum
equivalent
of
90
days
worth
of
operational
expenses
in
cash
reserves. Market
Risk

The
consolidated
entity
is
not
materially
exposed
to
movements
in
market
prices.

The
net
fair
value
of
financial
assets
and
liabilities
approximates
their
carrying
values
and
the
methods
for
estimating fair
values
are
outlined
in
the
relevant
notes
to
the
financial
statements.

HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Continued

**29.

FINANCIAL
INSTRUMENTS
(CONT’D)**

_Fair

value
Measurement_

The
consolidated
entity
has
a
number
of
financial
instruments
which
are
not
measured
at
fair
value
in
the
statement of
financial
position.
These
had
the
following
fair
values
at
30
June
2014:

of financial position. These had the following fair values at 30 June 2014:
	CONSOLIDATED $ $
Current Assets Rental bonds and guarantees Non-Current Assets Rental bonds and guarantees	Carrying Fair value
	amount amount

	116,600 116,600


	547,307 547,307
	663,907 663,907

Due
to
their
short
term
nature,
the
carrying
amounts
of
current
trade
and
other
receivables
and
current
trade
and other
payables
is
assumed
to
approximate
their
fair
value.

HUB24 ANNUAL REPORT 2014 89 FINANCIAL STATEMENTS

DIRECTORS’ DECLARATION

FOR THE YEAR ENDED 30 JUNE 2014

In the opinion of the Directors:

(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001 and other mandatory professional reporting requirements.
(b) the financial statements and notes comply with International Financial Reporting Standards as disclosed in Note 2.
(c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(d) this declaration has been made after receiving the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors.

==> picture [92 x 28] intentionally omitted <==

Bruce Higgins Chairman Sydney, 29 August 2014

HUB24 ANNUAL REPORT 2014 DIRECTORS’ DECLARATION

INDEPENDENT AUDITOR’S REPORT

==> picture [61 x 24] intentionally omitted <==

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   

         

 

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    

HUB24 ANNUAL REPORT 2014 INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT Continued

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    

HUB24 ANNUAL REPORT 2014 INDEPENDENT AUDITOR’S REPORT

ASX ADDITIONAL INFORMATION

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. This information is current as at 26 August 2014.

DISTRIBUTION OF EQUITY SECURITIES

Ordinary share capital – 47,058,181 fully paid ordinary shares are held by 1,451 individual security holders.

All issued ordinary shares carry one vote per share without restriction and carry the rights to dividends. The number of security holders, by size of holding, in each class are:

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Fully paid ordinary shares - Holders Total Units %
Holdings Ranges
1–1,000 428 165,191 0.4
1,001–5,000 474 1,315,184 2.8
5,001–10,000 210 1,696,221 3.6
10,001–100,000 283 8,672,363 18.4
100,001 and over 56 35,209,222 74.8
Totals 1,451 47,058,181 100.0
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Holding less than a marketable parcel of shares, based on the closing price $1.14 on 26 August 2014, are 244 shareholders.

OPTIONS

4,959,381 options are held by option holders. Options do not carry a right to vote.

SUBSTANTIAL SHAREHOLDERS – QUOTED ORDINARY SECURITIES

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||||
|---|---|---|
|Number fully paid|%|
|THORNEY HOLDINGS PTY LTD & Related Parties|8,289,012|17.6|
|ACORN CAPITAL LTD|4,738,278|10.1|
|IAN LITSTER & Related Parties|3,588,751|7.6|

