for personal use only - asx · for personal use only 28 february 2013 end of the trust company...

The Trust Company Limited ABN 59 004 027 749

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http://www.thetrustcompany.com.au/

THE TRUST COMPANY LIMITED

ASX Appendix 4E

Results for announcement to the market

(i)

29-Feb-12

$'000

Total revenue from continuing operations 84,931 up 41%

Profit attributable to members of the parent entity 12,600 up 12%

(ii) Net tangible asset per security

29-Feb-12

$'000

Net tangible asset per security 1.34

(iii) Dividend information

Final dividend 2011 (paid on 16 May 2011 - fully franked)

Interim dividend 2012 (paid on 14 December 2011 - fully franked)

Final dividend 2012 (payable on 24 May 2012 - fully franked)

(iv)

(v)

(vi)

Cents

Changes from the year ended 28 February 2011 to the year ended 29 February 2012

Movement

28-Feb-11

$'000

2.16

This report is based on the consolidated financial report which has been subject to audit.

per share

18.0

17.0

18.0

Refer to Note 4 to the financial report for further details of dividends paid and payable.

Details of entities over which control has been gained or lost

Refer to Note 28 to the financial report for details of entities over which control has been gained or lost.

Details of associates and joint venture entities

There was no investment in associates or joint ventures during the financial year.

Compliance statement

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THE TRUST COMPANY LIMITEDAnnual Report 2012

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The Trust Company ANNUAL REPORT1

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The Trust Company ANNUAL REPORT 2

The TrusT CompanyAnnual Report

2012 Annual Report Table of Contents

Director’s Report 03

Auditor’s Independence Declaration 25

Consolidated Financial Report 26

Notes to Financial Statements 32

Director’s Declaration 85

Independent Auditor’s Report 87

Corporate Governance 89

Additional Shareholder Information 92

Contact Us 94

The 127th Annual General Meeting of The Trust Company Limited

ACN 004 027 749

Location: The Trust Company Limited Sydney Offices Level 15, 20 Bond Street Sydney, New South Wales

Time: 10.00 am to 11.00 am (registration from 9.30 am)

Date: Monday, 25 June 2012

A separate notice of meeting, including a proxy form, is enclosed with this Annual Report.

Key Dates

9 May 2012 Annual Report mailed to shareholders

24 May 2012 FY12 final dividend paid to shareholders

25 June 2012 Annual General Meeting of shareholders

31 August 2012 Half year end

October 2012 Half year results announced

28 February 2013 End of The Trust Company financial year For

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direCTors’ reporTAnnual Report

The Directors of The Trust Company Limited (The Trust Company or the Company) present their report together with the financial statements of the Company and its controlled entities (The Trust Company Group or the Group) for the financial year ended 29 February 2012. In order to comply with the provisions of the Corporations Act 2001, the Directors’ Report as follows:

The names and particulars of the Directors and the Company Secretaries in office during the year and since the end of the year are:

Bruce Corlett AM

BA, LLB

Chairman of The Trust Company, Independent Non-Executive Director

Member of the Audit, Risk and Compliance Committee, Investment Committee and the Philanthropy and Community Committee

Bruce Corlett was appointed to the Board of The Trust Company in 2000 and appointed as Chairman on 17 July 2003. He has had extensive experience as a public company director over many years. He is also Chairman of Servcorp Limited. Although he trained as a solicitor, Bruce has spent much of his life involved in the Australian finance, property, securities and maritime industries.

He has had a lifetime involvement in the community and not for profit sector including Chairman - Microsearch Foundation of Australia, Senate Fellow - University of Sydney, Chairman - Advisory Board, Faculty of Economics and Business - University of Sydney. Current roles include Ambassador - Australian Indigenous Education Foundation, Chairman - Lifestart, Chairman - Mark Tonga Relief Foundation.

Listed company directorships held during the past three financial years:

• ServcorpLimitedfromOctober1999 to date

• Tooth&CoLimitedfromSeptember 1999 to date (delisted 12 February 2010).

John Atkin

BA (Hons) LLB (Hons)

Chief Executive Officer

Member of the Investment Committee and the Philanthropy and Community Committee

John Atkin joined The Trust Company on 19 January 2009 as Chief Executive Officer. Most recently, John held the position of Managing Partner and Chief Executive Officer at Blake Dawson from 2002 to 2008. Prior to his position at Blake Dawson, John was a senior partner at Mallesons Stephens Jaques. During his time as a professional lawyer, John’s work principally focused on equity capital markets and mergers and acquisitions. John is a Non-Executive Director of the Australian Outward Bound Foundation and QR National Limited.


• QRNationalLimitedfromSeptember 2010 to date.

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John Macarthur-Stanham

BEc, MBA

Vice Chairman, Independent Non-Executive Director

Chairman of the People and Remuneration Committee, Member of the Audit, Risk and Compliance Committee

John Macarthur-Stanham was appointed as a Director of The Trust Company on 29 October 1991. He is a Director of Dairy Farmers Milk Co-operative Limited. He has had extensive experience as a director on a number of CSR subsidiaries and related companies, and Gosford Quarry Holdings Limited until his resignation in 2007. John also looks after his family’s farming and investment interests.

Roger Davis

BEc (Hons), MPhil (Oxon)

Independent Non-Executive Director

Chairman of the Audit, Risk and Compliance Committee

Roger Davis was appointed as a Director of The Trust Company on 23 June 2006. He is an experienced senior executive in the financial services industry, a professional company director and is currently a consulting director at Rothschild Australia Limited. Roger’s career spans more than 30 years in financial services. He has held senior positions in Australia, the USA and Japan, including the positions of Managing Director, Citigroup Inc. New York and Group Managing Director, ANZ Banking Group Limited. He is also a Director of Bank of Queensland Limited, Chartis Australia Limited, Ardent Leisure Limited, Aristocrat Leisure Limited, Territory Insurance Office (a Northern Territory statutory body corporate) and Charter Hall Office Management Limited (the responsible entity for the listed Charter Hall Office REIT).


• BankofQueenslandLimitedfrom August 2008 to date

• AristocratLeisureLimitedfromJune 2005 to date

• ArdentLeisureLimited(astapled entity within the Ardent Leisure Group) from May 2008 to date.

James King

B.Comm, FAICD


Member of the People and Remuneration Committee

James King was appointed as a Director of The Trust Company on 1 February 2007. He is a professional company director with experience in leading major multinational corporations in Australia and Asia Pacific markets. He was previously with Foster’s Group Limited as Managing Director of Carlton &UnitedBreweries,ManagingDirector of Foster’s Asia and Senior Vice President Strategy and Business Development. Prior to joining Foster’s, he spent six years in Hong Kong as President of Kraft Food (Asia Pacific). James is also past Chairman of the Juvenile Diabetes Research Foundation (Victoria) and on the Council of Xavier College.


• JBHi-FiLimitedfromMay2004to date

• NavitasLimited(formerlyIBT Education Limited) from November 2004 to date

• PacificBrandsLtdfromSeptember 2009 to date.

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direCTors’ reporTContinued

Warren McLeland

BSc (Hons), FFin, MCSI, MBA


Chairman of the Investment Committee

Warren McLeland was appointed as a Director of The Trust Company on 3 May 2005. Before his appointment, he acted as a standing Alternate Director from 28 August 2003 until his appointment as a Director. Previously, he served as a member of the Board from August 1997 to July 2003. Warren was previously a stockbroker and member of the Sydney Stock Exchange and a senior managing director with Chase Manhattan Bank. He has more than 30 years experience in domestic and international financial services business. He is a Director of, and adviser to, a number of public companies including Utilico Limited, a UK listed investment trust and Bermuda Commercial Bank and Managing Director of Resimac Limited. Warren is also a Director of the Pain Management Research Institute Limited.


• EllectHoldingsLimited(formerly Intellect Holdings Limited) from April 2005 to date

• WilsonHTMInvestmentGroupLimited from March 2007 to date.

Josephine Sukkar

BSc (Hons), Grad. Dip. Ed.


Chairman of the Philanthropy and Community Committee and member of the People and Remuneration Committee

Josephine Sukkar was appointed as a Director of The Trust Company on 26 March 2010. Josephine is co-owner of Buildcorp, where she has overall responsibility for executive business development and marketing, human resources and sustainability. Josephine is a keen philanthropist. She is a Director of YWCA NSW (Co- President), a Director of Opera Australia, The Centenary Institute and the Sydney University Football Club Foundation, and is actively involved with a number of other charitable and community organisations including the Museum of Contemporary Art and The General Sir John Monash Foundation. She has a personal interest in mentoring young businessmen and women and facilitating support and sponsorship of community organisations through her business network.

Sally Ascroft

BEc, LLB

Company Secretary

Appointed 2 November 2009

Sally Ascroft joined The Trust Company in November 2009 as General Counsel and Company Secretary.

Alex Carrodus

BEc, MFin, ACA, AFin

Company Secretary

Appointed 10 February 2010

Alex Carrodus joined The Trust Company in December 2009.

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Principal activities

The Trust Company is one of the region’s foremost trustee companies, offering services for individuals, companies and charitable trusts.

Across the Group we provide wide-ranging advice and expertise in Personal Client Services including Estate Planning and Administration, Lifestyle and Executor Assist, Financial Planning, Personal Trusts, Charitable Trusts, Wealth Management and Health and Personal Injury services.

Our Corporate Client Services in Australia and Singapore include Responsible Entity, Property and Infrastructure Custody, Superannuation Compliance and Trustee, Structured Finance Trustee and REIT Trustee services. In New Zealand we offer trustee services for Debt Securities, Securitisation, Unit Trusts, Superannuation and KiwiSaver.

The Trust Company Group has aover A$900 million in charitable funds under administration and we are currently serving as trustee for over 800 charitable trusts.

The Trust Company has offices in Australia, New Zealand and Singapore, with around 440 employees and a market capitalisation of approximately A$167 million as at 29 February 2012.

Consolidated results and review of operations

The consolidated profit after income tax expense for the financial year attributable to members of the parent entity was A$12.6 million (2011: profit of A$11.3 million).

Consolidated revenue from ordinary activities increased by 41 percent to A$84.9 million (2011: A$60.3 million).

The Trust Company (ASX: TRU), today announced a 12% increase in reported Net Profit After Tax (NPAT) to A$12.6 million for its financial year ended 29 February 2012 (FY12). This result was enhanced by a full 12 month contribution from New Zealand Guardian Trust which was acquired in March 2011.

Operating revenue of A$82.8 million for FY12 was up 45% on the prior corresponding period (pcp). Earnings before interest, tax, depreciation and amortisation (EBITDA) for FY12 of A$18.5 million were up 14% on FY11. The contribution from Guardian Trust, reflecting the favourable terms of the acquisition, was largely responsible for the increases in operating revenue and EBITDA.

Speaking of the FY12 performance, Chief Executive Officer John Atkin said: “This is a solid performance in the face of continuing global economic uncertainty. The strong contribution from our New Zealand business and the emergence of cross border capital market opportunities emphasises the value of our regional presence.”

FY12 final dividend

A fully franked final dividend of 18 cents per share was declared (FY11:18 cents per share, fully franked). For FY12 dividends per share totalled 35 cents per share (FY11: 35 cents).

Attractive opportunities for growth

With our regional presence we have a unique opportunity to capitalise on the long-term drivers of growth in investment flows and capital markets:

• Capitalismovingtowardsthe Asia-Pacific region as the fastest growing part of the global economy

• Thisisgivingrisetoaninexorable increase in cross border investments into our region, with both Australia and New Zealand being favoured destinations for patient long-term investment funds

• Atthesametimeweareseeingthe growth of Asian capital markets, particularly Singapore, to access directly the pools of capital being generated in the emerging powerhouse economies of the region.

With our with market leading Corporate trust capabilities in Australia, New Zealand and Singapore, we are ideally and uniquely placed to take advantage of these trends by providing regional support to those investment flows and capital markets.

At the same time, the client centric business model which is at the very essence of our fiduciary heritage is an increasingly important differentiator in the personal wealth management sector:

• Anageingpopulationandincreasing post-retirement wealth will drive growth in demand for retirement and trans-generational wealth management services

• Regulatoryreformswiththeiremphasis on client service and efficiency are likely to increasingly challenge product centric models and favour the transparent professional fiduciary model.

While our core strategy to become the region’s pre-eminent trustee remains a key focus, we will seek to broaden our vision from trustee to a more complete range of fiduciary services supported by 21st century technology and systems.

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Corporate Client Services above expectations

The Corporate Client Services business performed ahead of expectations from unanticipated delays in termination of some significant mandates, higher activity based fees and the continued growth of our award-winning Managed Investment Trusts (MIT) service.

Mr Atkin said: “In Australia, our Corporate Client Services retained clear market leadership in MITs. We are now trustee to 30 MITs supervising over A$5.2 billion in assets. This compares with 13 mandates supervising just over A$2.1 billion at the same time last year. Many of these transactions have been introduced and supported by our Singapore office. And we are now seeing the first signs of these investments being supported through the use of regional capital markets, particularly Singapore.”

Continuing our work with international investors and intermediaries will remain a focus for the year ahead, as Australia and New Zealand’s popularity as a destination for global investors shows no signs of waning and the regional capital markets continue to expand.

Personal Client Services re-focused to enable growth

As foreshadowed in previous announcements, the financial performance of the Australian Personal Client Services business in FY12 was affected by the absence of significant but non-recurring capital commission revenues received in prior years. Good progress has been made in simplifying management structures to ensure delivery of stronger client focused services and a business development team across Australia is now in place. We have also redefined our service offering in Personal Client Services

to support the trans-generational management of personal wealth, with a particular focus on the retiree market where our fiduciary client centric model and heritage provides clear competitive advantage.

To raise awareness of our offer in Australia a targeted marketing campaign was launched during the year across radio, print and online. This delivered a 64% increase in traffic to our website over the period and new business enquiries are beginning to flow through. Given the long lead times between activity and a decision we anticipate it will take some time for proactive marketing to flow through into revenue.

New Zealand Personal Client Services is also seeking to raise awareness of its offering, leveraging our extensive regional footprint through 13 branches to connect with traditional centres of wealth. Building on the qualifications our staff achieved in the first half, a recent client seminar series emphasising our thought leadership position was designed to encourage referrals.

New systems fast-track transformation

A critical enabler for the transformation and growth of our business, especially in Personal Client Services, is the upgrade of our business systems and processes. As previously announced, the overall program is expected to take around three years with preliminary cost estimated to be in the order of A$10 million.

The modular and staged nature of the program provides flexibility in implementation. After our initial requirements planning and market assessment, we have decided to proceed with a client relationship management system, investment management platform and personal trust account

administration system as the first three components of the program. These systems will enable us to take a single Group wide view of our clients. At the same time they will enable our Personal Clients to have greater visibility of their account information, enhance our level of service and reduce operating costs.

The capital expenditure and operating costs for these components will be incurred in FY13 before significant benefits are realised in FY14 and beyond. At the same time, we will plan for the progressive implementation of the later stages of the program.

The power of philanthropy

Our approach of Engaged Philanthropy is at the heart of the evolution of our philanthropic service which promotes the generosity of our existing clients and anticipates the needs of future philanthropists and philanthropic organisations. In FY12 we were responsible for over A$40 million of philanthropic distributions and we are trustees for over A$900 million in charitable funds across Australia and New Zealand.

Organisational Review and Remuneration

A simplified Group-wide management structure is being progressively implemented following the Guardian Trust acquisition. This new structure allows greater client engagement, enabling our people to deliver high quality services to all our clients.

A recent Organisational Review has streamlined our business at all levels. These changes are expected to have a payback of around six months and result in annual savings of approximately A$2.5 million.

Our employee performance management framework has been rolled out throughout Guardian Trust and a consistent remuneration and employee

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incentive program commenced on 1 March 2012. In response to the continued economic volatility, base salary increases in FY13 will be limited to those with changed accountabilities or high performers. The CEO and Executive Team will receive no base salary increase in the coming year.

Outlook for FY13

Volatility in investment markets will continue to influence earnings with every 1% movement in the ASX200 index estimated to have a corresponding effect on Group revenue of approximately A$150,000 pa. Our reported results for FY13, particularly for the first six months, will also be impacted by the significant operating expense from the Organisational Review and implementation of the first components of our systems upgrade. At this stage we estimate the impact on the reported NPAT for the first half of FY13 at around A$2 million (pre-tax). We will provide further guidance on progress in relation to the first stage of our systems upgrade at our Annual General Meeting on 25 June 2012.

In FY13, we are expecting to see a significant improvement in the underlying performance of our business as Corporate Client Services continues to take advantage of higher levels of activity or transaction fees that have been experienced recently. We will also enjoy the full year benefit of the annuity fees from the cross border investment and capital markets services in the region. Expect to see our Personal business stabilise and commence its longer term growth after a significant restructuring both in Australia and New Zealand.

Consistent with our stated capital management objective of being debt free and retaining a modest amount of uncommitted cash over the medium term, we will retain a dividend reinvestment plan at

a discount of 5%. At this stage we anticipate repeating a share purchase plan during FY13, to be implemented in conjunction with dividend for the first half. At the same time the Board has confirmed its commitment to a progressive dividend policy with a payout of at least 80% of reported NPAT, consistent with our strategic goal of delivering increased dividends to our shareholders

In closing Mr Atkin commented: “The coming year will see us focus on regional integration and transforming the performance of all aspects of our business. Now is the time to take advantage of the favourable long-term trends affecting our business. We will also continue to be alert for opportunities that may arise that align with our strategic direction and enable us to enhance returns to shareholders.”

Changes in state of affairs

Other than the acquistion of The New Zealand Guardian Trust Company Limited, there were no significant changes in the state of affairs of the Group other than that referred to in the financial report.

Subsequent events

A final dividend of 18c cents per share fully franked was declared on 17 April 2012 to be paid on 24 May 2012 (2011: 18.0c per share declared on 19 April 2011 and paid on 16 May 2011).

There has not been any other matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group for future financial years.

Future developments

Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this report.

Dividends

In respect of the financial year ended 29 February 2012:

• Aninterimdividendwaspaidon14 December 2011 of 17.0 cents per fully paid ordinary share (A$5.5 million), fully franked at 30%.

In respect of the financial year ended 28 February 2011:

• Afinaldividendwaspaidon16May 2011 of 18.0 cents per fully paid ordinary share (A$5.83 million), fully franked at 30%.

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Remuneration Report

The Remuneration Report sets out The Trust Company Limited’s (The Trust Company) remuneration framework and arrangements for Key Management Personnel (KMP) and other executives. The information provided in this remuneration report has been audited as required by the Corporations Act 2001.

The Trust Company Directors believe the remuneration philosophy, processes and arrangements (including Short Term and Long Term Incentive structures) are consistent with good corporate governance and are firmly aligned to creating long-term wealth for our shareholders.

