Statement of Advice

Prepared for

Mr. Walter Gannon

Prepared by

Tracy Burton

Authorised Representative Number: 15326128 Cemex St.,Turramurra NSW 2074

02 9440 5555Authorised representative of

Burton Financial Planning GroupABN: 65 001 232 232

Australian Financial Services LicenseeLicense No. 16029

Head Office: Level 26, 1 Carlyle St.,

MELBOURNE VIC 3000

12 February 2010

You are entitled to receive a Statement of Advice (‘SOA’) whenever we provide you with any personal financial advice. Personal advice is advice that takes into account your goals, objectives, financial situation and needs.

This SOA is a report of the personalised financial advice provided to you and includes information on the basis on which this advice is given, information about fees and commissions and any connective information which might influence the advice.

If this advice includes a recommendation to you to acquire a particular financial product (other than securities) or an offer to issue or arrange the issue of a financial product to you, we will also provide you with a Product Disclosure Statement containing highly detailed supportive information about the particular product to help you make well informed decisions about the product.

Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this time, it will no longer be current and will need to be reviewed for accuracy.

February 2010 Page 1

Statement of Advice

Table of Contents

Executive Summary ………………………………………………………………………………………....3

Summary of our recommendations………………………………………………………………………..3

Summary of expected outcomes if you implement our advice…………………………………….…...3

Risks in our advice………………………………………………………………………………………..…4

Summary of our fees and commissions……………………………………………………………….…..4

Your next step……………………………………………………………………………………………..…4

Important information about you………………………………………………………………………..…5

Your reasons for seeking us………………………………………………………………………………..5

What you would like to achieve………………………………………………………………………….…5

Your personal and financial information………………………………………………………….……...6

Personal information………………………………………………………………………………………...6

Your existing insurance……………………………………………………………………………………..6

Your existing estate planning……………………………………………………………………………....6

Financial Information……………………………………………………………………………………..….7

Current income and expense details……………………………………………………………………....7

Your risk profile…………………………………………………………………………………………….....8

Strategy recommendations…………………………………………………………………………………9

Recommended action – after one year…………………………………………………………………...9

Reasons for recommendation – first year………………………………………………………………..10

Things you should consider………………………………………………………………………………..11

Investment product recommendations……………………………………………………………….…12

Recommended asset allocation…………………………………………………………………………..13

Disclosure of commissions, fees and benefits…………………………………………………….…..14

Ongoing services…………………………………………………………………………………………....15

Authority to Proceed…………………………………………………………………………………….….16

SOA Appendix 1 Cash flow projections after one year – No implementation of strategy……..18

SOA Appendix 2 Cash flow projections after one year – After implementation strategy………21

SOA Appendix 3 – Cash flow projections……………………………………………………………….24

February 2010 Page 2

Executive summary

Summary of our recommendations

For the short term - up to one year

I recommend that:

You pay off your personal debt including the car loan and mortgage of $242000. You open a high yielding savings account and place $15000 within as an emergency

fund. You set up Family Tax Benefit B. You see a solicitor to update your Will.

For the medium term - one to five years

Invest $40000 in a balanced managed fund, and then be accessed in 4 years when Chloe begins her high school studies.

Invest $50000 in a growth managed fund for the build up of retirement wealth.

For the long term - ten years+

Invest $80000 in a growth investment bond which can be accessed in 10 years when Chloe begins her university studies.

Maintain current super arrangements and review in 12 months time. Maintain general and personal insurance and private health cover. Maintain existing share portfolio of $40000.

Summary of expected outcomes if you implement our advice

If you decide to follow through with the recommendations of this report, we estimate thatyour daughters’ education funds should grow over time and meet the financial needs to pay for their high school and university studies.

Your personal debts being paid off and setting up your high savings account will generate further savings. This will allow you to enjoy the lifestyle you require with minimum worry.

The growth managed funds and your existing share portfolio will grow over time while still being accessible. This will help you achieve your retirement goals.

You will have effective insurance and health cover in the unlikely events of death, sickness or injury.

Your updated Will can protect your family in the case of unlikely events.

February 2010 Page 3

Risks in our advice

As has been discussed, all investment options do carry some risk. You are to be aware that your managed investments may not increase as quickly as you expect, or the value may not change or go down.

