DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 The Directors of OzForex Group Limited (OzForex, the Company), submit their report (including the Remuneration Report), Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended 31 March 2016 and the Statement of Financial Position as at 31 March 2016 of the Company and its subsidiaries (the Consolidated Entity, the Group), the auditor’s report, and report as follows: 1. DIRECTORS The Directors of the Company as at 31 March 2016 at any time during or since the end of the financial year are: PETER WARNE CHAIRMAN – BA, FAICD Member of the Audit, Risk and Compliance Committee and Member of the Remuneration and Nomination Committee Age: 60 years Appointed: 19 September 2013 Independent Director Residence – Sydney, Australia Peter joined OzForex in September 2013 and has over 30 years’ experience in banking and finance. Peter’s prior professional experience includes 12 years as Head of Bankers Trust Australia Limited’s Financial Markets Group. Current directorships Chairman: Australian Leisure and Entertainment Property Group; Macquarie Group Limited; Macquarie Bank Limited Director: ASX Limited Member: NSW Treasury Corporation; Patron of Macquarie University Foundation Interest in shares: 250,000 ordinary shares RICHARD KIMBER MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER – BSC, MBA (MACQUARIE) Age: 47 years Appointed: 1 June 2015 Not independent Residence – Sydney, Australia Richard was appointed Managing Director and Chief Executive Officer on 1 June 2015. Richard has 25 years of diverse global leadership experience that has included several chief executive and board roles in the banking and technology sectors and has extensive experience in financial services, marketing, social media and capital markets. Current Directorships Director: RTI Cable Limited; Unlockd Media Limited; Strone Limited. Interest in shares: 21,000 ordinary shares, 135,995 performance rights, 400,000 options. MELINDA CONRAD NON-EXECUTIVE DIRECTOR – MBA (HARVARD), FAICD Chair of the Remuneration and Nomination Committee and Member of the Audit, Risk and Compliance Committee Age: 47 years Appointed: 19 September 2013 Independent Director Resident – Sydney, Australia Melinda joined OzForex in September 2013 and has over 20 years’ experience in business strategy and marketing. Melinda’s prior professional experience includes executive roles at Harvard Business School, Colgate-Palmolive, and several retail businesses. Melinda was previously a director of APN News & Media Limited and David Jones Limited. Current directorships Director: The Reject Shop Limited; the George Institute for Global Health; the Australian Brandenburg Orchestra Member: Minter Ellison Advisory Council; Australian Institute of Company Directors Corporate Governance Committee Interest in shares: 100,000 ordinary shares 22 OZFOREX GROUP GRANT MURDOCH NON-EXECUTIVE DIRECTOR – MCOM (HONS), FAICD, FICAA. Chair of the Audit, Risk and Compliance Committee Appointed: 19 September 2013 Age: 64 years Independent Director Resident – Brisbane, Australia Grant joined OzForex in September 2013 and has over 35 years’ experience in accounting and corporate finance. Grant’s prior professional experience includes Head of Corporate Finance for Ernst & Young Queensland, and he is a graduate of the Kellog Advanced Executive Program at the North Western University, Chicago, United States. Current directorships Director: ALS Limited; QIC Limited; Redbubble Limited, UQ Holdings Limited Other: Senator of the University of Queensland; Adjunct Professor School of Business, Economics and Law at the University of Queensland; member of Queensland State Council of AICD Interest in shares: 145,000 ordinary shares DOUGLAS SNEDDEN NON-EXECUTIVE DIRECTOR – BEC, MAICD Member of the Remuneration and Nomination Committee and Member of the Audit, Risk and Compliance Committee Age: 58 years Appointed: 16 March 2015 Independent Director Resident – Sydney, Australia Doug joined OzForex in March 2015 and has over 30 years’ experience in finance, consulting, strategic management and outsourcing. Doug has previously worked as Country Managing Director of Accenture Australia. Current directorships Director: Broadspectrum Limited; Sirca Technology Limited Chairman: Odyssey House NSW; McGrath Foundation; Chris O’Brien Lifehouse Interest in shares: 39,000 ordinary shares NEIL HELM CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR – BSC (HONS) Age: 51 Appointed: 2 September 2013 Resigned: 1 June 2015 Not independent Residence – Sydney, Australia Neil commenced working with OzForex in June 2007 and resigned as an employee of the Group on 6 August 2015. Prior to joining the Group, Neil was a Senior Manager at Accenture, a Business Manager for the Foreign Exchange Division at Bankers Trust Australia and an Executive Director at Macquarie. Neil is AFMA accredited and was a responsible manager for the OzForex Group’s AFSL. Interest in shares as at 6 August 2015: 176,250 performance rights in the OzForex Group Limited Performance Rights Plan and 275,000 ordinary shares. ANNUAL REPORT 2016 23 DIRECTORS’ REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 2.  