Details of KMP

KMP have authority and accountability for planning, directing and controlling the activities of The Trust Company Group. The KMP of The Trust Company Group in office during the year and up to the date of this report were as follows:

Non-Executive Directors

Bruce Corlett (Chairman)

John Macarthur-Stanham (Vice Chairman)

Roger Davis

James King

Warren McLeland

Josephine Sukkar

Executive Director

John Atkin (Chief Executive Officer)

Executive Team

John Atkin (Chief Executive Officer)

Vicki Allen (Chief Operating Officer) – resignation effective 18 March 2011

Sally Ascroft (Group General Counsel and Company Secretary)

John Botica (Managing Director, The New Zealand Guardian Trust Company Limited) – appointed 15 March 2011

Andrea Free (Head of People and Development)

Raymond Gould (Executive General Manager, Personal Client Services) – appointed 18 April 2011

David Grbin (Chief Financial Officer)

Simon Lewis (Head of Philanthropy and Community)

Myles Orsler (Head of Strategy, Planning and Projects) - appointed 1 March 2011

Cathryn Stephenson (Executive General Manager, Business Operations and Information Systems) - appointed 7 March 2011

Our remuneration policies and disclosures are set out in the following five sections:

1. People and Remuneration Committee – membership and role responsibility

2. Remuneration philosophy – the underlying principles and approach to remuneration at The Trust Company

3. Executive compensation – describes the framework and composition of executive remuneration, including an

outline of the performance schemes in place for executives and remuneration tables for the Executive Team

4. Performance of The Trust Company Group – summarises The Trust Company Group’s five year performance

5. Non-Executive Director compensation – outlines the fee structure and limits as approved by shareholders and includes remuneration tables for Non-Executive Directors.

1. People and Remuneration Committee

The People and Remuneration Committee (the Committee) oversees and makes recommendations to the Board on executive and director remuneration arrangements. The Committee recommends to the Board any remuneration changes for the CEO, determines the remuneration of Executives reporting to the CEO, and oversees general remuneration policies across The Trust Company.

The Committee engages external consultants every second year for the purpose of conducting remuneration benchmarking and market reviews prior to the Committee making recommendations to the Board on changes to the CEO’s remuneration arrangements. For this purpose, KPMG were engaged by the Committee during the 2011 reporting period for a fee of A$10,000.

The Committee met on four occasions during the reporting period. The Company Secretary acts as secretary to the People and Remuneration Committee.

The Committee consists of three Non-Executive Directors:

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• JohnMacarthur-Stanham(Chairman)

• JamesKing

• BruceCorlett-resignedfromthe People and Remuneration Committee on 24 August 2011.

• JosephineSukkar-appointedto the People and Remuneration Committee on 24 August 2011.

The CEO and the Head of People and Development attend Committee meetings by invitation, but do not attend when matters directly affecting their remuneration arrangements are being considered by the Committee.

2. Remuneration philosophy

The Trust Company recognises that its success depends on the quality and contribution of its people. The principles underlying The Trust Company’s remuneration philosophy for all its employees and executives are to:

• Linkrewardstothecreationof sustainable value for shareholders

• Attract,developandretaintalented employees and executives

• InitiateandexecutetheCompany’s business plans and strategy as endorsed by the Board

• Rewardthedeliveryofsuperiorperformance

• Haveabalancedmixofshort-term and long-term remuneration components

• Beconsistentwithandsupportive of the Company’s ethical framework and commitment to good corporate governance

• Ensurethatremuneration

arrangements are competitive and fair, and reflect the external labour market within the finance sector.

The Trust Company reviews employee performance throughout the year, culminating in an annual performance review for all permanent employees. This includes an assessment of development needs and evaluation of Key Performance Indicators (KPIs) and behaviours. There is a link between an individual’s achievements as assessed through the annual performance review and their level of reward. Thus the outcome of an employee’s performance is a critical part of their remuneration review.

Remuneration reviews take place on an annual basis. Current market conditions and The Trust Company Group’s financial performance are taken into consideration to determine the extent of remuneration adjustments in any given year. The Trust Company’s People and Development team, in conjunction with the Executive Team and the Committee, are involved in the remuneration review process.

The Trust Company periodically engages external advisers to conduct reviews of remuneration for all employees company wide. This review takes into consideration current market rates and trends for a cross-section of roles, including executive positions. The advice of other external advisors is also sought from time to time in order to retain and attract qualified and appropriately skilled employees.

Directors and employees are required to comply with all company policies and procedures at all times, including a Share Trading Policy and confidentiality and compliance obligations. These policies and procedures are available on The Trust Company’s website.

3. Executive compensation

Remuneration of Executive is assessed on an annual basis. The external economic environment and the Company’s performance is taken into consideration for any remuneration changes. The remuneration review takes into consideration individual, divisional and Group performance criteria established within a formal performance appraisal system operating for executives and all employees. In addition to base salary, executives participate in the Short Term Incentive (STI) plan and the Long Term Incentive (LTI) plan.

The Trust Company’s current remuneration framework has two components:

1. Fixed remuneration - base salary and statutory superannuation contributions which represents total fixed remuneration

2. At Risk remuneration - in addition to fixed remuneration, a performance related (At Risk) component is delivered in the form of performance rights, or a mixture of cash and performance rights, through the STI and LTI plans.

The following graph shows the mix in remuneration for fixed and performance related (At Risk) components for the CEO and Executive Team. An appropriate remuneration mix is determined for each position, taking into consideration the executive role and the level of responsibility.

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3.1. Fixed remuneration

Fixed remuneration is determined by reference to independent research, factoring in the scope and nature of the role, along with the incumbent’s skills, experience, knowledge and capability. The fixed remuneration component of the executive’s remuneration includes base salary and superannuation contributions in line with the compulsory Superannuation Guarantee Contribution (SGC). All employees of The Trust Company have the option of electing a superannuation fund of their choice, including an option to select The Trust Company’s default superannuation fund. Salary packaging is available to executives which provides them with flexibility to vary the mix of cash and benefits they receive within fixed remuneration. Such benefits may include motor vehicles and parking, and are provided at cost, inclusive of any Fringe Benefits Tax incurred by The Trust Company. By way of additional benefit offered to The Trust Company’s employees (excluding Non-Executive Directors), The Trust Company currently offers an additional 1% company funded employer superannuation contribution, over and above the statutory superannuation contribution.

To be eligible for this benefit, an employee must elect to join the Company’s default superannuation fund and make a minimum 1% employee contribution through salary sacrifice arrangement.

3.2 Performance related (At Risk) component

The two key performance schemes in place for executives are the STI and LTI plans.

The Trust Company’s current incentive arrangements were approved by shareholders at the 2009 Extraordinary General Meeting and are outlined below.

3.2.1 Short Term Incentive (STI) plan

The Trust Company’s STI plan is a performance-based plan designed as an incentive to participants, dependent on their role in the organisation to create new business or strengthen or improve the business. The STI plan is part of the overall remuneration strategy of The Trust Company to strengthen the alignment between employee and shareholder interests through ensuring a greater proportion of performance payments are made in shares and less in cash.

Eligibility is determined at the beginning of The Trust Company’s financial year, based on role importance and individual performance. To encourage and reward high performance in achieving objectives aligned to The Trust Company’s strategic plan, commencing the beginning of The Trust Company’s financial year, all permanent employees are invited to participate in the STI plan. The quantum is a dollar amount target that is specified for each participant and is measured against performance hurdles, with a minimum threshold necessary to qualify for an award and a maximum upper limit applicable where targets have been exceeded.

Performance hurdles

The participant in the STI plan is measured against financial and non-financial targets. Depending on a participant’s role in the organisation, the financial target of the potential STI is dependent on The Trust Company Group’s overall performance, and the non-financial target is dependent on strategic objectives linked to The Trust Company’s strategic plan. The Trust Company Group’s financial performance hurdles are based on targeted earnings before interest, tax, depreciation and amortisation. Individual performance hurdles

CEO

Fixed Target STI Target LTI

39% 24% 37%

Executive Team* 60% 18% 22%

Remuneration mix based on achievement of target STI and LTI

*The remuneration component percentages for each of the Executive Team members vary.

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are specific to the participant’s function or business unit and are weighted according to the participant’s role in The Trust Company.

Participants can elect to receive:

• 100%oftheirSTIinperformance rights; or

• 50%oftheirSTIincashand50%in performance rights.

A performance right represents a right to acquire a fully paid ordinary share in The Trust Company at the end of the vesting period. Performance rights may only vest if performance hurdles and employment tenure conditions are satisfied in the vesting period. The number of performance rights is determined by dividing the STI dollar amount by the volume weighted average price of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceding the performance period, less the final dividend for that year.

The award of performance rights is divided into two equal tranches over a two year period, commencing from the end of the performance period. The first tranche of performance rights vests at the end of the performance period and the second tranche vests in the following year. Both tranches are conditional

on the continued satisfactory performance of the participant and will not vest if the participant has exposed The Trust Company to any unintended risks. Allocation of the award over a two year period helps to align short-term objectives with longer-term strategy and also serves as a retention incentive.

Subject to vesting of the performance rights, shares awarded under the STI plan carry a seven year trading restriction, commencing from the date on which performance rights were granted to the participant.

3.2.2 Long Term Incentive (LTI) plan

The Trust Company’s LTI plan seeks to reward executives for creating strong shareholder value over the medium and longer term relative to the general share market. Executives benefit from this plan only when shareholders benefit from above average shareholder return.

The first LTI plan commenced in February 2001. The current LTI plan is a Performance Rights plan, offered to KMP and other Executives. The LTI plan seeks to align rewards for key staff with shareholders’ interest and rewards high performance and improvements to support business plans and corporate strategies.

Performance rights are granted to executives which, subject to vesting conditions, entitle the executive

to shares. Eligibility is determined at the beginning of The Trust Company’s financial year, based on role importance and individual performance. The quantum or dollar amount of the LTI is set each year at the beginning of The Trust Company’s financial year. The CEO nominates the participants of the LTI plan to the Committee, who approve the participants.

The performance period for the LTI plan is three consecutive financial years. The performance hurdles are as follows:

Key management personnel and other executives

• TotalShareholderReturn(TSR) of The Trust Company compared to the TSR of the comparator group companies, comprising the constituent companiesoftheS&P/ASX200index

• Completionofcontinuousemployment service with The Trust Company, commencing on the first day of the performance period and ending on the last day of the vesting period.

TSR is the total returns on investment a shareholder receives over a specified period of time, including dividends and share price movements. The group of constituent companies in the comparator group is defined at the commencement of the LTI performance period.

Ranking of The Trust Company’s TSR against TSR of the comparator group

Proportion of performance rights vesting

Lower than 55th percentile Nil

At the 55th percentile 10%

Higher than 55th percentile but lower than 75th percentile

Proportion of TSR grant vesting increases in a straight line between 10% and 100%

75th percentile or higher 100%

TSR used in LTI plan

The table below outlines the performance thresholds of TSR used in the LTI plan:

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A performance right represents a right to acquire a fully paid ordinary share in The Trust Company at the end of the vesting period. Performance rights may only vest if performance hurdles and employment tenure conditions are satisfied in the performance period. The number of performance rights is determined by dividing the LTI plan dollar amount by the volume weighted average price of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceding the performance period, less the final dividend for that year.

The award of performance rights under the LTI plan is divided into three equal tranches over a three year period, commencing from the end of the performance period. The first tranche of performance rights vests at the end of the three year

performance period. The second tranche vests in the following year, and the third tranche vests in the year thereafter.

The participant is not entitled to shares in The Trust Company before the performance rights vest. The participant therefore cannot use the rights to vote or receive dividends.

Subject to vesting of the performance rights, shares awarded under the LTI plan carry a seven year trading restriction, commencing from the date performance rights were granted to the participant.

Once the performance rights vest, shares of The Trust Company will be transferred to the participant. Once vested the performance rights do not expire.

Under amendments made to the plan in 2009, participants are not

permitted to hedge their exposure to movements in The Trust Company’s share price.

Options

No options have been granted in respect to The Trust Company’s share capital.

0102030405060708090

100

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Ranking of The Trust Company’s TSR against TSR of the comparator group (%)

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Short-term employee benefits

Post employment

benefits Share-based payments*

Other long-term benefits Termination payments

Financial Year

Salary and fees

Short Term Incentive**

Other short-term benefits

Total short-term payments

Super-annuation benefits^^


Long Term Incentive

Value of restricted

shares

Long service leave

Cash-based payments

Share-based payments

Total Rights over equity

instruments granted~

Rights over equity

instruments awarded

$ $ $ $ $ $ $ $ $ $ $ $ No. No.

Executive***

John Atkin 2012 502,105 - 502,105 17,894 220,416 103,546 - - - - 843,961 120,611 34,827#

Chief Executive Officer 2011 477,064 - - 477,064 42,936 211,146 142,908 - - - - 874,054 104,142 35,183^

Vicki Allen(1) 2012 18,149 - - 18,149 1,633 - - - - - - 19,782 - -

Chief Operating Officer 2011 358,187 - - 358,187 31,813 - - - - 170,000 - 560,000 54,587 -

David Grbin 2012 359,025 47,880 406,905 20,976 47,880 29,277 - - - - 505,038 35,425 7,565##

Chief Financial Officer 2011 324,404 46,462 - 370,866 29,196 46,462 65,157 - - - - 511,681 36,392 9,835###

Simon Lewis 2012 242,327 24,180 266,507 17,673 24,180 23,981 - - - - 332,341 19,308 3,821#

Head of Philanthropy and Community

2011 204,050 - - 204,050 18,365 57,817 24,154 - - - - 304,386 23,286 9,634^

Andrea Free 2012 264,208 27,332 291,540 21,515 27,332 19,431 - - - - 359,818 20,979 4,319##

Head of People and Development 2011 201,835 27,139 - 228,974 22,121 29,581 24,430 - - - - 305,106 18,329 4,929^^^

Sally Ascroft 2012 283,667 - 283,667 21,554 - 18,273 - - - - 323,494 22,307 -

Group General Counsel and Company Secretary

2011 262,459 35,290 - 297,749 29,422 38,466 15,794 - - - - 381,431 23,834 6,409 ̂ ^^

Myles Orsler 2012 169,725 - - 169,725 19,617 - 4,312 - - - - 193,654 10,231 -

Head of Strategy, Planning and Projects

2011 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Cathryn Stephenson 2012 242,512 27,784 - 270,296 4,850 27,784 8,437 - - - - 311,367 19,202 4,412##

Executive General Manager, Group Operations and Information Systems


John Botica 2012 219,156 37,603 - 256,759 5,458 13,581 7,404 - - - - 283,202 15,332 2,157##

Managing Director - New Zealand 2011 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Raymond Gould 2012 224,877 29,469 - 254,346 15,202 22,281 8,973 - - - - 300,802 19,751 3,521##

Executive General Manager, Personal Client Services


Total remuneration 2012 2,525,751 194,248 - 2,719,999 146,372 383,454 223,634 - - - - 3,473,459 283,146 60,622

2011 1,827,999 108,891 - 1,936,890 173,853 383,472 272,443 - - 170,000 - 2,936,658 260,570 65,990

3.3 Remuneration tables for the Executive Team

This section provides the remuneration details for the Executive Team.

The designated Executive comprises the ‘Company Executives’ receiving the highest remuneration during the year and identified as KMP as defined by the Corporations Act 2001.

(1) Vicki Allen - resignation effective 18 March 2011~ Fair value at grant date for 2012 is $2.34 and $2.84 for 2011* Refer to valuation assumptions table for details of valuations of Long Term Incentive plans. **ShortTermIncentivesmaybedeliveredincashand/orshares.The

CEO receives 100% of his STI in the form of shares.^^Some Executives have elected to contribute superannuation contributions based on the FY12 maximum earnings base cap # Half of these shares will vest in May 2012 and the other half will vest in May 2013

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Post employment

benefits Share-based payments*


Financial Year

Salary and fees




Super-annuation benefits^^


Long Term Incentive

Value of restricted

shares

Long service leave

Cash-based payments



instruments granted~

Rights over equity

instruments awarded

$ $ $ $ $ $ $ $ $ $ $ $ No. No.

Executive***

John Atkin 2012 502,105 - 502,105 17,894 220,416 103,546 - - - - 843,961 120,611 34,827#

Chief Executive Officer 2011 477,064 - - 477,064 42,936 211,146 142,908 - - - - 874,054 104,142 35,183^

Vicki Allen(1) 2012 18,149 - - 18,149 1,633 - - - - - - 19,782 - -

Chief Operating Officer 2011 358,187 - - 358,187 31,813 - - - - 170,000 - 560,000 54,587 -

David Grbin 2012 359,025 47,880 406,905 20,976 47,880 29,277 - - - - 505,038 35,425 7,565##

Chief Financial Officer 2011 324,404 46,462 - 370,866 29,196 46,462 65,157 - - - - 511,681 36,392 9,835###

Simon Lewis 2012 242,327 24,180 266,507 17,673 24,180 23,981 - - - - 332,341 19,308 3,821#

Head of Philanthropy and Community

2011 204,050 - - 204,050 18,365 57,817 24,154 - - - - 304,386 23,286 9,634^

Andrea Free 2012 264,208 27,332 291,540 21,515 27,332 19,431 - - - - 359,818 20,979 4,319##

Head of People and Development 2011 201,835 27,139 - 228,974 22,121 29,581 24,430 - - - - 305,106 18,329 4,929^^^

Sally Ascroft 2012 283,667 - 283,667 21,554 - 18,273 - - - - 323,494 22,307 -


2011 262,459 35,290 - 297,749 29,422 38,466 15,794 - - - - 381,431 23,834 6,409 ̂ ^^

Myles Orsler 2012 169,725 - - 169,725 19,617 - 4,312 - - - - 193,654 10,231 -



Cathryn Stephenson 2012 242,512 27,784 - 270,296 4,850 27,784 8,437 - - - - 311,367 19,202 4,412##



John Botica 2012 219,156 37,603 - 256,759 5,458 13,581 7,404 - - - - 283,202 15,332 2,157##

Managing Director - New Zealand 2011 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Raymond Gould 2012 224,877 29,469 - 254,346 15,202 22,281 8,973 - - - - 300,802 19,751 3,521##



Total remuneration 2012 2,525,751 194,248 - 2,719,999 146,372 383,454 223,634 - - - - 3,473,459 283,146 60,622

2011 1,827,999 108,891 - 1,936,890 173,853 383,472 272,443 - - 170,000 - 2,936,658 260,570 65,990

## These shares will vest in May 2013### 2,093 shares have vested and the remaining shares will vest in May 2012^ Half of these shares vested in May 2011 and the other half will vest in May 2012

^^^ These shares will vest in May 2012*** Net growth of Executive has increased by two following the acquisition of The New Zealand Guardian Trust CompanyN/A-notapplicable

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Total STI (shares and cash)# Total STI LTI Total LTI

Plan Year

Percentage allocated (against target)

Percentage forfeited (against target)

Maximum total future

value (against

stretch)^

Percentage awarded

Percentage forfeited**

Percentage vested

Maximum total future

value^

% % S % % % $

Executive

John Atkin 2012 66.79 33.21 595,000 - - - 500,000

Chief Executive Officer 2011 84.46 15.54 450,000 - - - 375,000

Vicki Allen(1) 2012 N/A N/A N/A N/A N/A N/A N/A

Chief Operating Officer 2011 - 100.00 - - 100.00 - -

David Grbin^^ 2012 72.00 28.00 239,400 - - - 171,000

Chief Financial Officer 2011 74.46 25.54 224,640 - - - 156,000

Simon Lewis 2012 62.00 38.00 140,400 - - - 91,000

HeadofPhilanthropy&Community

2011 89.64 10.36 109,650 - - - 75,250

Andrea Free 2012 64.50 35.50 152,551 - - - 98,875

Head of People and Development

2011 89.64 10.36 112,200 - - - 77,000

Sally Ascroft 2012 0.00 100.00 162,207 - - - 105,134


2011 89.64 10.36 145,901 - - - 100,128

Myles Orsler 2012 0.00 100.00 83,250 - - - 46,250


2011 N/A N/A N/A N/A N/A N/A N/A

Cathryn Stephenson 2012 72.00 28.00 136,615 - - - 90,499



John Botica 2012 62.00 38.00 78,857 - - - 79,423

Managing Director - New Zealand


Raymond Gould 2012 62.00 38.00 129,373 - - - 96,250



STI plan and LTI plan allocations of benefits and vesting details for current year plans

(1) Vicki Allen - resignation effective 18 March 2011#Total STI Shares and Cash are based on percentages against target STI amounts which are less than the STI maximum total future value against stretch. ^MaximumtotalSTI&LTIfuturevaluerepresentsthemaximum(stretch)amountofremunerationthatcouldariseintheeventthatallperformancehurdles,asoutlinedinNote25oftheFinancialStatements,areachievedinfull.MinimumtotalSTI&LTIfuturevalueiszero.^^ 2,093 shares vested for the Executive under the retention component of the 2009 LTI plan** Percentage forfeited is the portion of the grant that the Executive foregoes at the end of the performance period. Other than the 2009 LTI plan relating to the CFO, all plans prior to 2010 LTI plan year have forfeited. N/A-notapplicable

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Details of share performance rights for all KMP under the STI plan are as follows:

Details of share performance rights for all KMP under the LTI plan are as follows:

Valuation assumptions

Details of movements in the number of performance rights outstanding for KMP are as follows:

(i) The quantum or dollar amount of the STI is set each year, normally at the beginning of The Trust Company’s financial year. The number of performance rights is determined by dividing the set dollar amount by the volume weighted average price (VWAP) of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceding the performance period, less the final dividend for that year.

