Announcement PDF Finbar Group Limited 27th Annual Report for the year ended 30 June 2011 27TH ANNUAL REPORT For the year ended 30 June 2011 www.finbar.com.au Cover Image Pelago West - Karratha’s first luxury highrise apartments CONTENTS Chairman’s Report 3 Managing Director’s Report 4 About Finbar 7 Development Overview 8 Completed Developments  8 Under Construction 10 Future Developments 16 Financial Report 17 Directors’ Report 18 Consolidated Statement of Comprehensive Income 33 Consolidated Statement of Changes in Equity 34 Consolidated Statement of Financial Position 35 Consolidated Statement of Cash Flows 36 Notes to the Financial Statements 37 Directors’ Declaration 68 Independent Auditor’s Report  69 Lead Auditor’s Independence Declaration  71 ASX Additional Information 72 Notes74 CORPORATE DIRECTORY Offices and Officers Directors Mr John Chan (Executive Chairman) Mr Darren John Pateman (Managing Director) Mr John Boon Heng Cheak Mr Kee Kong Loh Company Secretary Mr Edward Guy Bank  Principal Registered Office Finbar Group Limited Level 3, 15 Labouchere Road SOUTH PERTH WA 6151 PO Box 113 SOUTH PERTH WA 6951 Telephone: +61 8 9474 4460 Facsimile: +61 8 9474 4458 Email: info@finbar.com.au Website: www.finbar.com.au Share Registry Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000 Telephone: +61 8 9323 2000 Auditors KPMG 235 St Georges Terrace PERTH WA 6000 FAIRLANES OFFICE Fairlanes Perth 18 on Plain ADAGIO AT SYMPHONY CITY 1 1 2 Chairman’s Report GATEWAY Dear Shareholder On behalf of the Board of Directors I am pleased to present you with the 27th Annual Report of your Company for the financial year ended 30 June 2011, the Company’s 16th year as a property developer. Finbar Group has achieved a record after tax profit of $24.03 million despite the prevailing challenges facing the global economy. Your board and management continue to run your Company using the same core principles adopted over the past 16 years, ensuring we are well placed to withstand a volatile economic environment, adapt quickly to changes in this environment and deliver on our financial performance. The short term outlook remains positive and is driven by projects with presales on the books and a bolstered project pipeline that will provide exciting growth opportunities for your Company. We are poised to benefit from latent profitability in current projects and stand to benefit significantly from an improving market. Investments in new medium cost projects like Dianella, Lime, Au, and Ecco demonstrate our ability to continue to meet our customers’ changing needs and pricing expectations while focusing on growth to generate shareholder value. Given the strength of our financial performance this year and confidence in our outlook, we have rewarded shareholders with a 50% increase in the interim dividend paid in March, resulting in an 8.5 cents fully franked dividend for the financial year. In 2012, we will be relocating the corporate office from South Perth, which has seen the Company through the last 10 years of growth, into the Fairlanes office building in Adelaide Terrace in East Perth, providing your Company with the capability to grow for at least the next 10 years. In conclusion, we face the future with confidence in our projects, our key relationships partners, and our project team. We have a number of strategic competitive advantages that your Company will continue to bolster and capitalise, and shareholders may be confident in both Finbar’s short and long term prospects. Sadly this year we lost our valued colleague and fellow director Paul Rengel to a long term illness. Paul provided a valuable contribution to the Board for 18 years, and the Board remains very grateful for his significant contribution to the Company’s growth and will be greatly missed by everyone in the Finbar team. On behalf of the Board and Shareholders, I thank our management and staff for contributing significantly towards Finbar Group’s successes this year, and I welcome their continued dedication to the future of this Company. We thank you for your support over the past year and look forward to updating you on our exciting projects and activities at the Annual General Meeting in November. John Chan Executive Chairman 4 October 2011 