Annual Report - MFAA...Annual Report 2014/2015 2 MFAA 2015/16 Annual Report It’s hard to believe how much has changed since I wrote my last annual report. In my last update I was

Annual Report 2014/2015

2 MFAA 2015/16 Annual Report

It’s hard to believe how much has changed since I wrote my last annual report. In my last update I was talking about how buoyant the residential property market was and while this is still the case APRA is doing everything in its power to change this.

It always concerns me when Governments interfere with free markets, especially when they do not understand the full consequences of their actions. More recently, ARNECC the new National Conveyancing Board, tried to introduce higher Professional Indemnity Insurance Premiums on Mortgage Brokers under some misguided belief that this would mitigate fraud. Again it was only through the action of the Board and Management that this was prevented. The outcome of this becoming legislation would have been devastating and cost the average mortgage broker tens of thousands of dollars in new professional indemnity premium to comply. This is an area the Board wants to focus on in the next financial year and we are in the process of recruiting a lobbyist. The purpose is to educate the Government and the Regulators on what an important role the Mortgage Broker plays in maintaining a competitive market and ensuring the consumer gets the most appropriate advice for their situation. This is often overlooked when brokers are referred to as commission driven which could not be further from the truth.

There has been an enormous amount of change at the MFAA over the last two years. Some of this was driven by the Board and obviously the balance by the appointment of Siobhan Hayden as the new CEO, which is not uncommon with a new Chief Executive.

Highlights of the last two years:

• the Board in now broker driven but still Industry focussed;

• the constitution now recognises all of these changes;

• more communication and face to face meetings;

Chairman’s Report

MFAA 2015/16 Annual Report 3

Chairman’s Reports

• changes to the Mentor program to make it more accessible to all brokers;

• the appointment of a new CEO; and

• the Office moving to the Sydney Central Business District (CBD) and creating an environment where brokers can utilise the internal office area when in the CBD.

All of these changes have improved our engagement with the Membership. The Board and the CEO will continue to focus on improving communication both internally and externally on the importance the role of a mortgage broker plays in assisting the consumer in getting not only the best deal but the most appropriate for their situation.

I would like to thank the Board and the Management team at the Association for all their help and support. I could not have done it without their assistance.

Kind Regards,

Tim Brown

MFAA Chairman


As I approach the completion of my initial 12 months as CEO of the MFAA, I am pleased with the achievements we have made so far. I am firmly focused on the plans ahead and confident the MFAA team will create the association that members all around the country have told me they want, and that my research says brokers and the industry need.

Following my appointment last October, I embarked on a ‘roadshow’ of consultation with finance brokers, lenders, aggregators and mortgage managers. On my travels I had the pleasure to meet with more than 1,000 finance brokers and gauge their opinions of the industry, their barriers to success within business, as well as their impressions of the MFAA and what we delivered.

My customer feedback, along with the extensive association best practice research have been critical to the development of the MFAA strategic direction. The feedback has allowed me to measure the current ‘pulse’ of the industry. A summation of the understandings, learnings and solutions being developed following my consultation is available in the MFAA Pulse of the Industry Report.

To complement my review of the industry’s current state, I commissioned Ernst & Young (EY) to conduct a study on the value of the mortgage broking industry. In their review, EY interviewed 700 customers that had used either a finance broker or the retail environment to source a loan, along with nine key lenders who are responsible for 88% of all mortgage flows within Australia. The report provided critical learnings about the partnership model lenders have adopted with mortgage brokers, as well as finance broker customers’ demographics and preferences. The resulting EY report Observations on the Value of Mortgage Broking was released in May.

Observations is a valuable reference to shape discourse about the value and high quality of the third-party channel. It found that, just as this industry began with disruptors, we need to keep innovating if we are to face the challenges of consumers’ increasing reliance on digital channels, and if we are to retain and grow our 50 per cent share of loan origination.

As anyone who has seen me speak can attest, I believe that the way to do this is through product diversification, innovation of business models, strategic partnerships with related professionals and bringing highly qualified new blood into the industry. This belief comes directly from Observations.

The MFAA has made substantial changes already that help members address all four of these pillars of future success, with further changes on the cards. We have introduced rigorous training in commercial and asset finance for residential brokers. We are encouraging and supporting members to diversify their product offerings to incorporate broader banking and insurance products.

At an association level, we are continuing to develop our relationships with related stakeholders including the Real Estate Institute of Australia, Financial Planners Association (FPA), Association of Financial Advisers (AFA), CPA Australia, National Insurance Brokers Association (NIBA), Professional Advisers Association (PAA) New Zealand and the Mortgage and Finance Association of Singapore (MFAS). We have also continued to nurture our existing close relationship with the Australian Securities and Investments Commission (ASIC), as well as extend audiences with Reserve Bank of Australia (RBA) and Australian Prudential Regulator Authority (APRA).

The area in which we have made the greatest progress this year is the creation of pathways into the industry for highly qualified, professional recruits. The MFAA already held finance brokers to a higher qualification standard and training requirements than those demanded by regulators, and has steadfastly upheld the professional and ethical standards that members are expected to meet.

CEO’s Report


CEO’s Reports

We are now making recruiting new blood and training industry entrants to a high standard simpler for existing broker businesses through the Mortgage and Finance Traineeship. Aimed at school leavers, the MFAA Traineeship will provide a critical flow of new talent into broker businesses along with the ongoing training and development of new-to-industry members. Our new member acquisition process allows experienced and competent Certificate IV qualified individuals to join the MFAA and gain accreditation with lenders while working towards their diploma qualification, following the completion of a new skills evaluation assessment.

We are also well advanced on the process of selecting a lobbyist who will represent our industry interests in Canberra. This professional’s role is to ensure that our politicians are well informed of the value mortgage brokers bring to consumers and of our industry’s high professional standards. They will work towards the best outcomes for brokers in the event of any changes to housing and finance policy or the regulatory burden. We thankfully saw the benefit of professional lobbyist efforts in the successful removal of finance brokers from the pending Australian Registrars’ National Electronic Conveyancing Council (ARNECC) changes to Verification of Identity (VOI).