(ii) The ‘fair value’ of LTI performance rights has been calculated using a Monte-Carlo simulation method, incorporating the assumptions below:

The fair values reflect the assessment of the probability that the plan performance hurdles will be subsequently met for the shares to be allocated.

Grant date Performance period Vesting date VWAP(i) No. of performance rights

23 August 2010 1 March 2010 to 28 February 2011

May 2011, May 2012 $6.00 99,712

19 December 2011 1 March 2011 to 29 February 2012

May 2012, May 2013 $6.33 81,147

180,859

Grant date Performance period Vesting dateFair value

at grant date(ii) No. of performance rights

16 January 2010 1 March 2009 to 29 February 2012

May 2012, March 2013, March 2014

$3.31 163,968

22 July 2010 1 March 2010 to 28 February 2013


$2.84 160,859



$2.34 201,999

526,826

Grant date Fair value Exercise price Risk free rate Assumption term Dividend yield Volatility

16 January 2010 $3.31 - 4.75% 26 months 5.50% 39.00%

22 July 2010 $2.84 - 4.64% 32 months 5.70% 34.00%

29 December 2011 $2.34 - 3.18% 26 months 6.00% 31.00%

2012 No. 2011 No.

Balance at the beginning of the year 255,786 189,989

Granted during the financial year 283,146 260,570

Awarded during the financial year (60,621) (65,990)

Forfeited during the financial year (20,526) (128,783)

Balance at the end of the financial year 457,785 255,786

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3.4 Employment and termination arrangements

All KMP are employed for an indefinite period of time. The notice period for termination of the contracts under normal circumstances by either the employee or The Trust Company ranges from three months to 12 months. The following table outlines arrangements for termination payments:

The increase in STI payments in 2012 primarily reflects the net growth by two in the number of KMP following the acquisition of The New Zealand Guardian Trust Company.

The STI payments in 2011 were of a similar level to the previous year with varying increases to KMP being offset by the resignation (and hence no STI payment) of one of the KMP.

The increase in STI payments in 2010 reflected an up-skilling of the Executive Team, an increased proportion of executive remuneration being at risk, and progress that had been made in the development of strategic priorities and financial performance delivered against a backdrop of the GFC.

The Trust Company’s LTI plan is closely aligned to creating sustainable value for shareholders. Due to the relatively high performance hurdles of the LTI plan, no entitlements were earned by KMP under the LTI plan over the last five years other than a retention component consisting of 2,093 shares for one KMP under the year ended 2011 LTI plan.

4. Performance and reward in the past five years

Payments under The Trust Company’s STI plan are related to Company performance. The following table summarises STI payments made to KMP in the past five years:

Key management personnel

STI payments made to KMP

Name Notice period Severance Payment(1)

John Atkin 12 months 12 months, inclusive of notice period (i.e. maximum of 12 months payment on termination, inclusive of notice period)

Other KMP 3 months Linked to length of service with a maximum of 40 weeks payment

Year ended

2008 2009 2010 2011 2012

Amount paid ($) 336,000 378,178 507,465 497,980 577,702

(1) Severance payment applies where termination is initiated by the Company, other than for misconduct or unsatisfactory performance. Fixed remuneration is used to calculate severance payment.

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5. Non-Executive Director compensation

Non-Executive Directors’ fees are determined by the Board within the limits approved by shareholders.

A resolution was approved by shareholders at the 2011 AGM to increase the Non-Executive Directors’ aggregate fee limit from A$600,000 to A$750,000. This was to accommodate possible future Non-Executive Director appointments as a result of the expansion of the business.

The last increase in individual Director fees took effect in July 2010. There was no increase in individual Director fees during the Company’s financial year March 2011 to February 2012. Any changes in total Director fees in the remuneration report reflect the appointment of Josephine Sukkar on 26 March 2010, the timing of the July 2010 Director fee increase and changes in Director Committee responsibilities.

The Board has access to the advice of independent consultants to ensure remuneration levels are appropriate and relative to fees paid by comparable companies. The Board is conscious that it must set remuneration levels to attract and retain experienced Directors who can contribute at a high level to Board and Company performance.

The Trust Company Group’s five year financial performance

The following table summarises The Trust Company Group’s five year financial performance:

Year ended

2008 2009 2010 2011 2012

Annual ongoing EBITDA performance (A$‘000) 18.857* 15,108* 8,663* 16,164* 18,463

Net profit after tax - continuing operations (A$'000) 20,295 20,604 10,911 11,286 12,600

Total net profit after tax (A$'000) 20,295 20,604 10,911 11,286 12,600

Ordinary fully franked dividends per share declared with respect to that year (cents) 54.0 42.0 33.7 35.0 35.0

Special dividends per share declared with respect to that year (cents) - 100.0 - - -

Total dividends per share declared with respect to that year (cents) 54.0 142.0 33.7 35.0 35.0

Basic earnings per share - operating profit continuing operations (cents) 62.8 63.8 33.8 35.0 38.7

Closing share price (A$) 9.71 4.10 6.40 6.50 5.00

3 year TSR performance percentile 25% 38% 30% 48% 47%

* From FY12 and for future reporting periods the test for allocating revenue and expense items between operating EBITDA and significant items has been tightened to minimise the difference between operating EBITDA and NPAT, and to focus management on growth in earnings per share. This is in line with one of our strategic goals to ensure ‘consistent growth in shareholder distributions’. As a consequence and convenience, EBITDA and significant items have been restated. This change has no impact on NPAT.

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5.1 Remuneration tables for Non-Executive Directors


Post employment

benefits Share-based payments


Financial Year

Salary and fees

Short Term Incentive



Super-annuation

benefits


Long Term Incentive

Value of restricted

shares

Long service leave

Cash-based payments



instruments granted

Rights over equity

instruments awarded

$ $ $ $ $ $ $ $ $ $ $ $ No. No.

Non-Executive Director

Bruce Corlett 2012 145,000 - - 145,000 13,050 - - - - - - 158,050 - -

Chairman 2011 138,333 - - 138,333 12,450 - - - - - - 150,783 - -

John Macarthur-Stanham 2012 90,000 - - 90,000 8,100 - - - - - - 98,100 - -

Vice Chairman 2011 85,000 - - 85,000 7,650 - - - - - - 92,650 - -

Warren McLeland 2012 70,000 - - 70,000 6,300 - - - - - - 76,300 - -

2011 66,667 - - 66,667 6,000 - - - - - - 72,667 - -

Roger Davis 2012 75,000 - - 75,000 6,750 - - - - - - 81,750 - -

2011 68,333 - - 68,333 6,150 - - - - - - 74,483 - -

James King 2012 70,000 - - 70,000 6,300 - - - - - - 76,300 - -

2011 65,000 - - 65,000 5,850 - - - - - - 70,850 - -

Josephine Sukkar 2012 75,000 - - 75,000 6,750 - - - - - - 81,750 - -

2011 61,214 - - 61,214 5,509 - - - - - - 66,723 - -

Total remuneration 2012 525,000 - - 525,000 47,250 - - - - - - 572,250 - -

2011 484,547 - - 484,547 43,609 - - - - - - 528,156 - -

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Post employment

benefits Share-based payments


Financial Year

Salary and fees




Super-annuation

benefits


Long Term Incentive

Value of restricted

shares

Long service leave

Cash-based payments



instruments granted

Rights over equity

instruments awarded

$ $ $ $ $ $ $ $ $ $ $ $ No. No.

Non-Executive Director

Bruce Corlett 2012 145,000 - - 145,000 13,050 - - - - - - 158,050 - -

Chairman 2011 138,333 - - 138,333 12,450 - - - - - - 150,783 - -

John Macarthur-Stanham 2012 90,000 - - 90,000 8,100 - - - - - - 98,100 - -

Vice Chairman 2011 85,000 - - 85,000 7,650 - - - - - - 92,650 - -

Warren McLeland 2012 70,000 - - 70,000 6,300 - - - - - - 76,300 - -

2011 66,667 - - 66,667 6,000 - - - - - - 72,667 - -

Roger Davis 2012 75,000 - - 75,000 6,750 - - - - - - 81,750 - -

2011 68,333 - - 68,333 6,150 - - - - - - 74,483 - -

James King 2012 70,000 - - 70,000 6,300 - - - - - - 76,300 - -

2011 65,000 - - 65,000 5,850 - - - - - - 70,850 - -

Josephine Sukkar 2012 75,000 - - 75,000 6,750 - - - - - - 81,750 - -

2011 61,214 - - 61,214 5,509 - - - - - - 66,723 - -

Total remuneration 2012 525,000 - - 525,000 47,250 - - - - - - 572,250 - -

2011 484,547 - - 484,547 43,609 - - - - - - 528,156 - -

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Directors’ shareholdings and units in registered schemes

Directors’ shareholdings in fully paid ordinary shares of the Company and units in registered schemes made available by the Company at the year ended 29 February 2012:

Directors

Sharesbeneficially

held

Shares non-beneficially

held

Share options

held

Registeredscheme

unitsdirect

Registeredscheme

unitsindirect

Bruce Corlett - 218,875 - - -

John Atkin 59,405 - - - -

John Macarthur-Stanham 379,490 441,905 - 230,757 519,945

Roger Davis - 8,000 - - -

James King - 12,995 - - -

Warren McLeland 1,520 17,995 - - -

Josephine Sukkar 4,700 - - - -

Directors’ Meetings

The following table sets out the number of directors’ meetings and committee meetings held during the financial year ended29February2012andthenumberofmeetingsattendedbyeachdirector(whiletheywereadirector/committeemember).

DirectorsBoard of

Directors

Audit, Risk and Compliance

Committee (1) (2)

Philanthropy and Community

Committee (1)

People and Remuneration Committee (1)

Investment Committee (1)

Held Attended Held Attended Held Attended Held Attended Held Attended

Bruce Corlett 16 16 6 6 5 5 2* 2 4 4

John Atkin 16 16 - - 5 5 - - 4 4

John Macarthur Stanham 16 16 6 6 - - 4 4 - -

Roger Davis 16 16 6 6 - - - - - -

James King 16 15 - - - - 4 3 - -

Warren McLeland 16 14 - - - - - - 4 4

Josephine Sukkar 16 16 - - 5 5 2* 2 - -

(1) Only those directors who are members of the relevant committees have their attendances recorded. Other directors do attend committee meetings from time to time, however, as they do not attend as committee members, their attendance is not recorded.(2) John Richardson is a committee member of ARCC. Details of ARCC members are contained in the Corporate Governance report on page 89.* The composition of the committee changed on 24 August 2011 with Josephine Sukkar replacing Bruce Corlett. In addition to the formal meetings recorded above, directors meet informally or undertake specific tasks for the Board to deal with a large variety of matters for the Group. These meetings and tasks are not regarded as formal meetings and are not minuted. They are, however, invaluable for the efficient management of the Group with all directors making themselves freely available to attend to company matters.Directors who are also directors of subsidiary companies attend formal meetings that are minuted however those subsidiary meetings are not required to be reported in this annual report. F

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Indemnification of Directors and officers

To the extent permitted by law, the Company has resolved to indemnify directors and officers against any liability incurred by the Director or Officer as a consequence of being a director or officer of the Group except where the liability arises out of conduct involving a lack of good faith.

Directors’ and officers’ liability insurance

The Company has arranged directors’ and officers’ liability insurance policies which cover all the Directors and Officers of the Group against certain liabilities they may incur in carrying out their duties for the Group. The terms of the policies prohibit disclosure of details of the amount of the insurance cover, the nature thereof and the premium paid.

Audit Committee

At the date of this report, the Company has a formally constituted Audit and Risk Committee of the Board of Directors.

Non-audit services

The Directors are satisfied that the provision of non-audit services, during the year, by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The reasons for the Directors being satisfied that the provision of the non-audit services during the year did not compromise the auditor independence requirements of the Corporations Act are:

• Thenon-auditservicesprovideddidnotincludeinvolvementindecisionmaking

• Thequantumofnon-auditfeesissmallrelativetotherevenueoftheauditorsfromtheCompany.

Details of the amount paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 23 to the financial statements.

Auditor independence declaration

The auditor’s independence declaration is included on page 25 of the financial report.

Rounding

TheCompanyisacompanyofthekindreferredtoinASICClassOrder98/0100,dated10July1998,and,inaccordance with that Class Order, amounts in the Directors Report and the Financial Report have been rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001.

On behalf of the Directors

Bruce Corlett AM John Atkin

Chairman Chief Executive Officer

Sydney, 17 April 2012 Sydney, 17 April 2012

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independenCe deClaraTionto the Directors’ of The Trust Company Limited

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ConsolidaTed FinanCial reporTAnnual Report

THE TRUST COMPANY LIMITED

ACN 004 027 749

FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2012

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sTaTemenT oF ComprehensiVe inComefor the financial year ended 29 February 2012

Note Consolidated Parent Entity

2012 2011 2012 2011

$'000 $'000 $'000 $'000

Fee and commission income 2(a) 82,844 57,073 35,207 39,694

Other income 2(a) 2,087 3,212 19,328 30,992

84,931 60,285 54,535 70,686

Employee benefit expense 2(b) (43,805) (28,954) (30,140) (28,358)

Occupancy expenses (5,090) (3,463) (1,272) (1,232)

Transitional service agreement charges (1,388) - - -

Insurance expenses (2,184) (1,831) (1,808) (1,816)

Depreciation and amortisation expense 9(c) (2,604) (1,089) (933) (1,034)

Auditor’s remuneration 23 (722) (625) (394) (613)

Consultancyand internal audit expenses (1,296) (719) (1,162) (753)

Repairs and maintenance of computer equipment (3,010) (572) (602) (570)

Marketing expenses (1,061) (362) (795) (355)

Financing expenses (1,132) - (535) -

Business acquisition costs 31 - (1,500) - (1,500)

Business transformation expenses - (1,326) - (1,326)

Impairment of fixed assets 9(c) - (461) - (390)

Other recoveries 1,535 628 527 (213)

Client claims (429) 313 (172) 313

Other expenses (5,923) (3,159) (1,432) (2,769)

Profit before income tax expense 17,822 17,165 15,817 30,070

Incometax(expense)/benefit 3(a) (5,222) (5,879) 806 (689)

Profit attributable to members of the parent entity 12,600 11,286 16,623 29,381

Other comprehensive income

Financial assets at fair value (3,845) (195) - -

Fair value movement on cash flow hedge 341 (341) 341 (341)

Other comprehensive income for the year (net of tax) (3,504) (536) 341 (341)

Total comprehensive income attributable to members of the parent entity

9,096 10,750 16,964 29,040

Earnings per share

Basic (cents per share) 20 38.7 35.0

Diluted (cents per share) 20 38.5 34.6

The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.For

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sTaTemenT oF FinanCial posiTionas at 29 February 2012


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Current assets

Cash and cash equivalents 29(c) 17,656 37,685 5,419 22,279

Trade and other receivables 6(a) 18,039 14,183 6,905 9,870

Total current assets 35,695 51,868 12,324 32,149

Non-current assets

Trade and other receivables 6(b) 634 618 21,833 408

Other non-current financial assets 7 16,118 19,964 123,524 110,221

Indemnities receivable 8 5,564 - - -

Property, plant and equipment 9 14,576 10,576 5,356 10,428

Goodwill 10 60,568 39,218 - -

Intangible assets 11 9,222 41 - 41

Deferred tax assets 3 3,570 2,795 1,386 1,846

Total non-current assets 110,252 73,212 152,099 122,944

Total assets 145,947 125,080 164,423 155,093

Current liabilities

Trade and other payables 12 6,115 2,458 7,873 14,917

Provisions 13(a) 4,884 4,132 2,221 3,409

Derivative financial instruments 15 - 487 - 487

Current tax liabilities 16 638 1,531 676 1,531

Total current liabilities 11,637 8,608 10,770 20,344

Non-current liabilities

Borrowings 17 8,385 - 8,385 -

Provisions 13(b) 2,426 2,468 2,303 2,468

Indemnities payable 8 5,564 - - -

Total non-current liabilities 16,375 2,468 10,688 2,468

Total liabilities 28,012 11,076 21,458 22,812

Net assets 117,935 114,004 142,965 132,281

Equity

Issued capital 19 107,688 102,683 107,688 102,683

Investment revaluation reserve (3,723) 122 - -

Share-based payments reserve 2,089 2,299 2,089 2,299

Asset revaluation reserve 655 655 655 655

Cash flow hedge reserve - (341) - (341)

Foreign currency translation reserve 1,115 - - -

Retained earnings 10,111 8,586 32,533 26,985

Total equity 117,935 114,004 142,965 132,281

Net tangible asset per share ($) 1.34 2.16

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

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sTaTemenT oF ChanGes in eQuiTyfor the financial year ended 29 February 2012

Consolidated

Note

Issued capital$’000

Invest-ment

reval-uation

reserve$’000

Share-based

payments reserve

$’000

Asset reval-

uation reserve

$’000

Cash flow hedge

reserve$’000

Foreign currency

trans-lation

reserve$’000

Retained earnings

$’000Total

$’000

Balance at 1 March 2010 102,491 317 1,938 655 - - 7,464 112,865Unrealised loss on investments 7(c) - (279) - - - - - (279)Deferred tax asset on revaluation of investments

3(c) - 84 - - - - - 84

Fair value movement on cash flow hedge

15 - - - - (487) - - (487)

Deferred tax asset on cash flow hedge 3(c) - - - - 146 - - 146Profit attributable to members of the parent entity

- - - - - - 11,286 11,286

Total comprehensive income for the year

- (195) - - (341) - 11,286 10,750

Treasury shares allocated 192 - (192) - - - - - Recognition of share-based payments 2(b) - - 1,231 - - - - 1,231Transfer of share-based payments to retained earnings

- - (678) - - - 678 -

Dividends paid in the financial year 4 - - - - - - (10,842) (10,842)Balance at 28 February 2011 102,683 122 2,299 655 (341) - 8,586 114,004

Balance at 1 March 2011 102,683 122 2,299 655 (341) - 8,586 114,004Unrealised loss on investments 7(c) - (3,845) - - - - - (3,845)Deferred tax asset on revaluation of investments

- - - - - - - -

Fair value movement on cash flow hedge

15 - - - - 487 - - 487

Deferred tax asset on cash flow hedge 3(c) - - - - (146) - - (146)Profit attributable to members of the parent entity

- - - - - - 12,600 12,600

Total comprehensive income for the year

- (3,845) - - 341 - 12,600 9,096

Treasury shares allocated 246 - (246) - - - - - Recognition of share-based payments 2(b) - - 261 - - - - 261Transfer of treasury share dividends to retained earnings

- - - - - - 259 259

Issue of shares under employee share plan

225 - (225) - - - - -

Issue of shares under share purchase and dividend reinvestment plans

4,534 - - - - - - 4,534

Foreign currency movements - - - - - 1,115 - 1,115 Dividends paid in the financial year 4 - - - - - - (11,334) (11,334)Balance at 29 February 2012 107,688 (3,723) 2,089 655 - 1,115 10,111 117,935

The investment revaluation reserve arises on the revaluation of financial assets at fair value investments. Where a revalued investment is sold, that portion of the investment revaluation reserve which relates to that investment is effectively realised and is included in the Statement of Comprehensive Income for the period.