3 4 Managing Director’s Report TIMES 2 APARTMENTS Finbar’s record result for FY2011 was achieved against the backdrop of a volatile global economy which continues to challenge the property market in Western Australia. Investor buyer activity is soft which normally represents approximately 50% of sales activity in a more buoyant marketplace. Finbar is an agile and scalable company that enables us to adapt quickly to changing markets and economic environments. This agility means we have been able to introduce products to new markets with a change in product mix that allows us to meet the underlying demand in respect to both price and product expectations. Our low cost base still enables us to protect our superior profit margins. Marketing this year has been redirected to the owner occupier market which is currently the largest sector of the market in the absence of investment activity. Owner occupiers seek accommodation for more immediate occupation and this underlying demand is evident in the fact that Finbar has only five individual apartments to sell out of all completed company projects. Approximately 25% of our apartments are currently selling after practical completion of the project. This absence of stock has enabled us to focus on projects currently under construction and allowed us to launch new projects confidently and drive shareholder value though securing our future profitability and growth. Under construction at present is the Fairlanes building, 18 on Plain, Pelago West in Karratha, Adagio and Lime. Fairlanes and 18 on Plain are due to be completed in the second half of this financial year which will underpin our FY12 earnings. Pelago West in Karratha has already reached the stage of construction where the structure is complete and construction is on track to be completed in or around April 2012 with revenue anticipated to fall into FY13. Such progress in a short period of time and in a challenging regional location is a testament to the dedication and determination by our builder Hanssen and our project team. The cover, and page 8 of this report contains updated images and information on progress. Our strong balance sheet and cashflow from sold property enables us to continue to grow and invest in new projects for our future. This new investment is evident in our recent launch of the new St Marks project in Highgate, and Au in East Perth. Further details of these projects are contained in this report. Finbar has historically leveraged growth through a number of successful Joint Venture relationships. This year has been no different with Finbar privileged to have the continued support of enduring joint partners that reinvest alongside Finbar in multiple projects as they have done now for over a decade. This year we welcome two new land owner JV partners to the Finbar JV family with the owners of the new Ecco Apartment project in Lord Street, and joint owners of our Au project in East Perth. Both projects will be launched in this financial year and together will bring an additional 300 apartments into the project pipeline. We look forward to working with our new partners at Swanline Developments and Heyspring International to produce an exemplary outcome for our mutual benefit. Finbar has always been proud of our brand, and we are recognised as Western Australia’s most active and reliable apartment developer. The Company has taken steps over the past year to extend this brand awareness to the Asian markets where we are seeing an increase in demand. Asian buyers are currently seeking to secure property in Perth, where their children are schooled, where they are in the same time zone, and in a country that is considered a safe haven with a high standard of living. This marketing exercise has increased the level of sales in our higher priced luxury apartments, like Adagio, where sales have reached the stage that pre-sales cover in excess of the construction facility. FY2011 is the first year in which Finbar has retained a substantial asset to generate investment income to supplement our property development business. The Gateway office building is now 95% leased, and this building, along with the intended retention of the Fairlanes office building and Pelago commercial due within