Non disclosure of personal information

Under RG 175.109, we are required to give you warnings on the accuracy of advice, due to not being able to obtain all information required, regarding your personal circumstance, e.g. (Superannuation, Insurance cover).

Our advise may be limited if we do not have all relevant information required. It is up to you to assess how appropriate our recommendations are in your circumstances.

Summary of fees and commissions

The fee required for our advice and the preparation of making this Statement of Advice is $2600 including GST. Burton Financial Planning Pty Ltd is entitled to receive $1600 and I will receive the balance.

There are no ongoing commission costs for investment recommendations. Where necessary, the costs will be rebated. You may be charged fees for purchasing and investing in some products we recommend.

Further details on the fees, commissions and benefits relevant to our advice can be found in the Disclosure of commissions, fees and benefits section.

Your next steps

In order to decide whether to take our advice you should: Read the Statement of Advice fully to understand our advice Feel free to ask any questions you have as a result of reading the Statement of

Advice.

To proceed with your advice, please complete the ‘Authority to Proceed’ at the end of the statement and return it to us.

February 2010 Page 4

Important information about you

This section shows information about you we have used to prepare advice:

Why you are seeking advice What you would like to achieve Personal and financial information

Please inform us if you feel any of this information is incorrect or incomplete.

Your reasons for seeking advice

Walter - we agreed that we would provide advice on: Investments Taxation Estate Planning

Walter - you mentioned you did not want any advice on: Insurance Superannuation

What you would like to achieve

After our discussion, we understood your main objectives and needs as follows:

You would like Patricia’s Super invested in best possible way, producing as much income as possible with minimum worry;

You want Patricia’s Super to pay for your daughters’ future high school & university studies of $115000;

You wish to maintain family lifestyle whilst working part-time till Larissa is 13. You expect to retire at 65 with $40000pa.

As mentioned previously, because some of your information regarding your circumstances, needs and objectives is limited, you will have to consider if our advice is appropriate before acting upon it.

February 2010 Page 5

Your personal and financial information

Written below is a summary of your personal and financial details you have provided.

Personal Information

Personal Details

First name WalterSurname GannonDate of Birth ?/? /1974?Current Age 36Martial Status SingleHealth Status -Smoker Status -Employment Status Part-timeEmployer name -Occupation ManufacturingAnnual Salary $42000

Children & Dependent details

Name Date of birth Sex School Occupation

Larissa Gannon ?/? /2004? F Primary Student

Chloe Gannon ?/? /2002? F Primary Student

Your existing insurance

Walter - you have $300000 Life and TPD cover under your superannuation fund and your family has private health insurance.

Your existing estate planning

You have advised us that your Will requires updating, and need to see a solicitor.

February 2010 Page 6

Financial information

Current income and expense details

Income and expenses

Walter TotalAssessable income $44014 $44014Income after tax $37604 $37604Yearly expenses $52636 $52636Estimated surplus/deficit -$15032

Walter- based upon the income and expenses schedule above, you have a deficit -$15032 income available if after 1 year this implementation is not followed.

Please refer to your Cash Flow Statement in Appendix 1.

Assets and Liabilities

Value Liabilities Net ValueTotal personal assets $980500 $233296 $747204Total investment assets $153780 $0 $153780Net Worth $900984

Please refer to Assets and Liabilities in Appendix 1 for more details.

Incomplete and/or inaccurate information warning

Be advised, that for any reason, information on which our advice is based upon, is either inaccurate or not complete, then it may be necessary to consider its appropriateness in respect to your particular circumstances, needs and objectives.

February 2010 Page 7

Your risk profile

All choices of investment have a certain element of risk. Generally, however, investments that have high rates of return involve high levels of risk, and more conservative investments bear lower returns.

From our discussions, and from the answers of your risk profile questionnaire, we believe that you are a Balanced investor.

You are a cautious investor who wants a balanced portfolio that can work towards medium and long-term financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good returns. An appropriate asset mix for you would be:

40% in defensive assets for example: cash, fixed interest, and 60% in growth assets such as Australian equities, international equities, property.

The target asset allocation for your risk profile is seen below:

Target asset allocation- balanced growth

February 2010 Page 8

Strategy Recommendations

The aim of this section is to tell you: what our advice is; reasons for our recommendations; things to consider and risks of our advice.

Read this section and ask if you have any queries.

Recommended actions - after one year

I recommend that you:

Repay all personal debt including the car loan and mortgage of $242000, this will reduce your interest expense, resulting in future savings over time and a greater income level.