The share-based payments reserve arises on the grant of share-based incentives to executives and selected staff under the Long Term Incentive and Short Term Incentive plans. Amounts are transferred out of the reserve and into issued capital when the shares are allocated. Further information is contained in Note 25 to the financial statements.

The asset revaluation reserve arises on the revaluation of land and buildings. Where revalued land or buildings are sold that portion of the asset revaluation reserve which relates to that asset and is effectively realised, is transferred directly to retained earnings.

The cash flow hedge reserve arose from the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges. When the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. All cash flow hedges have been closed out during the year.

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

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sTaTemenT oF ChanGes in eQuiTyfor the financial year ended 29 February 2012

Parent Entity

Note

Issued capital$’000

Invest-ment

reval-uation

reserve$’000

Share-based

payments reserve

$’000

Asset reval-

uation reserve

$’000

Cash flow hedge

reserve$’000

Retained earnings

$’000Total

$’000

Balance at 1 March 2010 102,491 - 1,938 655 - 7,768 112,852Fair value movement on cash flow hedge 15 - - - - (487) - (487)Deferred tax asset on cash flow hedge 3(c) - - - - 146 - 146Profit attributable to members of the parent entity

- - - - - 29,381 29,381

Total comprehensive income for the year - - - - (341) 29,381 29,040Treasury shares allocated 192 - (192) - - - - Recognition of share-based payments 2(b) - - 1,231 - - - 1,231Transfer of share-based payments to retained earnings

- - (678) - - 678 -

Dividends paid in the financial year 4 - - - - - (10,842) (10,842)Balance at 28 February 2011 102,683 - 2,299 655 (341) 26,985 132,281

Balance at 1 March 2011 102,683 - 2,299 655 (341) 26,985 132,281Fair value movement on cash flow hedge 15 - - - - 487 - 487Deferred tax asset on cash flow hedge 3(c) - - - - (146) - (146)Profit attributable to members of the parent entity

- - - - - 16,623 16,623

Total comprehensive income for the year - - - - 341 16,623 16,964Treasury shares allocated 246 - (246) - - - - Recognition of share-based payments 2(b) - - 261 - - - 261Transfer of treasury share dividends to retained earnings

- - - - - 259 259

Issue of shares under employee share plan 225 - (225) - - - - Issue of shares under share purchase and dividend reinvestment plans

4,534 - - - - - 4,534

Dividends paid in the financial year 4 - - - - - (11,334) (11,334)Balance at 29 February 2012 107,688 - 2,089 655 - 32,533 142,965

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

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sTaTemenT oF Cash Flowsfor the financial year ended 29 February 2012


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Cash flows from operating activities

Receipts from customers 89,805 65,069 41,978 48,554

Payments to suppliers and employees (71,312) (50,515) (41,771) (43,690)

Claim recoveries received 841 841 - -

Financing expenses paid (1,011) - (1,011) -

Income tax paid (5,747) (4,058) (4,480) (4,058)

Net cash provided by/(used in) operating activities 29(a) 12,576 11,337 (5,284) 806

Cash flows from investing activities

Payments on purchase of investments 31 (31,632) - (31,632) -

Cash and cash equivalents acquired as part of business combination

450 - - -

Proceeds from sale of property, plant and equipment 3 - - -

Payments for property, plant and equipment (5,691) (5,289) (212) (5,108)

Loans made to clients (108) - - -

Repayments of client loans 135 - - -

Purchase of mortgage backed securities (10) - - -

Dividends received 1,194 1,313 18,000 30,771

Interest received 1,084 1,695 343 222

Net cash (used in) / provided by investing activities (34,575) (2,281) (13,501) 25,885

Cash flows from financing activities

Proceeds from borrowings 12,500 - 12,500 -

Repayment of borrowings (4,000) - (4,000) -

Proceeds from issue of shares - employee share schemes 225 - 225 -

Proceedsfromissueofshares-DRP/SPP 4,534 - 4,534 -

Dividends paid - members of the parent entity

Ordinary dividends 4 (11,334) (10,842) (11,334) (10,842)

Net cash provided by/(used in) financing activities 1,925 (10,842) 1,925 (10,842)

Net (decrease)/increase in cash and cash equivalents (20,074) (1,786) (16,860) 15,849

Cash and cash equivalents at the beginning of the financial year

37,685 39,471 22,279 6,430

Effects of exchange rate changes on the balance of cash held in foreign currencies

45 - - -

Cash and cash equivalents at the end of the financial year 29(c) 17,656 37,685 5,419 22,279

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

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noTes To The FinanCial sTaTemenTsfor the financial year ended 29 February 2012

1. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report includes the separate financial statements of The Trust Company Limited (the Company or Parent Entity) and the entities it controlled during the financial year (the Group or Consolidated).

Accounting Standards include Australian equivalents to International Financial Reporting Standards (A-IFRS). Compliance with the A-IFRS ensures that the financial report complies with International Financial Reporting Standards (IFRS).

The financial report was authorised for issue by the Directors on 17 April 2012.

The Company is a public company listed on the Australian Securities Exchange (code: TRU), incorporated in Australia and operating in Australia, New Zealand and Singapore.

The registered office of the The Trust Company is: Level 15, 20 Bond Street, Sydney, NSW 2000.

Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair value of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The Company is a Company of the kind referred to in ASIC ClassOrder98/100,dated10July1998,andinaccordancewith that Class Order amounts in the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(i) Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Income and expense of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

(ii) Foreign currency

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Australian dollars ($), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in the Statement of Comprehensive Income in the period in which they arise except for:

- Exchange differences on transactions entered into in order to hedge certain foreign currency risks

- Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

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1. Significant accounting policies (cont’d)

(ii) Foreign currency (cont’d)

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in equity.

(iii) Goods and Services Tax (GST)

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

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

ii. for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the Cash Flow Statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority, is classified as operating cash flows.

(iv) Revenue recognition

Fee and commission income

Revenue is measured at the fair value of the consideration received or receivable. Fee and commission income is recognised when:

• theamountcanbemeasuredreliably

• itisprobablethatthefutureeconomicbenefitassociated with the transaction will flow to the Company

• thestageofcompletioncanbemeasuredreliably.

Where the Group acts as a responsible entity, it does not recognise revenue where it is collected on behalf of third party providers as the commercial risks and benefits associated with those services are borne by those third parties.

Other income

Rental income is recognised on an accruals basis in the Statement of Comprehensive Income. Dividend income is recognised on a receivable basis on the date when the Group’s right to receive payment is established. Interest income is recognised on an accruals basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s carrying amount.

(v) Share-based payments

The Company has a Long Term Incentive plan (share-based) for key staff and a Short Term Incentive plan (share and cash-based) for all staff. The cost of administering both schemes is expensed as incurred.

Share-based payments granted are measured at fair value at the date of grant. All current long term and short term incentive plans were valued externally.

The fair value determined at the grant date of the equity settled share-based payments is expensed on a straight-line basis over the vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.

Shares purchased on market by CPU Share Plans Pty Ltd (formerly Trust Company Share Plan Pty Limited) to satisfy these obligations are accounted for by the Company as Treasury Shares within equity.

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(vi) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability to the extent that it is unpaid.

Deferred tax

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against the deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if temporary differences giving rise to them, arise from an initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with those investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset and liability giving rise to them are realised or settled, based on tax rates and tax laws that have been enacted

or substantively enacted by the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow in a manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authorityandtheCompany/Groupintendstosettleitscurrent tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the Statement of Comprehensive Income, except where it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity or where it arises from the initial accounting for a business combination, in which case it is included in the accounting for the business combination.

Tax consolidation

The Trust Company and all of its wholly-owned Australian resident entities are part of a tax consolidated group under Australian taxation law. The Trust Company is the head entity in the tax consolidated group.

Taxexpense/income,deferredtaxliabilitiesanddeferredtax assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the ‘separate taxpayer within group’ approach.

Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax consolidated group are recognised by the Company (as head entity in the tax consolidated group).

Due to the existence of a tax funding arrangement between the entities in the tax consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax consolidated group in accordance with the arrangement. Where the tax contribution amount recognised by each member of the tax consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.

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(vi) Income tax (cont’d)

Tax consolidation (cont’d)

The tax sharing agreement entered into between members of the tax consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each member’s liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under the tax funding agreement.

(vii) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash on demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(viii) Financial assets and liabilities

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. Investments are initially measured at fair value net of transaction costs, except for those financial assets classified as fair value through the Statement of Comprehensive Income, which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the parent entity’s financial statements.

Trade receivables

Trade receivables, represented by fee income accrued, are contractually due under the terms of the relevant contract or trust deed; provision is made for any debts considered doubtful.

Loans and other receivables

Loans and other receivables are recorded at amortised cost.

Financial assets at fair value

Shares in listed companies are stated at fair value. Fair value is determined in the manner described in Note 30(i). Gains and losses arising from changes in fair value are recognised directly in the investment revaluation reserve, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in the investment revaluation reserve is included in the Statement of Comprehensive Income.

Derivative financial instruments

The Company has designated certain derivatives as hedges of foreign currency risk of firm commitments (cash flow hedges). A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Hedge accounting

The Company designates certain hedges of foreign exchange risk on firm commitments as cash flow hedges.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

Note 30(d) sets out details of the fair values of the derivative instruments used for hedging purposes.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Comprehensive Income.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Comprehensive Income.

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(viii) Financial assets and liabilities (cont’d)

Hedge accounting (cont’d)

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the Statement of Comprehensive Income as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows are significantly reduced.

For financial assets carried at amortised cost, the amount of the impairment 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.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the Statement of Comprehensive Income.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the Statement of Comprehensive Income to the extent the carrying amount of the investments at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of financial assets at fair value equity securities, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

Derecognition of financial assets

A financial asset is derecognised only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

(ix) Property, plant and equipment

Land and buildings are measured at fair value. Fair value is determined on the basis of an annual valuation prepared by the Directors and every three years by external valuation experts, unless Directors determine a more frequent external valuation is required. The valuation is based on discounted cash flows or capitalisation of net income. The fair values are recognised in the financial statements of the Group and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values.

Any revaluation increases arising on the revaluation of land and buildings is credited to the asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in the Statement of Comprehensive Income, in which case the increase is credited to the Statement of Comprehensive Income to the extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of land and buildings is charged as an expense in the Statement of Comprehensive Income to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged as an expense to the Statement of Comprehensive Income. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the asset revaluation reserve, net of any deferred taxes is transferred directly to retained earnings.

Plant and equipment, leasehold improvements and motor vehicles are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of an item.

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(ix) Property, plant and equipment (cont’d)

Depreciation is provided on property, plant and equipment including freehold buildings but excluding land. Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

• Motorvehicles 7to8years

• Buildings 40years

• Leaseholdimprovements 3to10years

• Plantandequipment 2.5to13years

(x) Leased assets

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments and sub lease rental income are recognisedasanexpense/incomeonastraight-linebasisover the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Lease incentive

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(xi) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of

assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquire and the equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

• Deferredtaxassetsorliabilitiesandliabilitiesorassets related to employee benefit arrangements are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively

• Liabilitiesorequityinstrumentsrelatedtoshare-basedpayment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date

• Assets(ordisposalgroups)thatareclassifiedasheld for sale in accordance with AASB 5 ‘Noncurrent Assets Held for Sale and Discontinued Operations’ are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Standard.F

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(xi) Business combinations (cont’d)

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquired business is remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquired business prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

(xii) Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business (refer Note 1 (xi)) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the Statement of Comprehensive Income. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(xiii) Intangible assets

Indemnities

To the extent that indemnities exist, these are recognised as the Directors’ best estimate of the amount recoverable and payable. This is subject to annual impairment assessment.

Intangible assets acquired separately

Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Amortisation is calculated using the straight line method to allocate the cost of separately identifiable intangible assets over their estimated useful lives as follows:

• ProfessionalFiduciaryRelationships 15to60years

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(xiv) Impairment of other tangible and intangible assets

At each reporting date, the consolidated entity reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss amount (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of each CGU to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and wherever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount and an impairment loss is recognised in the Statement of Comprehensive Income immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised in the Statement of Comprehensive Income immediately.

(xv) Payables

Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services.

(xvi) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave, when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows in respect of services provided by employees up to the reporting date.

(xvii) Provisions

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

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the recovery receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

Provision for redundancies and transition costs

A provision for redundancies and transition costs is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of the provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.F

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(xvii) Provisions (cont’d)

Contingent liabilities acquired in a business combination

Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the amount initially recognised less cumulative amortisation recognised in accordance with AASB 118 ‘Revenue’.

(xviii) Financial liabilities and equity instruments

Equity instruments

Equity instruments are classified as equity in accordance with the substance of the contractual arrangement. Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Dividends are classified as distributions of profits consistent with the Statement of Financial Position classification of the related equity instruments.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

(xix) Adoption of new and revised Accounting Standards

In the current year, the Group has adopted all new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the current annual reporting period. Other than as described below, the adoption of these new and revised Standards and Interpretations has not resulted in any changes to the

Group’s accounting policies that have affected the amounts reported for the current or prior years.

Effective for annual reporting periods beginning on or after 1 January 2013. Management have made the decision to early adopt AASB 9 ‘Financial Instruments’ as of 1 March 2011. This did not have any material impact on the financial report of the Group.

At the date of authorisation of the financial report, all other relevant Standards and Interpretations that were in issue but not yet effective are not expected to have a material impact on the financial report of the Group. Management have not yet assessed which of these are likely to be relevant to the Group.

(xx) Critical accounting estimates and judgements

The preparation of this financial report required the use of certain critical accounting estimates and exercises judgement in the process of applying the accounting policies. The estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectation of future events. The directors believe the estimates and judgements are reasonable. Actual results in the future may differ from those reported.

The key accounting estimates and judgements used in the preparation of the financial report are as follows:

Goodwill

At each reporting date, goodwill is assessed for impairment. The model used to assess whether an impairment exists includes growth assumptions which may differ from future actual performance. Refer to Note 10.

Trustee risk

Part of the business of the Group is its trustee and custodian business. This includes custodial services, acting as trustee for debenture and convertible note issues, acting as trustee or responsible entity of unit trusts and managed investment schemes and acting as a trustee for retail superannuation funds. There are particular risks that apply to such business. In particular, as a trustee, responsible entity or custodian, the Group may generally be liable in its personal capacity (i.e. without a right of indemnity from the assets of the trust for which it is the trustee) for losses or damages caused as a result of negligence, fraud or breach of duty by the Group or its officers. Further, as a trustee, responsible entity or custodian, the reputation of the Group may be impacted adversely by the actions of its clients notwithstanding it has acted in good faith. Refer to Note 22.

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Consolidated Parent Entity

2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Revenue

Fee and commission income from trust and other fiduciary activities

82,844 57,073 35,207 39,694

Dividends from wholly-owned controlled entities - - 18,000 30,771

Dividends from non-related listed companies 1,075 1,313 - -

Interest income from bank deposits 1,012 1,899 365 221

Interest income from wholly-owned controlled entities - - 963 -

Total revenue 84,931 60,285 54,535 70,686

(b) Employee benefit expense

Employee benefit expense includes:

Salaries and wages 35,922 19,700 23,606 19,181

Defined contribution superannuation plan expense 2,356 2,079 2,091 2,079

Equity settled share-based incentives* 261 1,231 261 1,231

Other employee benefits (includes payroll tax and annual leave)

5,266 5,944 4,182 5,867

43,805 28,954 30,140 28,358

* In the current year, the estimated vesting period of equity settled share-based payments has been revised. In accordance with AASB 108, the effect of this provision has been adjusted through the employee benefit expense component of the Statement of Comprehensive Income.

2. Profit before income tax expense

Profit before income tax expense includes the following items of revenue and expense:

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2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Income tax expense / (benefit) comprises:

Currenttaxexpense/(benefit) 4,966 4,872 (1,134) (171)

Under provision of income tax in previous year - current tax 10 331 10 331

Under/(over)provisionofincometaxinpreviousyear-deferred tax

- 20 - (3)

Movement in deferred tax balance recognised in the Statement of Comprehensive Income

246 656 318 532

Total income tax expense / (benefit) 5,222 5,879 (806) 689

(b) The prima facie income tax expense on pre-tax profit is reconciled with the income tax expense shown in the financial statements as follows:

Profit before income tax expense 17,822 17,165 15,817 30,070

Income tax expense @ 30% (New Zealand @ 28%) 5,266 5,150 4,745 9,021

Non-allowable expenses 268 772 33 571

Franked dividends (322) (394) - -

Non-assessable income - - (5,594) (9,231)

Under provision of income tax in previous year 10 351 10 328

Total income tax expense / (benefit) 5,222 5,879 (806) 689

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law (28% payable by New Zealand corporate entities). There has been no change in the Australian corporate tax rate when compared with the previous reporting period (New Zealand prior period was 30%).

(c) Income tax recognised directly in equity

The following deferred income tax assets were credited or charged directly to equity during the year:

Investment revaluation reserve - 84 - -

Cash flow hedge reserve (146) 146 (146) 146

(146) 230 (146) 146

Investments within tax consolidated group

Under Australian Tax Law, the taxable profit made by a tax consolidated group in relation to an entity leaving thegroupdependsonarangeoffactors,includingthetaxvaluesand/orcarryingvaluesofassetsandliabilitiesof the leaving entity, which vary in line with the transactions and events recognised in each entity. The taxable profit or loss ultimately made on any disposal of the investments within the tax consolidated group will therefore depend upon when each entity leaves the tax consolidated group and the assets and liabilities that the leaving entity holds at that time.

Because the consolidated entity has no current intention to dispose of any subsidiaries within the Group, a deferred tax liability has not been recognised in relation to investments within the tax consolidated group. Furthermore, temporary differences that might arise on disposal of the entities in the tax consolidated group cannot be reliably measured because of their inherent uncertainties surrounding the nature of any future disposal that might occur.