the next nine months, will all make a substantial and ongoing contribution to company earnings to underpin and smooth our development earnings. Finbar’s balance sheet has strengthened again this year and a robust cash reserve secures our equity commitments to our committed projects. Our debt remains limited to long term facilities secured on investment property held for recurrent income, or construction finance facilities which are repaid from pre-sales on completion. Again, we thank our bankers Commonwealth Bank, Westpac, and NAB for continuing to support our Company growth with our new project facilities this past year. Imminent changes to the accounting standards and our anticipated early adoption in the current financial year will see all revenue consolidated and reflect the real level of settlement activity. These changes will ensure a more accurate, concise and transparent method for shareholders and analysts to track our sales activity, which is one of a number of key benchmarks for measuring our financial performance. Given that we currently derive the majority of our income from earnings that can only be recognised on physical completion and settlement of projects, providing accurate guidance on earnings for a property development company is a challenging task that only becomes more precise much closer to book close date. However, for the purposes of estimating our current financial year earnings, we anticipate a modest increase in profitability this year, and further growth into 2013 as the Company’s shareholders begin to benefit from either their dilution or new investment in the Company resulting from our 2010/11 capital raisings to fund our Pilbara expansion. Your Company has an employee team with an average tenure in excess of 10 years. Decision making for short term benefit is not part of our cultural philosophy. Every day this team thinks about ways that we can build on the intrinsic value of this Company to create shareholder value, and do so in a way that will continue to protect it from the harsh realities of a volatile global economic environment. This commitment extends beyond those directly employed by the Company but uniquely exists within the key relationships we have built over the past 16 years with our design team, building contractors, service providers and consultants. I take this opportunity to thank all those who work with Finbar who have all contributed to the success and exciting future potential of this Company. Darren Pateman Managing Director 4 October 2011 5 6 Finbar Group Limited is an Australian property development company listed on the Australian Stock Exchange trading under the security code ‘FRI’. Incorporated in 1984, Finbar first listed as a property development company in 1995 and has established itself as the market leader in built form apartment development in the Perth metropolitan area. Finbar’s core business lies in the development of medium to high density residential apartments and commercial property within the state of Western Australia where it carries out its development projects in its own right or through incorporated special purpose entities and Joint Venture companies of which the Company either directly or indirectly holds interests in project profitability ranging between 50% and 100%. Finbar’s business model involves the acquisition of suitable development land either directly or by way of incorporated Joint Ventures whereby equity partners are sought to allow the Company to leverage into larger redevelopment projects to take advantage of the benefits of economies of scale, and to help spread project risk. Joint Venture opportunities are also brought to the Company through land owners who require partners with project delivery expertise. Joint Ventures of this nature enable the Company to leverage our development expertise and help limit the level of capital contribution required by the Company to achieve higher returns on equity. In addition to residential projects, the Company has developed and retained an interest in an office building to provide future annuity income to supplement core residential development income. Finbar outsources its development activities to external consultants, sales persons, and building contractors. The