I am excited about what 2016 will bring, with plenty of initiatives aimed at ensuring the MFAA is viewed as professional, forward-thinking, trusted and an advocate, and that we remain the industry leader. We are committed to supporting our customers, to facilitating growth within their businesses and the industry, and to ensuring success.

Next year, the MFAA Annual Convention will be delivered in a full day, in each state. The content will be focused on future proofing our industry and, due to being state-based, more accessible to all. The MFAA has committed $1 million to consumer education over the next 18 months, based on feedback from members, and gained national sponsorship rights for Global Money Week 2016. This fantastic initiative will engage every MFAA member and offer them the opportunity to increase the financial literacy of a new generation of Australians, as well as standing in front of

the families of that new generation sharing their expertise and representing the industry in their local communities. We expect, and are working hard to ensure, considerable media coverage of this initiative.

Overall, we are aiming for growth. The Observations report found that lenders believe the third-party channel could soon be responsible for the bulk of lending growth, and every initiative we put the MFAA name to is aimed at supporting members to make this happen.

Siobhan Hayden,

MFAA CEO


New South Wales & ACT

President Stuart Garvey

Forum members Chris Carn

David Jackson

Semeara Hannouf

Sandra Djalo

Steven McClure

Fred Obeido

Lindsay Rogers

David Thomas

Elizabeth Wilson

South Australia & Northern Territory

President Amanda Scott

Vice President Marissa Schulze

Forum members Wendy Higgins

Gerald Jones

Michelle Murphy

Tony Schelling

Leah Busby

Mitchell Blackburn

Zoe Uyen

Sandy Basso

Mark Caesar

Brenton Rolton

Western Australia

President Marco Meloni

Vice President Rose De Rossi

Forum members Karen Hambleton-O’Grady

Tony Versace

Simon Munkelt

Neville Hamilton

Rebecca Parkin

Don Crellin

David Devenish

Joe Zappia

Queensland

President Vicki Mitchell-Taylor

Vice President Mark Lewis

Forum members James Higgs

Tracie Palmer

Wayne Marks

Scott Smith

John Trubicyn

Julie Anderson-Tofts

Boris Biskupic

Forums


Forums

Tasmania

President Bryce Harding

Vice President Troy Spinks

Forum members Damian Vout

Ross Taylor

Brady Henley

Lance Cure

Gemma Robertson

Paul Gilhooly

Geoff Colls

Business Development Managers

NSW/ACT Zarko Jokic

VIC/TAS Kylie Louden

SA/NT Wendy Robertson

WA Natalie Price

QLD Vicki Devine

Victoria

President Lee Dittmer

Vice President Laurie Duffus

Forum members Barrie Henman

Leith Wickstein

Blake Albones

Robert Krol


Industry Partners

National Sponsors

Major National Sponsors

Sponsors

Principal Industry Partner

Diamond Industry Partners

Gold Industry Partner


Sponsors

New South Wales/ACT

Queensland

Victoria

South Australia/Northern Territory

Western Australia

WIMBN

Sponsor

Regional Sponsor

Platinum Sponsor

Principal Sponsor

Major Sponsors

Supporter

Sponsors

Gold Sponsors

Silver sponsor

SponsorsGold sponsor


MFAA Board & Strategic Direction

• Support and Represent Professional Finance Brokers

• Lobby for the Interests of Professional Finance Brokers

• Develop and Deliver Services that Enhance the Professional Skills and Careers of Professional Finance Brokers

• Facilitate Stakeholder Engagement

• Promote MFAA Professional Finance Brokers to Consumers

In September 2014, MFAA members changed the Constitution to allow direct election of members to the Board and to prescribe new election rules. The Board is now comprised of five elected directors, four of whom must be ‘Eligible Brokers’, i.e. individual brokers or nominated representatives of broking or mortgage management businesses. ‘Additional Directors’ may be appointed by the Board to make up to a maximum of ten Board members provided that Eligible Brokers form a majority. Elected Directors have a two year term and may stand for re-election for a second term. Previous Directors can stand again if two years have elapsed since they retired.

State Forums (previously State Councils) no longer form part of the MFAA’s governance structure but rather were established by the MFAA Forums Charter (January 2015).

The Board regularly reviews its Strategic Direction to ensure the Association is appropriately representing its members.

Following the decision to move to an elected Board, the Board began its transition to the new elected format in 2014 when two new Directors were elected by members.

The Board


MFAA Board

The Board in the previous governance format:

July 2014 to November 2014

President Tim Brown

Deputy Chairman Cynthia Grisbrook Victoria State President

Treasurer Ray Slack (retired November 2014) Chair, National Equipment & Commercial Finance Committee

Director Corinna Dieters (retired October 2014) Independent

Director Stephen Moore (retired November 2014) Chair, National Brokers Committee

Director Damian Percy (retired November 2014) Chair, National Lenders Committee

Director Darren McLeod Chair, National Mortgage Management Committee

Director Marco Meloni (retired November 2014) WA State President

Director Bryce Harding (retired November 2014) Tasmania State President

Director Amanda Scott (retired November 2014) SA & NT State President

Director Warren Prince (retired June 2014 ) NSW & ACT State President

Director Jeana Scott Queensland State President

From November 2014 to July 2015, the Board comprised:

Chairman Tim Brown (retires as Chairman November 2015)

Deputy Chairman Cynthia Grisbrook Cynthia was voted as Chairman-elect and becomes Chairman in November 2015

Director Darren McLeod

Director Jeana Scott

Director (elected) Donna Beazley

Director (elected) Tim Donahoo

Director (appointed) Michael Cottier


Support and representation of the profession

In a year that the industry continued to grow, the MFAA welcomed 1,675 new members to the association, bringing the total membership number to 11,457. This represents a growth rate for the organisation of 9.4%.

The MFAA remains committed to strong membership growth which allows us to represent the interests of the majority of the profession.

Updating technology to help us determine the needs of members

In January, we implemented a new membership system, designed to link member’s details and records with events and education systems. Stage 1 involved developing a new Customer Relationship Management (CRM) database, new member application and renewal system, a record of Continuing Professional Development (CPD), reporting, accounts, email communications, and a CPD platform. Future stages will link up a new events system and finalise integration of communications.

It is anticipated that integrating all of the services used by members will allow us to better understand the needs of members to help us develop improved products and services into the future.

