SEQUOIA FINANCIAL GROUP LTD — Annual Report 2017

Aug 30, 2017

Appendix 4E Preliminary final report

1. COMPANY DETAILS

Name of entity:	Sequoia Financial Group Limited
ABN:	90 091 744 884
Reporting period:	For the year ended 30 June 2017
Previous period:	For the year ended 30 June 2016

2. RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenues from ordinary activities	up	93.1% to	44,364,946
Profit from ordinary activities after tax attributable to the ownersof Sequoia Financial Group Limited	up	121.5% to	709,799
Profit for the year attributable to the owners of SequoiaFinancial Group Limited	up	121.5% to	709,799
DividendsThere were no dividends paid, recommended or declared duringthe current financial period.
CommentsThe profit for the Group after providing for income tax andnon-controlling interest amounted to $709,799 (30 June 2016:$320,397).

3. NET TANGIBLE ASSETS

	Reporting period Cents	Previous period Cents
Net tangible assets per ordinary security	3.04	0.01

4. CONTROL GAINED OVER ENTITIES

Not applicable.

5. LOSS OF CONTROL OVER ENTITIES

Not applicable.

6. DIVIDENDS

Current period There were no dividends paid, recommended or declared during the current financial period.

Previous period There were no dividends paid, recommended or declared during the previous financial period.

7. DIVIDEND REINVESTMENT PLANS

Not applicable.

8. DETAILS OF ASSOCIATES AND JOINT VENTURE ENTITIES

Not applicable.

9. FOREIGN ENTITIES

Details of origin of accounting standards used in compiling the report:

Not applicable.

10. AUDIT QUALIFICATION OR REVIEW

Details of audit/review dispute or qualification (if any):

The financial statements have been audited and an unqualified opinion has been issued.

11. ATTACHMENTS

Details of attachments (if any): The Annual Report of Sequoia Financial Group Limited for the year ended 30 June 2017 is attached.

12. SIGNED

Date: 31 August 2017

Michael Carter Chairman Sequoia Financial Group Sydney

Sequoia Financial Group Limited

ABN 90 091 744 884

Annual Report 30 JUNE 2017

CONTENTS

Portfolio of Companies3
Chairman's report4
Directors' report6
Auditor's independence declaration23
Consolidated statement of profit or loss and other comprehensive income24
Consolidated statement of financial position25
Consolidated statement of changes in equity26
Consolidated statement of cash flows27
Notes to the consolidated financial statements28
Directors' declaration78
Independent auditor's report to the membersof Sequoia Financial Group Limited79
Shareholder information85
Corporate directory87

Portfolio of Companies

D2MX Pty Ltd is an ASX market participant providing advisory and trade execution services to retail investors, institutional and wholesale dealer groups. Services include:

• general and personal advice;
• corporate advisory;
• institutional equity sales; and
• wholesale broking.

Sequoia Direct Pty Ltd (formerly known as Trader Dealer Online Pty Ltd) is an online trading Company providing general advice, executiononly trading and software solutions for clients investing in ASX equities, options and warrants.

Bourse Data Pty Ltd is a software technology Company that develops, sells and supports The Bourse market data platform.

Proprietary software platforms include d2mxIRESS and Market Analyser.

Sequoia Specialist Investments Pty Ltd ("SSI") is a leading issuer of bespoke investment products to retail, sophisticated and other wholesale investors. SSI has established a suite of products providing investors with exposure to unique investment themes.

Sequoia Asset Management Pty Ltd is an investment services firm and holder of an Australian Financial Services License. Our team of experts provide general advice on portfolio management, SMSFs, direct shares, superannuation, structured products, option trading, personal insurance, margin lending and cash solutions.

Sequoia Superannuation Pty Ltd provides a complete portfolio administration solution to the SMSF market, designed specifically for anyone that has or wants a SMSF. Sequoia Superannuation also provides SMSF portfolio administration solutions to financial planners, stock brokers, mortgage brokers and accountants Australia wide.

Sequoia Corporate Finance Pty Ltd provides specialised corporate advisory services to clients. Clients include successful domestic and multi-national corporations, emerging growth companies, private equity sponsors and familyowned and entrepreneur-led businesses. We are rigorous in our working practices, ensuring compliance, confidentiality and protection of our client's business.

Sequoia Wealth Management Pty Ltd offers general and personal advice on financial services products. These products include Australian equities, International Shares, options, corporate finance, managed portfolios, margin lending, fixed income, structured products and contracts for difference (CFD's).

Finance TV Pty Ltd ("FNN") is a partly owned (53.95%) subsidiary of Sequoia Financial Group Ltd. FNN is an independent news organisation that specialises in both the production and distribution of financial news content, digital communications and productions services to ASX-Listed companies and managed funds. Annually FNN produces more than 3000 video news items.

Sequoia Funds Management Pty Ltd manages various activities in bringing unit trust and managed schemes to retail investors.

CHAIRMAN'S REVIEW

Financial Year 2017 has been a year of growth, investment and development for Sequoia Financial Group Limited ('Sequoia' or 'the Company'), characterised by solid financial results, investment in the business to scale up and strong operational progress across all divisions.

Sequoia has continued to evolve into a well-regarded financial services company with a diversified and growing base of recurring revenue streams as well as continued growth and diversification through earnings accretive acquisitions.

This growth trajectory is only just beginning.

A solid financial performance

Sequoia's 2017 performance is best reflected in its improved financial results recorded for the year. Revenue increased almost 93% to $44.4 million (FY2016: $23.0 million), EBITDA was up 101% to $1.5 million (FY2016: $743,956) and net profit after tax increased 154% to $725,573 (FY2016: $285,733).

In reporting these financial results, it is important to recognise as at 30 June Sequoia has net deferred revenue of approximately $3.3 million. The revenue and associated costs have been received and subsequently paid however due to the nature of the investment product and adopting best practice accounting standards the revenue is spread over the lifetime of the investment. Of the $3.3 million, approximately $2.6 million was received in FY17 with approx. $1.3 million to be realised in the current financial year (FY18). Recognising this future income gives greater perspective to the net profit and margins reported this financial year and scope for continued NPAT growth in coming years.

Sequoia's revenue performance from operating divisions is pleasing which has resulted in Sequoia exceeding its overall revenue forecasts.

Sequoia has enjoyed a positive cash flow each quarter in financial year 2017 culminating in an operating cash flow of $5.8 million, being a major turnaround from prior years (FY16: negative cash flow of $248,798). This is reflective of the strong cash generating capabilities of the operating divisions. Further to this, loans reduced by 21%.

Sequoia ended the year with net cash at bank of $6.2 million, providing sufficient financial flexibility for the current year.

Strengthened leadership

Sequoia recognises the critical importance of continuously optimising the skills of its Board and management ranks to ensure that it has the expertise necessary to become a leading and respected financial services organisation.

As a result of this ongoing process, Sequoia was delighted to welcome highly regarded financial services professional Garry Crole to its' Board in November 2016. Garry brings more than 30 years' experience to the role, including extensive expertise in establishing and developing financial services firms. These capabilities have been invaluable as Sequoia takes the next step in its growth.

Improved capital structure to facilitate ongoing growth

Another important milestone in Sequoia's transformation in the year has been the streamlining of our capital structure through a 100 to 1 share consolidation to assist meaningful value-accretive acquisitions. The improvement to the capital structure has also been an important step in making the Company more marketable and appealing to the investment community.

Complementary acquisitions

During the year, Sequoia continued its track record of growth through complementary acquisitions with the proposed acquisition of Melbourne-based financial and professional services business InterPrac, announced in June 2017.

Interprac is highly complementary to Sequoia's current operating divisions and will add immediate scale to a number of the Company's divisions including SMSF Administration, Wealth Advisory and Investment Solutions.

Pleasing progress has been made towards executing the acquisition and the Sequoia Board will dispatch a Notice of AGM to shareholders to convene a shareholder meeting early in November 2017 to approve this transaction. The Sequoia Board is delighted to present this opportunity to shareholders for their support.

A sound foundation now in place

Financial year 2018 has commenced well for Sequoia and the Board anticipates continued growth in revenue and earnings, driven by organic growth. Sequoia expect returns on the investments it has made in operational efficiency in 2016 and again in 2017 to further improve performance, including contribution from the Interprac business, subject to shareholder approval of the acquisition.

With a stronger Board, a conservative capital structure and growing diversified recurring revenue streams, Sequoia is poised for the next phase of growth. Acquisitions that make a positive contribution to earnings and strengthen existing operations will continue to be a focus, as will organic growth initiatives.

I would like to take this opportunity to thank our people for their hard work and commitment during the year. Sequoia now have a team of over 50 professionals and staff in Sydney and Melbourne who represent our brand and values well, and they are to be commended for their efforts.

Sequoia and its' Board are also grateful to our valued shareholders for their ongoing support, and assure you, the Board and Management team is working hard to realise Sequoia's true value and establish the Company as a trusted, dependable and well recognised Australian financial services business. Improving profit contribution and sharing this with our shareholders in coming years is a priority.

Our mission is to generate profitable growth through superior customer service, innovation, quality advice and commitment to our industry. It is early stages but we believe Sequoia has begun the journey on delivering on this objective.

In concluding this shareholder update, I would specifically like to thank our Managing Director Scott Beeton for his vision in commencing the Sequoia journey. In particular, for all of his hard work and that of his management team, who have turned the business around to create a strong environment that over time has the potential to deliver shareholders returns on their investment.

Michael Carter Chairman

Directors' report

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Sequoia Financial Group Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2017.

DIRECTORS

The following persons were directors of Sequoia Financial Group Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Scott Lionel Beeton Managing Director Marcel John Collignon Executive Director

Michael Kenneth Carter Non-Executive Chairman Garry Peter Crole Non-Executive Director (appointed 18 November 2016)

PRINCIPAL ACTIVITIES

The Group's principal activities offer diversified financial products, including but not limited to investment and superannuation products, wealth management services and retail, wholesale and institutional trading platforms.

DIVIDENDS

There were no dividends paid, recommended or declared during the current or previous financial year.

REVIEW OF OPERATIONS

The profit for the Group after providing for income tax and non-controlling interest amounted to $709,799 (30 June 2016: $320,397).

The comprehensive income attributable to owners is $830,652 (30 June 2016: $618,042).

Summary of results

Operating performance

	2017$	2016$	Change$	Change%
Revenue	44,364,946	22,980,597	21,384,349	93%
Expenses	(43,328,524)	(22,479,006)	(20,849,518)	93%
Profit before tax	1,036,422	501,591	534,831	107%
Tax expense	(310,849)	(215,858)	(94,991)	44%
Profit after tax	725,573	285,733	439,840	154%

Cash flow

	2017$	2016$
Operating cash flow	5,837,865	(248,798)
Investing cash flow	(114,453)	(841,309)
Financing cash flow	(358,825)	1,289,411
Net increase in cash	5,364,587	199,304
Opening cash	812,831	613,527
Closing cash	6,177,418	812,831

Financial position

	2017$	2016$
Current assets	22,707,527	6,317,616
Non-current assets	42,399,752	22,115,179
Total assets	65,107,279	28,432,795
Current liabilities	20,915,562	9,004,539
Non-current liabilities	33,989,637	10,132,986
Total liabilities	54,905,199	19,137,525
Net assets	10,202,080	9,295,270

Business review

Trading and Execution

The Trading and execution division has experienced strong growth to its wholesale client base in financial years 2016 and 2017, with revenue growth in financial year 2017 of 32%.

D2MX Pty Ltd (D2MX) is a leading provider of seamless and cost effective third-party stock broking execution solutions to AFSL holders. Its investment of resources into third-party solutions resulted in increased revenue in financial year 2016 and we expect to see realisation of investments in this area over the coming financial year, culminating in a growing market awareness of D2MX with financial services professionals seeking its services.