administration of the Company along with the operating, investment, and acquisitions decisions are made by the Company board and management. The Company employs just twelve staff members in its South Perth offices. Adaigo - Symphony City Blue 2 Matilda Bay Bluewater 85 Riverstone Seville on the Point Altair Reflections The Westralian Infinity 18 on Plain Times 2 Domus Au Royale Verve Soho Wellington Place Circle Fairlanes The Rise Sol One28 Cosmopolitan Paddington Place The Saint Code Kingston 175 Hay Market Rise Chelsea Aerial view of Finbar’s past and current developments THE SAINT About Finbar 7 8 Development Overview Information current as of 30th September 2011 COMPLETED DEVELOPMENTS Code Code - 69 Milligan Street, Perth is a 50% Joint Venture project located in the heart of the CBD opposite the Perth Arena and the future Northbridge Link. The development comprises of 110 – 1 and 2 bedroom apartments plus 4 commercial lots. Marketing commenced off the plan in November 2006 with construction works completed in September 2009. All apartments have been sold and settled. Del Mar Apartments Del Mar Apartments - located at 3 The Palladio, Mandurah Ocean Marina is a 100% owned project completed in November 2007. All lots are now sold, with settlement of the last unit occurring during the reporting period. Gateway Gateway - located at 59 Albany Highway in Victoria Park is a 64% Joint Venture commercial project. The project has a total net lettable area of 15,099m2 generating approximately $5,038,000 in gross rental per annum. Construction works completed in July 2010 with the major tenant Monadelphous Group Limited now occupying the premises. The Edge Apartments The Edge Apartments - located at 8 Hordern Street, Victoria Park is a 64% Joint Venture project comprising a total of 75 apartments in 2 and 3 bedroom configuration including 11 townhouse style apartments. Marketing commenced in August 2008 with construction works completed in November 2010. 70 units were settled in the reporting period with two units sold and only 3 units left remaining unsold. The Company anticipates all remaining units will be sold and settled in the financial year ending 30 June 2012. The Saint The Saint - located at 118 Adelaide Terrace in East Perth is a 50% Joint Venture project comprising a total of 84 – 1, 2 and 3 bedroom apartments plus 1 commercial lot. Marketing commenced off the plan in July 2007 with construction works completed in December 2009. All lots are now sold. 6 units settled in the reporting period and one unit contracted to settle in the financial year ending 30 June 2012. Times 2 Apartments Times 2 Apartments - located at 143 Adelaide Terrace East Perth is a 50% Joint Venture project totalling 200 apartments plus 2 commercial lots. Marketing commenced in November 2009 with construction works completed in April 2011. All but two lots remains unsold with a total of 191 apartments now settled. The Company anticipates to have all units sold and settled in the financial year ending 30 June 2012. Verve Apartments Verve Apartments - is a 50% Joint Venture project set within a close proximity of the vibrant Northbridge nightlife at 145 Newcastle Street, Perth. Verve boasts 28 – 2 and 3 bedroom apartments and 6 commercial lots. Marketing commenced in March 2008 with construction works completed in November 2009. All units are now sold. A total of 10 units settled in the reporting period, with one unit contracted to settle in the financial year ending 30 June 2013. Code Gateway The Saint Times 2 Apartments Del Mar Apartments The Edge Apartments Verve Apartments 9 10 UNDER CONSTRUCTION Fairlanes Perth 181 ADELAIDE TERRACE, EAST PERTH UNDER CONSTRUCTION Fairlanes Office 181 ADELAIDE TERRACE, EAST PERTH TOTAL LOTS 128 – 2 and 3 bedroom apartments COMMERCIAL Refer to Fairlanes Office AVERAGE SALE PRICE TO DATE $845,478 % SOLD 90% FINBAR’S ULTIMATE INTEREST 100% SALES CONTRACTS SECURED $97,230,000 TOTAL PROJECT SALES VALUE $108,185,000 ESTIMATED COMPLETION DATE Financial Year 2012 PROJECT COMPANY 175 Adelaide Terrace Pty Ltd NETT LETTABLE AREA 7,155m2 COMMERCIAL RETAIL LOTS 52 APPROXIMATE GROSS RENTAL PA $3,220,000 FINBAR’S ULTIMATE INTEREST 100% BUILDING END VALUE $50,041,000 ESTIMATED COMPLETION DATE