3. Income tax expense

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3. Income tax expense (cont’d)

(d) Deferred tax balances

Consolidated

Opening balance

Balances acquired as part of business

combinations#

Charged to income

Charged to equity

Closing balance

$’000 $’000 $’000 $’000 $’000

2012

Deferred tax assets

Provisions 2,098 1,055 (1,213) - 1,940

Doubtful debts and impairment losses

799 - 242 - 1,041

Other 502 2,424 (1,368) (146) 1,412

Deferred tax (liabilities)

Property, plant and equipment (513) - 2 - (511)

Other (91) (2,330) 2,109 - (312)

2,795 1,149 (228) (146) 3,570

2011

Deferred tax assets

Provisions 2,389 - (291) - 2,098

Doubtful debts and impairment losses

724 - (9) 84 799

Other 642 - (286) 146 502


Property, plant and equipment (513) - - - (513)

Other (2) - (89) - (91)

3,240 - (675) 230 2,795

# Net of foreign exchange translation movement.

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Parent Entity

Opening balance

Charged to income

Charged to equity

Closing balance

$’000 $’000 $’000 $’000

2012

Deferred tax assets

Provisions 1,877 (404) - 1,473

Doubtful debts and impairment losses 20 9 - 29

Other 478 86 (146) 418


Property, plant and equipment (511) - - (511)

Other (18) (5) - (23)

1,846 (314) (146) 1,386

2011

Deferred tax assets

Provisions 2,192 (315) - 1,877

Doubtful debts and impairment losses 12 8 - 20

Other 535 (203) 146 478


Property, plant and equipment (511) - - (511)

Other - (18) - (18)

2,228 (528) 146 1,846

3. Income tax expense (cont’d)

(d) Deferred tax balances (cont’d)

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2012 2011

Cents per Total Cents per Total

Recognised amounts share $’000 share $’000

Fully paid ordinary shares

Final dividend paid on 16 May 2011 (prior year 25 May 2010)

Fully franked at 30% (prior year fully franked at 30%) 18.0 5,825 16.5 5,340

Interim dividend paid on 14 December 2011 (prior year 11 November 2010)

Fully franked at 30% (prior year fully franked at 30%) 17.0 5,509 17.0 5,502

Total dividends paid in the financial year 35.0 11,334 33.5 10,842

Unrecognised amounts

Fully paid ordinary shares

Final dividend (declared on 17 April 2012)

Fully franked at 30% (prior year 30%) 18.0 5,998 18.0 5,825

4. Dividends

Parent Entity

2012 2011

$’000 $’000

Franking account balance at the end of the financial year 5,857 5,723

Franking credits that will arise from the payment of income tax payable as at reporting date

676 1,531

Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

205 256

Adjusted franking account balance 6,738 7,510

Impact on the franking account of dividends proposed or declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the period

(2,571) (2,497)

Franking account balance post payment of final dividend 4,167 5,013

Grossed up dividend that can be paid 9,723 11,697

The Company is a member of a tax consolidated group for income tax purposes effective 1 March 2003. The Company is also the head entity within the tax consolidated group and under this regime, the franking credits of all member entities are passed up to the Company.

5. Franking account

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2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Current

Trade receivables (i) 15,743 11,869 6,230 7,133

Allowance for doubtful debts (ii) (1,003) (232) (98) (66)

14,740 11,637 6,132 7,067

Amounts receivable from controlled entities - - 377 506

Receivable relating to Townsville fraud - 1,825 - 1,825

Other receivables and prepayments 3,299 721 396 472

Total current receivables 18,039 14,183 6,905 9,870

(i) The average credit period on provision of services is 30 days. No interest is charged on trade receivables.

Included in the Group's trade receivable balance are debtors with a carrying amount of $703,086 (2011: $1,064,348) which are past due date at the reporting date for which the Group has not provided an allowance for doubtful debts as there has not been a significant change in credit quality of the debtors and the Group believes that the amounts are still considered recoverable. The Group does not hold any collateral over these balances. The average age of these receivables is 135 days (2011: 103 days). There has been no deterioration of the credit quality of receivables not past due or not impaired.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(ii) Movement in allowance for doubtful debts

Balance at the beginning of the year 232 261 66 41

Balance acquired as part of business combinations 64 - - -

Amounts written off during the year (217) (379) (62) -

Increase/(decrease)inallowancerecognised 924 350 94 25

Balance at end of financial year 1,003 232 98 66

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, there is no further credit provision required in excess of the allowance for doubtful debts.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(b) Non-current

Loan to subsidiary - - 21,259 -

Other receivables and prepayments 634 618 574 408

Total non-current receivables 634 618 21,833 408

6. Trade and other receivables

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2012 2011 2012 2011

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(a) Investments carried at cost

Shares in subsidiaries - - 123,524 110,221

(b) Financial assets at fair value

Shares in non-related corporations at fair value 16,118 19,964 - -

Total other non-current financial assets 16,118 19,964 123,524 110,221

(c) Fair value disclosure by fair value hierarchy level Fair value measurement at end ofthe reporting period using:

29 Feb 12 Level 1* Level 2* Level 3*

$'000 $'000 $'000 $'000


Shares in non-related corporations at fair value 16,118 16,118 - -

28 Feb 11 Level 1* Level 2* Level 3*

$'000 $'000 $'000 $'000


Shares in non-related corporations at fair value 19,964 - - 19,964

* Level 1 - Fair value based on quoted prices in active markets.* Level 2 - Fair value based on inputs other than quoted prices.* Level 3 - Fair value not based on observable market data.

Level 1 represents the Group’s holding in Equity Trustees Limited. For the current year, it has been determined that fair value is best determined by the price listed on the Australian Securities Exchange of $13.50 per share. For the comparative period, a discounted cash flow (DCF) model was used to calculate fair value.

Level 3 represents the Group's holding in Equity Trustees Limited. In the prior reporting period, the fair value of $16.72 per share has been determined using a discounted cash flow valuation model. The market price of these shares listed on the Australian Securities Exchange as at 28 February 2011 was $16.30 per share.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Balance at beginning of financial year 19,964 20,243 - -

Change in fair value of financial asset during the year (3,846) (279) - -

Closing balance (Level 1 financial asset as at 29 February 2012) 16,118 19,964 - -

7. Other non-current financial assets

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2012 2011 2012 2011

$'000 $'000 $'000 $'000

Indemnity receivable (i) 5,564 - - -

Indemnity payable (i) 5,564 - - -

(i) The indemnities receivable and payable concern certain indemnity arrangements that have been agreed between The Trust Company and Suncorp Group New Zealand Limited. These indemnities relate to certain Group Investment Funds and certain Specified Client Matters, which were agreed as part of the acquisition of The New Zealand Guardian Trust Company Limited by The Trust Company.

Consolidated

Freehold land at fair

valueBuilding at

fair value

Motor vehicles at

cost

Leasehold improvement

at cost

Plant and equipment at

cost Total

$’000 $’000 $’000 $’000 $’000 $’000

2012

Gross carrying amount

Balance at 1 March 2011 1,711 1,249 117 8,341 20,637 32,055

Balance acquired as part of business combination

- - 639 1,550 4,736 6,925

Additions - - - 1,755 3,936 5,691

Disposals - - (20) (1,320) (10,993) (12,333)

Balance at 29 February 2012 1,711 1,249 736 10,326 18,316 32,338

Accumulated depreciation

Balance at 1 March 2011 - (87) (52) (2,984) (18,356) (21,479)

Balance acquired as part of business combination#

- - (443) (1,185) (4,552) (6,180)

Disposals - - 20 1,790 10,475 12,285

Depreciation expense - (88) (97) (1,009) (1,194) (2,388)

Balance at 29 February 2012 - (175) (572) (3,388) (13,627) (17,762)

Net book value

As at 1 March 2011 1,711 1,162 65 5,357 2,281 10,576

As at 29 February 2012 1,711 1,074 164 6,938 4,689 14,576


8. Indemnities

9. Property, plant and equipment

(a) Reconciliation of property, plant and equipment

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Consolidated


valueBuilding at

fair value

Motor vehicles at

cost


at cost


cost Total

$’000 $’000 $’000 $’000 $’000 $’000

2011


Balance at 1 March 2010 1,711 1,249 117 4,759 18,932 26,768

Additions - - - 3,582 1,707 5,289

Disposals - - - - (2) (2)



Balance at 1 March 2010 - - (37) (2,629) (17,334) (20,000)

Disposals - - - - 1 1

Depreciation expense - (87) (15) (348) (569) (1,019)

Impairment expense - - - (7) (454) (461)


Net book value

As at 1 March 2010 1,711 1,249 80 2,130 1,598 6,768

As at 28 February 2011 1,711 1,162 65 5,357 2,281 10,576

(i) An independent external valuation for the Brisbane freehold land and building was undertaken by LPC Australia at 24 December 2009. The valuation was done on the basis of capitalisation of net operating income and checked by comparison to market activity. The Directors have determined the value of the property as at 29 February 2012 remains materially accurate.

9. Property, plant and equipment (cont’d)

(a) Reconciliation of property, plant and equipment (cont’d)

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(a) Reconciliation of property, plant and equipment (cont’d)

Parent Entity


valueBuilding at

fair value

Motor vehicles at

cost


at cost


cost Total

$’000 $’000 $’000 $’000 $’000 $’000

2012


Balance at 1 March 2011 1,711 1,249 117 6,437 9,030 18,544

Additions - - - 14 198 212

Intercompany transfers - - - (3,318) (1,051) (4,369)

Disposals - - - (27) (846) (873)



Balance at 1 March 2011 - (87) (52) (1,215) (6,762) (8,116)

Disposals - - - 22 828 850

Depreciation expense - (88) (15) (318) (471) (892)


Net book value

As at 1 March 2011 1,711 1,162 65 5,222 2,268 10,428

As at 29 February 2012 1,711 1,074 50 1,595 926 5,356

2011


Balance at 1 March 2010 1,711 1,249 117 3,025 7,336 13,438

Additions - - - 3,412 1,696 5,108

Disposals - - - - (2) (2)



Balance at 1 March 2010 - - (37) (903) (5,823) (6,763)

Disposals - - - - 1 1

Depreciation expense - (87) (15) (305) (557) (964)

Impairment expense - - - (7) (383) (390)


Net book value

As at 1 March 2010 1,711 1,249 80 2,122 1,513 6,675

As at 28 February 2011 1,711 1,162 65 5,222 2,268 10,428

(i) An independent external valuation for the Brisbane freehold land and building was undertaken by LPC Australia at 24 December 2009. The valuation was done on the basis of capitalisation of net operating income and checked by comparison to market activity. The Directors have determined the value of the property as at 29 February 2012 remains materially accurate.

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(b) The carrying amount, after depreciation, of land and buildings had they been recognised under the historical cost model are as follows:

(c) Aggregate depreciation allocated and recognised as an expense during the year is as follows:

10. Goodwill


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Freehold land 1,104 1,104 1,104 1,104

Building 1,010 1,098 1,010 1,098

2,114 2,202 2,114 2,202


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Buildings 88 87 88 87

Motor vehicles 97 15 15 15

Leasehold improvement 1,009 348 318 305

Plant and equipment 1,194 569 471 557

2,388 1,019 892 964

Amortisation of intangibles 11 216 70 41 70

2,604 1,089 933 1,034

Impairment expense - 461 - 390

2,604 1,550 933 1,424


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Gross carrying amount and net book value

Balance at beginning of financial year 39,218 39,218 - -

Additional amounts recognised from business combinations 31 20,838 - - -

Effects of foreign exchange rates during the year 512 - - -

Balance at end of financial year 60,568 39,218 - -

Allocation of goodwill to cash-generating units

Goodwill has been allocated for impairment testing purposes to two individual cash-generating units (CGUs). The carrying amount of goodwill in each of the CGUs are as follows:

Corporate Client Services 22,191 22,191 - -

Personal Client Services 17,027 17,027 - -

The New Zealand Guardian Trust Company Limited 21,350 - - -

60,568 39,218 - -

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10. Goodwill (cont’d)Impairment Testing - Australia

The recoverable amount has been determined on a consistent basis (refer to Note 1(xii)) across the CGUs by using their value in use. The following assumptions have been applied across all the CGUs:

• Thevalueinuseisestimatedbythenetpresentvalueoffuturenetcashflowprojectionstoberealisedfromeachof the CGUs over the next five years plus a terminal value.

• Thepre-taxdiscountrateusedis15.67%(post-taxis10.97%)(2011:pre-tax16.8%;post-tax11.76%)asthiswouldrepresent the pre-tax projected weighted average cost of capital.

• Netcashflowsareprojectedforfiveyearswithaveragegrowthratesof4%p.a.forCorporateClientServicesand4% p.a. for Personal Services (2011: 9% p.a. for Corporate Services and 8% p.a. for Personal Client Services).

• Theterminalvalueisthatsetofnetcashflowsbeyondthatfiveyearperiodandhavebeenextrapolatedusinggrowth rates of 3% p.a. (2011: 3% p.a.).

• Projectedcashflowsdonotincludeanyallowancesforfuturerestructuringorenhancementstoanyassets.

Impairment Testing - New Zealand

The accounting for the acquired goodwill has only been provisionally determined. See below for more information. As such, the impairment testing of goodwill has only been completed by testing the carrying value of goodwill against the entire expected future cash flows of The New Zealand Guardian Trust Company Limited business as a whole. This is opposed to testing on an individual CGU basis as the Company is still determining the allocation of goodwill between respective CGU’s.

The recoverable amount has been determined on a consistent basis (refer to Note 1(xii)) across the business as a whole by using its value in use. The following assumptions have been applied:

• Thevalueinuseisestimatedbythenetpresentvalueoffuturenetcashflowprojectionstoberealisedfromthebusiness as a whole, over the next five years plus a terminal value.

• Thepre-taxdiscountrateusedis23%(post-taxis16.10%)asthiswouldrepresentthepre-taxprojectedweightedaverage cost of capital.

• Netcashflowsareprojectedforfiveyearswithaveragegrowthratesof4%p.a.

• Theterminalvalueisthatsetofnetcashflowsbeyondthatfiveyearperiodandhavebeenextrapolatedusinggrowth rates of 3% p.a.

• Projectedcashflowsdonotincludeanyallowancesforfuturerestructuringorenhancementstoanyassets.

Provisional Accounting

The additional goodwill recognised during the year relates to the acquisition of The New Zealand Guardian Trust Company Limited.

As at the time the financial statements were authorised for issue, the Group had only provisionally accounted for the business combination and the recognition of acquired intangible assets. Details of the reasons regarding the provisional accounting are included in Note 31. As the acquisition accounting has not yet been finalised, the goodwill acquired during the period has not been allocated to cash-generating units. The accounting for the business combination, the recognition of acquired intangibles assets and the allocation of goodwill to cash-generating units will be finalised during the year ending 28 February 2013.

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11. IntangiblesNote Consolidated Parent Entity

2012 2011 2012 2011

$'000 $'000 $'000 $'000


Balance at beginning of financial year 351 351 351 351

Acquisitions through business combinations# 9,397 - - -

Balance at end of financial year 9,748 351 351 351

Accumulated amortisation

Balance at beginning of financial year (310) (240) (310) (240)

Amortisation expense 9(c) (216) (70) (41) (70)

Balance at end of financial year (526) (310) (351) (310)

Net book value

Balance at beginning of financial year 41 111 41 111

Balance at end of financial year 9,222 41 - 41


The intangibles as at 28 February 2011 relate to customer contracts purchased. As at 29 February 2012, the amortisation period had expiredonthosecustomercontractsandallintangibleamountshadbeenwrittendowntozero.

On 1 March 2011, the Company acquired 100% of The New Zealand Guardian Trust Company Limited. As part of this acquisition, ($9,397,000) of professional fiduciary relationships were recognised as separately identifiable intangible assets. These relationships have been identified as having finite lives and have been amortised accordingly over their useful lives.

As at the time the financial statements were authorised for issue, the Group had only provisionally accounted for the business combination and the recognition of acquired intangible assets. The accounting for the business combination and the recognition of acquired intangibles assets will be finalised during the year ending 28 February 2013.

Refer to Note 1(xiii) for the accounting policy on the useful lives of intangible assets.

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12. Trade and other payables

13. Provisions


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Current (unsecured)

Trade payables 3,269 1,534 490 1,525

Other payables 1,898 635 1,111 548

GST payable 948 289 456 182

Loans payable to controlled entities - - 5,816 12,662

Total current payables 6,115 2,458 7,873 14,917

The average credit period on purchases is 30 days. No interest is charged on trade payables.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Current

Employee benefits 18 2,270 2,546 1,494 2,482

Provision for redundancies and transformation costs 14(a) - 264 - 264

Provision for Townsville fraud 14(b) 105 163 105 163

Provision for claims 14(c) 2,509 500 622 500

Property provision 14(d) - 659 - -

Total current provisions 4,884 4,132 2,221 3,409

(b) Non-current

Employee benefits 18 1,507 1,464 1,456 1,464

Property provision 14(d) 73 - - -

Exit of businesses 14(e) 44 35 44 35

Lease incentive 802 969 803 969

Total non-current provisions 2,426 2,468 2,303 2,468

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14. Reconciliation of provisions (current and non-current)

Reconciliations for the carrying amount of each class of provision, except for employee benefits and lease incentive, are set out below:


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Provision for redundancies and transformation costs (current)

Balance at 1 March 2011 264 2,542 264 2,542

Provision during the year - 100 - 100

Payments made during the year (264) (2,378) (264) (2,378)

Balance at 29 February 2012 - 264 - 264

The provision for redundancies and transformation costs represents the cost of redundancies made during the 2011 financial year and the costs of remediating a number of prior period issues in the Company's common funds and businesses that the Company has sold.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(b) Provision for Townsville fraud (current)

Balance at 1 March 2011 163 447 163 447

Reversal during the year - (160) - (160)

Transfer from trade and other payables - 1,552 - 1,552

Reclassification to receivables - - - -

Payments made during the year (58) (1,676) (58) (1,676)

Balance at 29 February 2012 105 163 105 163

For further details, refer to Note 22(b)

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14. Reconciliation of provisions (current and non-current) (cont’d)


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(c) Provision for claims (current)

Balance at 1 March 2011 500 800 500 800

Opening balance of subsidiary on acquisition 2,050 - - -

(Release)/provisionduringtheyear 410 (300) 154 (300)

Payments made during the year (451) - (32) -

Balance at 29 February 2012 2,509 500 622 500

The provision for claims represents the estimated cost of claims from the Company's clients and warranty claims relating to the purchase of The New Zealand Guardian Trust Company Limited.

(d) Property provision (current)

Balance at 1 March 2011 659 659 - -

Release during the year (110) - - -

Payments made durng the year (549) - - -

Unwinding of discount - - - -

Balance at 29 February 2012 - 659 - -

Property provision (non-current)

Balance at 1 March 2011 - - - -

Provision during the year 73 - - -

Unwinding of discount - - - -

Balance at 29 February 2012 73 - - -

The provision for property represents the estimated make good cost arising from cessation of the operating lease in respect of the Group's Sydney premises.