Consolidated

Software Subscriptions

During the financial year, we continued to invest in our Fintech business Bourse Data Pty Ltd and released enhanced state-of-the-art software allowing users to have a key cross-platform advantage. The launched software has a mobile application with full trading functionality and offers a white label solution to wholesale clients of D2MX allowing them to offer a customised solution to their clients.

We expect this software will create stronger loyalty to D2MX execution clients resulting in increased revenue turnover and overall satisfaction of the end customer.

Capital Markets Advisory

The Capital Markets Advisory division increased revenue by 255% in financial year 2017. It continued to be a consistent contributor to Group performance with several exclusive mandates signed during the financial year that made a pleasing contribution to revenue. Mandates included IPO's, secondary capital placements, rights issues, merger and acquisitions, hybrid securities and debt advisory.

Self-Managed Superannuation Fund Administration

Sequoia Superannuation Pty Ltd continued its consistent revenue growth trajectory during financial year 2017, through an increase in new mandates secured for the administration of SMSFs, resulting in a revenue increase of 14%. The division is a reliable and growing source of recurring revenue streams and has been successful in building the number of SMSFs under administration to more than 850.

Wealth Advisory

The revenue of the Wealth Advisory Division increased by 93% over financial year 2017. The specialised team of Sequoia Asset Management continued to provide general advice and support with investment solutions including in respect to SMSF's, portfolio management, securities, derivatives, superannuation, structured products, and insurance whilst Sequoia Wealth Management obtained its own financial services licence during the financial year focusing its activities on recruitment of new advisors and roll outing new product and service offerings to its client base.

Investment Solutions

The Investments Solutions division experienced revenue growth of 165% due to many of its' investment offers resonating well with investors and their advisors. Investment in resources to educate external advisers has resulted in greater demand from wholesale clients with a number of bespoke solutions requested and delivered.

Growing awareness of our Investment Solutions division together with several planned upcoming investment products are expected to continue to appeal to investors and their advisers and contribute to future revenue.

Sequoia Funds Management

In its first year of operation, the Sequoia Funds Management division achieved pleasing traction with its flagship investment vehicle, the AIM Gateway Fund. The AIM Gateway Fund is an Australian unit trust and registered managed investment scheme providing investors (including Retail Clients) with exposure to the AIM Global High Conviction Fund, which is a wholesale unit trust only open to wholesale investors.

The Gateway Fund is a "feeder fund" which is managed by Sequoia Funds Management Pty Ltd and designed to provide investors with returns linked to the performance of the AIM Fund and Cash (net of fees).

Directors' report

An increase in fees payable to the division arranged late in the financial year together with strong fund performance, the AIM Gateway Fund is likely to continue its forward momentum building its funds under management. The fund is seeing increased interest from AFSL holders and expects to gain approval on various investment platforms. Strong direct retail interest is also continuing. All of this is expected to see this division grow its funds under management.

Financial News Services

FNN contributed $1.3 million to the Group result this financial year following its acquisition in 2016. As the largest supplier of wholesale online finance news specialising in both the production and distribution of financial news content involving greater than 3,000 video news items annually, we believe it will contribute favourably to the Group.

The Group vision is represented by the Sequoia tree, with a strong foundation at its base, once it is formed it has the capability to grow to be amongst the tallest, widest, longest and fastest growing organisms on earth.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

At the Company's Annual General Meeting ('AGM') held on 1 November 2016, the Sequoia Employee Incentive Plan ('SEIP') was approved by shareholders. A summary of the key terms of the SEIP is set out in the Company's notice of the 2016 AGM lodged on the ASX.

On 1 September 2016, the Group acquired an additional 3.86% shareholding in Finance TV Pty Ltd bringing its total shareholding to 53.95%.

On 1 February 2017, the Company granted 1,300,000 performance rights under the terms and conditions of the Sequoia Employee Incentive Plan. Vesting of performance rights were made subject to prescribed service and performance conditions. Vesting occurs in tranches on 31 January 2018, 31 January 2019 and 31 January 2020 with the expiry date of all performance rights being 31 January 2022.

On 19 June 2017, the Company announced that it proposed to acquire InterPrac Limited ('InterPrac'), a well-established financial and professional services business that is highly complementary to the Group's existing operations and that, subject to a completion of the proposed acquisition, will deliver immediate scale to a number of the Group's operating divisions.

Completion of the proposed acquisition is subject to a number of conditions, including due diligence to the satisfaction of the Company, entry into formal documentation and all relevant necessary regulatory and shareholder approvals being obtained by the Company.

During the financial year, the Company entered into a heads of agreement for new premises in Sydney, the terms of which are still being negotiated.

There were no other significant changes in the state of affairs of the Group during the financial year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

On 27 July 2017, Marika White resigned as Company Secretary. Tharun Kuppanda is now the Company Secretary.

On 18 August 2017, Computershare Investor Services Pty Limited ceased as the Company's registry provider and Registry Direct was appointed service provider and commenced on 21 August 2017.

No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

The Group does not expect any major developments changes or variation to results if the Group were to continue as normal. However major variation would be expected to revenue and the expected results if shareholders approve any acquisition proposed by the directors.

ENVIRONMENTAL REGULATION

The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Directors' report

INFORMATION ON DIRECTORS

Name: Michael Kenneth Carter

Title: Non-Executive Chairman

Experience and expertise: Michael has over 25 years' experience in financial services with previous executive roles at companies such as Macquarie Bank (now Macquarie Group), NRMA Insurance Group (now IAG) and Bridges Financial Services / IOOF Holdings. Michael was Managing Director at Bridges Financial Services, Executive Wealth

Management and associated entities until April 2014 and was part of the Leadership Group at IOOF Holdings. Bridges was a Market Participant and a major financial planning organisation. Michael has a Bachelor of Engineering (Mining) from the University of New South Wales and Diploma of Financial Services. He is a member of the Australian Institute of Company Directors.

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: Member of Audit Committee, Remuneration Committee and Risk and Compliance Committee

Interests in shares: 525,000 ordinary shares (directly held)

Interests in rights: None

Name: Scott Lionel Beeton

Title: Managing Director

Experience and expertise: Scott has 17 years' experience in the finance industry working in a variety of roles across Superannuation, funds management, investment management, stockbroking, AFSL dealer services and advice. Scott was appointed Managing Director of SEQ in December 2014, following the approval for SEQ to acquire

Sequoia Financial Group and became CEO for the newly formed Group. Scott is co-founder of Sequoia and has developed the capabilities of the various Sequoia businesses. Scott has a Bachelor of Business from Newcastle University.

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: Member of Remuneration Committee and Risk and Compliance Committee

Interests in shares: 11,658,560 ordinary shares (indirectly held)

Interests in rights: None

Title: Executive Director

Experience and expertise: Marcel was appointed as Executive Director in December 2014. Marcel is Founder and Managing Director of Sequoia Specialist Investments and is head of Investment Solutions at Sequoia. For 16 years Marcel, has worked in financial markets developing extensive experience in equities and derivatives, trading,

portfolio management, superannuation and financial planning. Marcel holds a Bachelor of Commerce from the Australian National University, a Diploma of Financial Planning and has completed the ASX derivative accreditation course.

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: Member of Audit Committee

Interests in shares: 4,129,824 ordinary shares (indirectly held)

Interests in rights: None

Name: Garry Peter Crole

Title: Non-Executive Director (appointed 18 November 2016)

Experience and expertise: Garry is a highly experienced and well regarded businessman. He founded Deakin Financial Planning, an ASX listed company that was later acquired by IOOF. In more recent years, Garry started Interprac Financial Planning Pty Ltd, which is a leading independently owned Australian Financial Services Licensee.

Other current directorships: Non-Executive Director of Glennon Capital Ltd (ASX: GC1)

Former directorships (last 3 years): Non-Executive Director of Diversa Ltd (ASX: DVA) which merged with OneVue Ltd (ASX: OVH)

Special responsibilities: Chair of Audit Committee, Remuneration and Risk and Compliance Committee

Interests in shares: 740,000 ordinary shares (directly held) and 200,000 ordinary shares (indirectly held)

Interests in rights: None

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

COMPANY SECRETARY

Mr Tharun Kuppanda was appointed Company Secretary on 27 July 2017. He is employed by Boardroom Pty Ltd in their Corporate Secretarial Services Division in Sydney. He holds a Bachelor of Business and a Bachelor of Laws.

During the financial year to 30 June 2017, Ms Marika White was also appointed Company Secretary. Marika has extensive company secretarial experience within the public, private and not for profit sectors in Australia and overseas. Marika is a member of the Australian Institute of Company Directors and the Governance Institute of Australia.

MEETINGS OF DIRECTORS

The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2017, and the number of meetings attended by each director were:

	Full Board	Audit Committee
	AttendedHeld		Attended	Held
SL Beeton	9	10	-	-
MK Carter	10	10	2	2
MJ Collignon	10	10	2	2
GP Crole	56		1	1
		Risk and ComplianceCommittee		Remuneration andNomination Committee

	Attended	Held	Attended	Held
SL Beeton	9	10	1	1
MK Carter	9	10	1	1
MJ Collignon	4	4	-	-
GP Crole	6	6	1	1

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

REMUNERATION REPORT (AUDITED)

The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.

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

• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Additional information
• Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration

The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness
• acceptability to shareholders
• performance linkage / alignment of executive compensation
• transparency

The Board of Directors, through its Remuneration and Nomination Committee, accepts responsibility for determining and reviewing remuneration arrangements for the directors and the senior management team. The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration of directors and senior managers on a periodic basis by reference to relevant employment market conditions, giving due consideration to the overall profitability and financial resources of the Group, with the objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.

The Board proposes to review reward structures and the remuneration arrangements for Directors and executives in conjunction with a return to profitability.

In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate.

Non-executive directors remuneration

Fees and payments to non-executive directors reflect the demands which are made of the directors in fulfilling their responsibilities. Non-executive director fees are reviewed annually by the Board. The constitution of the Company provides that the non-executive directors of the Company are entitled to such remuneration, as determined by the Board, which must not exceed in aggregate the maximum amount determined by the Company in general meeting. The most recent determination was at the Annual General Meeting held on 15 December 2006 where the shareholders approved an aggregate remuneration of $200,000.

Senior management and executive director remuneration Executive remuneration comprises:

• Fixed remuneration component
• Variable remuneration component including short-term incentive (STI) and long-term incentive (LTI)
• An Employee Share Option Plan was approved at a meeting of shareholders on the 27 November 2015 (LTI)

Fixed remuneration

Fixed remuneration consists of base remuneration as well as employer contributions to superannuation. Remuneration levels are reviewed annually through a process that considers individual performance and that of the overall Group.

Variable remuneration – short term incentive (STI)

STIs are available to executives who achieve performance criteria including compliance. The Board is responsible for determining who is eligible to participate in STI arrangements as

well as the structure of those arrangements. No STI's, including options have been awarded in the current financial year.

Variable remuneration – long term incentive (LTI)

The objective of the LTI plan is to reward senior managers in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such, LTI grants are only made to executives who are able to influence the generation of shareholder wealth and thus have a direct impact on the Group's performance against relevant long term performance hurdles. LTI grants to executives are delivered in the form of options or shares.

On 1 February 2017, the Company established an employee equity scheme, called the Sequoia Employee Incentive Plan ('SEIP') to offer performance rights to certain employees and executives employed by the Company.

All performance rights offered under the February 2017 grant were granted for nil consideration and had a nil exercise price.

Performance rights vest in three tranches:

Tranche	Vesting date
Tranche 1	31 January 2018
Tranche 2	31 January 2019
Tranche 3	31 January 2020

The vesting conditions of the performance rights granted under the February 2017 grant are:

• 50% of each tranche where the employee meets the service condition; and
• 50% of each tranche where the employee meets the service condition and the Company meets the performance conditions.

All performance rights tranches expire on 31 January 2022.