STATE OF AFFAIRS AND SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the Directors’ opinion, there have been no significant changes in the state of affairs of the Group during the year. A further review of matters affecting the Group’s state of affairs is contained on pages 26 and 27 in the Operating and Financial Review. 3.  STATUTORY AND UNDERLYING INFORMATION As required for statutory reporting purposes, the consolidated financial statements of the Consolidated Entity have been presented for the financial year ended 31 March 2016. The Group’s statutory financial information for the year ended 31 March 2016 and for the comparative year ended 31 March 2015 present the Group’s performance in compliance with statutory reporting obligations. To assist shareholders and other stakeholders in their understanding of the Group’s financial information as a publicly listed entity, additional underlying financial information for the years ended 31 March 2016 and 31 March 2015 are provided in the Operating and Financial Review section of this report. A reconciliation of the Company’s statutory and underlying financial information is included on page 27. The reconciliation and the underlying information have not been audited. 4. DIRECTORS The following persons were Directors of the Group either during the year or as at 31 March 2016: Peter Warne Chairman Richard Kimber1 Managing Director and Chief Executive Officer (CEO) Neil Helm2 Managing Director and Chief Executive Officer Melinda Conrad Non-Executive Director Grant Murdoch Non-Executive Director Douglas Snedden Non-Executive Director 1. Mr Kimber was appointed a Director on 1 June 2015. 2. Mr Helm ceased to be a Director on 1 June 2015. The background, qualifications and experience of each of the Directors as at the date of this report are included on pages 22 and 23. 5.  COMPANY SECRETARY Ms Linda Cox was appointed Group Company Secretary and Head of Investor Relations of OzForex on 31 January 2014. Ms Cox has over 16 years of experience working in company secretarial roles in ASX and NZX listed companies including Telecom Corporation of New Zealand Limited (now Spark), Xero Limited and Trade Me Group Limited. Ms Cox holds a Bachelor of Laws from Victoria University of Wellington and a Diploma of Investor Relations. She is a Fellow of the Governance Institute of Australia and a member of the NSW Law Society. 24 OZFOREX GROUP 6.  DIRECTORS’ MEETINGS The following table shows meetings held between 1 April 2015 and 31 March 2016 and the number attended by each Director or Committee member. Remuneration and Nomination Audit, Risk and Compliance Committee Committee Board Director Eligible R Kimber G Murdoch 4 D Snedden Attended 20 6 5 5 5 17 4 4 3 3 5 2 2 2 2 22 M Conrad Eligible 5 N Helm1,3 Attended 17 1,2 Eligible 22 P Warne Attended 20 6 6 5 5 22 21 6 6 5 5 22 21 6 6 5 5 1. Mr Kimber and Mr Helm attended the Audit, Risk and Compliance Committee and the Remuneration and Nomination Committee meetings at the invitation of the Committees. 2. Mr Kimber was appointed a Director on 1 June 2015. 3. Mr Helm ceased to be a Director on 1 June 2015. 4. Mr Murdoch attended the Remuneration and Nomination Committee meetings at the invitation of the Committee. 7.  DIRECTORS’ INTERESTS The relevant interest of each Director in the equity of the Company as at the date of this report is outlined in the table below. All interests are ordinary shares unless otherwise stated. Type P Warne R Kimber Opening balance Acquisition Disposals/ forfeit Closing balance ordinary 150,000 100,000 – 250,000 ordinary – 21,000 – 21,000 performance rights – 135,995 – 135,995 share options – 400,000 – 400,000 M Conrad ordinary 50,000 50,000 – 100,000 G Murdoch ordinary 95,000 50,000 – 145,000 D Snedden ordinary – 39,000 – 39,000 There were no disposals of shares by the Directors during the year or share transactions post year end. 8.  PRINCIPAL ACTIVITIES The Group’s principal activity during the year was the provision of international payments and foreign exchange services. 9.  DIVIDENDS AND DISTRIBUTIONS Dividends paid or declared by the Company during and since the end of the year are set out in Notes 17 and Notes 28 to the Financial Statements respectively. Final 2016 Interim 2016 Final 2015 Per share (cents) 3.100 3.600 3.584 Total amount ($’000) 7,440 8,640 8,602 Franked 5 Payment date 100% 100% 100% 24 June 2016 18 December 2015 26 June 2015 5. All dividends are fully franked based on tax paid at 30%. ANNUAL REPORT 2016 25 DIRECTORS’ REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 10.  OPERATING AND FINANCIAL REVIEW A summary of financial results for the years ended 31 March is outlined below: 2016 $’000 Underlying EBITDA 32,758 5.2% 33.2% Underlying earnings per share (EPS) (cents) 5 2 24,266 9.95 10.11 32,758 30.3% Statutory net profit (after tax) Earnings per share (cents) 6 24,266 174,004 (3.9%) 10.11 162,890 (1.6%) 36.3% 21,814 9.09 3 Cash balance as at 31 March 36.3% 23,889 3 Underlying net profit (after tax)4 Statutory EBITDA margin 15.3% 31,488 Underlying EBITDA margin Statutory EBITDA 90,144 34,453 2 Growth 103,913 Net operating income 1 2015 $’000 (10.1%) (6.3%) 1. Net operating income is the combination of interest income and net fee and commission income. Net operating income is a non-IFRS measure. 2. Earnings before interest, tax, depreciation and amortisation (EBITDA) is a non-IFRS measure that is unaudited. 