Members can now login and access their record at any time to:

• change their contact details;

• update their CPD record;

• renew membership;

• access a range of courses via MFAA Online Courses; and

• obtain membership certificates, statements of attainment, tax invoices and CPD completion certificates.

While there certainly were problems with the initial im-plementation of the system, we now have an excellent platform which can be built on into the future.

Increased contact with members

The membership team has made over 2,500 outbound phone calls and emails to customers to help them renew their membership, provide information about becoming members, and advise on how to best make use of the benefits available to members.

The MFAA provides a mix of help, online information and three membership staff who are available from 8:30am - 5:30pm EST to provide any assistance required.

Continuing the benefits

Only MFAA membership offers its members:

Credibility As the peak industry body, the MFAA is determined to rid the industry of unscrupulous operators. We continue to maintain strict accreditation standards on education, experience and ethics. Consumers can go to an MFAA member and receive professional assistance in finding the right loan.

Visibility Our advertising campaign ensures that MFAA members are always promoted to consumers in the media. We also provide helpful hints and tips for homebuyers via the Mortgage & Finance Help website, and on our Facebook page.

Authority The MFAA is the acknowledged authority in the mortgage and finance industry. The MFAA can give you the access to what you need, when you need it. Our CEO Siobhan Hayden is frequently sought by the media for comment on industry developments.

Unity The MFAA continues to proactively lobby governments at all levels on behalf of its members. The past year has seen us making submissions to the Federal Government on anti-money laundering and counter-terrorism financing, electronic conveyancing and many other issues.

Opportunity Increasingly consumers will be asking if you are an MFAA Member. Being a member of the MFAA enables you to take advantage of our extensive professional development program and the numerous events around Australia to broaden your contacts and develop your business networks. The MFAA also provides the opportunity to be recognised by your peers and the community via the MFAA Excellence Awards.

Membership


Strong growth in membership

Members at 30 June 2013

9,927


10,469 (+5.5%)


11,457 (+ 9.4%)

A snapshot of you

Strong representation by gender

Female

26% Male

74%Over 33% of new members in 2014/15 were female

Strong representation of loan writing members

94%Loan writing members consist of 94% of all members

Strong commitment to the MFAA

Years a Member:

<2 19.23%

2-5 24.64%

6-10 30.10%

11-15 19.37%

16+ 0.79%

N/A 5.86%

Membership


Lobbying Report

In the past 12 months the MFAA has continued to influence industry regulators and key stakeholders, to the benefit of finance brokers in a quickly changing environment. As the leading industry body, the MFAA has maintained our leadership position with the provision of key market analytics as well as media commentary on important matters throughout the year.

Loans introduced by Finance Brokers currently represent 51.3% of all residential mortgage flows within Australia and, last November, David Murrays’ Financial Systems Inquiry (FSI) presented 44 recommendations including to ‘foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, public confidence and capacity to meet the needs of users’. Overall the MFAA was pleased with the recommenda-tions in the FSI and felt the outcomes of the Inquiry had a minimal impact on Finance Brokers.

However, in the wake of these recommendations, ASIC announced in January 2015 that licensed finance broker Aizaz Hassan and associate Najam Shah from Myra Financial ‘had been charged with conspiracy to defraud over their alleged involvement in a $110 million scam targeting Australia’s four largest banks and half a dozen other lenders’, creating a surge in mainstream media interest in Finance Brokers as well as questions about industry regulation.

Working closely with Ernst & Young the MFAA commissioned a report on the Observations on the Value of Mortgage Broking in May 2015. The report included interviews with 700 customers and nine key lenders that represent 88% of all mortgage flows within Australia. The report proved indispensable when demonstrating the value of our industry during meetings with ASIC, RBA and APRA throughout the year. We have consistently and proactively engaged with our industry regulators to ensure that the MFAA is in a good position to respond to issues as they arise, and to ensure timely and accurate commentary in the media.

Most recently the MFAA achieved a very positive outcome from our work arguing against massive increases to professional indemnity (PI) insurance requirements for finance brokers. This success – the result of three separate submissions to ARNECC, with MFAA representatives meeting with ARNECC on three occasions; as well as the engagement of a government relations specialist solely for this project – has avoided significant cost increases for broker members.

The MFAA has also lodged a submission to Treasury in early October, outlining the key constraints and our lack of support for ASIC’s proposed industry funding model. The proposal was tabled following a recommendation by David Murray in the FSI and was supported by Josh Frydenberg, who was Federal Assistant Treasurer at that time. Treasury closed submissions in response on 9 October, and we look forward to a positive result that will see government funding for ASIC continue, rather than burdening the industry with costs of up to $405 million each year .

The landscape ahead for the finance broker profession remains unclear. Treasury has most recently examined the financial planning industry and published their Future of Financial Advice (FoFA) Report. Further, John Trowbridge has provided his recommendations on the structural reform of the Life Insurance sector. Both Reports have created repercussions in their respective sectors and with finance brokers now accounting for more than 50% of all new mortgage flows in Australia, it is critical that the MFAA is prepared for any future examination of our profession.

Lobbying


Lobbying

Tactical changes have already been undertaken with the early adoption of Basel III recommendations by lenders, demonstrated by their investor lending caps and increases to risk weightings for all new and existing investment loans. Questions have also been raised about the use of interest-only loan features within a low interest rate environment. The MFAA believes that a deeper data set on our industry, as well as the involvement of a professional lobbyist, is essential to ensure that we are well positioned for any future scrutiny. Clear arguments based upon data, not emotion about our professionalism and importance to the industry, will secure positive outcomes for our profession.

Finally, our State, Broker and Equipment and Commercial Finance (E&CF) Forums have undergone a transition over the past twelve months with the incorporation of a Board liaison representative. The Board liaison attends the Forum meetings and is well positioned to provide input into the issues that, tactically the Forums see at a state level and to enable the Board to respond more efficiently to issues. We are seeing the positive impact of this change now and expect further improvements to productivity over the coming year.

Lobbying and Finance, Audit & Risk Management

Submissions made:

1. FSI Submission for the continuation of Self Managed Super Funds (SMSF) lending. In that proposition, we engaged financial planning industry bodies and Commercial Asset Finance Brokers Association of Australia (CAFBA) to put together a consolidated view, as well as inviting submissions from MFAA members directly. The March 2014 submission is still under Government consideration.