The service conditions are that Tranche 1, Tranche 2 and Tranche 3 will vest if continuous employment is maintained with the Company from the date the performance rights are granted until their respective vesting dates.

The performance conditions are related to share price hurdles as follows:

• Tranche 1 will vest if the Company's 90 Day VWAP up to and including 31 January 2018 is at least $0.25.
• Tranche 2 will vest if the Company's 90 Day VWAP up to and including 31 January 2019 is at least $0.30.
• Tranche 3 will vest if the Company's 90 Day VWAP up to and including 31 January 2020 is at least $0.35.

Any performance rights which meet the vesting conditions above will be available for exercise up until the expiry date. On exercise of vested performance rights Company shares may be acquired and held by an Employee Share Trust ('EST') to be established for the purpose of settlement. Shares may be held subject to the EST and the Company's Securities Trading Policy.

If the Company provide an EST, the employee can apply to the Trustee to have their shares transferred or sold from the EST, subject to compliance with the Company's Securities Trading Policy.

Consolidated entity performance and link to remuneration

Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining portion of the cash bonus and incentive payments are at the discretion of the Remuneration and Nomination Committee. Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last four years.

Use of remuneration consultants

During the financial year ended 30 June 2017, the Group engaged Crichton and Associates Pty Limited, remuneration consultants, to review its existing remuneration policies and provide recommendations. This has resulted in share-based payments remuneration in the form of options (LTI) being implemented. Crichton and Associates Pty Limited were paid $8,070 for these services.

Voting and comments made at the Company's 2016 Annual General Meeting ('AGM') At the 1 November 2016 AGM, 97.58% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2016. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

Details of remuneration

Amounts of remuneration

Details of the remuneration of key management personnel of the Group are set out in the following tables.

The key management personnel of the Group consisted of the following directors of Sequoia Financial Group Limited:

• Michael Kenneth Carter Non-Executive Chairman
• Scott Lionel Beeton Managing Director
• Marcel John Collignon Executive Director
• Garry Peter Crole Non-Executive Director (appointed 18 November 2016)

And the following persons:

• Marika White Company Secretary (appointed 28 December 2016)
• Andrew Guy Phillips Company Secretary (resigned 28 December 2016)
• Renee Louise Minchin Chief Financial Officer

	Short-term benefits			Postemploymentbenefits	Long-termbenefits	Sharebasedpayments
2017	Cash salaryand fees$	Cashbonus$	Nonmonetary$	Superannuation$	Leavebenefits$	Equity-settled$	Total$
Non-Executive Directors:
MK Carter	119,488	-	-	10,409		--	129,897
GP Crole**	13,532	-	-	1,286		--	14,818
Executive Directors:
SL Beeton	276,080	40,000	-	19,594		--	335,674
MJ Collignon	246,801	40,000	-	19,547		--	306,348
Other Key Management
Personnel:
M White*	24,000	-	-	-		--	24,000
AG Phillips*	28,000	-	-	-		--	28,000
RL Minchin	161,986	-	-	15,389		--	177,375
	869,887	80,000	-	66,225		--	1,016,112

* Remuneration is for the period from 1 July 2016 to date of resignation as a key management personnel.

** Remuneration is for the period from date of appointment as a key management personnel to 30 June 2017

	Short-term benefits		Postemploymentbenefits	Long-termbenefits	Sharebasedpayments
2016	Cash salaryand fees$	Cashbonus$	Nonmonetary$	Superannuation$	Leavebenefits$	Equitysettled$	Total$
Non-Executive Directors:
MK Carter	69,745		-	-6,626	-	-	76,371
Executive Directors:
SL Beeton	276,386		-	-19,308	-	-	295,694
MJ Collignon	246,513		-	-19,308	-	-	265,821
DP Pagliaccio*	165,000		-	--	-	-	165,000
BRS Symon*	45,000		-	--	-	-	45,000
Other Key ManagementPersonnel:
AG Phillips	102,000		-	--	-	-	102,000
RL Minchin	131,667	-	-	12,508	-	-	144,175
	1,036,311	-	-	57,750	-	-	1,094,061

*Remuneration is for the period from 1 July 2015 to date of resignation as a key management personnel.

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

	Fixed remuneration		At risk - STI		At risk - LTI
Name	2017	2016	2017	2016	2017	2016
Non-Executive Directors:
MK Carter	100%	100%	-	-	-	-
GP Crole	100%	-	-	-	-	-
Executive Directors:
SL Beeton	100%	100%	-	-	-	-
MJ Collignon	100%	100%	-	-	-	-
DP Pagliaggio	-	100%	-	-	-	-
BRS Symon	-	100%	-	-	-	-
Other Key Management
Personnel:
M White	100%	-	-	-	-	-
AG Phillips	100%	100%	-	-	-	-
RL Minchin	100%	100%	-	-	-	-

Service agreements

Where contracts have been established, employment terms and conditions of key management personnel and Group executives are formalised in standard contracts of employment. All contracts are for no fixed term with one to three months' notice required for termination by either party.

Share-based compensation

Issue of shares

There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2017.

Performance rights

The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

Grant date	Vesting date andexercisable date		Expiry date	Share price hurdle forvesting		Fair value per right atgrant date
1 Feb 2017		31 Jan 2018	31 Jan 2022		$0.000	$0.320
Name	Number ofrights granted	Grant date	Vesting dateand exercisabledate	Expiry date	Share pricehurdle forvesting	Fair value perright at grantdate
Renee Minchin	150,000	1 Feb 2017	31 Jan 2018	31 Jan 2022	$0.000	$0.320

Performance rights granted carry no dividend or voting rights.

The number of performance rights over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2017 are set out below:

Name	Number of rights	Number of rights	Number of rights	Number of rights
	granted during the	granted during the	vested during the	vested during the
	year 2017	year 2016	year 2017	year 2016
Renee Minchin	150,000	-	-	-

Details of performance rights over ordinary shares granted, vested and lapsed for directors and other key management personnel as part of compensation during the year ended 30 June 2017 are set out below:

Name	Grant date	Vesting date	Number ofrights granted	Value ofrights granted$	Value ofrights vested$	Numberof rightslapsed	Value of rightslapsed$
Renee Minchin	1 Feb 2017	31 Jan 2018	150,000	-	-	-	-

All performance rights under the 1 February 2017 grant were granted for nil consideration and had a nil exercise price.

Additional information

The earnings of the Group for the four years to 30 June 2017 are summarised below:

	2017$	2016$	2015$	2014$
Sales revenue	44,364,946	22,980,597	21,406,293	19,509,124
Profit/(loss) after income tax	725,573	285,733	(17,974,212)	345,892

The factors that are considered to affect total shareholders return ('TSR') are summarised below:

	2017	2016	2015	2014
Share price at financial year end ($)	0.320	0.200	0.100	0.200

Additional disclosures relating to key management personnel

Shareholding

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

	Balance at thestart of the year	Received as partof remuneration	Additions	Disposals/ other	Balance at theend of the year
Ordinary shares
SL Beeton	11,958,754	-	22,220	(322,414)	11,658,560
MK Carter	525,000	-	-	-	525,000
MJ Collignon	4,129,824	-	-	-	4,129,824
GP Crole	-	-	940,000	-	940,000
AG Phillips	530,714	-	-	-	530,714
RL Minchin	242,647	-	-	-	242,647
	17,386,939	-	962,220	(322,414)	18,026,745

'Balance at the start of the year' holdings have been restated for the 1:100 share consolidation split which occurred during the year.

Performance rights holding

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

	Balance at thestart of the year	Granted	Vested	Expired/forfeited/other	Balance at theend of the year
Performance rights over ordinary shares
RL Minchin	-	150,000	-	-	150,000
	-	150,000	-	-	150,000

This concludes the remuneration report, which has been audited.

SHARES UNDER PERFORMANCE RIGHTS

Unissued ordinary shares of Sequoia Financial Group Limited under performance rights at the date of this report are as follows:

Grant date	Expiry date	Number under rights
1 February 2017	31 January 2022	1,300,000

No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate.

SHARES ISSUED ON THE EXERCISE OF PERFORMANCE RIGHTS

There were no ordinary shares of Sequoia Financial Group Limited issued on the exercise of performance rights during the year ended 30 June 2017 and up to the date of this report.

INDEMNITY AND INSURANCE OF OFFICERS

The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

INDEMNITY AND INSURANCE OF AUDITOR

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

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.

NON-AUDIT SERVICES

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 33 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 33 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Directors' report

OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF HALL CHADWICK (NSW)

There are no officers of the Company who are former partners of Hall Chadwick (NSW).

AUDITOR'S INDEPENDENCE DECLARATION

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

AUDITOR

Hall Chadwick (NSW) continues in office in accordance with section 327 of the Corporations Act 2001.

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

On behalf of the directors

Michael Carter Chairman 31 August 2017 Sydney

	Consolidated
	Note	2017$	2016$
Revenue	5	44,364,946	22,980,597
Expenses
Data fees		(1,641,570)	(1,139,430)
Dealing and settlement		(10,562,208)	(6,498,185)
Payments to investors		(4,783,659)	(3,965,169)
Commission and hedging		(16,412,144)	(4,128,428)
Employee benefits	6	(6,598,190)	(4,103,466)
Occupancy		(482,232)	(379,491)
Telecommunications		(439,503)	(268,881)
Marketing		(342,672)	(203,995)
General and administrative		(1,606,032)	(1,390,344)
Impairment, amortisation and depreciation	6	(235,121)	(160,861)
Finance costs	6	(225,193)	(240,756)
Profit before income tax expense		1,036,422	501,591
Income tax expense	7	(310,849)	(215,858)
Profit after income tax expense for the year		725,573	285,733
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gain on the revaluation of available-for-sale financial assets, net of tax		120,853	297,645
Other comprehensive income for the year, net of tax		120,853	297,645
Total comprehensive income for the year		846,426	583,378
Profit for the year is attributable to:
Non-controlling interest		15,774	(34,664)
Owners of Sequoia Financial Group Limited	27	709,799	320,397
		725,573	285,733
Total comprehensive income for the year is attributable to:
Non-controlling interest		15,774	(34,664)
Owners of Sequoia Financial Group Limited		830,652	618,042
		846,426	583,378
		Cents	Cents
Basic earnings per share	41	1.455	0.007
Diluted earnings per share	41	1.385	0.007

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

		Consolidated
	Note	2017$	2016$
Assets
Current assets
Cash and cash equivalents	8	6,177,418	812,831
Trade and other receivables	9	1,621,161	1,594,641
Derivative financial instruments	10	5,976,249	883,111
Deferred costs	11	7,500,455	2,865,995
Other	12	1,432,244	161,038
Total current assets		22,707,527	6,317,616
Non-current assets
Derivative financial instruments	10	19,335,325	5,278,666
Financial assets	13	1,425,575	1,836,575
Property, plant and equipment	14	268,050	154,647
Intangibles	15	8,719,122	8,813,012
Deferred taxDeferred costs	716	5,718,8816,715,907	2,482,0362,334,591
Other	17	216,892	1,215,652
Total non-current assets		42,399,752	22,115,179
Total assets		65,107,279	28,432,795
Liabilities
Current liabilities
Trade and other payablesBorrowings	1819	4,423,857273,307	2,274,7152,060,000
Derivative financial instruments	10	5,976,249	883,111
Income tax	7	849,695	-
Employee benefits	20	457,323	370,451
Deferred revenue	21	8,935,131	3,416,262
Total current liabilities		20,915,562	9,004,539
Non-current liabilities
Borrowings	22	1,427,868	-
Derivative financial instruments	10	19,335,325	5,278,666
Deferred tax	7	4,537,561	1,778,045
Employee benefits	23	30,643	32,517
Deferred revenue	24	8,658,240	3,043,758
Total non-current liabilities		33,989,637	10,132,986
Total liabilities		54,905,199	19,137,525
Net assets		10,202,080	9,295,270
Equity
Issued capital	25	26,724,112	26,724,112
Reserves	26	408,335	177,098
Accumulated losses	27	(17,005,876)	(17,670,141)
Equity attributable to the owners of Sequoia Financial Group Limited		10,126,571	9,231,069
Non-controlling interest	28	75,509	64,201
Total equity		10,202,080	9,295,270