With $15000, set up a high yielding savings account for use as an emergency fund, where further income earned can be saved here.

Set up a balanced managed fund of $40000 for secondary school expenses. This will provide greater returns then a bank account.

Organise a growth managed fund of $50000 to help fund retirement and necessary expense.

Set up a growth investment bond of $80000 that can be used in 10 years for University expenses. This will provide returns as well as tax advantages.

Set up your entitlement Family Tax Benefit B with Centerlink. Update you Will.

Product recommendations

Note that we can only recommend products that have received approval by Burton Financial Planning Pty Ltd.

February 2010 Page 9

Reasons for recommendations- first year

Personal investment

As can be seen in the Cash Flow Statement in Appendix 1, you currently have a deficit of funds which is largely due to the mortgage and car loan. The faster these are paid off, the sooner you will have access to greater funds at your disposal. This is due to the fact you will not be paying interest on your debts. Setting up the high yield savings account will help you have added security as an emergency fund in reserve.

Managed funds

Managed funds will give you diverse investment over different types of assets which will help create wealth. Your fund managers have the advantage of much expertise and resources as well as good administration procedures for regular reports. This has contributed to reason why Colonial First State is one of the largest in Australia.

The recommendation to place $40000 in a balanced managed fund is for your daughters’ high school expenses. This fund will provide a balanced level of risk and will likely provide greater growth of funds then keeping it in a bank account.

Having $50000 in growth managed fund is for your personal investment. These funds have the potential for greater growth then the balanced managed funds. This should help you achieve your retirement goals and any other necessary expense.

By using managed fund shares and keeping your existing shares, you allow yourself long term capital growth as well as interest income Also, shares by their nature, can easily be sold on the stock exchange and provide you with funds on short notice.

Growth Investment Bond

The growth investment bond of $80000 is for the purpose of funding your daughters’ university expenses whilst generating growth from its interest payments. The growth investment bond will keep its yearly earnings and pay its 30% tax on its own, so you won’t have to be taxed on anything unless you withdraw within the 10 year period, for which it will be listed as an earning in your assessable income. Otherwise you do not have to declare anything on your income statement even when it is matured in10 years time. This method is a popular instrument used to save for children’s education whilst minimising risk and benefiting from tax advantages.

Gearing

Gearing is another method investors uses. It is the practice of borrowing funds to purchases investments that produce assessable income, e.g. shares or property. Although there is possibility of gaining returns from an investment, exposure to risk also increases. The risk of gearing can occur when an investment does not perform well, interest rates may change and affect the value of the investment and interest on the borrowing must still be paid in the process. I would not recommend gearing at this time.

February 2010 Page 10

Family Tax Benefit

Family Tax Benefit is an exempt tax benefit which Australian citizens have the right to use. Family Tax Benefit B gives benefits for single parent families. Depending on the age of your youngest child, you should be entitled for $2675.45/year.

Please check the Cash Flow and Assets and Liabilities Statements in SOA Appendix 2, for your financial position after recommendations.

Things you should consider

Paying off your mortgage

Please be aware there may be discharge or legal fees associated with paying the mortgage off early. You will have to discuss this with your mortgage provider. This may also be the case with the car loan.

Family Tax Benefit B

You need to be aware that you should discuss this with a Centerlink representative, as I have limited knowledge in this advice.

Taxation issues

Taxation is fairly complex and beyond my limited taxation advice. I recommend that you see a taxation advisor/accountant on any taxation advice you may require.

February 2010 Page 11

Investment product recommendations

Colonial First State investments: was established in 1988 and manages $90 billion worth of investments globally. Colonial First State also has one of the largest investment teams; it also has wide range of investments and fund managers and can bring highly diversified portfolios. Lastly, Colonial First State is a leader in providing value for money.

Cooling off period

You have 14 days from the time your investment is confirmed to change your mind on any products. If you wish to return a product and get a refund you must notify us within 14 days after confirmation. Please note that if you return a product within the cooling off period you may get back less than you originally paid for. This can be due to market fluctuations, taxes and administrative costs.

February 2010 Page 12

Recommended Asset Allocation

Your managed funds assets are invested across different classes. The table below shows a comparison of your balanced managed fund allocation and your growth managed fund allocation.