2. ARNECC submission on proposed increases to broker PI insurance aggregates. The ARNECC deemed that identity agents (including mortgage brokers), required a $20m aggregate PI policy. The MFAA’s September 2015 submission plus forceful lobbying terminated this requirement.

3. Commonwealth House of Representatives Inquiry into Home Ownership. This June 2015 submission argued for more land and property supply and the phasing out of residential property stamp duty on sale.

4. Treasury Proposed ASIC Industry Funding model. This October 2015 submission which the MFAA believes is unfair to industry participants and particularly, small business owners, is likely to result in decreased competition and increased costs to the sector.


Lobbying and Finance, Audit & Risk Management

Committee Chair Report

It is a pleasure to present my first annual MFAA financial report in my capacity as an appointed Director and Chairman of the Board’s Finance, Audit and Risk Management Committee.

The financial year ended 30 June 2015 was a year of transition. We saw the MFAA appoint our new CEO Siobhan Hayden and farewell predecessor Phil Naylor. We also saw the organisation relocate its head office from Neutral Bay to the Sydney CBD, and undertake a number of new initiatives for members as outlined elsewhere in this report.

Since her appointment, Siobhan has been very focussed on meeting and listening to members right around the country, studying relevant industry trends and best practices, and from there refining the strategy and operating plans for the organisation to take it forward in the best interests of members. For me personally, it has been a pleasure to join the Board in late February and to begin working with my fellow Directors, Siobhan, and her management team.

I am pleased to report that despite a year of great challenge and change, the MFAA delivered a small operating surplus of $217,886. Revenues for the year were up 6.91% on last year at $8,526,113. This is very pleasing; because although in many respects market and business conditions for our members were positive, there were challenging operating conditions for the organisation, including major regulatory changes that adversely impacted some of our key planned education offerings. Expenses were up 4.02% on last year at $321,059, impacted in part by the transitions mentioned above.

The MFAA has maintained a sound financial position at 30 June 2015, with net assets increasing by 10.82% to $2,231,490 for the year. The MFAA maintains healthy working capital and reserve positions as reported in the Balance Sheet.

At times during the year the Board was concerned that we would not meet our Budget, but we did. The year finished strongly, thanks in large part to members’ ongoing support of our events and education programs, and management’s good work in delivering value for money.

The new financial year is well underway with exciting plans for the organisation to build on the strong financial foundations in place and to provide new and valuable initiatives for our members.

I would like to join the Chairman of the Board in thanking Siobhan and her team for their ongoing efforts in support of the Board and members. I also want to thank my fellow directors for their warm welcome and ongoing support.

Michael CottierDirector

Finance Audit and Risk Management


Your directors present their report on the Mortgage & Finance Association of Australia (‘the Association’ or ‘MFAA’) for the year ended 30 June 2015.

Directors

The directors of the Association in office during the financial year until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. Number of Board Meetings attended of possible meetings is noted against each director.

Name Years on Board

Tim Brown (7 of 7)

Cynthia Grisbrook (7 of 7)

Michael Cottier (4 of 4) Appointed 27/2/2015

Jeana Scott (7 of 7)

Darren McLeod (7 of 7)

Timothy Donahoo (5 of 5) Appointed 18/11/2014

Donna Beazley (6 of 7)

Corinna Dieters (2 of 2) Retired 31/10/2014

Bryce Harding (2 of 2) Retired 26/9/2014

Marco Meloni (2 of 2) Retired 18/11/2014

Damian Percy (2 of 2) Retired 26/9/2014

Ray Slack (1 of 2) Retired 18/11/2014

Amanda Scott (1 of 2) Retired 26/9/2014

Stephen Moore (1 of 2) Retired 26/9/2014

Principal activities

The principal activities of the Association during the year were:

(a) providing lobbying especially on the Financial System Inquiry, representational services, professional development services, publications, convention and like events for members’ benefit;

(b) increasing member professional standards via professional development programs and ensuring compliance with MFAA Code of Practice and MFAA Disciplinary Rules for the benefit of consumers; and

(c) raising the MFAA profile with stakeholders and consumers.

Ongoing Objectives, strategies and performance indicators- The Strategic Objectives of the association are:

Support and representation of professional finance brokers.

Support of professional finance brokers through higher education standards and higher levels of professional standards.

Promotion of consumer awareness of MFAA finance brokers.

Lobbying to advance and protect the interests of professional finance brokers.

Facilitating stakeholder engagement.

- Strategy for achieving those objectives:

Ongoing review of professional standards via professional development programs, membership criteria, Constitution, Code of Practice and Disciplinary processes.

Advertising and PR campaigns on an ongoing basis.

Lobbying in respect of legislation or proposed legislation impacting members.

Directors’ Report


Convening appropriate forums to engage stakeholders.

- Key performance indicators used by the entity:

The KPI’s set for the association for the year ending 30 June 2015 were: total increase of 10% new members (14.62% achieved); retention rate 90% (93.74% achieved).

The effectiveness of the advertising and PR campaigns is measured against industry benchmarks of broker market share, net promoter score (NPS) and consumer surveys on the value of mortgage broking.

Success of lobbying is measured against the Board’s assessment of the appropriateness of the legislation for members’ purposes.

Corporate information

This financial report covers the Mortgage & Finance Association of Australia as an individual entity.

Mortgage & Finance Association of Australia is a company limited by guarantee, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Mortgage & Finance Association of Australia Suite 902, Level 9, 130 Pitt Street Sydney NSW 2000

Members’ Liability

The liability of the Members is limited.

Members’ Contributions

Every Member undertakes to contribute to the assets of the Association if it is wound up while the Member is a Member, or within one year after the Member ceases to be a Member, for:

(a) the payment of the debts and liabilities of the Association, contracted before the Member ceased to be a Member;

(b) the expenses of winding up the Association; and

(c) the adjustment of the rights of the contributories among themselves.

The amount of the contribution under Members’ Contributions above must not exceed $10.00 per Member in any circumstance.

Review of operations

Following on from the previous financial years’ good increase in membership, the current financial year saw a larger net increase of 9.43%.