The above statement of financial position should be read in conjunction with the accompanying notes

Consolidated	Issuedcapital$	Availablefor-salereserve$	Share-basedpaymentsreserve$	Accumulatedlosses$	Noncontrollinginterest$	Totalequity$
Balance at 1 July 2015	24,765,885	(482,765)	-	(17,628,320)	-	6,654,800
Profit/(loss) after income taxexpense for the year	-	-	-	320,397	(34,664)	285,733
Other comprehensive incomefor the year, net of tax	-	297,645	-	-	-	297,645
Total comprehensive incomefor the year	-	297,645	-	320,397	(34,664)	583,378
Transactions with owners in theircapacity as owners:
Share capital issued	1,997,514	-	-	-	-	1,997,514
Transaction costs	(39,287)	-	-	-	-	(39,287)
Recognition of non-controllinginterest on acquisition of subsidiary	-	-	-	-	98,865	98,865
Transfer from reserves to
accumulated losses	-	(362,218)	-	(362,218)	-	-
Balance at 30 June 2016	26,724,112	177,098	-	(17,670,141)	64,201	9,295,270

Consolidated	Issuedcapital$	Availablefor-salereserve$	Share-basedpaymentsreserve$	Accumulatedlosses$	Noncontrollinginterest$	Totalequity$
Balance at 1 July 2016	26,724,112	177,098	-	(17,670,141)	64,201	9,295,270
Profit after income tax expensefor the year	-	-	-	709,799	15,774	725,573
Other comprehensive incomefor the year, net of tax	-	120,853	-	-	-	120,853
Total comprehensive incomefor the year	-	120,853	-	709,799	15,774	846,426
Transactions with owners in theircapacity as owners:
Share-based payments	-	-	110,384	-	-	110,384
Transaction with non-controllinginterest	-	-	-	(45,534)	(4,466)	(50,000)
Balance at 30 June 2017	26,724,112	297,951	110,384	(17,005,876)	75,509	10,202,080

The above statement of changes in equity should be read in conjunction with the accompanying notes

		Consolidated
Note		2017$	2016$
Cash flows from operating activities
Receipts from customers (inclusive of GST)		59,802,560	20,982,069
Payments to suppliers and employees (inclusive of GST)		(53,771,003)	(20,827,543)
		6,031,557	154,526
Interest received		9,309	5,338
Interest and other finance costs paid		(225,193)	(240,756)
Income taxes refunded		22,192	-
Income taxes paid		-	(167,906)
Net cash from/(used in) operating activities	40	5,837,865	(248,798)
Cash flows from investing activities
Payment for purchase of subsidiary, net of cash acquired	38	-	(571,240)
Payments for purchase of additional equity in subsidiary		(50,000)	-
Payments for property, plant and equipment	14	(229,020)	(120,874)
Payments for intangibles	15	-	(63,556)
Payments for bonds, guarantees and other assets		(301,240)	(127,145)
Proceeds from disposal of financial assets		465,807	41,506
Net cash used in investing activities		(114,453)	(841,309)
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs	25	-	1,089,411
Proceeds from borrowings		1,001,175	200,000
Repayment of convertible notes		(1,360,000)	-
Net cash from/(used in) financing activities		(358,825)	1,289,411
Net increase in cash and cash equivalents		5,364,587	199,304
Cash and cash equivalents at the beginning of the financial year		812,831	613,527
Cash and cash equivalents at the end of the financial year	8	6,177,418	812,831

The above statement of cash flows should be read in conjunction with the accompanying notes

Notes to the consolidated financial statements

NOTE 1. GENERAL INFORMATION

The financial statements cover Sequoia Financial Group Limited as a Group consisting of Sequoia Financial Group Limited ('Company' or 'parent entity') and the entities it controlled at the end of, or during, the year (referred to in these financial statements as the 'Group'). The financial statements are presented in Australian dollars, which is Sequoia Financial Group Limited's functional and presentation currency.

Sequoia Financial Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 36 50 Bridge Street Sydney NSW 2000

A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 31 August 2017. The directors have the power to amend and reissue the financial statements.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

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

New or amended Accounting Standards and Interpretations adopted

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

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

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 for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 37.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Sequoia Financial Group Limited as at 30 June 2017 and the results of all subsidiaries for the year then ended. Sequoia Financial Group Limited.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Revenue recognition

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

Rendering of services

Revenue from the provision of services to customers is recognised upon delivery of the service to the customer. Revenue received that relates to the provision for future services is accounted for as deferred income.

Commissions and fee income

When the consolidated entity acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the consolidated entity.

Commission and fee income is recognised as related services are performed. Where commissions and fees are subject to clawback or meeting certain performance hurdles, they are recognised as income at the point when those conditions can no longer affect the outcome.

Interest

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

Other revenue

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

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

• When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Current and non-current classification

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

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

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

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classified as current or non-current depending on the expected period of realisation.

Fair value hedges

Fair value hedges are used to cover the Group's exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion thereof, that is attributable to a particular risk and could affect profit or loss. The hedged item is adjusted for gains and losses attributable to the risk being hedged and the derivative is remeasured to fair value. Gains and losses from both are taken to profit or loss.

Fair value hedge accounting is discontinued if the hedging instrument is sold, terminated, expires, exercised, it no longer meets the criteria for hedge accounting or designation is revoked. Any adjustment to the carrying amount of a hedged financial instrument is amortised to profit or loss using the effective interest rate method. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit; or (ii) designated as such upon initial recognition, where they are managed on a fair value basis or to eliminate or significantly reduce an accounting mismatch. Except for effective hedging instruments, derivatives are also categorised as fair value through profit or loss. Fair value movements are recognised in profit or loss.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets, principally equity securities, that are either designated as available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised in other

comprehensive income through the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised had the impairment not been made and is reversed to profit or loss.

The amount of the impairment allowance for financial assets carried at cost is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for similar financial assets.

Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below initial cost.

Property, plant and equipment

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

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

Leasehold improvements Over the term of the lease Plant and equipment 3 years

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

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

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.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Website

Significant costs associated with the development of the revenue generating aspects of the website, including the capacity of placing orders, are deferred and amortised on a straightline basis over the period of their expected benefit, being their finite life of 3 years.

Customer list

Customer lists acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years.

Regulator memberships and licences

Costs in relation to regulatory memberships and licences are capitalised as an asset. These costs are not subsequently amortised but impaired regularly.

Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

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

Trade and other payables

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

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs.

On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Employee benefits

Short-term employee benefits

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

Other long-term employee benefits

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

Share-based payments

Equity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with nonvesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period.
• from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

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

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

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisitiondate fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisitiondate, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Sequoia Financial Group Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and Services Tax ('GST') and other similar taxes

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

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

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

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 Group for the annual reporting period ended 30 June 2017. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.

AASB 9 Financial Instruments

The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The Group will adopt this standard from 1 July 2018. Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group's financial instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service,

or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1 July 2018. Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the Group.

NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

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

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor's financial position.

Fair value measurement hierarchy

The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Estimation of useful lives of assets

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

Goodwill and other indefinite life intangible assets

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

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

Income tax

The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Employee benefits provision

As discussed in note 2, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Notes to the consolidated financial statements

NOTE 4. OPERATING SEGMENTS

Identification of reportable operating segments

The Group is organised into seven operating segments which are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The information reported to the CODM is on a monthly basis.

Types of products and services

The principal products and services of each of these operating segments are as follows:

Trading and Execution	Provision of execution only, online trading services
Software Subscriptions	Provision of financial market data and analysis tools for
	sophisticated investors
Capital Markets Advisory	Provision of capital markets advice and related services
SMSF Administration	Provision of complete market solutions for SMSF
Wealth Advisory	Provision of client advisory services
Investment Solutions	Provision of bespoke investment products
Market Data and	Provision of financial news services
Financial News Services
Managed Fund	Provision for retail investors being able to gain exposure to
	the AIM Global High Conviction Fund

All products and services are provided predominantly to customers in Australia.

Intersegment transactions

Intersegment transactions were made at cost. Intersegment transactions are eliminated on consolidation.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

NOTE 4. OPERATING SEGMENTS (CONTINUED)

Operating segment information

Consolidated - 30 June 2017	Trading andExecution$	SoftwareSubscriptions$	Capital MarketsAdvisory$	SMSFAdministration$	WealthAdvisory
Revenue
Revenue	10,946,301	1,241,385	2,489,609	2,147,891	2,935,646
Total revenue	10,946,301	1,241,385	2,489,609	2,147,891	2,935,646
Segment result before impairment expenseand revaluation increments to fair valueAssets	(643,213)	(100,465)	799,579	248,616	(251,269)
Segment assets	3,459,738	797,049	264,663	2,068,327	1,646,999
LiabilitiesSegment liabilities	1,150,208	362,410	27,503	175,752	254,464

Consolidated - 30 June 2017	InvestmentSolutions$	Market Dataand FinancialNewsServices$	ManagedFunds$	Unallocated$	Total$
Revenue
Revenue	23,126,051	1,348,345	15,337	114,381	44,364,946
Total revenue	23,126,051	1,348,345	15,337	114,381	44,364,946
Segment result before impairment expenseand revaluation increments to fair value	1,127,058	34,254	(295,518)	(187,469)	725,573
Assets
Segment assets	55,922,023	930,161	18,319	-	65,107,279
Total assets					65,107,279
Liabilities
Segment liabilities	52,750,765	163,372	20,725	-	54,905,199
Total liabilities					54,905,199

NOTE 4. OPERATING SEGMENTS (CONTINUED)

Consolidated - 30 June 2016	Trading andExecution$	SoftwareSubscriptions$	Capital MarketsAdvisory$	SMSFAdministration$	WealthAdvisory
Revenue
Revenue	8,265,683	1,291,884	701,021	1,884,922	1,520,098
Total revenue	8,265,683	1,291,884	701,021	1,884,922	1,520,098
Segment result before impairment expenseand revaluation increments to fair value	277,144	486,914	443,828	562,550	273,027
Assets
Segment assets	3,420,738	806,369	583,219	1,872,142	2,357,346
LiabilitiesSegment liabilities	1,377,180	316,884	200,453	169,163	1,137,639

Consolidated - 30 June 2016	InvestmentSolutions$	Market Dataand FinancialNewsServices$	ManagedFunds$	Unallocated$	Total$
Revenue
Revenue	8,723,043	523,209	-	70,737	22,980,597
Total revenue	8,723,043	523,209	-	70,737	22,980,597
Segment result before impairment expenseand revaluation increments to fair value	940,665	(69,454).	-	(2,628,945)	285,729
Assets
Segment assets	18,556,296	836,685	-	-	28,432,795
Total assets					28,432,795
LiabilitiesSegment liabilities	15,751,619	184,587	-	-	19,137,525
Total liabilities					19,137,525

Notes to the consolidated financial statements

NOTE 5. REVENUE

	Consolidated
	2017$	2016$
Sales revenue
Data subscriptions fees	1,235,931	1,320,224
Brokerage and commissions revenue	13,446,395	9,147,216
Superannuation product revenue	2,142,017	1,881,653
Structured product revenue	23,168,171	8,796,832
Corporate advisory fees	2,769,663	522,363
Media revenue	1,348,338	520,255
Other income	194,319	359,610
	44,304,834	22,548,153
Other revenue
Interest	9,309	5,338
Other revenue	50,803	427,106
	60,112	432,444
Revenue	44,364,946	22,980,597