Financial Year 2012 PROJECT COMPANY 175 Adelaide Terrace Pty Ltd Fairlanes Perth is a 27 story mixed used development located in the eastern end of the city. The residential portion of the development contains 128 apartments in 2 and 3 bedroom configurations boasting lifestyle resort style amenities on the 7th Floor. Marketing commenced in March 2009. The Company is pleased with the progress of construction with the final floor slab now completed and internal fit outs currently progressingatarapidrate.Only13apartments remain unsold which the Company hopes to secure prior to end of FY2012. Located directly below the residential portion of Fairlanes Perth, Fairlanes Office will comprise 7,155m2 of office space over 5 floors. The Company has retained the top floor and intends to move its registered office once construction is complete. The residential component has secured the financial success of the Fairlanes project which has enabled the Company to offer the remaining 6,700 sqm of office space in the commercial component of the building for lease without offering lease incentives which will help maximise the future income potential and value of this to be retained investment. 11 12 UNDER CONSTRUCTION 18 on Plain 18 PLAIN STREET, EAST PERTH UNDER CONSTRUCTION Pelago West 23 SHARPE AVENUE, PEGS CREEK TOTAL LOTS 29 – 2 bedroom apartments COMMERCIAL LOTS 2 AVERAGE SALE PRICE TO DATE $629,261 % SOLD 74% FINBAR’S ULTIMATE INTEREST 50% SALES CONTRACTS SECURED $14,473,000 TOTAL PROJECT SALES VALUE $20,471,000 ESTIMATED COMPLETION DATE Financial Year 2012 PROJECT COMPANY 22 Plain Street Pty Ltd TOTAL LOTS 114 – 1, 2 & 3 bedroom apartments COMMERCIAL LOTS 8 AVERAGE SALE PRICE TO DATE $689,516 % SOLD 55% FINBAR’S ULTIMATE INTEREST 100% SALES CONTRACTS SECURED $43,282,604 TOTAL PROJECT SALES VALUE $96,369,749 ESTIMATED COMPLETION DATE Financial Year 2012 PROJECT COMPANY Finbar Karratha Pty Ltd 18 on Plain is a boutique development located in East Perth comprising 29 – 2 bedroom apartments over 10 storeys. The development sits opposite the Hyatt Hotel and only 300m from the Swan River. Marketing commenced in March 2010 with 23 apartments now sold and only 8 lots remaining. Construction is progressing well with the structure now complete and internal fitouts underway. The Project is scheduled for completion with results being reflected in the current financial year to 30 June 2012. Pelago West Apartments, Stage One will be Karratha’s first luxury highrise apartments situated in the heart of the city centre comprising a total of 114 – 1, 2 and 3 bedroom apartments plus 8 ground floor commercial lots. Marketing commenced in March 2011 and to date 61 lots have been sold with a further 12 leased on a five year contract to a service contractor. Construction commenced in the second half of the reporting year and the structure is now complete. 13 14 UNDER CONSTRUCTION Lime 189 SWANSEA STREET EAST, EAST VICTORIA PARK UNDER CONSTRUCTION Adagio at Symphony City TERRACE ROAD, EAST PERTH TOTAL LOTS 95 – 2 bedroom apartments COMMERCIAL 16 AVERAGE SALE PRICE TO DATE $432,692 % SOLD 32% FINBAR’S ULTIMATE INTEREST 50% SALES CONTRACTS SECURED $11,250,000 TOTAL PROJECT SALES VALUE $51,163,500 ESTIMATED COMPLETION DATE Financial Year 2012 PROJECT COMPANY 185 Swansea Street Pty Ltd TOTAL LOTS 113 – 2 and 3 bedroom apartments COMMERCIAL 2 AVERAGE SALE PRICE TO DATE $1,652,065 % SOLD 40% FINBAR’S ULTIMATE INTEREST 50% SALES CONTRACTS SECURED $75,995,000 TOTAL PROJECT SALES VALUE $183,943,000 ESTIMATED COMPLETION DATE Financial Year 2013 PROJECT COMPANY 88 Terrace Road Pty Ltd Lime Apartments located at 189 Swansea Street East in East Victoria Park is a 50% Joint Venture project comprising a total of 95 – 2 bedroom apartments and 16 commercial lots over 3 walk-up levels. The development is situated just a few minutes from the café and restaurant precinct along Albany Highway. Marketing commenced in March 2011 and the Company has secured 30 pre- sales contracts. Construction works has now commenced with brick works currently progressing. Adagio Apartments is situated along the exclusive Terrace Road precinct in East Perth with uninterrupted panoramic views of the Swan River. Adagio will comprise 113 luxury 2 and 3 bedroom apartments over 23 storeys. Marketing commenced in October 2010 with over $75.9 million in pre- sales achieved to date. Construction works has now commenced. 