Accordingly total national membership of the Association as at 30 June 2015 was 11,457. Included in this figure are 10,796 members with Finance Broker and Accredited Finance Broker status.

Although 687 members left during the year, the vast majority as a result of the leaving the industry, the association welcomed 1,675 new members.

The total number of employees as at 30 June 2015 was 24 (2014:24).

A summary of revenues and results by significant segments is set out on the following page:


Directors’ Report

Segment revenues Segment results 2015 2014 2015 2014 $ $ $ $

Operations

Membership 4,636,327 4,256,730 4,518,825 3,652,449

Administration 321,085 268,711 (4,798,910) (4,185,256)

Professional Standards

Events 2,287,234 2,263,210 417,584 346,896

Professional development courses 969,383 943,979 499,229 446,712

Marketing & Communications

Marketing/merchandising 13,920 383 (73,677) (86,230)

Publishing – print & digital advertising 298,164 241,764 (345,165) (186,962)

Total Revenue/Results 8,526,113 7,974,777 217,886 (12,391)

Likely developments and expected results of operations

As new brokers are continuing to join the industry (exceeding the number of those exiting), MFAA membership is projected to again increase during the next 12 months.

At an Extraordinary General Meeting on 24 September 2014, members voted to amend the Constitution to change the Board structure so that it was controlled by those who comprise the vast majority of members – brokers and mortgage managers -and elected directly by the members, as opposed to the previous system of election via state councils and national committees.

The Board structure and composition now in place is expected to more effectively support and advance the interests of members.

Further information on likely developments in the operations of the Association and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Association.

Environmental regulation

The operations of the Association are not subject to any particular or significant environmental regulations under a Commonwealth, State, or Territory law.


Qualifications and Special Responsibilities of Directors

Tim Brown (Board Chairman) Mr Brown is CEO of Vow Financial, Sydney NSW

Tim has extensive experience in Banking, Sales & Distribution with over 35 years in the finance Industry, working in many Senior Roles across different channels within the Mortgage Industry.

Cynthia Grisbrook (Board Deputy Chairman) Ms Grisbrook is Principal, DLV Finance Solutions, Melbourne VIC

Cynthia has provided mortgage financing and leasing services to individuals and business for 15 years. She has had a diverse career in the banking and finance industry holding management positions in retail banking, lending and Treasury where she was a Money Market Dealer.

Jeana Scott (Appointed Director) Ms Scott is Finance Consultant, Kandu Finance Solutions, Wellington Point QLD

Jeana has extensive experience in finance & banking, both domestic & international over 35 years, together with governance & risk management experience with a large international bank based in the Middle East.

Darren McLeod (Appointed Director) Mr McLeod is Head of Third Party, Beyond Bank Australia, Adelaide SA

Darren has 29 years’ experience in Financial Services and 19 years’ experience in dealing Third party Mortgage Origination.

Michael Cottier (Appointed Director) Before becoming a non-executive director, Michael was CFO of the QSuper group and before that QIC Limited. Michael’s experience spans not just finance, with over 12 years’ experience at senior executive level leading risk, compliance, investment operations, and other corporate centre functions. Michael is a Fellow of the Australian Institute of Company Directors, a Fellow of Chartered Accountants Australia and New Zealand, and a former State Chairman of the Taxation Institute of Australia.

Donna Beazley (Elected Director) Ms Beazley is Principal, Oxygen Home Loans, Sydney NSW

Donna has over 20 years’ experience in the finance industry and has been a mortgage broker since 2004. Donna is currently undertaking a Master of Business Administration degree.

Timothy Donahoo (Elected Director) Mr Donahoo is Credit Services and Standards Manager with Mortgage Choice, Sydney NSW

Tim entered the banking and finance world in 1985, and has experience in various roles encompassing retail banking, training, commercial recoveries, credit management and operations. Tim joined Mortgage Choice in October 1999.

Insurance of officers

During the year, the Association paid an insurance premium to insure the directors of the Association for professional indemnity and office bearers’ liability, association reimbursement and entity insurance.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Association, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Association. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Indemnification of auditors

To the extent permitted by law, the Company has agreed to indemnify its auditors, Hall Chadwick, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Hall Chadwick during or since the financial year.

Non audit services

The Association may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Association are important.

Details of the amounts paid or payable to the auditor (Hall Chadwick) for audit and non audit services provided during the year are set out below.

The board of directors has considered the position and is satisfied that the provision of the non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.


Directors’ Report

Non audit services (continued)

The directors are satisfied that the provision of non audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non audit services have been reviewed by the board of directors to ensure they do not impact the impartiality and objectivity of the auditor

• none of the services undermine the general principles relating to auditor independence as set out in Professional Statement F1, including reviewing or auditing the auditor’s own work, acting in a management or a decision making capacity for the Association, acting as advocate for the Association or jointly sharing economic risk and rewards.

During the year the following fees were paid or payable for services provided by the auditor of the Association, its related practices and non related audit firms:

Auditor’s independence declaration

Copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 22.

Signed in accordance with a resolution of the directors.

Tim BrownDirector

Michael CottierDirector

Sydney 14 October, 2015

2015 2014 1. Audit services $ $

Hall Chadwick

Audit and review of financial reports and other audit work under the Corporations Act 2001 (2014: Ernst & Young) 27,500 40,000

Total remuneration for audit services 27,500 40,000

2015 2014 2. Other services $ $

Ernst & Young

Tax compliance services 11,559 18,000

Total remuneration for audit services 11,559 18,000 Total remuneration paid to audit firms 39,059 58,000


MORTGAGE & FINANCE ASSOCIATION OF AUSTRALIA ABN 62 002 650 704

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF MORTGAGE & FINANCE ASSOCIATION OF AUSTRALIA

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2015 there have been no contraventions of: i. the auditor’s independence requirements as set out in the Corporations Act

2001 in relation to the audit; and ii. any applicable code of professional conduct in relation to the audit. Hall Chadwick Level 40 2 Park Street SYDNEY NSW 2000 Drew Townsend PARTNER Dated: 14 October 2015