NOTE 6. EXPENSES

	Consolidated
	2017$	2016$
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements	45,775	9,132
Plant and equipment	69,842	20,555
Total depreciation	115,617	29,687
Amortisation
Website	10,007	5,021
Customer list	76,938	92,400
Software	25,614	-
Black hole	-	3,753
Total amortisation	112,559	101,174
Total depreciation and amortisation	228,176	130,861
Impairment
Regulator memberships	6,945	30,000
Finance costs
Interest and finance charges paid/payable	225,193	240,756
Rental expense relating to operating leases
Minimum lease payments	429,325	351,228
Employee benefits
Wages and salaries	5,346,329	3,092,614
Defined contribution superannuation expense	393,437	264,997
Other employment costs	858,424	745,855
Total employee benefits	6,598,190	4,103,466

NOTE 7. INCOME TAX

	Consolidated
	2017$	2016$
Income tax expense
Current tax	847,186	221,317
Deferred tax - origination and reversal of temporary differences	(535,977)	(5,459)
Adjustment recognised for prior periods	(360)	-
Aggregate income tax expense	310,849	215,858
Deferred tax included in income tax expense comprises:
Increase in deferred tax assets	(3,379,133)	(5,458)
Increase/(decrease) in deferred tax liabilities	2,843,156	(1)
Deferred tax - origination and reversal of temporary differences	(535,977)	(5,459)
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense	1,036,422	501,591
Tax at the statutory tax rate of 30%	310,927	150,477
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Reverse acquisition	19,853	-
Sundry items	24,700	50,039
	355,480	200,516
Adjustment recognised for prior periods	(361)	-
Current year tax losses not recognised	(33,255)	20,801
Prior year temporary differences not recognised now recognised	(11,015)	(5,459)
Income tax expense	310,849	215,858

		Consolidated
	2017$	2016$
Amounts charged/(credited) directly to equity
Deferred tax assets	142,288	845,208
Deferred tax liabilities	(83,640)	(426,736)
	58,648	418,472

NOTE 7. INCOME TAX (CONTINUED)

	Consolidated
	2017$	2016$
Deferred tax assetDeferred tax asset comprises temporary differences attributable to:
Tax lossesImpairment of receivablesEmployee benefitsAccrued expensesDeferred incomeShare issue expensesNet fair value loss on investmentOther	-18,165143,020197,8645,278,01148,12933,692-	284,56910,173122,03858,1161,880,92483,65736,3676,192
Deferred tax asset	5,718,881	2,482,036
Amount expected to be recovered within 12 months	5,637,060	2,071,251
Amount expected to be recovered after more than 12 months	81,821	410,785
	5,718,881	2,482,036
Movements:Opening balanceCredited to profit or lossCharged to equity	2,482,0363,379,133(142,288)	3,321,7865,458(845,208)
Closing balance	5,718,881	2,482,036
	Consolidated2017$	2016$
Deferred tax liabilityDeferred tax liability comprises temporary differences attributable to:
Available-for-sale financial assets	297,848	381,488
Deferred expenses	4,239,713	1,396,557
Deferred tax liability	4,537,561	1,778,045
Amount expected to be recovered within 12 months	4,239,713	1,396,557
Amount expected to be recovered after more than 12 months	297,848	381,488
	4,537,561	1,778,045
Movements:
Opening balance	1,778,045	2,204,782
Charged/(credited) to profit or lossCredited to equity	2,843,156(83,640)	(1)(426,736)
Closing balance	4,537,561	1,778,045

Provision for income tax Provision for income tax 849,695 -

Consolidated

2016 $

2017 $

NOTE 8. CURRENT ASSETS - CASH AND CASH EQUIVALENTS

	Consolidated
	2017$	2016$
Cash at bank and on hand	6,177,418	812,831

NOTE 9. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

	Consolidated
	2017$	2016$
Trade receivables	1,442,669	1,420,379
Less: Provision for impairment of receivables	(60,551)	(33,909)
	1,382,118	1,386,470
Other receivables	239,043	208,171
	1,621,161	1,594,641

Impairment of receivables

The ageing of the impaired receivables provided for above are as follows:

	Consolidated
	2017$	2016$
Over 60 days overdue	60,551	33,909

Movements in the provision for impairment of receivables are as follows:

	Consolidated
	2017$	2016$
Opening balance	33,909	3,909
Additional provisions recognised	26,642	30,000
Closing balance	60,551	33,909

Past due but not impaired

Customers with balances past due but without provision for impairment of receivables amount to $99,186 as at 30 June 2017 ($183,132 as at 30 June 2016).

The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent collection practices.

The ageing of the past due but not impaired receivables are as follows:

		Consolidated
	2017$	2016$
31 to 60 days overdue	25,662	29,614
Over 60 days overdue	73,524	153,518
	99,186	183,132

NOTE 10. DERIVATIVE FINANCIAL INSTRUMENTS

	Consolidated
	2017$	2016$
Current assets
Derivatives - fair value hedges	5,976,249	883,111
Non-current assets
Derivatives - fair value hedges	19,335,325	5,278,666
Current liabilities
Derivatives - fair value hedges	(5,976,249)	(883,111)
Non-current liabilities
Derivatives - fair value hedges	(19,335,325)	(19,335,325)
	-	-

Refer to note 30 for further information on financial instruments.

Refer to note 31 for further information on fair value measurement.

The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in the value of its investment products issued to the Group's investors in accordance with the Group's financial risk management policies (refer to Note 30).

The Group enters into hedging instruments with financial institutions to hedge its exposure to fluctuations in the value of its investment and loan products. The hedging instruments are fair valued by financial institutions to reflect the market value of the hedged instruments. The hedge assets are selected so that the fair value of the hedged liabilities equates to the fair value of the hedged assets and loans. In this way the liabilities and assets are hedged and the risk associated with changes in market conditions has been neutralised.

Information about the Group's exposure to market risk, liquidity risk, and credit risk is disclosed in Note 30. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of derivative financial assets outlined above.

NOTE 11. CURRENT ASSETS - DEFERRED COSTS

		Consolidated
	2017$	2016$
Deferred costs	7,500,455	2,865,995

Deferred costs consists of the appropriate recognition of option premium expenses incurred by Sequoia Specialist Investments.

NOTE 12. CURRENT ASSETS - OTHER

	Consolidated
	2017$	2016$
Prepayments	132,244	161,038
Other deposits	1,300,000	-
	1,432,244	161,038

NOTE 13. NON-CURRENT ASSETS - FINANCIAL ASSETS

		Consolidated
	2017$	2016$
Investment in listed entities - at cost	26,460	437,460
Investment in other non-listed entities - at cost	1,399,115	1,399,115
	1,425,575	1,836,575

On 8 June 2017, the Group sold its entire holding of 435,334 ordinary shares in ASX-listed Goldfields Money Limited (ASX: GMY) for a total consideration of $465,807.

NOTE 14. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

		Consolidated
	2017$	2016$
Leasehold improvements - at cost	161,655	138,735
Less: Accumulated depreciation	(120,678)	(70,403)
	40,977	68,332
Plant and equipment - at cost	828,428	647,863
Less: Accumulated depreciation	(601,355)	(561,548)
	227,073	86,315
	268,050	154,647

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

	Leaseholdimprovements $	Plant andequipment $	Total $
Balance at 1 July 2015	-	30,349	30,349
Additions	77,464	43,410	120,874
Additions through business combinations (note 38)	-	33,111	33,111
Depreciation expense	(9,132)	(20,555)	(29,687)
Balance at 30 June 2016	68,332	86,315	154,647
Additions	22,920	206,100	229,020
Depreciation expense	(45,775)	(69,842)	(115,617)
Balance at 30 June 2017	45,477	222,573	268,050

NOTE 15. NON-CURRENT ASSETS - INTANGIBLES

	Consolidated
	2017$	2016$
Goodwill - at cost	25,560,156	25,560,156
Less: Impairment	(16,952,860)	(16,952,860)
	8,607,296	8,607,296
Website - at cost	72,112	72,112
Less: Accumulated amortisation	(54,822)	(44,815)
	17,290	27,297
Customer list - at cost	413,472	413,472
Less: Accumulated amortisation	(354,492)	(277,553)
	58,980	135,919
Regulator memberships and licences - at cost	102,500	102,500
Less: Accumulated amortisation	(66,944)	(60,000)
	35,556	42,500
	8,719,122	8,813,012

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

	Goodwill$	Website$	Customerlist$	Black hole$	Regulatormember-shipsand licences$	Software$	Total $
Balance at 1 July 2015	7,381,832	8,762	228,319	3,753	32,500	-	7,655,166
Additions	-	23,556	-	-	40,000	-	63,556
Additions through businesscombinations (note 38)	1,225,464	-	-	-	-	-	1,225,464
Impairment of assets	-	-	-	-	(30,000)	-	(30,000)
Amortisation expense	-	(5,021)	(92,400)	(3,753)	-	-	(101,174)
Balance at 30 June 2016	8,607,296	27,297	135,919	-	42,500	-	8,813,012
Additions	-	-	-	-	-	25,614	25,614
Impairment of assets	-	-	-	-	(6,945)	-	(6,945)
Amortisation expense	-	(10,007)	(76,938)	-	-	(25,614)	(112,559)
Balance at 30 June 2017	8,607,296	17,290	58,981	-	35,555	-	8,719,122

NOTE 15. NON-CURRENT ASSETS - INTANGIBLES (CONTINUED)

Impairment testing

Goodwill acquired through business combinations has been allocated to the following cash generating units:

		Consolidated
	2017$	2016$
Cash generating units ('CGUs'):
Sequoia Specialist Investments	5,162,392	5,162,392
Sequoia Superannuation	1,688,608	1,688,608
Software Subscriptions	530,832	530,832
Sequoia Wealth Group	674,686	674,686
Finance TV	550,778	550,778
	8,607,296	8,607,296

The recoverable amount of the Group's goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a 12-month projection period approved by management and extrapolated for a further 4 years by using key assumptions.

Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.

The following key assumptions were used in the discounted cash flow model in relation to the goodwill associated to various cash generating units:

Key assumptions	Revenue growthrate %	Increase in directand overheadcosts per annum%	Discount rate %
Sequoia Specialist Investments	1.0%	1 - 2.5%	15.0%
Sequoia Superannuation	5.0%	2.5%	15.0%
Software Subscriptions	2.0%	2.5%	15.0%
Sequoia Wealth Group	5.0%	2.5%	15.0%
Finance TV	5.0%	2.5%	15.0%

The goodwill is considered to be sensitive to these assumptions and is carried in the statement of financial position at a written-down value.

Any impairment is recognised in respect of goodwill at the end of the relevant reporting period.

Sensitivity

As disclosed in note 3, the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows:

(a) Revenue growth would need to decrease by more than 1% before goodwill would need to be impaired, with all other assumptions remaining constant.

(b) The discount rate would be required to increase by 1% before goodwill would need to be impaired, with all other assumptions remaining constant.

NOTE 15. NON-CURRENT ASSETS - INTANGIBLES (CONTINUED)

Management believes that other reasonable changes in the key assumptions on which the recoverable amount of goodwill is based would not cause the cash-generating unit's carrying amount to exceed its recoverable amount.

If there are any negative changes in the key assumptions on which the recoverable amount of goodwill is based, this would result in a further impairment charge for goodwill.

NOTE 16. NON-CURRENT ASSETS - DEFERRED COSTS

	Consolidated
2017$	2016$
6,715,907	2,334,591

Deferred costs consists of the appropriate recognition of option premium expenses incurred by Sequoia Specialist Investments.

NOTE 17. NON-CURRENT ASSETS - OTHER

		Consolidated
	2017$	2016$
Other deposits	202,490	1,201,250
Other non-current assets	14,402	14,402
	216,892	1,215,652

NOTE 18. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

	Consolidated
	2017$	2016$
Trade payables	1,343,454	1,662,557
Accrued expenses	2,813,751	193,721
Other payables	266,652	418,437
	4,423,857	2,274,715

Refer to note 30 for further information on financial instruments.