3. EBITDA margins are calculated with reference to net operating income. 4. Underlying net profit (after tax) (NPAT) is net profit after tax adjusted for one-time expenses. Underlying net profit (after tax) is a non-IFRS measure that is unaudited. Refer to the NPAT reconciliation on page 27. 5. Underlying earnings per share was calculated with reference to underlying net profit after tax. 6. Cash includes cash held for subsequent settlement of client liabilities and term deposits of all maturities. The net cash position after client liabilities is $38.1 million at 31 March 2016 (31 March 2015: $49.4 million). Higher active client numbers with an increased propensity to deal in 2016 helped to drive revenue growth, increasing net operating income by 15.3% to $103.9 million. As part of the enablement phase of the Accelerate Strategy, significant investment was made in the Group’s core business processes and infrastructure and, together with the one-off impacts of corporate actions, rebranding to OFX and an Executive Team restructure, resulted in statutory net profit after tax (NPAT) decreasing by 10.1% to $21.8 million. Underlying NPAT adjusted for the one-off impacts was down by 1.6% to $23.9 million. In order to better understand the underlying NPAT of the Group, the reconciliation is outlined on the following page. Australia and New Zealand (ANZ) and Europe were the two largest contributors to the Group’s fee and commission income. These regions experienced growth of 18.4% and 9.0% respectively. They continue to provide the majority of the Group’s fee and commission income, delivering 72.8% of the Group total. The proportion attributable to ANZ and Europe has decreased marginally from 73.1 % for the year ended 31 March 2015. This decrease is being driven by the strong growth being achieved in the Group’s core strategic growth market, North America. In North America, there are operations in Canada and the US. As at 31 March 2016 the Group was able to operate in 46 of the states in the United States of America and has been continuing to develop its presence in North America, utilising search engine marketing, social media and customer advocacy in order to gain brand awareness. The US customers of the North American segment have, in the main, been with the Group less than four years; however, the existing customer base is becoming more significant. This growth has enabled the Group to grow fee and commission income by 35.9% to $17.6 million. North America’s contribution to the Group’s fee and commission income increased from 13.5% in the year ended 31 March 2015 to 15.8% in the year ended 31 March 2016. Hong Kong remained the Group’s key Asian focus during the year. The segment experienced 16.7% growth in fee and commission income to $2.1 million. Hong Kong is typified by a banking market place that offers significantly lower retail margins than in other geographies. 26 OZFOREX GROUP The International Payment Solutions (IPS) division (Wholesale division) continued to develop the Group’s existing branded partnership solutions for Macquarie Bank, ING and MoneyGram in Australia and New Zealand, as well as the Group’s global partner Travelex (Australia, New Zealand, Canada and the US). The IPS division’s fee and commission income decreased by 3.9% to $10.6 million due to the closure of the OzForex ‘branded’ prepaid Travel Card in November 2015. The Group also introduced its embedded payments functionality into the cloud-based accounting software Xero. 2016 $’000 2015 $’000 Growth % 23,889 24,266 (1.6) Corporate action costs after tax (827) – Rebranding expenditure after tax (506) – Executive Team restructure costs after tax (742) – 21,814 24,266 Underlying NPAT Statutory NPAT (10.1) EBITDA is a non-IFRS unaudited measure that is calculated by deducting interest and adding back tax, depreciation and amortisation. The reconciliation is outlined below: 2016 $’000 2015 $’000 Growth % 34,453 32,758 5.2 Corporate action costs before tax (1,182) – Rebranding expenditure before tax (723) – Executive Team restructure costs before tax (1,060) – Statutory EBITDA 31,488 32,758 (3.9) Underlying EBITDA 1,662 1,754 (5.2) Earnings before tax, depreciation and amortisation (EBTDA)1 Add back interest income 33,150 34,512 (3.9) Less income tax expense (9,979) (9,667) (3.2) Less depreciation and amortisation (1,357) (579) (134.4) Statutory NPAT 21,814 24,266 (10.1) 1. The Group actively uses its cash balances as part of its hedging strategy, making the interest income integral to its earnings. For this reason, the Group regularly uses EBTDA as a measure of performance. The Group’s financial position remains strong. The balance sheet consists predominantly of cash and client liabilities. The cash position net of client liabilities decreased to $38.1 million from $49.4 million as a result of significant investment in capital items due to two office moves in Toronto and Sydney, and investment in core business applications such as the new website and mobile app. The Group currently has no external debt. 2016 $’000 Client liabilities 1 Net cash position Growth % 162,890 Cash1,2 2015 $’000 174,004 (6.4) (124,827) (124,591) (0.2) 38,063 49,413 (23.0) 1. Cash and client liabilities can vary greatly depending on the timing of deal flows. 