Directors’ Report

Statement of profit or loss and other comprehensive income Note 2015 2014 $ $

Revenue 5 8,526,113 7,974,777 Depreciation, amortisation & impairment expense 6(a) (223,010) (152,865) Employee benefits expense 6(b) (3,259,887) (2,921,227) Other expenses 6(c) (4,825,330) (4,913,076)

Profit/(loss) before income tax 217,886 (12,391)

Income tax expense 7 - - Profit/(loss) attributable to members of Mortgage & Finance Association of Australia 217,886 (12,391) Other comprehensive income/(loss) - -

Total comprehensive income/(loss) for the year 217,886 (12,391)

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


Statement of financial position Note 2015 2014 Assets $ $

Current Assets Cash and cash equivalents 8 4,347,950 4,465,158 Trade and other receivables 9 239,084 367,020 Other current assets 10 59,793 140,449 Total current assets 4,646,827 4,972,627

Non current assets Property, plant and equipment 11 40,491 44,039 Intangible assets 12 945,632 404,781 Other non current assets 13 5,482 5,482 Total non current assets 991,605 454,302

Total assets 5,638,432 5,426,929

Note 2015 2014 Liabilities $ $

Current liabilities Unearned membership subscriptions 2,721,539 2,483,976 Trade and other payables 14 359,986 557,881 Provisions 15 281,349 317,588 Total current liabilities 3,362,874 3,359,445

Non current liabilities Provisions 16 44,068 53,880 Total non current liabilities 44,068 53,880

Total liabilities 3,406,942 3,413,325 Net assets 2,231,490 2,013,604

Note 2015 2014 Members Fund $ $

Members’ funds 2,231,490 2,013,604

Total members’ funds 2,231,490 2,013,604

The above statement of comprehensive income should be read in conjunction with the accompanying notes.


Directors’ Report

Statement of cash flows Note 2015 2014 $ $

Cash flows from operating activities Membership subscriptions received (inclusive of goods and services tax) 5,361,279 4,840,365 Receipts from customers (inclusive of goods and services tax) 4,089,844 3,983,659 Payments to suppliers and employees (inclusive of goods and services tax) (8,988,079) (8,582,355) Interest received 180,059 181,620

Net cash flows from operating activities 21 643,103 423,289

Cash flows from investing activities Payments for intangible assets and property, plant and equipment (760,311) (287,941)

Net cash flow used in investing activities (760,311) (287,941)

Cash flow from financing activities Net cash flows from financing activities - - Net increase/(decrease) in cash and cash equivalents (117,208) 135,348 Cash and cash equivalents at beginning of the year 4,465,158 4,329,810

Cash and cash equivalents at end of the year 8 4,347,950 4,465,158

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Statement of changes in members’ funds 2015 2014 $ $

Total members’ funds at the beginning of the financial year 2,013,604 2,025,995

Profit/(loss) for the year 217,886 (12,391) Other comprehensive income - - Total comprehensive income for the year 217,886 (12,391)

Total members’ funds at the end of the financial year 2,231,490 2,013,604


Heading

Notes to the financial statements1. Corporation Information

The financial report of Mortgage & Finance Association of Australia for the year ended 30 June 2015 was authorised for issue in accordance with a resolution of the directors on 14 October 2015.

Mortgage & Finance Association of Australia is a company limited by guarantee incorporated in Australia.

The nature of its operations and principal activities are disclosed in the directors’ report.

2. Summary of significant accounting policies

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

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

Historical cost convention These financial statements have been prepared under the historical cost convention.

Functional and presentation currency The functional and presentation currency of the Association is Australian dollars ($).

Critical accounting estimates The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Association’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 4.

(b) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Association and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:


Directors’ Report

i) Subscription and sponsorship

Revenues are recognised as revenue in the year to which the service relates with the unearned portion deferred.

ii) Education/Professional Development

Revenues are recognised when received, which is the point at which the Association has control of the monies.

iii) Events

Revenues are deferred when received, and recognised as revenue when the event occurs.

iv) Interest revenue

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.

(c) Income tax

Mortgage & Finance Association of Australia is a non profit organisation for taxation purposes. Accordingly, the Association’s mutual income is not subject to income tax while non mutual income (such as interest income) in excess of specified levels is subject to tax at prescribed rates.

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not

affect either accounting profit or taxable profit or loss.


Heading

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.

Current and deferred tax balances attributable to amounts recognised directly in members funds are also recognised directly in members funds.

(d) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 19). Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight line basis over the period of the lease.

(e) Impairment of assets

Goodwill and 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 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. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(f) Cash and cash equivalents

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

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

(g) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for impairment. Trade receivables are due

for settlement between 30-60 days from the date of recognition.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An impairment provision is recognised when there is objective evidence that the Association will not be able to collect all amounts due according to the original terms of receivables. The amount of the impairment loss 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.

(h) Property, plant and equipment

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

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Association and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost or re-valued amounts, net of their residual values, over their estimated useful lives, as follows:

Plant and equipment 2-10 years Leasehold improvement Over term of lease

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

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income.

(i) Intangible assets

(i) Software

Software has a finite useful life and is carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of software over their estimated useful life of 4 years. (ii) Web site costs

Costs in relation to web sites are charged as expenses in the period in which they are incurred unless they


Directors’ Report

relate to the acquisition of an asset, in which case they are capitalised and amortised over their period of expected benefit. Generally, costs in relation to feasibility studies during the planning phase of a website, and ongoing costs of maintenance during the operating phase of a website are considered to be an expense. Cost incurred in building or enhancing a web site, to the extent that they represent probable future economic benefits that can be reliably measured, are capitalised as an asset and amortised over the period of the expected benefits which may vary from 2 to 5 years.

(iii) Trademarks

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

(j) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short term nature are not discounted. These amounts represent liabilities for goods and services provided to the Association prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(k) Employee benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including non monetary benefits and annual leave expected to be

settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Employee benefit on costs

Employee benefit on costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

(l) Recoverable amount of non current assets

The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

Where the carrying amount of a non current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in the net profit or loss in the reporting period

2015 2014 (a) Interest rate risk $ $

Financial assets

Cash and Cash equivalents 4,347,950 4,465,158

Net Exposure 4,347.950 4,465,158


The Association’s policy is to maintain sufficient cash and cash equivalents to fund its operations. The policy is to hold cash and cash equivalents with institutions that have “Approved Deposit Taking Institution” status. Annual budgets are framed to achieve a 5% of turnover surplus to build cash reserves sufficient to cover 6 months operating expenses.