NOTE 19. CURRENT LIABILITIES - BORROWINGS

	Consolidated
	2017$	2016$
Bank loans	158,820	-
Capital finance	14,487	-
Convertible notes payable	100,000	2,060,000
	273,307	2,060,000

Refer to note 22 for further information on assets pledged as security and financing arrangements.

Refer to note 30 for further information on financial instruments.

Convertible notes payable comprised of a number of convertible loans to the value of $700,000 (2016: $2,060,000). Interest is payable at a rate of 7 (2016: 10 to 12) percent per annum. The comparative convertible notes were repaid during the year and new convertible notes were issued.

NOTE 20. CURRENT LIABILITIES - EMPLOYEE BENEFITS

		Consolidated
	2017$	2016$
Annual leave	232,571	205,394
Long service leave	224,752	165,057
	457,323	370,451

NOTE 21. CURRENT LIABILITIES - DEFERRED REVENUE

	Consolidated
2017$	2016$
8,935,131	3,416,262

Deferred revenue consists of fees paid in advance for customer subscriptions and investment solutions.

NOTE 22. NON-CURRENT LIABILITIES - BORROWINGS

		Consolidated
	2017$	2016$
Bank loans	827,868	-
Convertible notes payable	600,000	-
	1,427,868	-

Refer to note 30 for further information on financial instruments.

Total secured liabilities

The total secured liabilities (current and non-current) are as follows:

	Consolidated
	2017$	2016$
Bank loans	986,688	-
Capital finance	14,487	-
	1,001,175	-

Assets pledged as security

The bank loans are secured by a limited guarantee and indemnity over the existing and future assets of Sequoia Superannuation Pty Ltd and partially the assets of Sequoia Asset Management Pty Ltd.

The carrying amounts of assets pledged as security for current and non-current borrowings are:

		Consolidated
	2017$	2016$
Sequoia Asset Management Pty Ltd	218,000	-
Sequoia Superannuation Pty Ltd	1,160,000	-
	1,378,000	-

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

		Consolidated
	2017$	2016$
Total facilities
Bank loans	1,097,766	-
Used at the reporting date
Bank loans	986,688	-
Unused at the reporting date
Bank loans	111,078	-

NOTE 23. NON-CURRENT LIABILITIES - EMPLOYEE BENEFITS

	Consolidated
	2017$	2016$
Long service leave	30,643	32,517

NOTE 24. NON-CURRENT LIABILITIES - DEFERRED REVENUE

	Consolidated
	2017$	2016$
Deferred revenue	8,658,240	3,043,758

Deferred revenue consists of fees paid in advance for customer subscriptions and investment solutions. The deferred revenue can be recognised over 5 years however in most cases it is between 1 and 3 years.

NOTE 25. EQUITY - ISSUED CAPITAL

	Consolidated
	2017Shares	2016Shares	2017$	2016$
Ordinary shares - fully paid	48,798,706	4,879,870,632	26,851,001	26,851,001
Transaction costs	-	-	(126,889)	(126,889)
	48,798,706	4,879,870,632	26,724,112	26,724,112

At the Annual General Meeting held on 1 November 2016, the shareholders of Sequoia Financial Group Limited agreed to a 1:100 share consolidation. The movement above reflects the shares on issue after consolidation.

Movements in ordinary share capital

Details	Date	Shares	Issue price	$
Balance	1 July 2015	3,881,112,532		24,853,485
Payment in shares	August 2015	59,408,100	$0.200	118,816
Shares placement/script	September 2015	76,000,000	$0.200	152,000
Script issue	October 2015	375,000,000	$0.200	750,000
Placement	December 2015	305,850,000	$0.200	611,700
Placement	February 2016	182,500,000	$0.200	365,000
Balance	30 June 2016	4,879,870,632		26,851,001
1:100 share consolidation split	11 November 2016	(4,831,071,926)		-
Balance	30 June 2017	48,798,706		26,851,001

NOTE 25. EQUITY - ISSUED CAPITAL (CONTINUED)

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Share buy-back

There is no current on-market share buy-back.

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.

The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

The capital risk management policy remains unchanged from the 2016 Annual Report.

NOTE 26. EQUITY - RESERVES

		Consolidated
	2017$	2016$
Available-for-sale reserve	297,951	177,098
Options reserve	110,384	-
	408,335	177,098

Available-for-sale reserve

The reserve is used to recognise increments and decrements in the fair value of available-for-sale financial assets.

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

NOTE 26. EQUITY - RESERVES (CONTINUED)

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Consolidated	Available-forsale$	Share-basedpayments$	Total$
Balance at 1 July 2015	(482,765)	-	(482,765)
Available-for-sale reserve	297,645	-	297,645
Transfer to accumulated losses	362,218	-	362,218
Balance at 30 June 2016	177,098	-	177,098
Available-for-sale reserve	120,853	-	120,853
Share-based payments	-	110,384	110,384
Balance at 30 June 2017	297,951	110,384	408,335

NOTE 27. EQUITY - ACCUMULATED LOSSES

	Consolidated
	2017$	2016$
Accumulated losses at the beginning of the financial year	(17,670,141)	(17,628,320)
Profit after income tax expense for the year	709,799	320,397
Transfer from revaluation surplus reserve	-	(362,218)
Transaction with non-controlling interest	(45,534)	-
Accumulated losses at the end of the financial year	(17,005,876)	(17,670,141)

NOTE 28. EQUITY - NON-CONTROLLING INTEREST

	Consolidated
	2017$	2016$
Retained profits	75,509	64,201

NOTE 29. EQUITY - DIVIDENDS

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Franking credits

	Consolidated
	2017$	2016$
Franking credits available for subsequent financial years based on a tax rate of 30%	2,985,683	3,139,720

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

• franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

NOTE 30. FINANCIAL INSTRUMENTS

Financial risk management objectives

The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable, derivative assets and liabilities, convertible notes and loans receivable and payable.

This note provides details of the Group's financial risk management objectives and policies and describes the methods used by management to control risk. In addition, this note includes a discussion of the extent to which financial instruments are used, the associated risks and the business purpose served.

One of the Group's main activities is to issue investments to its product holders which provide returns based on the performance of an underlying reference asset, typically a single index or a single listed equity. Different underlying reference assets, with varying features are issued in separate series. The series are exposed to securities listed on global or local exchanges. The products issued to the product holders have a maturity of 3 years from the date of issue. On maturity, if the investment has performed sufficiently, the product holder has the option to contribute in cash the notional value of the investment on issue date to receive a delivery asset (a liquid security on the ASX) equal to the value of the underlying reference asset or the value in cash of the financial liability. The Group enters into a financial instrument with an investment bank, which hedges each series that is offered to its product holders. The Group ensures that the notional exposure across all its products are covered via the arrangement, and as such mitigates its risk in this fashion.

The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk.

The Board of Directors are monitoring and managing financial risk exposures of the Group. The Board of Directors monitors the Group's financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to financing risk and interest rate risk.

	Consolidated
	2017$	2016$
Financial assets
Cash and cash equivalents	6,177,418	812,831
Trade and other receivables	1,528,682	1,594,641
Derivative assets	25,311,574	6,161,777
Available-for-sale financial assets	1,425,575	1,836,575
Total financial assets	34,443,249	10,405,824
Financial liabilities
Trade and other payables	4,423,857	2,274,715
Derivative liabilities	25,311,574	6,161,777
Bank loans and capital finance	1,001,175	-
Convertible notes	700,000	2,060,000
Total financial liabilities	31,436,606	10,496,492

Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the Group's income or value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Group issues a structured product to the product holder that is hedged with the financial instrument that it purchases from an investment bank. The details of the financial instruments are such that the future cash flows from the financial assets offset the cash flows needed to settle the financial liabilities. The Group uses this arrangement to mitigate the market risks below, except for credit risk.

Price risk

Price risk arises from changes in underlying investments designated in the financial instruments held by the Group for which values in the future are uncertain.

The Group mitigates the above price risk by ensuring that price risk in the financial instruments is offset with one another. The difference in fair value between the financial asset and liability held through profit and loss is as a result of the premium associated with the financial liability arising from being issued in the retail market. The Group does not monitor the price risk associated with the premium, as price risk would only result if the Group were to transfer the liability, and since the Group has no intention of transferring the financial liability, no disclosures regarding the sensitivity to price risk have been made.

The Group is, therefore, not exposed to any significant price risk.

Interest rate risk

Interest rate risk is the risk that the value of the Group's financial instruments will fluctuate due to changes in market interest rates.

The Group's cash and cash equivalents are exposed to interest rate risk, however the Directors of the Group manage financial instruments to ensure that interest rate risk remains hedged and is therefore offsetting.

The Group is also exposed to interest rate risk arising from long-term borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.

As at the reporting date, the Group had the following borrowings and cash and cash equivalents:

	2017		2016
	Weightedaverage interestrate%	Balance$	Weightedaverage interestrate%	Balance$
Cash and cash equivalents	0.07%	6,177,418	0.07%	812,831
Bank loans	5.51%	(986,688)	-	-
Capital finance	7.00%	(14,487)	-	-
Convertible notes payable	7.00%	(700,000)	12.00%	(2,060,000)
Net exposure to cash flow interest rate risk		4,476,243		(1,247,169)

An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk management' below.

The Group is not exposed to interest rate risk on the financial assets and liabilities held through the profit and loss as the financial asset offsets and hedges the risk of changes in interest rate for the financial liability.

The tables below illustrate the sensitivity attributable to profit or loss for the year for reasonably possible changes in interest rates:

		Basis points increase			Basis points decrease
Consolidated - 2017	Basis pointschange	Effect onprofit beforetax	Effect onequity	Basis pointschange	Effect onprofit beforetax	Effect onequity
Cash and cash equivalents	100	61,774	61,774	(100)	(61,774)	(61,774)
Bank loans	100	9,867	9,867	(100)	(9,867)	(9,867)
Capital finance	100	145	145	(100)	(145)	(145)
Convertible notes payable	100	7,000	7,000	(100)	(7,000)	(7,000)
		78,786	78,786		(78,786)	(78,786)

			Basis points increase
Basis pointschange	Effect onprofit beforetax	Effect onequity	Basis pointschange	Effect onprofit beforetax	Effect onequity
100	8,128	8,128	(100)	(8,128)	(8,128)
100	20,600	20,600	(100)	20,600	20,600
	28,728	28,728		12,472	12,472
			Basis points increase

Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Board of Directors has otherwise cleared as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed by obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default.

The financial products issued by Sequoia Specialist Investments Pty Ltd ('Issuer') are secured obligations of the Issuer. Investors are granted a charge which is held on trust by the Security Trustee (Australian Equity Trustee). If the Issuer fails to (i) make a payment or delivery on its due date; or (ii) meet any other obligation and in the Security Trustee's opinion, the failure is materially adverse to the investors and cannot be remedied (or has not been remedied within 5 business days of written notice), the Security Trustee may enforce the charge. In this case the investors are unsecured creditors of the provider of the hedge assets. Investors' rights of recourse against the Issuer on a default are limited to the assets subject to the charge. This structure has the effect of passing through the credit rating of the provider of the hedge asset and protecting different financial product series from cross-liability issues (other than on an insolvency of either the Issuer or the provider of the hedge asset). The Issuer will only deal with investment-grade (or better, bank) or a subsidiary of an investment-grade (or better, bank).

The following tables detail the Group's potential exposure, should the counterparties be unable to meet their obligations:

2017	Fair value$	Notional value$
Derivative liabilities	25,424,320	130,443,319
2016	Fair value$	Notional value$
Derivative liabilities	6,161,777	113,351,387

Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Financing arrangements

Unused borrowing facilities at the reporting date:

	Consolidated
	2017$	2016$
Bank loans	111,078		-

Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and have an average maturity of 3 years.