2. Cash includes cash held for subsequent settlement of client liabilities and term deposits of all maturities. The financial position provides a good platform to pursue future growth opportunities. ANNUAL REPORT 2016 27 DIRECTORS’ REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 11. STRATEGY The Group is embarking on the execution phase of the three-year Accelerate Strategy with the aim of doubling revenue. The Group’s key strategic focus is on expanding penetration within the Australian market to reinforce its presence as the market leader, increase offshore presence with a focus on the US and expanding adjacent opportunities within the wholesale market. Critical to our success will be maintaining and sustaining a high performing diverse workforce across all office locations. OPERATIONAL HIGHLIGHTS •• Developed brand positioning, rolled out new brand with new website in Australia and started website build for other markets globally. •• Conducted quantitative research study in key markets to size the market that OFX operates in, and better understand consumers and how to realise the opportunity. •• Invested in acquisition capability and started to expand beyond search as a marketing medium. •• Invested in social media capability in the marketing team and significantly increased customer engagement. •• Implemented relational database in order to better understand and respond to customers. •• Updated mobile app to be transactional. •• Integrated into Xero, Australia’s largest cloud accounting platform, which significantly reduces manual processing effort and eliminates the chance of human error when processing invoices. Capability has been rolled out in Australia, New Zealand and the UK to date. •• Developed a new suite of representational state transfer (REST)-based application programming interfaces (APIs) that makes it easy for partners to integrate their system into our international payments platform, removing the need for partners to build their own capability. •• Launched an accounts receivable facility for clients selling internationally through online marketplaces who receive foreign currencies with a need to translate back to their home currency. •• Employed three new key executives. •• Developed product impact teams in order to increase development efficiencies within the IT department. •• Successfully moved to a cloud-based server hosting environment. •• Launched a 24 hour, 7 days a week service, providing customers with the convenience of transacting on weekends. The service will enable customers to make international transfers, speak to an OFX customer representative and check current exchange rates 363 days of the year, 24 hours a day. •• Implemented new telephony infrastructure that will deliver superior customer service and operational efficiencies. •• Established an Operational Compliance team within the business to reduce customer on-boarding times. •• Developing the capability of the treasury function to facilitate better customer pricing and enhanced internal risk management practices. •• Added new banking partners to support our global growth plans, as our network banking relationship is a key strategic asset and competitive advantage of our business. •• Initiated the money transmitter licensing process for Ohio, Hawaii and New Hampshire in the US, which would bring our licensed states to 49 out of 50. •• Received favourable outcomes from all the external regulatory examinations conducted in a number of jurisdictions throughout the year. •• Continued to invest in fraud risk management systems and technology integration. •• Accepted as a member of the Fraud Focus Group Committee in Australia for 2016, the first time a business like OFX has been appointed to the Committee. •• Continued to investigate merger and acquisition opportunities in offshore markets to aid geographic expansion. •• Relocated the Sydney and Toronto teams to new offices to accommodate future growth expectations. 28 OZFOREX GROUP 12. RISK The potential risks associated with the Group’s business are outlined below. The list does not show every risk that may be associated with the Group, and the occurrence or consequences of some of the risks described are partially or completely outside the control of the Group, its Directors and senior management. There is also no guarantee or assurance that the risks will not change or that other risks will not emerge: •• Competition – A substantial increase in competition could result in the Group’s services becoming less attractive to consumer or business clients and partner companies; require the Group to increase its marketing or capital expenditure; or require the Group to lower its spreads or alter other aspects of its business model to remain competitive. The Group continues to invest in product innovation, marketing efforts and monitoring competition to ensure that it is able to respond to such challenges. •• Relationships with banking counterparties – The Group relies on a range of banking counterparties to conduct its business, particularly to provide its network of local and global bank accounts and act as counterparties in the management of foreign exchange and interest rate risk. There is a risk that one or more of these banks may cease to deal with the Group (which may occur on short notice), cease to deal with international payments services generally, substantially reduce the services it offers, substantially alter the terms on which it is willing to offer services to the Group, exit one or more of the markets for which the Group uses its services, or collapse. This has occurred in the past and may occur again in the future. The Group manages this risk by having a suite of banking service providers to ensure that there is redundancy in its banking relationships to operate effectively. •• Regulatory compliance – The international payments market is a highly regulated area of economic activity. The Group devotes significant resources to comply with applicable regulations. However, there is a risk that any new or changed regulations could require the Group to increase its spending on regulatory compliance and/or change its business practices, which could adversely affect the Group’s profitability. There is a risk that such regulations could also make it uneconomic for the Group to continue to operate in places where it currently does business. In addition, there is a risk that evidence of a serious failure to comply with laws may result in severe penalties, including being forced to cease doing business as a result of a revocation or cancellation of one or more of the Group’s regulatory licences or authorisations. •• Information technology (IT) – The Group’s business operations rely on IT infrastructure and systems. Any interruptions to these operations could impair the Group’s ability to operate its customer-facing websites, which could have a negative impact on performance. The Group has a number of operational processes and disaster risk recovery plans in place to mitigate this risk. •• Data security – Through the ordinary course of business, the Group collects a wide range of personal and financial data from clients. The Group takes measures to protect this data; however, there is a risk that a cyber-attack may result in data being compromised, resulting in loss of information integrity, breaches of the Group’s obligations under applicable laws or client agreements and website and system outages, each of which may potentially have a material adverse impact on the Group’s reputation and financial performance. •• Fraud – There is a risk that, if the Group’s services are used to transfer money in connection with a fraud or theft, the Group may be required to take steps to recover the funds involved and may in certain circumstances be liable to repay amounts that it accepted for transfer, even after it has made the corresponding international payment. For example, when the Group accepts payment by direct debit, it may ultimately be held liable for the unauthorised use of bank account details in an illegal activity and be required to refund the transaction. If the rate of refunds becomes excessive, banks and card associations also may require the Group to pay additional penalties. The Group has a range of fraud prevention controls in place to mitigate this risk. •• Foreign exchange rate fluctuations – The Group may be affected by a change in the value of currencies, in particular a strengthening of the Australian dollar, which may impact both transaction turnover and reported earnings. The Group continues to increase its geographic footprint and therefore the diversity of its currency flows in order to mitigate the impact of any one currency’s fluctuation. 13. OUTLOOK OzForex is a high growth business with a strong balance sheet, no external interest bearing debt and strong cash flow conversion. The focus is on growth in net operating income and EBTDA but still with the emphasis on cost containment and efficiency. There will be continued investment in people, new opportunities, marketing and sales initiatives and development of the Group’s IT and physical infrastructure. The Group’s wholesale business, which includes international payment services, is a large and growing market driven by increases in global population and migration, leading to a larger level of cross border transactions and investment. OzForex is participating in, and in many respects leading, a successful industry disruption of traditional international payment methods and processes, driven by technology. OzForex will look to continue developing its strong position in the market through its: •• Scalable proprietary technology platform; •• Attractive customer value proposition; •• Large portfolio of Tier 1 banking relationships; •• Effective operational risk and compliance management; •• Clearly defined organic and inorganic growth strategies. ANNUAL REPORT 2016 29 DIRECTORS’ REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 14.  EVENTS SUBSEQUENT TO BALANCE DATE As at the date of this report, the Directors are not aware of any circumstance that has arisen since 31 March 2016 that has significantly affected, or may significantly affect the Group’s operations in future financial years, the results of those operations in future financial years, or the Group’s state of affairs in future financial years. 15.  