The Board constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing, and the mix of fixed and variable interest rates, where applicable.

The following sensitivity analysis is based on the interest risk exposures in existence at the reporting date.

Significant assumptions used in the interest rate sensitivity analysis include:

- Reasonably possible movements in interest rates were determined based on the Association’s current mix of investments in Australia, relationships with finance institutions, the level of investment that is expected to be renewed as well as a review of the last two year’s historical movements and economic forecasters’ expectations.

- The net exposure at the reporting date is representative of what the Association was and is expecting to be exposed to in the next twelve months from the reporting date.

(b) Foreign currency risk

As all transactions are denominated in Australian Dollars, the Association is not exposed to foreign currency risk.

(c) Price risk

The Association has no exposure to commodity and equity securities price risk.

(d) Credit risk

Credit risk arises from the financial assets of the Association, which comprise cash and cash equivalents, trade and other receivables. The Association’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

The Association trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Association’s policy to securitise

its trade and other receivables.

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

In addition, receivable balances are monitored on an ongoing basis with the result that the Association’s exposure to bad debts is not significant.

(e) Liquidity risk

Prudent liquidity risk management is maintained such that the Association maintains sufficient cash and cash equivalents to fund its operations. As a result, the Association is not subject to liquidity risk at the reporting date. A liquidity maturity analysis has not been prepared as there are sufficient cash and cash equivalents on hand to cover total liabilities.

(f) Fair Value

The methods for estimating fair value are outlined in the relevant notes to the financial statements.

2015 2014 (a) Interest rate risk $ $

Higher (Lower) Post Tax Profit +1% (100 basis points) 43,479 (44,652) -.5% (50 basis points) (21,739) (22,326)

Judgements of possible reasonable movements:


Directors’ Report

4. Significant accounting judgements, estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant accounting estimates and assumptions

Impairment of goodwill and intangibles with indefinite useful lives

The Association determines whether goodwill and intangibles with indefinite lives are impaired at least on an annual basis in accordance with accounting policy stated in note 2 (i)

Estimation of useful lives of assets

The estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties (for plant and equipment)

and lease terms (for leased equipment). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary. Depreciation charges are included in note 11.

Impairment of non-financial assets other than goodwill

The Association assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Association estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. When the carrying amount of an asset or the cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

2015 2014 5. Revenue from operating activities $ $

Membership subscriptions 4,636,327 4,256,730 Membership Admin Fees 177,300 117,540 Professional Development income 969,383 943,979 Events income 2,287,234 2,263,210 Marketing income 13,920 383 Advertising & Public Relations 298,164 241,764 Interest 133,214 141,907 Other revenue from ordinary activities 10,572 9,264

8,526,114 7,974,777

2015 2014 6. Expenses $ $

(a) Depreciation, Amortisation & Impairment expense Depreciation (26,060) (36,029) Amortisation (196,950) (116,836)

(223,010) (152,865)

(b) Employee Benefits Expense Wages & Salaries (2,730,763) (2,485,020) Defined contribution Superannuation expense (231,644) (189,277) Other employee benefits & statutory taxes (297,480) (246,930)

(3,259,887) (2,921,227)


2015 2014 6. Other expenses (cont’) $ $

(c) Profit before income tax includes the following specific expenses Administration (1,133,751) (880,590) Advertising and public relations (179,506) (428,726) Disciplinary process (155,771) (201,895) Professional Development (470,154) (497,267) Events (1,869,650) (1,916,314) Legal fees (171,665) (169,415) Marketing expense (87,597) (86,613) Publishing (463,823) (506,354) Rental expense on operating leases (293,413) (225,902)

(4,825,330) (4,913,076)

2015 2014 7. Income tax expense $ $

Numerical reconciliation of income tax expense to prima facie tax payable Profit/(Loss) before income tax expense 217,886 (12,391) Tax at the Australian tax rate of 30% (2014 30%) 65,365 (3,717) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Income not taxable (2,108,492) (1,843,729) Deductions not allowed 2,044,151 1,815,818 1,024 (31,628) Tax losses not brought to account (1,024) 31,628

Income tax expense - -

Tax Losses

The association has accumulated tax losses of $5,349,050 to 2014 that may be treated as an allowable deduction against assessable income derived in future taxable income years. The utilisation of carried forward tax losses would be subject to certain carry forward loss rules.

Deferred tax assets have not been recognised in respect of these tax losses as they arise as a result of the Not-for-profit status of the association where tax is assessable only on non-mutual income. Whilst that tax status continues it is unlikely that these tax losses will be realised in the future.


Directors’ Report

8. Current assets – cash and cash equivalents

(a) Deposits at call

Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value.

The deposits are bearing floating interest rates between 3.02% and 3.06% (2014:3.18% and 3.22%).

(b) Reconciliation to statement of cash flows

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

2015 2014 $ $ Cash at bank and in hand 762,369 1,047,820 Deposits at call 3,585,581 3,417,338

4,347,950 4,465,338

2015 2014 9. Current assets – trade and other receivables $ $

Trade receivables 239,084 367,020 Allowance for impairment loss (a) - -

Net trade receivables 239,084 367,020

(a ) Allowance for impairment loss

Trade receivables are non-interest bearing and are generally on 30-60 day terms.

A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.

No impairment loss has been recognised in the current year (2014: nil).

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

Year Total 0-30 days 31-60 days 61-90 days PDNI* 61-90 days CI^ +91 days PDNI* +91 days CI^

2015 239,084 168,584 - 70,500 - - -

2014 367,020 269,731 - 35,000 - 62,289 -

* Past due not impaired (PDNI) ^ Considered impaired (CI)

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables.