15 FINBAR GROUP LIMITED 30 JUNE 2011 ANNUAL FINANCIAL REPORT 16 St Marks Apartments St Marks Apartments located at 131 Harold Street in Highgate is a 100% Finbar owned project comprising 130 – 1, 2 and 3 bedroom apartments valued at approximately $66 million. Marketing commenced in September 2011 with 20 pre-sales achieved within the first week of launch. Au Apartments Au Apartments located at 208 Adelaide Terrace and 311 Hay Street is a Joint Venture project which the Company entered into during the reporting period. The development will encompass a total of 192 – 1, 2 and 3 bedroom apartments plus 2 commercial lots over 9 storeys. Marketing will commence in October 2011 with an approximate value of $104 million. Knightsgate Residence Knightsgate Residence located at 9 Citadel Way in Currumbine is a 50% Joint Venture project totalling 43 apartments in 1 and 2 bedroom configurations valued at approximately $14 million. Marketing commenced in February 2011 with 9 lots pre-sold to date. Ecco Apartments Ecco Apartments located at 262 Lord Street in Perth is a 50% Joint Venture project which the Company secured during the reporting period. Development Approval has been received for 90 apartments in 1, 2 and 3 bedroom layouts plus 8 commercial lots. The Company is planning to commence marketing in early 2012. 36 Chester Avenue 36 Chester Avenue located in Dianella is a 50% Joint Venture project. The Company is currently in the planning application process. Marketing is scheduled to commence in early 2012. Pelago East Apartments Pelago East Apartments, Stage Two in Karratha will comprise of 178 apartments plus 14 commercial lots. Pelago East will be launched to the market when more sales in Pelago West, Stage One have occurred. Toccata Apartments Toccata Apartments at Symphony City is located at 88 Terrace Road East Perth. The Company currently holds a Development Approval for this project and intends to commence marketing immediately upon Adagio securing more sales. Concerto & Harmony Concerto & Harmony located at 193 Adelaide Terrace in East Perth is the third stage of the Symphony City project and is currently in early stages of planning and design brief. St Marks Apartments Knightsgate Residence Pelago East Apartments – Stage Two Ecco Apartments Toccata Apartments 36 Chester Avenue Concerto & Harmony Au 311 Apartments FUTURE DEVELOPMENTS Financial Report FOR THE YEAR ENDED 30 JUNE 2011 ABN 97 009 113 473 ACN 009 113 473 Contents  Directors’ Report (including Corporate Governance Statement) 18 Consolidated Statement of Comprehensive Income 33 Consolidated Statement of Changes in Equity 34 Consolidated Statement of Financial Position 35 Consolidated Statement of Cash Flows 36 Notes to the Financial Statements 37 Directors’ Declaration 68 Independent Auditor’s Report 69 Lead Auditor’s Independence Declaration 71 ASX Additional Information 72 Notes 74 17 18 FINBAR GROUP LIMITED 30 JUNE 2011 ANNUAL FINANCIAL REPORT FINBAR GROUP LIMITED 30 JUNE 2011 ANNUAL FINANCIAL REPORT Directors’ Report FOR THE YEAR ENDED 30 JUNE 2011 Directors’ Report FOR THE YEAR ENDED 30 JUNE 2011 1 DIRECTORS The Directors of the Company at any time during or since the end of the financial year are: Executive Director and Chairman John CHAN - BSc, MBA, MAICD Director since 27 April 1995 Managing Director from 27 April 1995 to 15 July 2010 Chairman since 15 July 2010 John Chan is Executive Director and Chairman of Finbar, and a Director of its Subsidiaries and Jointly Controlled entities. John was appointed director in 1995 and was instrumental in re-listing Finbar on the ASX as a property development company. Prior to joining Finbar, John headed several property and manufacturing companies both in Australia and overseas. John holds a Bachelor of Science from Monash University in Melbourne and a Master of Business Administration from the University of Queensland. John is a Member of the Australian Institute of Company Directors, is a Trustee for the Western Australian Chinese Chamber of Commerce, and is a former Senate Member of Murdoch University. Non-executive (Independent) Director