(e) Exit of businesses (non-current)

Balance at 1 March 2011 35 27 35 27

Provision during the year 9 8 9 8

Balance at 29 February 2012 44 35 44 35

The provision for exit of businesses represents the estimated costs arising from the exit of the Melbourne leased premises.For

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15. Derivative financial instruments

16. Tax liabilities

17. Borrowings

18. Employee benefits

The aggregate employee benefits liability recognised and included in the financial statements is as follows:

19. Issued capital


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Current

Forward currency contracts - cash flow hedges - 487 - 487

Total derivative financial instruments - 487 - 487


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Current

Income tax payable 638 1,531 676 1,531

Total current tax liabilities 638 1,531 676 1,531


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Non-current

Loan facility (i) 8,385 - 8,385 -

Total borrowings 8,385 - 8,385 -

(i) On 15 June 2011, a three year loan facility was entered into with a limit of $15 million. On 30 June 2011, $12.5 million was drawn down. $4 million was repaid on 28 December 2011. The weighted average interest rate for the year ending 29 February 2012 is 6.94%.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

33,322,527 fully paid ordinary shares (2011: 32,362,335 shares) 107,688 104,184 107,688 104,184

Nil treasury shares (2011: 49,180 shares) - (1,501) - (1,501)

Issued capital 107,688 102,683 107,688 102,683

Fully paid ordinary shares carry one vote per share and carry the right to dividends.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Provision for employee benefit

Current 13(a) 2,270 2,546 1,494 2,482

Non-current 13(b) 1,507 1,464 1,456 1,464

Total employee benefits 3,777 4,010 2,950 3,946

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19. Issued capital (cont’d)

20. Earnings per share

Parent Entity

2012 2011

'000 '000

Movement in issued capital

Ordinary shares at 1 March 2011 32,362 32,362

Issue of shares under employee share plan 42 -

Issue of shares under dividend reinvestment and share purchase plans

918 -

Ordinary shares at 29 February 2012 33,322 32,362

Treasury shares at 1 March 2011 49 88

Allocation of shares (49) (39)

Treasury shares at 29 February 2012 - 49

The Company reopened its Dividend Reinvestment Plan and introduced a Share Purchase Plan effective from 18 October 2011.

Consolidated

2012 2011

cents per cents per

share share

Basic earnings per share 38.7 35.0

Diluted earnings per share 38.5 34.6

Consolidated

2012 2011

$'000 $'000

Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

Earnings 12,600 11,286

2012 2011

No. No.

Weighted average number of ordinary shares used in the calculation of basic earnings per share 32,584,153 32,287,770

2012 2011

No. No.

Weighted average number of ordinary shares 32,584,153 32,287,770

Weighted average number of ordinary shares deemed to be issued at no consideration in respect of performance rights

178,797 345,954

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 32,762,950 32,633,724

Consolidated

2012 2011

$'000 $'000

Diluted earnings per share

The earnings and weighted average number of ordinary and potential ordinary shares used in the calculation of diluted earnings per share are as follows:

Earnings 12,600 11,286For

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21. Commitments of expenditure

Commitments payable under non-cancellable operating rental leases

22. Contingent liabilities and contingent assets


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Not later than 1 year 3,644 2,195 679 817

Later than 1 year but not later than 5 years 13,379 8,357 2,792 2,816

5 years plus 8,586 9,855 - 654

Total commitments 25,609 20,407 3,471 4,287

Commitments payable relate to the lease of office space (at 20 Bond Street, Sydney; 530 Collins Street, Melbourne and 16 Collyer Quay, Singapore), data network agreements and plant and equipment leases.

The lease of office space at 20 Bond Street, Sydney has a lease term of ten years expiring in April 2021. The lease of office space at 530 Collins Street, Melbourne has a lease term of ten years expiring in January 2017. The lease of office space at 16 Collyer Quay, Singapore has a lease term of three years expiring in June 2013.


2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Contingent liabilities

Bank guarantee and performance bonds in favour of the Australian Securities and Investments Commission in relation to AFS licences

70 1,020 20 1,020

Undertaking supporting the AFS licence requirements for subsidiaries

35,000 35,000 35,000 35,000

Bank guarantee in favour of the ASX Settlement and Transfer Corporation Pty Limited with respect to trading activities

1,000 1,000 1,000 1,000

Bank guarantee in favour of Australian Prudential Regulation Authority in relation to the provision of superannuation services

5,000 5,000 - -

Bank guarantee issued in respect of the lease of premises at 20 Bond Street, Sydney

1,356 1,356 - -

Total contingent liabilities 42,426 43,376 36,020 37,020

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22. Contingent liabilities and contingent assets (cont’d)The Group, given the nature of its business, can receive claims for breach of duty from time to time. Where necessary, the Group has provided for potential litigation claims. The Group is not currently engaged in any litigation or claim in its personal capacity which is likely to have a materially adverse effect on the business, financial condition or operating results of the Group which has not been provided for in the financial statements. Where some loss in the Group’s personal capacity is probable and can be reliably estimated an appropriate provision has been made of the likely amount of each claim on an individual basis. The amount provided for each claim is reviewed by management regularly. Sufficient professional indemnity insurance cover is held to meet any potential liabilities that may arise.

The Group has provided indemnities to a number of related parties in respect of mortgage funds that it managed in New Zealand. All of the mortgage indemnities have back to back arrangements in place under which the Group is to recover certain losses from Suncorp Mortgage Company NZ Limited. The Group has entered into an agreement with Suncorp Group New Zealand Limited whereby the Group is indemnified in respect of certain client provisions.

As a consequence of the purchase of The New Zealand Guardian Trust Company Limited there are outstanding claims and circumstances which have not already been provided for which liability may arise with respect to controlled entities. The potential liability in respect of such matters is not capable of being quantified at 29 February 2012. In respect of these matters, the Group is investigating its contractual rights of recovery for any potential liability that may arise.

(b) Townsville fraud

In November 2008, the Company initiated a full review of all client accounts managed by its Townsville office following the discovery of a number of irregularities in that branch office. Independent forensic accountants were subsequently appointed to investigate these irregularities on the Company’s behalf and were able to determine that a fraud had occurred.

On 2 September 2010, a former employee of the Company, Gary Wilkins, appeared in the District Court at Townsville for sentencing on fraud charges. Wilkins pleaded guilty and was sentenced to a period of imprisonment, with a non parole period, until 2 January 2014. The charge against Wilkins was one count of dishonestly applying funds as an employee between 1987 and 2008. Like all major financial institutions, the Company carries insurance for these types of circumstances. On 2 April 2009, the Company lodged a formal proof of loss claim with its insurer. The insurer accepted indemnity for the claim and made progress payments of $5.1M in June 2009, $1.2M in August 2009, $1.2M in May 2010 and in October 2011 a final payment of $2M to settle the claim.

(c) Contingent assets

The Group has an admitted claim against FAI General Insurance Company Limited (in liquidation) of $17M. To date, 51.1 cents in the dollar ($8.69M of the admitted $17M) has been received in cash in financial years 2007, 2008, 2010, 2011 and 2012.

The scheme administrator has indicated that the estimate of total percentage payout is currently between 50 and 60 cents in the dollar but has not provided guidance as to timing of the payments.

The Trust Company has not recognised any receivable in the financial statements due to the uncertainty of timing and quantum of amounts to be received.

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24. Key management personnel compensation

Details of the key management personnel (KMP) remuneration, interests in long term incentive plans, shares, options and loans are included in the Remuneration Report within the Directors’ Report. Additional remuneration disclosures are provided in the Remuneration Report within the Directors’ Report on pages 9 to 22 and are designated as audited.

The aggregate compensation of the key management personnel of the consolidated entity and the Parent Entity is set out below:


2012 2011 2012 2011

$ $ $ $

Short-term employment benefits 3,244,999 2,421,437 3,244,999 2,421,437

Post employment benefits 193,622 217,462 193,622 217,462

Termination payments - 170,000 - 170,000

Share-based payments 607,088 655,915 607,088 655,915

4,045,709 3,464,814 4,045,709 3,464,814

23. Remuneration of auditorsConsolidated Parent Entity

2012 2011 2012 2011

$ $ $ $

Total remuneration paid or payable to the auditors, Deloitte Touche Tohmatsu, of the parent entity and its controlled entities is as follows:

Auditing the financial report 533,400 492,647 350,900 480,447

Audit of The New Zealand Guardian Trust Company 145,250 - - -

Taxation 35,000 103,392 35,000 103,392

Other services 8,000 28,730 8,000 28,730

Total charged to Statement of Comprehensive Income 721,650 624,769 393,900 612,569

Audit of Trust Schemes and Funds 558,350 654,401 - -

Total fees paid 1,280,000 1,279,170 393,900 612,569

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25. Incentive plans

(a) Long Term Incentive planThe Group’s Long Term Incentive (LTI) plan seeks to reward Executives for creating strong shareholder value over the medium and longer term relative to the general share market. It is only when shareholders benefit from above average returns that executives benefit from this plan.

The first LTI Plan commenced in February 2001. The current LTI plan is a Performance Rights plan, offered to KMP and other Executives. The LTI plan seeks to align rewards for key staff with shareholders’ interest and it rewards high performance and improvements to support business plans and corporate strategies.

Performance rights are granted to Executives which, subject to vesting conditions, entitle the Executive to shares. Eligibility is determined at the beginning of the Group’s financial year, based on role importance and individual performance. The quantum or dollar amount of the LTI is set each year at the beginning of the Group’s financial year. The CEO nominates the participants of the LTI plan to the People and Remuneration Committee, who approve the participants.

The performance period for the LTI plan is three consecutive financial years. The performance hurdles are as follows:

• TotalShareholderReturn(TSR)ofTheTrustCompanycomparedtotheTSRofthecomparatorgroupcompanies,comprisingtheconstituentcompaniesoftheS&P/ASX200index,and;

• completionofcontinuousemploymentservicewiththeGroup,commencingonthefirstdayoftheperiodandending on the last day of the vesting period.

TSR is the total returns on investment a shareholder receives over a specified period of time, including dividends and share price movements. The group of constituent companies in the comparator group is defined at the commencement of the LTI Performance Period.

The table below outlines the performance thresholds of TSR used in the LTI plan:

Ranking of The Trust Company's TSR against TSR of comparator group

Proportion of Performance Rights vesting

Lower than 55th percentile Nil

At 55th percentile 10%

Higher than 55th percentile but lower than 75th percentile Proportion of TSR grant vesting increases in a straight line between 10% and 100%

75th percentile or higher 100%

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25. Incentive plans (cont’d)

(a) Long Term Incentive plan (cont’d)

A performance right represents a right to acquire a fully paid ordinary share in The Trust Company at the end of the vesting period. Performance rights may only vest if performance hurdles and employment tenure conditions are satisfied in the vesting period. The number of performance rights is determined by dividing the LTI plan dollar amount by the volume weighted average price (VWAP) of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceeding the performance period, less the final dividend for that year.

The award of performance rights is divided into three equal tranches over a three year period, commencing from the end of the performance period. The first tranche of performance rights vests at the end of the three year performance period. The second tranche vests in the following year, and the third tranche vests in the year thereafter.

The participant is not entitled to shares in The Trust Company before the performance rights vest. The participant therefore cannot use the rights to vote or receive dividends. Once the performance rights vest, shares of The Trust Company will be transferred to the participant. Once vested, the performance rights do not expire.

Under amendments made to the plan in 2009, participants are not permitted to hedge their exposure to movements in The Trust Company’s share price.

Details of share performance rights for all employees under the LTI plan are as follows:

Grant Date Performance Period Vesting date (iv) VWAP (i)

No. of performance

rights (i)

Weighted average fair

value at grant date

30 June 2008 (ii) 1 March 2008 to 28 February 2011


$9.55 56,522 $4.33

23 July 2008 (iii) 1 March 2008 to 28 February 2011


$9.55 38,728 $6.86

16 January 2010 1 March 2009 to 29 February 2012


$4.94 259,322 $3.31

22 July 2010 1 March 2010 to 28 February 2013


$6.00 269,947 $2.84



$6.33 344,608 $2.34

(i) The quantum or dollar amount of the LTI is set each year at the beginning of the Group’s financial year. The number of performance rights is determined by dividing the set dollar amount by the VWAP of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceding the performance period.

(ii) For staff other than key management personnel.

(iii) For key management personnel.

(iv) Subject to vesting of the performance rights, shares awarded under the LTI plan carry a seven year trading restriction, commencing from the date performance rights were granted to the participant.

Details of movements in the number of performance rights outstanding are as follows:

2012 2011

No. No.

Balance at the beginning of the year 443,357 340,564


Vested during the financial year - (2,093)


Balance at the end of the financial year 668,527 443,357

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(b) Short Term Incentive plan

The Group’s Short Term Incentive (STI) plan is a performance-based plan designed as an incentive to participants, dependent on their role in the organisation to create new business or strengthen or improve the business. The STI plan is part of the overall remuneration strategy of The Trust Company to strengthen the alignment between employee and shareholder interests through ensuring a greater proportion of performance payments are made in shares and less in cash.

Eligibility is determined at the beginning of the Group’s financial year, based on role importance and individual performance. To encourage and reward high performance in achieving objectives aligned to the Group’s strategic plan, commencing the beginning of the Group’s financial year, all permanent employees are invited to participate in the STI plan. The quantum is a dollar amount target that is specified for each participant and is measured against performance hurdles, with a minimum threshold necessary to qualify for an award and a maximum upper limit applicable where targets have been exceeded.

Performance hurdles

The participant in the STI plan is measured against financial and non-financial targets. Depending on a participant’s role in the organisation, the financial target of the potential STI is dependent on the Group’s overall performance, and the non-financial target is dependent on strategic objectives linked to the Group’s strategic plan. The Group’s financial performance hurdles are based on targeted earnings before interest, tax, depreciation and amortisation. Individual performance hurdles are specific to the participant’s function or business unit and are weighted according to the participant’s role in the Group.

For this reporting period, participants could elect whether to receive:

• 100%oftheirSTIinperformancerights;or

• 50%oftheirSTIincashand50%inperformancerights.

A performance right represents a right to acquire a fully paid ordinary share in The Trust Company at the end of the vesting period. Performance rights may only vest if performance hurdles and employment tenure conditions are satisfied in the vesting period. The number of performance rights is determined by dividing the STI dollar amount by the VWAP of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year preceding the performance period, less the final dividend for that year.

The award of performance rights is divided into two equal tranches over a two year period, commencing from the end of the performance period. The first tranche of performance rights vests at the end of the performance period and the second tranche vests in the following year. Both tranches are conditional on the continued satisfactory performance of the participant and will not vest if the participant has exposed the Company to any unintended risks. Allocation of the award over a two year period helps to align short term objectives with longer term strategy and also serves as a retention incentive.

Details of share performance rights for all employees under the STI plan are as follows:

Grant Date Performance Period Vesting date (ii) VWAP (i)No. of performance

rights (i)

2012

19 December 2011 1 March 2011 to 29 February 2013 May 2012, May 2013 $6.33 378,147

2011

23 August 2010 1 March 2010 to 29 February 2012 May 2011, May 2012 $6.00 274,498

(i) The dollar amount of the STI is set each year at the beginning of the Group’s financial year. The number of performance rights is determined by dividing the dollar amount of the STI by the VWAP of The Trust Company’s shares traded on ASX during the first five trading days immediately following the day on which The Trust Company announces its results for the financial year proceeding the performance period, less the final dividend for that year. Expenses for the STI are recognised based on the dollar amount set.

(ii) Subject to vesting of the performance rights, shares awarded under the STI plan carry a seven year trading restriction, commencing from the date on which performance rights were granted to the participant.

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(b) Short Term Incentive plan (cont’d)

Details of movements in the number of performance rights outstanding are as follows:

2012 2011

No. No.

Balance at the beginning of the year - -


Awarded during the financial year (167,192) (206,388)


Balance at the end of the financial year - -

A portion of the performance rights which have been awarded during the financial year will vest in subsequent financial years, as discussed above.

The amount expensed to the Statement of Comprehensive Income with respect to incentives for Key Management Personnel during the financial year have been included in the Directors’ Report - Remuneration Report.

(c) Other

CPU Share Plans Pty Ltd (formerly Trust Company Share Plan Pty Limited) acquires The Trust Company shares, from time to time, from the market in the period at the prevailing market price. These shares are held until allocation to participants and this has been recognised in the Statement of Financial Position under Treasury Shares.

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26. Related party disclosures

(a) Equity interests in related parties

Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 28 to the financial statements.

(b) Key management personnel compensation

Details of key management personnel compensation are disclosed in the Remuneration Report within the Directors’ Report and Note 24 to the financial statements.

(c) Loans to key management personnel

No amounts were owed to the Group by key management personnel for the financial years ended 29 February 2012 or 28 February 2011.

(d) Key management personnel equity holdings

During the financial year ended 29 February 2012, the following share movements in the Company were transacted by key management personnel in fully paid ordinary shares.

Balance at the beginning of the

financial yearNo.

Net purchases/(sales)

No.

Balance at theend of the

financial yearNo.

2012


Bruce Corlett 203,875 15,000 218,875

Roger Davis 2,500 5,500 8,000

James King 10,000 2,995 12,995

John Macarthur-Stanham 809,415 11,980 821,395

Warren McLeland 16,520 2,995 19,515

Josephine Sukkar - 4,700 4,700

Executive Director

John Atkin 20,907 38,498 59,405

Other key management personnel

David Grbin - 2,093 2,093

Simon Lewis 3,843 8,575 12,418

Andrea Free - 3,615 3,615

Sally Ascroft 1,594 1,594 3,188

Myles Orsler (Appointed 1 March 2011) - - -

Cathryn Stephenson (Appointed 7 March 2011) - - -

John Botica (Appointed 15 March 2011) - - -

Raymond Gould (Appointed 18 April 2011) - - -

No shares were granted as compensation or options to non-executive directors during the financial year ended 29 February 2012. All acquisitions and disposals of shares in the Company, made by the directors or their related parties, were conducted at arm’s length.

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26. Related party disclosures (cont’d)

(d) Key management personnel equity holdings (cont’d)

During the financial year ended 28 February 2011, the following share movements in the Company were transacted by key management personnel in fully paid ordinary shares.

Balance at the beginning of the

financial yearNo.

Net purchases/(sales)

No.

Balance at theend of the

financial yearNo.

2011


Bruce Corlett 203,875 - 203,875

John Macarthur-Stanham 809,415 - 809,415

Warren McLeland 16,520 - 16,520

Roger Davis 2,500 - 2,500

James King 5,000 5,000 10,000

Josephine Sukkar - - -

Executive Director

John Atkin - 20,907 20,907


Vicki Allen - - -

David Grbin - - -

Simon Lewis 86 3,757 3,843

Andrea Free - - -

Sally Ascroft - 1,594 1,594

No shares were granted as compensation or options to non-executive directors during the financial year ended 28 February 2011. All acquisitions and disposals of shares in the Company, made by the directors or their related parties, were conducted at arm’s length.

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(e) Key management personnel equity rights holdings arising from incentive plans


Balance at 1 March

2011 No.

Equity rights

granted as compensa-

tion No.

Equity rights

awarded No.

Equity rights

forfeited No.

Balance at 29

February 2012

No.

Balance vested during

the year No.

2012

Executive Director

John Atkin 138,396 120,611 (34,827) (6,781) 217,399 38,498


David Grbin 56,358 35,425 (7,565) (841) 83,377 2,093

Simon Lewis 20,385 19,308 (3,821) (1,109) 34,763 8,575

Andrea Free 23,963 20,979 (4,319) (1,038) 39,585 3,615

Sally Ascroft 16,684 22,307 - (5,695) 33,296 1,594

Myles Orsler (Appointed 1 March 2011) - 10,231 - (2,923) 7,308 -

Cathryn Stephenson (Appointed 7 March 2011)

- 19,202 (4,412) (490) 14,300 -

John Botica (Appointed 15 March 2011) - 15,332 (2,157) (626) 12,549 -

Raymond Gould (Appointed 18 April 2011) - 19,751 (3,521) (1,022) 15,208 -

The performance rights awarded during the financial year will have shares vest in subsequent financial years.

Balance at 1 March

2010 No.

Equity rights

granted as compensa-

tion No.

Equity rights

awarded No.

Equity rights

forfeited No.

Balance at 28

February 2011 No.

Balance vested during

the year No.