2015 2014 10. Current assets – other current assets $ $

Event deposits 22,093 61,126 Prepayments 37,700 79,323

59,793 140,449


Plant and Leasehold Total Equipment Improvements 11. Non current assets – property, plant and equipment $ $ $

Year ended 30 June 2015 Opening net book amount 44,039 - 44,039 Additions 22,512 - 22,512 Depreciation charge (26,060) - (26,060)

Closing net book amount 40,491 - 40,491

At 30 June 2015 Cost 292,968 179,403 472,371 Accumulated depreciation (252,477) (179,403) (431,880)

Net book amount 40,491 - 40,491

Year ended 30 June 2014 Opening net book amount 71,660 - 71,660 Additions 8,408 - 8,408 Depreciation charge (36,029) - (36,029)

Closing net book amount 44,039 - 44,039

At 30 June 2014 Cost 309,140 179,403 488,543 Accumulated depreciation (265,101) (179,403) (444,504)

Net book amount 44,039 - 44,039

Software Trademark Total Website costs 12. Non-current assets – intangible assets $ $ $

Year ended 30 June 2015 Opening net book amount 373,663 31,118 404,781 Additions 737,801 - 737,801 Amortisation charge (196,950) - (196,950)

Closing net book amount 914,514 31,118 945,632

At 30 June 2015 Cost 1,131,918 31,565 1,843,713 Accumulated amortisation and impairment (217,404) (447) (898,081)

Net book amount 914,514 31,118 945,632


Directors’ Report

Software Trademark Total Website costs 12. Non-current assets – intangible assets (cont’) $ $ $

Year ended 30 June 2014 Opening net book amount 213,606 28,478 242,084 Additions 276,893 2,640 279,533 Amortisation charge (116,836) - (116,836)

Closing net book amount 373,663 31,118 404,781

At 30 June 2014 Cost 978,763 31,565 1,690,558 Accumulated amortisation and impairment (605,100) (447) (1,285,777)

Net book amount 373,663 31,118 404,781

2015 2014 13. Non current assets – other non current assets $ $

Rental and other bonds 5,482 5,482

2015 2014 14. Current liabilities – trade and other payables $ $

Trade payables 243,334 290,125 Other payables 116,652 267,756

359, 986 557,881

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

Trade payables Trade payables are non-interest bearing and are normally settled on 30 day terms.

Other payables Other payables are non-trade payables, are non-interest bearing and have an average term of three months.

2015 2014 15. Current liabilities – provisions $ $

Employee benefits 281,349 317,588


2015 2014 16. Non current liabilities – provisions $ $

Long Service Leave 44,068 53,880

2015 2014 17. Remuneration of auditors $ $

The auditor of the association is Hall Chadwick (NSW) Amounts received or due and receivable by Ernst & Young (2014) and Hall Chadwick for: - the audit of the financial report of the entity 27,500 40,000 - tax compliance services 11,559 18,000

39,059 58,000

18. Contingencies

Contingent liabilities Guarantees given in respect of leases amounting to $277,622 (2014: $38,510), secured over cash deposits held at financial institutions. These guarantees may give rise to liabilities if the obligations under the terms of the leases subject to the guarantees are not met.

2015 2014 19. Commitments $ $

Lease commitments

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities is as follows:

Commitments in relation to operating leases are payable as follows: Within one year 200,474 145,380 Later than one year but not later than five years 694,203 6,292

Minimum lease payments 894,677 151,672

The Association leases various offices under non cancellable operating leases expiring within five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.


Directors’ Report

20. Related party transactions

(a) Key management personnel compensation

Key management personnel compensation for the years ended 30 June 2015 and 2013 is set out below. The key management personnel are the 7 directors (2014: 12), 1 chief executive officer (2014: 1), 3 department heads (2014: 3 department heads) of the Association. These individuals have been determined to have the greatest authority for the strategic direction and management of the Association.

2015 2014 $ $

Short-term benefits 1,554,946 989,885 Post-employment benefits 112,726 86,302 Long Term Benefits 63,617 90,314

Total 1,731,289 1,166,501

(b) Other transactions and balances

A former Director, now Ex-Officio Board Member, Mr Jon Denovan, is a partner at Gadens Lawyers, Solicitors. Gadens Lawyers has provided legal services to Mortgage & Finance Association of Australia for several years on normal commercial terms and conditions.

2015 2014 $ $

Legal fees 171,665 164,415

21. Cash flow statement

Reconciliation of profit after income tax to net cash inflow from operating activities:

2015 2014 $ $

Profit/(loss) for the year 217,886 (12,391) Depreciation and amortisation 223,010 152,865 Change in operating assets and liabilities (Increase)/ decrease in prepayments 41,622 97,208 (Increase)/ decrease in receivables 127,936 50,542 (Increase)/ decrease in other operating assets 39,033 (45,351) Increase/(decrease) in payables (39,666) 205,594 Increase/(decrease) in employee provisions (46,050) (25,178)

Net cash from operating activities 643,103 423,289

22. Events after balance sheet date

There have been no significant events occurring after balance date which may affect either the Association’s operations or results of those operations or the Association’s state of affairs.


In accordance with a resolution of the directors of the Mortgage & Finance Association of Australia, we state that in the opinion of the directors:

(a) the financial statements and notes of the Association are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards and the Corporations Regulations 2001; and

(ii) giving a true and fair view of the Association’s financial position as at 30 June 2015 and of its performance, for the financial year ended on that date; and

(b) there are reasonable grounds to believe that the Association will be able to pay its debts as and when they become due and payable; and

(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Association will be able to meet any obligations or liabilities to which they are, or may become subject to.

On behalf of the Board

Tim Brown

Chairman

Michael Cottier

Director

Sydney 14 October, 2015

Director’s Declaration

MORTGAGE & FINANCE ASSOCIATION OF AUSTRALIA ABN 62 006 085 552

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MORTGAGE & FINANCE ASSOCIATION OF AUSTRALIA

Report on the Financial Report We have audited the accompanying financial report of Mortgage & Finance Association of Australia, which comprises the statement of financial position as at 30 June 2015, the statement of profit or loss and other comprehensive income, statement of changes in member’s funds and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Opinion In our opinion the financial report of Mortgage & Finance Association of Australia is in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the company’s financial position as at 30 June 2015

and of its performance for the year ended on that date; and b. complying with Australian Accounting Standards to the extent described in Note 1

and the Corporations Regulations 2001. Hall Chadwick Level 40 2 Park Street SYDNEY NSW 2000

Drew Townsend PARTNER Dated: 14 October 2015

Documents

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