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HUB24 ANNUAL REPORT 2014 ASX ADDITIONAL INFORMATION

ASX ADDITIONAL INFORMATION Continued

HUB24 LIMITED FULLY PAID ORDINARY SHARES

TOP 20 HOLDINGS AS AT 26-08-2014

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Holder Name Balance at 26-08-2014 %
UBS NOMINEES PTY LTD 3,895,896 8.3
THORNEY HOLDINGS PTY LTD 3,878,000 8.2
NATIONAL NOMINEES LIMITED 3,423,322 7.3
CITICORP NOMINEES PTY LIMITED 2,559,468 5.4
CS FOURTH NOMINEES PTY LTD 2,006,260 4.3
LITSTER & ASSOCIATES PTY LTD 1,504,911 3.2
FINOOK PTY LTD 1,475,000 3.1
WEALTHPLAN TECHNOLOGIES PTY LTD 1,247,545 2.7
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 1,203,496 2.6
JASFORCE PTY LTD 1,202,001 2.6
J P MORGAN NOMINEES AUSTRALIA LIMITED 1,131,531 2.4
BRISPOT NOMINEES PTY LTD 850,238 1.8
SKYLYX PTY LTD 774,793 1.6
EGG AU PTY LTD 692,715 1.5
MR BRUCE HIGGINS & MRS RUTH HIGGINS 510,000 1.1
CRX INVESTMENTS PTY LTD 500,000 1.1
ANZ TRUSTEES LIMITED 492,125 1.0
LITSTER & ASSOCIATES PTY LTD 462,000 1.0
RACT SUPER PTY LTD 400,000 0.9
MR PETER BARRETT CAPP 350,000 0.7
LITSTER & ASSOCIATES PTY LTD 350,000 0.7
Total 28,909,301 61.4
Total Issued Capital 47,058,181
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HUB24 ANNUAL REPORT 2014 ASX ADDITIONAL INFORMATION

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hub24.com.au

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AI assistant

HUB24 LIMITED — Annual Report 2014

65077_rns_2014-08-28_c1b8551d-232c-4d63-9d39-615ba440f4cb.pdf

CORPORATE DIRECTORY

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

SHARE REGISTRY

Boardroom Pty Limited

AUDITORS

BDO East Coast Partnership

SOLICITORS

Minter Ellison

Minter Ellison

INTERNET ADDRESS

BANKERS

CONTENTS

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

DIVIDENDS

AUDITOR REVIEW

ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD

Aequs Capital Ltd

EXPLANATION OF RESULT

Alert Trader Pty Ltd

CHAIRMAN AND CEO REPORT

Dear Shareholders,

CORPORATE

COMPANY SUCCESSES

$991m

345

$13.8m

161%

Super

3rd

188

FINANCIAL PERFORMANCE

GROSS PROFIT EMERGES WITH INCREASING SCALE $ PER MONTH

GROWTH

FUA BALANCE $M

FUA AND INFLOWS

ACQUISITIONS

CORPORATE GOVERNANCE

OPERATIONS

OUTLOOK

BUSINESS OVERVIEW

OUR INDUSTRY

ABOUT HUB24

OUR GROWTH

PROJECTED SUPERANNUATION ASSETS (2012 TO 2033)

KEY PLATFORM STATISTICS

FUA BALANCE $M

INFLOWS – QUARTERLY $M

YEAR ON YEAR INCREASES (FY14 OVER FY13)

INDUSTRY RECOGNITION[1]

KEY STRENGTHS

MANAGED PORTFOLIOS

FUA BY INVESTMENT TYPE $M

INDEPENDENCE

TECHNOLOGY

R&D INCENTIVES CONTINUE

DIRECTORS’ REPORT

BRUCE HIGGINS B ENG CP ENG, MBA, FAICD CHAIRMAN AND NON-EXECUTIVE DIRECTOR

VAUGHAN WEBBER B EC NON-EXECUTIVE DIRECTOR

HUGH ROBERTSON NON-EXECUTIVE DIRECTOR

IAN LITSTER B SC (HONS) NON-EXECUTIVE DIRECTOR

COMPANY SECRETARY

MATTHEW HAES B Ec (Syd) ACA AGIA

DIRECTORS’ INTERESTS

CONSOLIDATED ENTITY OVERVIEW

PRINCIPAL ACTIVITIES

CAPITAL RAISING

REVIEW OF FINANCIAL RESULTS

DIRECTORS’ REPORT Continued

GROSS PROFIT

FUA BALANCE $M

EBITDA (PRE-INVESTMENT)

GROSS PROFIT & EBITDA (PRE-INVESTMENT) TREND $M

EBITDA (POST-INVESTMENT)

OTHER ITEMS

HUB24 LIMITED Annual Report 2014