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and have an average maturity of 3 years.

Remaining contractual maturities

The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Consolidated - 2017	Weightedaverageinterest rate%	1 year or less$	Between 1 and5 years$	Over 5 years$	Remainingcontractualmaturities$
Non-derivatives
Non-interest bearing
Trade payables	-	1,343,454	-	-	1,343,454
Other payables	-	266,652	-	-	266,652
Interest-bearing - variable
Bank loans	5.51%	158,820	827,868	-	986,688
Interest-bearing - fixed rate
Capital finance	7.00%	14,487	-	-	14,487
Convertible notes payable	7.00%	100,000	600,000	-	700,000
Total non-derivatives		1,883,413	1,427,868	-	3,311,281
Derivatives
Value hedges, net settled	-	5,976,249	19,448,071	-	25,424,320
Total derivatives		5,976,249	19,448,071	-	25,424,320

Consolidated - 2016	Weightedaverageinterest rate%	1 year or less$	Between 1 and5 years$	Over 5 years$	Remainingcontractualmaturities$
Non-derivatives
Non-interest bearing
Trade payables	-	1,662,557	-	-	1,662,557
Other payables	-	418,437	-	-	418,437
Interest-bearing - fixed rate
Convertible notes payable	12.00%	2,060,000	-	-	2,060,000
Total non-derivatives		4,140,994	-	-	4,140,994
Derivatives
Value hedges, net settled	-	883,111	5,278,666	-	6,161,777
Total derivatives		883,111	5,278,666	-	6,161,777

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

NOTE 31. FAIR VALUE MEASUREMENT

Fair value hierarchy

The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability

Consolidated - 2017	Level 1$	Level 2$	Level 3$	Level 4$
Assets
Listed ordinary shares	26,460	-	-	26,460
Unlisted ordinary shares	-	-	1,399,115	1,399,115
Derivative financial instruments	-	25,424,320	-	25,424,320
Total assets	26,460	25,424,320	1,399,115	26,849,895
Liabilities
Derivative financial instruments	-	25,424,320	-	25,424,320
Convertible notes	-	-	700,000	700,000
Total liabilities	-	25,424,320	700,000	26,124,320

Consolidated - 2016	Level 1$	Level 2$	Level 3$	Level 4$
Assets
Listed ordinary shares	437,460	-	-	437,460
Unlisted ordinary shares	-	-	1,399,115	1,399,115
Derivative financial instruments	-	6,161,777	-	6,161,777
Total assets	437,460	6,161,777	1,399,115	7,998,352
Liabilities
Derivative financial instruments	-	6,161,777	-	6,161,777
Convertible notes	-	-	2,060,000	2,060,000
Total liabilities	-	6,161,777	2,060,000	8,221,777

There were no transfers between levels during the financial year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

NOTE 31. FAIR VALUE MEASUREMENT (CONTINUED)

Valuation techniques for fair value measurements categorised within level 2 and level 3 Financial instruments that are not traded in an active market are determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and relies as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Unquoted investments have been valued using prices evident in recent third party transactions.

The valuation process is managed by the Chief Operating Decision Makers ('CODM') of the Group who perform and validate valuations of non-property assets required for financial reporting purposes (including level 3 fair values). Discussion on valuation processes and outcomes are held between the CODM, CFO and audit committee every six months.

Level 3 assets and liabilities

Movements in level 3 assets and liabilities during the current and previous financial year are set out below:

Consolidated	Unlisted ordinaryshares - availablefor-sale$	Convertible notes$	Total$
Balance at 1 July 2015	752,000	1,860,000	2,612,000
Gains recognised in other comprehensive income	297,645	-	297,645
Additions	349,470	200,000	549,470
Balance at 30 June 2016	1,399,115	2,060,000	3,459,115
Disposals	-	(1,360,000)	(1,360,000)
Balance at 30 June 2017	1,399,115	700,000	2,099,115

NOTE 32. KEY MANAGEMENT PERSONNEL DISCLOSURES

Compensation

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

		Consolidated
	2017$	2016$
Short-term employee benefits	949,887	1,036,311
Post-employment benefits	66,225	57,750
	1,016,112	1,094,061

NOTE 33. REMUNERATION OF AUDITORS

During the financial year the following fees were paid or payable for services provided by Hall Chadwick (NSW), the auditor of the Company:

	Consolidated
	2017$	2016$
Audit services - Hall Chadwick (NSW)
Audit or review of the financial statements	106,500	134,000
Other services - Hall Chadwick (NSW)
Tax services	39,591	23,000
Other services	1,750	-
	41,341	23,000
	147,841	157,000

NOTE 34. CONTINGENT LIABILITIES

The Group has given a credit card facility bank guarantee as at 30 June 2017 of $100,000 (2016: $100,000).

NOTE 35. COMMITMENTS

		Consolidated
	2017$	2016$
Lease commitments - operatingCommitted at the reporting date but not recognised as liabilities, payable:
Within one year	78,133	531,069
One to five years	2,070	417,409
	80,203	948,478

Operating lease commitments includes contracted amounts for the Group's Melbourne and Sydney premises, insurance commitments and leased technology equipment under non-cancellable operating leases. The property leases are payable monthly in advance and have contingent rental provisions within the lease agreement which require that minimum lease payments shall be increased by 4% per annum. The Group has two five-year operational leases for printers, leased at a flat-rate and expiring in January 2018 and August 2019.

The Company entered into a heads of agreement for new premises in Sydney, the terms of which are still being negotiated.

NOTE 36. RELATED PARTY TRANSACTIONS

Parent entity

Sequoia Financial Group Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 39.

Key management personnel Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the directors' report.

Transactions with related parties The following transactions occurred with related parties:

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

NOTE 37. PARENT ENTITY INFORMATION

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

Statement of profit or loss and other comprehensive income

	Parent
	2017$	2016$
Loss after income tax	(1,154,643)	(846,739)
Total comprehensive income	(1,154,643)	(846,739)

Statement of financial position

	Parent
	2017$	2016$
Total current assets	330,542	11,892
Total assets	14,478,292	12,472,721
Total current liabilities	2,129,594	3,097,755
Total liabilities	6,257,969	3,097,755
Equity
Issued capital	62,351,171	62,351,171
Accumulated losses	(54,130,848)	(52,976,205)
Total equity	8,220,323	9,374,966

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity has guaranteed the bank loan by a general security arrangement over existing and future assets and undertakings in the case of default by Sequoia Superannuation Pty Ltd and Sequoia Asset Management Pty Ltd at 30 June 2017.

The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2016.

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2017 of 30 June 2016.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017 of 30 June 2016.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:

• Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Investments in associates are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

NOTE 38. BUSINESS COMBINATIONS

2016

Sequoia Wealth Group Pty Ltd ('SWG')

On 14 October 2015, the Group acquired 100% of the issued capital of Sequoia Wealth Group Pty Ltd ('SWG'), a financial services and wealth management company, for a purchase consideration of $750,000. As contracted, the financial performance of SWG was taken into the results of the Group from 1 October 2015.

The acquisition is part of the Group's overall strategy to expand its diversified financial service offerings. Through acquiring 100% of the issued capital of SWG, the Group has obtained control of the Company.

The purchase was satisfied by the issue of 375,000,000 ordinary shares at an issue price of $0.002 each. The issue price was based on the market price on date of purchase.

Net profit and revenue resulting from the acquisition of Sequoia Wealth Group Pty Ltd amounting to $2,145,171 and $830,473 respectively are included in the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2016.

At the time the financial statements were authorised for issue, the Group had not yet completed the accounting for acquisition of SWG. In particular, the fair values of the net assets and liabilities disclosed above have only been determined provisionally as the independent valuations have not been finalised.

Finance TV Pty Ltd ('FNN' of 'Finance News Network')

In 2013, the Group acquired 11.56% of the share capital of Finance TV Pty Ltd ('FNN' or 'Finance News Network'). On 12 February 2016, the Group acquired a further 38.53% of the share capital and obtained control of FNN, an independent news organisation that specialises in both the production and distribution of financial news content, digital communications and productions services to ASX-listed companies and managed funds.

As a result of the acquisition, the Group is expected to increase its presence in these markets. The goodwill of $554,789 arising from the acquisition is attributable to the acquired economies of scale expected from combining the operations of FNN and the Group. None of the goodwill recognised is expected to be deductible for income tax purposes.

The acquired business contributed revenues of $523,209 and net loss of $69,454 to the Group for the period from 12 February 2016 to 30 June 2016.

NOTE 38. BUSINESS COMBINATIONS (CONTINUED)

Details of the acquisitions are as follows:

	Sequoia WealthGroup Pty Ltd(SWG) Fair value$	Finance TV PtyLtd (FNN) Fairvalue$
Cash and cash equivalents	7,089	71,671
Trade and other receivables	381,228	270,401
Plant and equipment	4,589	28,522
Other assets	8,963	-
Trade and other payables	(326,555)	(115,314)
Employee benefits	-	(57,193)
Net assets acquired	75,314	198,087
Goodwill	674,686	550,778
Acquisition-date fair value of the total consideration transferred	750,000	748,865
Representing:
Sequoia Financial Group Limited shares issued to vendor	750,000	650,000
Non-controlling interest	-	98,865
	750,000	748,865
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred	750,000	748,865
Less: cash and cash equivalents	(7,089)	(71,671)
Less: shares issued by Company as part of consideration	(750,000)	(650,000)
Less: non-controlling interest	-	(98,865)
Net cash received	(7,089)	(71,671)

2017

On 1 September 2016, the Group acquired an additional 3.86% of the issued shares of Finance TV Pty Ltd for a purchase consideration of $50,000. The Group now holds 53.95% of the share capital of FNN. The carrying amount of the non-controlling interests in Finance TV Pty Ltd on the date of acquisition was $77,399. The Group recognised a decrease in non-controlling interests of $4,466 and a decrease in equity attributable to the owners of the parent of $45,534. The effect of changes in the ownership interest of FNN on the equity attributable to owners of the Group during the year is summarised as follows:

$ 4,466 Consideration paid to non-controlling interests (50,000) Excess of consideration paid recognised in the transactions with non-controlling interests reserve within equity (45,534)

Carrying amount of non-controlling interest acquired 4,466 Consideration paid to non-controlling interests (50,000) Excess of consideration paid recognised in the transactions with non-controlling interests reserve within equity (45,534)

NOTE 39. INTERESTS IN SUBSIDIARIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non-controlling interests in accordance with the accounting policy described in note 2:

		Parent		Non-controlling interest
Name	Principal placeof business /Country ofincorporation	Ownershipinterest2017	Ownershipinterest2016	Ownershipinterest2017	Ownershipinterest2016
Sequoia Financial Group Limited (formerly MDSFinancial Group Limited)	Australia	100.00%	100.00%	-	-
Sequoia Group Holdings Pty Ltd	Australia	100.00%	100.00%	-	-
Subsidiaries of Sequoia Financial Group Limited
Bourse Data Pty Ltd	Australia	100.00%	100.00%	-	-
The Cube Financial Group Ltd	Australia	100.00%	100.00%	-	-
D2MX Pty Ltd	Australia	100.00%	100.00%	-	-
Market Data Services Pty Ltd	Australia	100.00%	100.00%	-	-
MDSnews.com Pty Ltd	Australia	100.00%	100.00%	-	-
Subsidiaries of MDSnews.com Pty Ltd
Sequoia Direct Pty Ltd (formerly Trader DealerOnline Pty Ltd)	Australia	100.00%	100.00%	-	-
Finance TV Pty Ltd	Australia	53.95%	50.09%	46.05%	49.91%
Subsidiaries of Sequoia Group Holdings Pty Ltd
Sequoia Superannuation Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Specialist Investments Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Asset Management Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Lending Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Funds Management Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Wealth Group Pty Ltd	Australia	100.00%	100.00%	-	-
Subsidiaries of Sequoia Superannuation Pty Ltd
Sequoia Brisbane Pty Ltd	Australia	100.00%	100.00%	-	-
Subsidiaries of Sequoia Specialist InvestmentsPty Ltd
Sequoia Nominees No 1, Pty Ltd	Australia	100.00%	100.00%	-	-
Subsidiaries of Sequoia Asset ManagementPty Ltd
Acacia Administrative Services Pty Ltd *	Australia	100.00%	100.00%	-	-
Subsidiaries of Sequoia Wealth Group Pty Ltd
Sequoia Wealth Management Pty Ltd	Australia	100.00%	100.00%	-	-
Sequoia Corporate Finance Pty Ltd	Australia	100.00%	100.00%	-	-

* Acacia Administrative Services Pty Ltd acts as a service entity for the Group with all employees engaged under this entity.