2011

Executive Director

John Atkin 75,911 104,142 (35,183) (6,474) 138,396 20,907


Vicki Allen 49,032 54,587 - (103,619) - -

David Grbin 41,877 36,392 (9,835) (12,076) 56,358 2,093

Simon Lewis 12,033 23,286 (9,634) (5,300) 20,385 3,758

Andrea Free 11,133 18,329 (4,929) (570) 23,963 -

Sally Ascroft - 23,834 (6,409) (741) 16,684 1,594

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(f) Transactions within the wholly-owned group

The wholly-owned group includes the Company and its wholly-owned controlled entities as shown in Note 28 to the financial statements.

The aggregate amount of investments held by the Company in entities within the wholly-owned group are disclosed at Note 7 and Note 28 to the financial statements.

Details of amounts receivable and payable between members of the wholly-owned group are disclosed at Notes 6(a) and 12 to the financial statements. Amounts payable to, or receivable from controlled entities are recorded at an amount equal to the net amounts payable or receivable. Interest is neither accrued nor charged.

Details of revenue and expense during the financial year where these are between companies in the wholly-owned group are disclosed in Note 2 to the financial statements and in this note as above.

(g) Other transactions with key management personnel

In the ordinary course of business, key management personnel may have small APRA superannuation funds where the Company, through its 100% owned subsidiary The Trust Company (Superannuation) Limited, is the trustee of the superannuation fund.

In addition, The Trust Company (Superannuation) Limited is trustee for First Super, the default superannuation fund for employees of The Trust Company Limited. Most key management personnel of the Group are members of the default superannuation fund.

During the year, key management personnel and their personally related entities have entered into transactions with the Group. All such transactions have occured within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those that it is reasonable to expect The Trust Company would have adopted if dealing at arm’s length with an unrelated individual. These transactions include:

• Normalpersonalestateadministrationservices

• TheparticipationinTheTrustCompanyinvestmentproducts

• Financialinvestmentservices

• Communityandphilanthropicservices.

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(h) Holding of units in schemes where The Trust Company Limited is the responsible entity

The Company is the responsible entity of various managed funds. Directors’ holdings in these managed funds during the financial year ended 29 February 2012 are:

Balance at beginning of

financial year

Net applications/

(redemptions)

Balance at end of financial year

No. No. No.

2012

John Macarthur-Stanham 1,046,468 (295,766) 750,702

Transactions with related parties have taken place at arm’s length and in the ordinary course of business.

The Company is the responsible entity of various managed funds. Directors’ holdings in these managed funds during the financial year ended 28 February 2011 are:

Balance at beginning of

financial year

Net applications/

(redemptions)

Balance at end of financial year

No. No. No.

2011

John Macarthur-Stanham 980,895 65,573 1,046,468

Transactions with related parties have taken place at arm’s length and in the ordinary course of business.

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27. Segment reporting

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The accounting policies of the reportable segments are the same as the Group’s accounting policies.

Product and services from which reportable segments derive their revenues

Corporate Client Services

Corporate Client Services in Australia and Singapore include Responsible Entity, Property and Infrastructure Custody, Superannuation Compliance and Trustee, Structured Finance Trustee and REIT Trustee services. In New Zealand we offer trustee services for Debt Securities, Securitisation, Unit Trusts, Superannuation and KiwiSaver.

Personal Client Services

Across the Group we provide wide-ranging advice and expertise in Personal Client Services including Estate Planning and Administration, Lifestyle and Executor Assist, Financial Planning, Personal Trusts, Charitable Trusts, Wealth Management and Health and Personal Injury services.

The following is an analysis of the Group’s revenue and profit by reportable segment:

Segment revenue Segment profit

2012 2011 2012 2011

$'000 $'000 $'000 $'000

Corporate Client Services 32,344 24,038 14,201 9,623

Personal Client Services 49,657 32,235 8,524 9,862

Unallocated fee and commission income 843 800 - -

Total 82,844 57,073 22,725 19,485

Unallocated executive and legal expenses (4,262) (3,321)

Dividend income 1,075 1,313

NetInterestincome/(expense) (120) 1,899

Depreciation and amortisation expense (2,604) (1,091)

Impairment of fixed assets - (461)

Claim recoveries 1,008 841

Acquisition costs - (1,500)

Profit before tax 17,822 17,165

Income tax expense (5,222) (5,879)

Profit after tax 12,600 11,286

The revenue and results for the year ended 29 February 2012 consist of the Company and its controlled entities as outlined in Note 28 to the financial statements.

The revenue reported above represents revenue generated from external customers. There were no intersegment sales during the period.

Segment profit represents profit earned by each segment without allocation of executive and legal expenses, dividend income, interest income, depreciation and amortisation expense, impairment of fixed assets, claim recoveries, acquisition costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

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27. Segment reporting (cont’d)

The following is an analysis of the Group’s revenue from its major products and services:

Revenue from external customers Non-current assets

2012 2011 2012 2011

$'000 $'000 $'000 $'000

Australia 54,898 57,073 68,291 70,009

New Zealand 27,946 - 38,391 -

82,844 57,073 106,682 70,009

Non-current assets exclude financial instruments, deferred tax assets and post employment benefit assets.

2012 2011

$’000 $’000

Revenue by product and service

Funds management 15,546 16,407

Custody 15,323 12,672

Supervision of funds 17,022 11,366

Fee for other fiduciary services 34,953 16,628

Total revenue 82,844 57,073

No single customer accounts for 10% or more of the Group’s revenue.

Geographical information

The Company and its controlled entities operate in two principal geographical areas - Australia and New Zealand. The Singapore operation is not material.

The Group’s revenue from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

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28. Details of controlled entities

Ownership interest

Note Country of

incorporation 2012

% 2011

%

Parent entity

The Trust Company Limited (a) Australia

Controlled entities

Banano Pty Limited (b) Australia 100 100

GPTA-750 Collins Street Pty Ltd (b) Australia 100 100

Henty Real Estate (NSW) Pty Limited Australia 100 100

Henty Real Estate (Qld) Pty Limited Australia 100 100

The New Zealand Guardian Trust Company Limited New Zealand 100 -

NZGT Holding Company Limited New Zealand 100 100

PRE Services Limited (b) Australia 100 100

Real Estate Capital Partners Managed Investments Limited (b) Australia 100 100

The Trust Company (Asia Holdings) Pty. Ltd. Singapore 100 100

TCL Legal Services (Vic) Pty Limited Australia 100 100

The Trust Company (Asia) Limited Singapore 100 100

The Trust Company (Australia) Limited Australia 100 100

The Trust Company (FCNL) Pty Limited Australia 100 100

Trust Company (Hong Kong) Limited Hong Kong 100 100

The Trust Company (Legal Services) Pty Limited Australia 100 100

The Trust Company (Nominees) Limited Australia 100 100

The Trust Company (PTAL) Limited Australia 100 100

The Trust Company (PTCCL) Limited Australia 100 100

The Trust Company (Real Estate) Pty Limited Australia 100 100

The Trust Company (RE Services) Limited Australia 100 100

The Trust Company (Superannuation) Limited Australia 100 100

The Trust Company (UTCCL) Limited Australia 100 100

Trust Company Responsible Entity Services Limited Australia 100 100

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28. Details of controlled entities (cont’d)

Ownership interest

Note Country of

incorporation 2012

% 2011

%

Controlled entities (cont’d)

The New Zealand Guardian Trust Limited wholly owned subsidiaries:

AMP KiwiSaver Scheme Nominees Limited New Zealand 100 -

BNZ Investment Services Nominees Limited New Zealand 100 -

BTNZ Kiwisaver Nominees Limited New Zealand 100 -

BTNZ Unit Trusts Nominees Limited New Zealand 100 -

Cash Unit Trust Nominees Limited New Zealand 100 -

Customhouse Nominees Limited New Zealand 100 -

Customhouse Nominees No. 2 Limited New Zealand 100 -

Diversified Nominees Limited New Zealand 100 -

Foundation Nominees Limited New Zealand 100 -

Fund Nominees Limited New Zealand 100 -

GT Nominees Limited New Zealand 100 -

Guardian Nominees Limited New Zealand 100 -

Guardian Nominees No. 2 Limited New Zealand 100 -

Guardian Trust Fidelity Nominees Limited New Zealand 100 -

Guardian Trust Fund Nominees Limited New Zealand 100 -

Guardian Trust Nominees Limited New Zealand 100 -

Home Loan Nominees Limited New Zealand 100 -

Home Mortgage Nominees Limited New Zealand 100 -

Argosy Property Nominees Limited New Zealand 100 -

Investment Suite Nominees Limited New Zealand 100 -

Heartland PIE Nominees Limited New Zealand 100 -

NZGT LIC Nominees Limited New Zealand 100 -

NZGT Nominees Limited New Zealand 100 -

NZGT Trust Management Limited New Zealand 100 -

Pageant Limited New Zealand 100 -

PMIT Nominees Limited New Zealand 100 -

Premier Nominees Limited New Zealand 100 -

Private Portfolio Service Nominees Limited New Zealand 100 -

Propertyfinance Funding Nominees Limited New Zealand 100 -

TIM Nominees Limited New Zealand 100 -

TSB PIE Limited New Zealand 100 -

WINZ Nominees Limited New Zealand 100 -

Guardian Trust Investment Nominees (RWT) Limited New Zealand 100 -

Guardian Trust Investment Nominees Limited New Zealand 100 -

NZGT (Aurora) Security Trustee Limited New Zealand 100 -

NZGT (FP) Trustee Limited New Zealand 100 -

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28. Details of controlled entities (cont’d)

Ownership interest

Note Country of

incorporation 2012

% 2011

%

Controlled entities (cont’d)

The New Zealand Guardian Trust Limited wholly owned subsidiaries (cont’d):

NZGT (GMT) Security Trustee Limited New Zealand 100 -

NZGT (Highbrook) Security Trustee Limited New Zealand 100 -

NZGT (KB) Security Trustee Limited New Zealand 100 -

NZGT (Kingfisher) Security Trustee Limited New Zealand 100 -

NZGT (Montebello) Security Trustee Limited New Zealand 100 -

NZGT (NZ Finance) Security Trustee Limited New Zealand 100 -

NZGT (NZF) Servicer Nominees Limited New Zealand 100 -

NZGT (PFS) Security Trustee Limited New Zealand 100 -

NZGT (Portfolio Group) Security Trustee Limited New Zealand 100 -

NZGT (PSIS) Security Trustee Limited New Zealand 100 -

NZGT (Rembrandt) Security Trustee Limited New Zealand 100 -

NZGT (RFS) Security Trustee Limited New Zealand 100 -

NZGT (Scottish Pacific) Security Trustee Limited New Zealand 100 -

NZGT Security Trustee Limited New Zealand 100 -

NZGT (Te Rau Aroha Security Trustee) Limited New Zealand 100 -

NZGT (WNZ) Security Trustee Limited New Zealand 100 -

NZGT (WNZCB) Security Trustee Limited New Zealand 100 -

NZGT (YPG) Directors LTI Nominee Limited New Zealand 100 -

NZGT (YPG) Equity Nominee Limited New Zealand 100 -

NZGT (YPG) Management LTI Nominee Limited New Zealand 100 -

Guardian Trust Registry Services Limited New Zealand 100 -

Guardian Trust Superannuation Trustees Limited New Zealand 100 -

NZ International Trustee Company Limited New Zealand 100 -

NZGT Financial Services Limited New Zealand 100 -

NZGT Superannuation Trustees Limited New Zealand 100 -

The New Zealand Guardian Trust Funds Management Limited New Zealand 100 -

Notes

(a) The parent entity is a body corporate, incorporated and operating in Australia.

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29. Notes to the Cash Flow Statement Consolidated Parent Entity

2012 2011 2012 2011

$'000 $'000 $'000 $'000

(a) Reconciliation of profit after income tax expense to net cash provided by operating activities:

Net profit after income tax expense 12,600 11,286 16,623 29,381

Depreciation, amortisation and impairment 2,604 1,550 954 1,424

Share-based payments 262 1,231 262 1,231

Dividend income (1,075) (1,313) (18,000) (30,771)

Interest income (1,012) (1,899) (1,328) (222)

Changes in net assets and liabilities:

Decrease/(increase) in assets:

Current receivables (193) 3,414 3,492 3,660

Non-current receivables (448) 200 2,402 100

Deferred tax assets 243 676 314 528

Increase/(decrease) in liabilities:

Current payables 1,721 (2,385) (7,796) (3,078)

Current provisions (2,429) (2,023) (1,187) (2,706)

Current tax liabilities 395 1,144 (855) 1,144

Non-current provisions (92) (544) (165) 115

Net cash provided by / (used in) operating activities 12,576 11,337 (5,284) 806

(b) Stand-by credit arrangements

Amount of credit facility available and unused 6,500 15,000 6,500 15,000

6,500 15,000 6,500 15,000

(c) Reconciliation of cash and cash equivalents

Cash and cash equivalents at the end of the financial year comprises:

Cash and cash equivalents at bank and on hand 17,656 37,685 5,419 22,279

Cash and cash equivalents at the end of the financial year 17,656 37,685 5,419 22,279

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30. Financial instruments

(a) Financial risk management objectives

The Group seeks to minimise the effects of financial risk relating to the operations of the Group. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

(c) Categories of financial instruments

(d) Foreign currency risk management

Effective from 1 March 2011, the Company gained control of 100% of the equity in The New Zealand Guardian Trust Company Limited, a New Zealand based trustee business, for consideration of NZ$42 million. Refer to Note 31 for further information regarding the purchase details.

The purchase consideration of NZ$42 million was split into two tranches of NZ$21 million. The first tranche was paid on 1 March 2011, with the second tranche paid on 30 June 2011.

Due to the purchase consideration being denominated in a foreign currency, the Group decided to enter into forwardforeignexchangecontractstolimititsexposuretoadversemovementsintheAUD/NZDforeignexchange rate.

The Group has designated these forward foreign exchange contracts as cash flow hedges and have calculated their fair value accordingly.

The following table details the forward foreign exchange contracts outstanding at the end of the financial year:


2012 2011 2012 2011

$'000 $'000 $'000 $'000

Financial assets

Loans and receivables (including cash and cash equivalents) 35,589 52,128 33,778 32,222

Financial assets at fair value 16,118 19,964 - -

Total 51,707 72,092 33,778 32,222

Financial liabilities

Trade and other payables (6,115) (2,458) (7,873) (14,917)

Borrowings (8,500) - (8,500) -

Derivative financial instruments - (487) - (487)

Total (14,615) (2,945) (16,373) (15,404)

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(e) Liquidity risk management

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows.

The liquidity and interest risk table on the next page summarises the liquidity of financial assets and liabilities.

(f) Interest rate risk exposures

The Group is exposed to interest rate risk through primary financial assets and liabilities.

Atthereportingdate,ifinterestrateshadbeen100basispointshigher/lowerthroughouttheyearandallothervariableswereheldconstant,theGroup’snetprofitbeforetaxwouldbeincreased/decreasedby$92,000(2011:increased/decreasedby$377,000)mainlyasaresultoftheinterestoncashbalances.

Atthereportingdate,ifinterestrateshadbeen100basispointshigher/lowerthroughouttheyearandallothervariableswereheldconstant,theCompany’snetprofitaftertaxwouldhaveincreased/decreasedby$182,000(2011:increased/decreasedby$223,000)mainlyasaresultoftheinterestoncashbalances.

The following table summarises interest rate risk for the Group, together with effective interest rates as at balance sheet date.

30. Financial instruments (cont’d)

(d) Foreign currency risk management (cont’d)

2012 2011 2012 2011 2012 2011

FX FX Foreign Foreign Notional Notional Fair Fair

Rate Rate Currency Currency Value Value Value Value

Outstanding contracts AUD NZD NZD'000 NZD'000 $’000 $’000 $’000 $’000

Cash flow hedges

Buy NZD

Maturity-01/03/2011 1 1.3316 - 21,000 - 15,771 - (248)

Maturity-30/06/2011 1 1.3239 - 21,000 - 15,862 - (239)

- (487)

The aggregate amount of losses under forward foreign exchange contracts deferred to the cash flow hedging reserve, which relate to the exposure on these anticipated future transactions, is $nil gross of tax at the end of the financial year (2011: $487,000).

No ineffectiveness has been recognised in the Statement of Comprehensive Income arising from hedging the interest rate exposure during the financial year.

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(f) Interest rate risk exposures (cont’d)

Consolidated

Liquidity and interest risk tables maturing in

Weighted average

effective interest rate

%

Less than 1 month

$’000

1-3 months

$’000

3 months to 1 year

$’000

1-5 years

$’000

5+ years

$’000 Total

$’000

2012

Financial assets

Non-interest bearing - 33,417 - - 634 - 34,051

Variable interest rate 3.2% 17,656 - - - - 17,656

51,073 - - 634 - 51,707


Non-interest bearing - 6,115 - - - - 6,115

Variable interest rate 6.94% - - - 8,500 - 8,500

6,115 - - 8,500 - 14,615

2011

Financial assets



Fixed interest rate 5.18% - - 210 - - 210

71,882 - 210 - - 72,092



2,945 - - - - 2,945

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(f) Interest rate risk exposures (cont’d)

Parent Entity

Liquidity and interest risk tables maturing in

Weighted average

effective interest rate

%

Less than 1 month

$000

1-3 months

$000

3 months to 1 year

$000

1-5 years $000

5+ years $000

Total $000

2012

Financial assets

Non-interest bearing - 6,526 - - 574 - 7,100

Variable interest rate 5.35% 5,419 - - - 21,259 26,678

11,945 - - 574 21,259 33,778



Variable interest rate 6.94% - - - 8,500 - 8,500

7,873 - - 8,500 - 16,373

2011

Financial assets



32,222 - - - - 32,222



15,404 - - - - 15,404

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(g) Credit risk exposures

Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Group. The Group, while exposed to credit related losses in the event of non-performance by counter-parties to financial instruments, does not expect any counter-parties to fail to meet their obligations. The majority of receivables are largely indemnified by the priority payment status given by most trust deeds to reimbursement oftrustee/custodianfeesandexpenses.

The carrying amount of financial assets recorded in the financial statements represents the maximum exposure to credit risk without taking account of the priority payment status given to the majority of receivables. Credit risk associated with trade receivables and other receivables is considered minimal.

As at 29 February 2012, there is no significant credit risk exposure to any single counter-party or any Group counterparties having similar characteristics.

The following table summarises the age of financial assets that are past due at reporting date.

(h) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. Legislative capital requirements are monitored on an ongoing basis to ensure that each of the companies in the Group complies.

The capital structure of the Group consists solely of equity attributable to equity holders of the parent entity, comprising issued capital, reserves and retained earnings. There is no interest bearing external debt.

(i) Fair value of financial assets and liabilities

The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

The fair values of financial assets and financial liabilities are determined as follows:

• Thefairvalueoffinancialassetsandfinancialliabilitieswithstandardtermsandconditionsandtradedonactive liquid markets are determined with reference to quoted market prices

• Wherethefairvalueisbelowcost,andtheinvestmentisdeterminedtobeimpaired,thediminutioninvalueisexpensed in the Statement of Comprehensive Income.

The table disclosed above in Note 30(f), sets out the carrying amounts of financial assets and liabilities.

(j) Market risk

The Group’s activities expose it primarily to the financial risks of changes in interest rates (refer Note 30(f)).

Consolidated

Greater than

30 days$’000

Greater than

60 days$’000

Greater than

90 days$’000

Total$’000

2012

Trade receivables 816 129 790 1,735

2011

Trade receivables 431 349 517 1,297

Only receivables greater than 90 days are impaired. The allowance for doubtful debts of $1,003,000 (2011: $232,000) forms part of the greater than 90 day balance, with the remainder determined as still collectable. The factors considered when determining impairment were the age and likelihood of collectability. Refer to Note 6(a).