LIKELY DEVELOPMENTS AND EXPECTED RESULTS While the impacts of foreign exchange market conditions make accurate forecasting challenging, it is currently expected that the combined net profit for the financial year ending 31 March 2017 will be up on the financial year ended 31 March 2016. The key growth driver for the business is the number of active clients (the number of clients who have transacted at least once in the prior 12 months). The growth in active clients for the financial year ended 31 March 2016 was up 5.9% to 150,900. The existing client base of the North American segment is expected to continue to become a more significant portion of the segments active clients. This will help to drive further profitability in the North American market, increasing the segment’s contribution to the Group’s profit for the financial year ending 31 March 2017. While Europe is a more competitive market, growth in active clients in this region is expected to be more challenging. It is expected to be broadly in line with the financial period ended 31 March 2016. Subject to consistent currency exchange rates, contribution in the UK is expected to be up in the financial year ending 31 March 2017. The Australia and New Zealand segment is expected to continue to be the largest single contributor to the net profit of the Group. The growth in contribution, assuming a constant Australian dollar exchange rate, is expected to be in line with the growth in active clients. The tax rate for the financial year ending 31 March 2017 is expected to be in line with the financial year ended 31 March 2016. Accordingly, the Group’s result for the financial year ending 31 March 2017 is expected to be up on the result in the financial year ended 31 March 2016, with the potential for a better result if market conditions continue to improve, and the Group’s investment in above the line marketing is more successful than anticipated. The Group’s short-term outlook remains subject to the range of challenges outlined in the risks on page 29, including market conditions, the impact of volatility in the foreign exchange markets, the cost of its customer acquisition through online channels, potential regulatory changes and tax uncertainties. OzForex remains well positioned to deliver continued growth in the short to medium term. 16.  INSURANCE AND INDEMNIFICATION OF DIRECTORS AND OFFICERS The Directors of the Company, and such other officers as the Directors determine, are entitled to receive the benefit of an indemnity contained in the Constitution of the Company, to the extent allowed by the Corporations Act 2001. The Company has entered into a standard form deed of indemnity, insurance and access with the Non-Executive Directors against liabilities they may incur in the performance of their duties as Directors of the Company, to the extent permitted by the Corporations Act 2001. The indemnity operates only to the extent that the loss or liability is not covered by insurance. During the year, the Company has paid premiums in respect of contracts insuring the Directors and Officers of the Company against liability incurred in that capacity to the extent allowed by the Corporations Act 2001. The terms of the policies prohibit disclosure of the details of the liability and premium paid. 30 OZFOREX GROUP 17.  NO OFFICERS ARE FORMER AUDITORS No officer of the Consolidated Entity has been a partner of an audit firm or a Director of an audit company that is the auditor of the Company and the Consolidated Entity for the financial year. 18.  NON-AUDIT SERVICES The Company may decide to employ the external auditor on assignments additional to its statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. The Audit, Risk and Compliance Committee is required to pre-approve all audit and non-audit services provided by the external auditor. The Committee is not permitted to approve the engagement of the auditor for any non-audit services that may impair or appear to impair the external auditor’s judgement or independence in respect of the Company. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit, Risk and Compliance Committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Companies Act 2001 for the following reasons: •• All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit, Risk and Compliance Committee to ensure that they do not impact the integrity and objectivity of the auditor; and •• The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risk or rewards. During the year, the following fees were paid or payable for non-audit services provided by the external auditor (PWC) of the Company to its related practices and non-related audit firms: 2016 $’000 Due diligence services 2015 $’000 30 – Taxation services 148 86 Total remuneration for non-audit services 178 86 19.  AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in relation to the audit for the year ended 31 March 2016 is on page 47 of this report. 20.  CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER DECLARATION The Chief Executive Officer and the Chief Financial Officer have given the declarations to the Board concerning the Group’s Financial Statements and other matters as required under section 295A(2) of the Corporations Act 2001. 21.  ROUNDING AMOUNTS The Group is of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998 and, in accordance with that Class Order, amounts in the directors’ report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. ANNUAL REPORT 2016 31