NOTE 39. INTERESTS IN SUBSIDIARIES (CONTINUED)

Summarised financial information

Summarised financial information of subsidiaries with non-controlling interests that are material to the Group are set out below:

		Finance TV Pty Ltd
	2017$	2016$
Summarised statement of financial position
Current assets	286,931	234,799
Non-current assets	12,273	28,522
Total assets	299,204	263,321
Current liabilities	143,879	142,249
Total liabilities	143,879	142,249
Net assets	155,325	121,072
Summarised statement of profit or loss and other comprehensive income
Revenue	1,348,345	523,209
Expenses	(1,314,092)	(590,276)
Profit/(loss) before income tax expense	34,253	(67,067)
Income tax expense	-	-
Profit/(loss) after income tax expense	34,253	(67,067)
Other comprehensive income	-	-
Total comprehensive income	34,253	(67,067)
Statement of cash flows
Net cash from operating activities	49,537	38,327
Net cash used in investing activities	(2,830)	-
Net cash from/(used in) financing activities	14,487	(16,000)
Net increase in cash and cash equivalents	61,194	22,327
Other financial information
Profit/(loss) attributable to non-controlling interests	15,774	(34,664)
Accumulated non-controlling interests at the end of reporting period	75,509	64,201

NOTE 40. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FROM/(USED IN) OPERATING ACTIVITIES

	Consolidated
	2017$	2016$
Profit after income tax expense for the year	725,573	285,733
Adjustments for:
Depreciation and amortisation	228,176	130,861
Impairment of non-current assets	6,945	30,000
Impairment of intangibles	-	30,000
Net loss on disposal of non-current assets	79,757	8,402
Share-based payments	110,384	118,816
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables	(26,520)	1,609,278
Decrease/(increase) in deferred tax assets	(3,276,170)	839,750
Decrease/(increase) in other operating assets	(8,986,982)	1,737,129
Increase/(decrease) in trade and other payables	2,149,142	(2,348,726)
Increase in provision for income tax	849,695	10,529
Increase/(decrease) in deferred tax liabilities	2,759,516	(802,327)
Increase in employee benefits	84,998	64,947
Increase/(decrease) in other operating liabilities	11,133,351	(1,963,190)
Net cash from/(used in) operating activities	5,837,865	(248,798)

NOTE 41. EARNINGS PER SHARE

	Consolidated
	2017$	2016$
Profit after income tax	725,573	285,733
Non-controlling interest	(15,774)	34,664
Profit after income tax attributable to the owners of Sequoia Financial Group Limited	709,799	320,397
	Number	Number
Weighted average number of ordinary shares used in calculating basic earningsper share	48,798,706	4,479,817,035
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares	1,166,668	360,000,000
Performance rights	1,300,000	-
Weighted average number of ordinary shares used in calculating diluted earningsper share	51,265,374	4,839,817,035
	Cents	Cents
Basic earnings per share	1.455	0.007

Diluted earnings per share 1.385 0.007

NOTE 42. SHARE-BASED PAYMENTS

Performance rights

On 1 February 2017, the Company established an employee equity scheme, called the Sequoia Employee Incentive Plan ('SEIP') to offer performance rights to certain employees employed in the Company.

All performance rights offered under the February 2017 grant were granted for nil consideration and had a nil exercise price.

Performance rights vest in three tranches:

Tranche	Vesting date
Tranche 1	31 January 2018
Tranche 2	31 January 2019
Tranche 3	31 January 2020

The vesting conditions of the performance rights granted under the February 2017 grant are:

• 50% of each tranche where the employee meets the service condition; and
• 50% of each tranche where the employee meets the service condition and the Company meets the performance conditions.

All performance rights tranches expire on 31 January 2022.

The service conditions are that Tranche 1, Tranche 2 and Tranche 3 will vest if continuous employment is maintained with the Company from the date the performance rights are granted until their respective vesting dates.

The performance conditions are related to share price hurdles as follows:

• Tranche 1 will vest if the Company's 90 Day VWAP up to and including 31 January 2018 is at least $0.25.
• Tranche 2 will vest if the Company's 90 Day VWAP up to and including 31 January 2019 is at least $0.30.
• Tranche 3 will vest if the Company's 90 Day VWAP up to and including 31 January 2020 is at least $0.35.

Any performance rights which meet the vesting conditions above will be available for exercise up until the expiry date. On exercise of vested performance rights Company shares may be acquired and held by an Employee Share Trust ('EST') to be established for the purpose of settlement. Shares may be held subject to the EST and the Company's Securities Trading Policy.

If the Company provide an EST, the employee can apply to the Trustee to have their shares transferred or sold from the EST, subject to compliance with the Company's Securities Trading Policy.

NOTE 42. SHARE-BASED PAYMENTS (CONTINUED)

Set out below are summaries of performance rights granted under the plan:

2017

Grant date	Expiry date	Balance at thestart of the year	Granted	Exercised	Expired/forfeited/other	Balance at theend of the year
01/02/2017	31/01/2022	-	1,300,000	-	-	1,300,000
		-	1,300,000	-	-	1,300,000

The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 4.58 years.

For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

Grant date	Expiry date	Share price atgrant date	Expectedvolatility	Dividend year	Risk-free interestrate	Fair value at grantdate
01/02/2017	31/01/2022	$0.350	-	-	-	$0.320

NOTE 43. EVENTS AFTER THE REPORTING PERIOD

On 27 July 2017, Marika White resigned as Company Secretary. Tharun Kuppanda is now the Company Secretary.

On 18 August 2017, Computershare Investor Services Pty Limited ceased as the Company's registry provider and Registry Direct was appointed service provider and commenced on 21 August 2017.

No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements;
• the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2017 and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

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

On behalf of the directors

Michael Carter Chairman

31 August 2017 Sydney

Key Audit Matter	How Our Audit Addressed the Key AuditMatter
Carrying Value of GoodwillRefer to Note 15 "Non-Current Assets -Intangibles"
As at 30 June 2017 the Group's balance sheetgoodwill amounting to $8,607,296,includescontained within 5 cash generating units (CGUs).The assessment of impairment of the Group'sqoodwillbalancesincorporatedsignificantjudgment in respect of factors such as discountrates, current work in hand and future contractwins, as well as economic assumptions.	Our procedures included, amongst others, thefollowing:We assessed management's determination$\bullet$the Group's CGUs based on ourofunderstanding of the nature of the Group'sbusinesses and the economic environmentin which the segments operate.evaluatedWemanagement'sprocess$\bullet$regarding valuation of the Group's goodwill
A key audit matter for us was whether the Group'svolvo je voo model far impoiment instuded	assets to determine any asset impairments.We challenged the Group's assumptions and$\bullet$estimates used to determine the recoverable

Independent auditor's report to the members of Sequoia Financial Group Limited

Independent auditor's report to the members of Sequoia Financial Group Limited

The shareholder information set out below was applicable as at 31 July 2017.

Distribution of equitable securities

Analysis of number of equitable security holders by size of holding:

1 to 1,000 155 1,001 to 5,000 55 5,001 to 10,000 23 10,001 to 100,000 94 100,001 and over 69

Holding less than a marketable parcel -

Equity security holders

Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below:

	Ordinary shares
	Number held	% of total sharesissued
BEETON ENTERPRISES PTY LTD (THE SCOTT & SALLY BEETON A/C)	10,065,934	20.63
VISTA INVESTMENTS (NSW) PTY LTD	4,079,824	8.36
PAMELA BEETON INVESTMENT PTY LTD	3,586,063	7.35
MR PETER STIRLING + MRS ROS STIRLING	2,237,500	4.59
HENRY MORGAN LIMITED	1,804,534	3.70
AUST EXECUTOR TRUSTEES LTD (KENTGROVE CAPITAL FUND)	1,500,000	3.07
KALI GANDAKI INVESTMENTS PTY LTD (KALI GANDAKI INVESTMENTS A/C)	1,491,908	3.06
COJONES PTY LTD (JONES FAMILY NO 2 A/C)	1,047,066	2.15
SOPHAT PTY LTD (MATOPHIE SUPER FUND A/C)	1,000,100	2.05
BEETON ENTERPRISES PTY LTD (THE SCOTT & SALLY BEETON A/C)	830,250	1.70
BURATU PTY LTD (CONNOLLY SUPER FUND A/C)	780,000	1.60
MANLY LANE PTY LTD (SCOTT & SALLY BEETON SUP A/C)	740,155	1.52
VALUEAD PTY LTD	734,450	1.51
TOTAL LEGEND SUPER P/L (TOTAL LEGEND SUPER A/C)	600,000	1.23
MR GARRY CROLE	600,000	1.23
KABILA INVESTMENTS PTY LIMITED	535,000	1.10
MR ANDREW PHILLIPS	530,715	1.09
MR MICHAEL CARTER	525,000	1.08
MR MAKRAM HANNA + MRS RITA HANNA (HANNA & CO P/L SUPER A/C)	523,910	1.07
METAFUTURES PTY LTD (METAFUTURES INVESTMENT A/C)	508,912	1.04
	33,721,321	69.13

Number of holders of ordinary shares

396

Shareholder Information

Unquoted equity securities

	Number on issue	Number ofholders
Performance rights	1,300,000	-

Substantial holders

Substantial holders in the Company are set out below:

Number held% of total sharesissued
BEETON ENTERPRISES PTY LTD (THE SCOTT & SALLY BEETON A/C)10,065,934	20.63
VISTA INVESTMENTS (NSW) PTY LTD4,079,824	8.36
PAMELA BEETON INVESTMENT PTY LTD3,586,063	7.35

Voting rights

The voting rights attached to ordinary shares are set out below:

Ordinary shares

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

There are no other classes of equity securities.

Restricted securities

There are no restricted securities on issue.

Corporate Directory

Directors

Scott Lionel Beeton Michael Kenneth Carter Marcel John Collignon Garry Peter Crole

Company secretary

Tharun Kuppanda

Registered office

Level 36 50 Bridge Street Sydney NSW 2000 Telephone: + 61 2 8114 2222 Facsimile: + 61 2 8114 2200

Share register

Registry Direct Level 6 2 Russell Street Melbourne VIC 2000 Telephone: 1300 556 635 Facsimile: +61 3 9111 5652

Auditor

Hall Chadwick Level 40 2 Park Street Sydney NSW 2000

Bankers

National Australia Bank 330 Collins Street Melbourne VIC 3000

Westpac Australia Bank Royal Exchange, Cnr Pitt & Bridge Streets Sydney NSW 2000

Stock exchange listing

Sequoia Financial Group Limited shares are listed on the Australian Securities Exchange (ASX code: SEQ)

Website www.sequoia.com.au

Corporate Governance Statement

The Board of Directors of Sequoia Financial Group Limited is committed to maintaining high standards of Corporate Governance. This Corporate Governance Statement discloses the extent to which the Company has followed the 3rd Edition of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations ('ASX Principles and Recommendations').

The Corporate Governance Statement adopted by the Board can be found in the Company's Corporate Governance section www.sequoia.com.au/about-sequoia/ corporate-governance