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31. Business combinations

Subsidiaries acquired

Effective from 1 March 2011, the Company gained control of 100% of the equity in The New Zealand Guardian Trust Company Limited, a New Zealand based trustee business, for provisional consideration of NZ$42 million.

The New Zealand Guardian Trust Company Limited was acquired so as to continue the expansion of the Group’s regional business activities.

Although control to govern the financial and operating policies of The New Zealand Guardian Trust Company Limited was achieved on 1 March 2011, legal ownership of The New Zealand Guardian Trust Company Limited did not transfer to the Company until 14 March 2011. This was due to a delay in receiving regulatory approval for the acquisition by a local New Zealand authority.

Provisional consideration transferredNZD AUD

$'000 $'000

Cash 42,000 31,632

Total 42,000 31,632

Provisions of the Sale and Purchase Agreement, warranty claims and the provisional consideration is subject to variation arising from the final Completion Accounts based on discussions with the previous owner, Suncorp Group New Zealand Limited.

Any variation to the provisional consideration is too uncertain to quantity at the time of signing of the financial report. The Trust Company continues to manage post-acquisition contractual issues (including any resultant purchase price adjustment) in accordance with the share purchase agreement with the previous owner.

Acquisition-related costs amounting to $1.5 million have been excluded from the consideration transferred and have been recognised as an expense in the prior year, within the ‘Business acquisition costs’ line item in the Statement of Comprehensive Income.

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31. Business combinations (cont’d)

Provisional assets acquired and liabilities assumed at the date of acquisition

Further information on Intangible Assets - Professional Fiduciary Relationships acquired is included at Note 11.

Trade receivables acquired with a fair value of $3,907,000 had gross contractual amounts of $3,907,000. The best estimate at acquisition date of the contractual cash flows not expected to be collected is $nil.

The indemnities receivable and payable relate to indemnities provided to a number of related parties in respect of mortgage funds that The New Zealand Guardian Trust Company Limited managed. All of the mortgage indemnities have back-to-back arrangements in place under which The New Zealand Guardian Trust Company Limited is to recover certain losses from Suncorp Mortgage Company NZ Limited.

The contingent asset relates to an insurance proceeds amount that was expected to be received at the acquisition date.

The post-acquisition contractual issues (including any resultant purchase price adjustment) were not known at the acquisition date. Hence, no contingent assets or liabilities have been recognised as part of the acquisition accounting for these issues.

The initial accounting for the acquisition of The New Zealand Guardian Trust Company Limited has only been provisionally determined at the time the financial statements were authorised for issue.

NZD AUD

$'000 $'000

Current assets

Cash and cash equivalents 608 450

Trade and other receivables 5,281 3,907

Other current assets 148 109

Contingent assets 162 120

Non-current assets

Property, plant and equipment 961 711

Intangible assets - Professional Fiduciary Relationships 12,066 8,931

Indemnities receivable 8,520 6,303

Deferred tax assets 1,497 1,107

Current liabilities

Trade and other payables (3,407) (2,520)

Provisions (1,219) (902)

Non-current liabilities

Trade and other payables (100) (74)

Indemnities payable (8,520) (6,303)

Provisions (1,411) (1,044)

14,586 10,795

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31. Business combinations (cont’d)

Goodwill arising on acquisition

Goodwill arose on the acquisition of The New Zealand Guardian Trust Company Limited because the consideration paid for the combination effectively included amounts in relation to the benefit of expected revenue growth, synergies, future market development brought about by the Company and the know-how embedded in the assembled, skilled, professional and experienced workforce of The New Zealand Guardian Trust Company Limited.

None of the goodwill arising on the acquisition is expected to be deductible for tax purposes.

Net cash outflow on acquisition of subsidiary

Impact of the acquisition on the results of the Group

Included in the profit after tax for the year is $4,584,000 attributable to the additional business generated by The New Zealand Guardian Trust Company Limited. Revenue for the year includes $27,945,000 in respect of the acquired entity.

As the business combination was effected on 1 March 2011, there is no need to provide pro-forma numbers representing an approximate measure of the impact of the acquisition on the results of the Group on an annualised basis.

32. Subsequent events

A final dividend of 18 cents per share fully franked is expected to be declared on 17 April 2012 and to be paid on 24 May 2012.

There has not been any other matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Group.

NZD AUD

$'000 $'000

Consideration transferred 42,000 31,632

Less: fair value of identifiable net assets acquired (14,586) (10,794)

Goodwill arising on acquisition 27,414 20,838

NZD AUD

$'000 $'000

Consideration paid in cash 42,000 31,632

Less: cash and cash equivalent balances acquired (608) (450)

41,392 31,182

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direCTor’s deClaraTionfor the financial year ended 29 February 2012

The Directors declare that:

(a) In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;

(b) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; including compliance with accounting standards and give a true and fair view of the financial position and performance of the company and the consolidated entity

(c) In the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board

(d) The Directors have been given the declarations required by s.295A of the Corporations Act 2001.

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

On behalf of the Directors

Bruce Corlett AM John Atkin

Chairman Chief Executive Officer

Sydney, 17 April 2012 Sydney, 17 April 2012

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independenT audiTor’s reporTfor the financial year ended 29 February 2012

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CorporaTe GoVernanCeAnnual Report

The Trust Company is pleased to advise that its corporate governance practices are largely consistent with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Recommendations). Where its practices are not consistent with the Recommendations, we have identified where and why they are not consistent.

The Trust Company addresses each of the Recommendations below for the period from 1 March 2011. This corporate governance statement is current as at 17 April 2012.

A more detailed Corporate Governance Statement and additional corporate governance information, including copies of Board and Committee Charters, key policies and other relevant documentation are available on The Trust Company’s website at:

www.thetrustcompany.com.au/about_us/our_company/corporate_governance

Principle 1

Lay solid foundations for management and oversight

Role of Board and Management

The Trust Company in the Board Charter has established the functions reserved to the Board, the Chairman and the CEO. A copy of the Board Charter is available on The Trust Company website.

Evaluating the performance of the Executive Team

The Board evaluates the performance of the CEO against agreed plans and the key performance indicators that it sets at the beginning of each year. The CEO evaluates the performance of the other Executive Team members and makes his recommendations on their performance to the People and Remuneration Committee.

The performance of Executive Team members (and all The Trust Company employees) is evaluated on a six monthly basis against their key performance indicators that have been set at the start of the year. Key performance indicators cover both financial and non-financial aspects of each Executive Team member’s role. The key performance indicators are cascaded down from those set for the CEO.

The performance evaluation of the Executive Team has taken place in accordance with the above process.

Principle 2

Structure the board to add value

Independent Directors

The Trust Company Board consists of six independent Non-Executive Directors and one Executive Director. The names and details of the current Directors of The Trust Company, including attendance at Board and Committee meetings, are included in the Directors’ Report on page [xx].

The Board assesses director independence pursuant to the relationships that affect independent status as set out in the Recommendations, along with other matters that the Board considers relevant. In making the assessment of directors’ independence, materiality is assessed on a case by case basis having regard to the individual circumstances of each director.

The Board meets regularly and considers that the diversity, composition and mix of skills of directors is appropriate for the directors to understand The Trust Company’s business and to discharge their duties.

Chairman

The Chairman is selected by the Board and is an independent Non-Executive Director.

Selection and assessment of Directors

The Nomination Committee functions are carried out by the full Board of The Trust Company, given thesmallsizeofTheTrustCompanyand the Board itself. The Board makes an assessment in relation to the appointment of new directors and annually in relation to itself.

In accordance with The Trust Company’s constitution and the ASX Listing Rules a third of the Non-Executive Directors of The Trust Company stand for re-election at each Annual General Meeting (AGM).

New Directors are fully briefed on the terms and conditions of their appointment by the Chairman of The Trust Company, which is formalised in a letter of offer, and undertake an induction program to familiarise themselves with The Trust Company and its business operations.

Evaluating the performance of the Board, Committees and Directors

GiventhesizeoftheBoard,theChairman of The Trust Company is responsible for monitoring and providing feedback to individual directors. A confidential self assessment survey regarding the performance of the Board, committees and directors is undertaken annually and the Chairman discusses the results directly with each director and the Board collectively.

The Board’s, each committee’s and director’s performance was reviewed during the year in accordance with the process summarised above.

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Director access to independent professional advice

The Trust Company has entered into a Deed of Access, Indemnity and Insurance with each director entitling them to seek independent professional advice at The Trust Company’s expense with the prior approval of the Chairman. This advice is to be made available to all directors.

Principle 3

Promote ethical and responsible decision-making

The Trust Company has both an Ethical Framework and a Code of Conduct, copies of these documents are available on The Trust Company website.

Diversity Policy

The Trust Company’s Workplace Diversity Policy covers the following areas: women in the workforce, age, cultural background, disability and flexible working arrangements. It is approved by the Board and overseen by the People and Remuneration Committee.

The measurable objectives set by the Board for FY12 are:

• Percentageofwomeninseniormanagement positions to be a minimum of 35% by 2015

• AtleastonefemaleNon-Executive Director at all times.

A copy of the Workplace Diversity Policy is available on The Trust Company website.

The workforce of The Trust Company Group currently comprises a wide range of ages, cultural backgrounds and gender across all roles. As at 29 February 2012, women comprised 57.35% of the Group workforce. The Group is progressing towards achieving its objective of a minimum of 35% of women in senior management positions by 2015,

with the percentage of women in senior management positions comprising 31.03% as at 29 February 2012. As we work towards our objective we will continue our focus on our Talent Management program including succession planning, our Leadership program and strengthening our internal capabilities. For definition purposes, ‘women in senior management positions’ is inclusive of: Executive and Senior management roles as shown in the above table. (refer Chart 1)

With six Non-Executive Directors on the Board, the Group is currently meeting the objective of at least one female Non-Executive Director.

Principle 4

Safeguard integrity in financial reporting

The Trust Company has an Audit, Risk and Compliance Committee (ARCC). The Committee is comprised of four members with a majority of independent Non-Executive Directors. The Committee Members are Roger Davis (Chairman), Bruce Corlett and John Macarthur-Stanham and an independent Non-Executive Committee Member, John Richardson.

John Richardson, BEc, FCA, FCIS, is an independent accounting member of ARCC. Formerly a senior audit partner of KPMG Chartered Accountants, he retired

in 2001 after thirty years as a partner of that firm and now acts as an independent corporate adviser to a range of companies, both public and private, and provides expert advice on accounting and auditing issues.

The Committee has a charter, which sets out its role and responsibilities and a copy of this charter is available on The Trust Company website.

External auditor

The senior audit partner is rotated by agreement with the CEO and CFO at least once every five years and approved by the Board. For the 2009 financial report a new audit partner was appointed to the audit of The Trust Company Group in accordance with this agreement.

Principle 5

Make timely and balanced disclosure

The Trust Company has a continuous disclosure policy to ensure compliance with ASX and the Corporations Act continuous disclosure requirements. The policy requires timely disclosure of information to be reported to the Executive Team and CEO to ensure information that a reasonable person would expect to have a material effect on The Trust Company’s share price, or would influence an investment decision, is disclosed to the market.

Chart 1

The following table discloses the gender diversity of the Company as at 29 February 2012:

Category % Female % Male

Board 16.67% 83.33%

Executive roles 33.33% 66.67%

Senior management roles 30.00% 70.00%

Group workforce* 57.35% 42.65%

* Group workforce percentages in the above table represent all permanent employees in the Group.

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The CEO is the nominated continuous disclosure officer for The Trust Company and reports directly to the Board on disclosure matters and the Company Secretary is responsible for making disclosures to the ASX after appropriate Board consultation.

Principle 6

Respect the rights of shareholders

The Trust Company is committed to providing both shareholders and the market with timely information so that the market is sufficiently informed of The Trust Company’s business and operations.

In addition to The Trust Company’s continuous disclosure obligations, The Trust Company:

• Providesshareholderswith full copies of all ASX announcements and other press releases on its website immediately after being announced to the market

• RotatesthevenueoftheAnnualGeneral Meeting between Sydney, and Melbourne, where the majority of shareholders reside, to enable their attendance at meetings.

The Trust Company has an active program for effective communication with all of its shareholders, clients and other stakeholders. Copies of all communications material is made available on The Trust Company website.

Principle 7

Recognise and manage risk

ARCC is responsible for the oversight of risk management, internal control systems and compliance matters for The Trust Company Group. It also reviews internal and external audit processes and reports. ARCC meets regularly with the Executive Team, senior management and external advisers, and reports directly to the Board.

The Trust Company and a number of its subsidiaries hold Australian Financial Services Licences in relation to which ARCC acts as the Compliance Committee pursuant to Part 5C of the Corporations Act.

Management’s responsibilities for risk management

The Executive Team and the risk and compliance function regularly report any material business risks to the Board (via the CEO) and to ARCC through its quarterly risk and compliance reporting process. Significant matters arising during a quarter are addressed by management and escalated as appropriate.

Risk management and internal control systems

The Trust Company has a formal risk management program in place and maintains a current risk register. It is based on Standards AustraliaAS/NZSISO31000:2009– Risk Management Standard. The program includes policies and procedures to identify and address material financial and non-financial risks. This program has been endorsed by the Board and ARCC. The risks identified together with their management have been reported to the Board as part of regular reviews of the risk register.

The Trust Company also maintains an independent ’internal‘ audit function which reports directly to ARCC and the Board if necessary. This service is provided by KPMG in Australia and Singapore and Ernst &YounginNewZealand.

CEO and CFO declarations

The CEO and CFO provide formal assurance to the Board in accordance with section 295A of the Corporations Act.

Principle 8

Remunerate fairly and responsibly

People and Remuneration Committee

The Trust Company has a People and Remuneration Committee. The Committee is comprised of three independent Non-Executive Directors, with a Chairman who is different to the Chairman of the Board. The Committee Members are John Macarthur-Stanham (Chairman), James King and Josephine Sukkar. The Committee has a charter and a copy of this is available on The Trust Company website.

Director’s Remuneration

Non-Executive Directors are remunerated by way of directors’ fees and superannuation contributions. Non-Executive Directors do not participate in equity or option based incentive schemes, nor do they receive bonus payments.

Details of the Directors’ remuneration, together with the details of the remuneration of key management personnel, are set out in the Remuneration Report.

Executive Team remuneration

The Board, with advice from the People and Remuneration Committee, is responsible for approving the Executive Team’s incentive remuneration arrangements, which includes both fixed and performance related arrangements.

During 2009 The Trust Company introduced a policy of prohibiting the hedging of unvested equity entitlements by members of the Executive Team with non-vested incentive remuneration arrangements.

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addiTional shareholder inFormaTionAnnual Report

Shareholder information as at 4 April 2012

On 4 April 2012 there were 2,444 shareholders holding ordinary fully paid shares in the capital of The Trust Company. The maximum shareholding under The Trust Company’s constitution which may be registered in any one shareholder’s name is 6,664,505 shares representing 20% of the total shares on issue which are 33,322,527. However under Part 5D of the Corporations Act 2001, no one member shall hold more than 15% of the capital of The Trust Company, which currently represents 4,998,379 shares.

Shares on issue and voting rights

The Trust Company presently has one class of ordinary fully paid shares on issue. The voting rights attaching to the shares relating to meetings of The Trust Company provide that on a show of hands every person who is a member, or a representative or proxy of a member has one vote, and on a poll every person present, or by a representative or proxy has one vote for each share held. There is no current on-market buyback in place.

Shareholder categories 4 April 2012

No of ordinary shareholders

1-1,000 510

1,001-5,000 1,051

5,001-10,000 430

10,001-100,000 400

100,001 and above 53

Total 2,444

Holders with less than a marketable parcel of A$500 worth of fully paid shares at A$5.14 per share, 98 shares: 65

Directors’ shareholdings as at the date of the report are disclosed in the Directors’ Report to the financial statements.

Twenty largest shareholders

As at 4 April 2012 No of shares % Rank

Milton Corporation Limited 2,940,394 8.82 1

Australian Foundation Investment Company Limited

2,286,726 6.86 2

National Nominees Limited 722,425 2.17 3

Carlton Hotel Ltd 678,579 2.04 4

Australian United Investment Company Limited

600,000 1.80 5

Diversified United Investment Limited 600,000 1.80 6

Mirrabooka Investments Limited 507,666 1.52 7

The Trust Company Ltd <JohnPatrickSweeneyA/C>

477,682 1.43 8

Washington H Soul Pattinson and Company Limited

459,038 1.38 9

Djerriwarrh Investments Limited 370,000 1.11 10

Mr John G Macarthur-Stanham 366,490 1.10 11

Myora Pty Ltd 358,675 1.08 12

Mr Jonathan W Sweeney 341,760 1.03 13

Enbeear Pty Limited 319,577 0.96 14

HMS Nominees Ltd 298,158 0.89 15

Donetta Pty Limited 295,000 0.89 16

Prudential Nominees Pty Ltd 285,000 0.86 17

The Trust Company Ltd <Estates&TrustsA/C>

265,530 0.80 18

Gartfern Pty Limited 245,738 0.74 19

Alphoeb Pty Ltd 240,862 0.72 20

12,659,300 37.99

Substantial shareholders No of shares

Milton Corporation Limited 3,299,069 9.90

Australian Foundation Investment Co. Limited 2,286,726 6.86

The Trust Company Limited 1,902,549 5.71

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addiTional shareholder inFormaTionAnnual Report

Listing

The Trust Company Limited’s shares are listed on the Australian Securities Exchange (ASX), with Sydney as the Home Exchange. The ASX code is “TRU”.

Company Secretaries

Sally Ascroft (Appointed 2 November 2009)

Alex Carrodus (Appointed 10 February 2010)

Registered office and Principal Administrative Office

Level 15 20 Bond Street Sydney, NSW 2000 (GPO Box 4270, Sydney NSW 2001)

Telephone: +61 (0)2 8295 8100 Fax No: +61 (0)2 8295 8659

Share Register

Registry

Vic

Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street, Abbotsford, Vic 3067

Telephone: 1300 850 505 Switchboard: (03) 9415 4000 Overseas callers: + 61 3 9415 4000 Facsimile: (03) 9473 2500

Contact points in other states

QLD

Computershare Investor Services Pty Limited 117 Victoria Street West End, QLD 4101

Telephone: 1300 850 505

NSW

Computershare Investor Services Pty Limited Level 4, 60 Carrington Street Sydney, NSW 2000

Telephone: 1300 850 505

Nominations for the office of Director

Pursuant to Clause 66(3) of the Company’s Constitution, the closing date for nominations for election to the office of Director is 16 May 2012, for the Annual General Meeting to be held on 25 June 2012.

Auditors

Deloitte Touche Tohmatsu

ABN

59 004 027 749

Australian Financial Services Licence

235148

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ConTaCT usThe Trust Company Group Offices

Australia – Head Office

Sydney

The Trust Company Limited Level 15, 20 Bond Street Sydney NSW 2000

Phone: 1800 622 812

www.thetrustcompany.com.au

Asia

Singapore

The Trust Company (Asia) Limited 16 Collyer Quay #26-02, Hitachi Tower Singapore, 049318

Phone: +65 6645 0830

New Zealand

Auckland

The New Zealand Guardian Trust Company Limited

Level 7, Vero Centre 48 Shortland Street Auckland

Phone: 0800 801 135

www.guardiantrust.co.nz

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The Trust Company 1300 650 358 www.thetrustcompany.com.au

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for personal use only - asx · for personal use only 28 february 2013 end of the trust company...

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