Paul Anthony RENGEL - B Com, FCA Director since 22 May 1992 Chairman from 22 May 1992 to 15 July 2010 Paul Rengel was appointed Chairman in 1992 and has 39 years of professional experience with international accounting firms and is currently director for corporate finance services with Equity Finance & Securities Pty Ltd in Perth. Paul holds a Bachelor of Commerce degree from the University of Western Australia, he is a Fellow of the Institute of Chartered Accountants in Australia, an Associate Member of the Australian Institute of Company Directors, and an Associate Member of the Australian Institute of Management. Paul is an experienced professional company director and in the last four years has been non-executive chairman of ASX listed scientific equipment manufacturer - XRF Scientific Limited, and non-executive chairman of ASX listed mineral exploration company - Stonehenge Metals Limited. He brings to the Board a wide experience in the public company sector, financial management and corporate governance. Non-executive Director John Boon Heng CHEAK - B Com, B Eco Director since 28 April 1993 John Cheak joined the Board in 1993 and has extensive experience in the governance of companies in property development and marine transportation sectors. John has a Bachelor of Economics degree from the University of Western Australia and is a permanent resident of Singapore. John is a non-executive director of CH Offshore Limited, Singapore a publicly-listed marine transportation company. Non-executive Director Kee Kong LOH - B Acc, CPA Director since 28 April 1993 Kee Kong Loh joined the Board in April 1993 and has substantial experience in the governance of companies in property development, marine transportation, and electronics manufacturing sectors. He has a degree in Accountancy from the University of Singapore and is a member of the Institute of Certified Public Accountants of Singapore. Loh is a director of PCI Limited (Singapore) which is a publicly listed company in Singapore, where he is a resident. Managing Director Darren John PATEMAN - Director since 6 November 2008 EMBA, Grad Dip App CorpGov, ACIS, MAICD, AFAIM Managing Director since 15 July 2010 Darren Pateman is the Managing Director and was Company Secretary of Finbar until 15 July 2010. Darren joined Finbar in 1995 and has had an active role in the growth of Finbar since re-listing on the stock exchange as a property development company in 1995. He has held a number of positions in his 15 years with the Company and was appointed Managing Director on 15 July 2010. Darren is a Chartered Secretary and holds an Executive Master of Business Administration from the University of Western Australia and a Graduate Diploma in Applied Corporate Governance. Darren is an Associate of the Institute of Chartered Secretaries and Administrators, a Member of the Australian Institute of Company Directors and an Associate Fellow of the Australian Institute of Management. The Directors present their report together with the financial report of the Group, comprising Finbar Group Limited (‘the Company’) and its Subsidiaries and the Group’s interest in Jointly Controlled entities for the financial year ended 30 June 2011 and the independent auditor’s report thereon. Contents 1 Directors 19 2 Company Secretary 20 3 Directors’ Meetings 20 4 Corporate Governance Statement 20 4.1 Board of Directors 20 4.2 Remuneration Committee 21 4.3 Remuneration Report - Audited 22 4.3.1 Principles of Remuneration - Audited 22 4.3.2 Directors’ and Executive Officers’ Remuneration - Audited 23 4.3.3 Analysis of Bonuses included in Remuneration - Audited 24 4.3.4 Equity Instruments - Audited 24 4.4 Audit Committee 24 4.5 Risk Management 25 4.6 Ethical Standards 26 4.7 Communication with Shareholders 27 5 Principal Activities 28 6 Operating and Financial Review 28 7 Dividends 30 8 Events Subsequent to Reporting Date 30 9 Likely Developments 30 10 Directors’ Interests 31 11 Share Options 31 12 Indemnification and Insurance of Officers and Auditors 31 13 Non-audit Services 31 14 Lead Auditor’s Independence Declaration 32 19 20 FINBAR GROUP LIMITED 30 JUNE 2011 ANNUAL FINANCIAL REPORT FINBAR GROUP LIMITED 30 JUNE 2011 ANNUAL FINANCIAL REPORT Directors’ Report (contin