Comments on proposed asset allocation vs. your risk profile

As we discussed, your likely risk profile is a balanced investor. Your investment for your children’s high school education is a balanced managed fund, however your personal investment is a growth managed fund. This bears more risk then a balanced managed fund; however, it is set to a higher growth to help you generate extra income for future expense and retirement more quickly.

Asset allocation after implementation of recommendations

Assets Allocation Balanced Managed Fund

($40000)

Growth Managed Fund

($50000)Defensive assetsAustralian Cash 10% 10%Australian Fixed interest 20% 5%International fixed interest 10% 5%Total for defensive assets 40% 20%Growth assetsAustralian equities 30% 35%Australian property 10% 30%International equities 20% 15%Total for growth assets 60% 80%Grand Total 100% 100%

This chart indicates how your assets have been allocated for your managed funds.

Notice the balanced fund bears 40% defensive assets and 60% for growth assets, whilst your growth fund is set to 20% defensive and 80% growth. Defensive assets are asset classes such as fixed interest and cash, whilst growth asset classes are equities and property.

Defensive assets are less risky but generate less return compared to growth assets, which bear greater risk but potential for much greater returns.

February 2010 Page 13

Disclosure of fees, commissions and/or benefits

How are we paid?

The total fee for our advice is $2600 (including GST). $1600 will be received by Burton Financial Planning Pty Ltd and I will receive the balance. Please make this payment within 14 days of receiving this Statement of Advice.

Neither Burton Financial Planning Pty Ltd nor I will receive any commissions earned, and where necessary will be rebated. You may be charged for buying and investing in products that have been recommended in this statement.

The product providers usually charge fees, such as the management fee at 1.2%. As an example if you invest $40000, you will pay $480.

Other Benefits

Burton Financial Planning Pty Ltd and I may sometimes receive other benefits in addition to our fees. With benefits exceeding $300, they are recorded on alternative forms of remuneration. A copy of this Register can be publicly made available if requested.

February 2010 Page 14

Ongoing services

This Statement of Advice is a snapshot of your current circumstances, needs and objectives. Over time, finance changes. The Australian government passes new laws that can affect tax and superannuation rules, which may also apply to your investments. Also with time, new products will be introduced. These changes may bring benefit to you when taken advantage of.

Changes such as these must be assessed in an ongoing manner, and related to your particular situation. This will ensure you have the best resources to meet your goals and objectives.

The ongoing review is to:

Keep us updated on your circumstances, both personal and financial;Revise your risk profile;Keep you updated on the economy and any investment and legislative changes that can impact your current strategy;Keep you updated on your investment portfolio performance;When necessary, recommend changes to your investment or insurance strategy.

February 2010 Page 15

Implementation

Walter- for you to proceed with this recommendation, you need to complete the following:

Read, sign and return the Authority to Proceed attached; Organise an appointment with me and bring any completed application forms.

February 2010 Page 16

Authority to Proceed

Firstly, before signing this document please check that I have:

Given the Burton Financial Planning Pty Ltd’s Financial Services Guide;Confirmed that the personal information I have collected is correct;Discussed your goals and objectives;Confirmed that you are happy with your risk profile;Discussed any risks in the recommendations;Discussed fees that need to be paid.

Secondly, confirm that:

You have kept a copy of the SOA and have had the opportunity to read, consider and understand the document, supporting material and have asked questions.The SOA dated 17 February 2010 accurately summarises your current situation, investments, insurances and financial goals. You understand that any inaccurate or incomplete information provided to us, may bring risk to meeting your needs appropriately.You have understood the Disclosure of commissions, fees and benefits’ section of SOA.You understand that recommended investments may rise and fall with the market, and cannot guarantee future performance.You understand that this statement is solely for yourself; Burton Financial Planning Pty Ltd does not accept liability to others who rely on any of the information in this SOA.You hereby request Tracy Burton to provide services in the ‘Ongoing Services’.

Consent to ongoing contact

We consent to being contacted by our Advisor on an ongoing basis, in line with the ongoing service review within this recommendation.

Our preferred hours of contact between_____and_____.

Signed__________________ Date __/__/___ Client NameSigned__________________ Date __/__/___ Financial Advisor

February 2010 Page 17

SOA Appendix 1 Cash flow projections after one year - No implementation of strategy

Income and expenses

Walter Notes

Taxable income

Salary $42000

Salary sacrifice $0 (state % if applicable)

Salary after salary sacrifice $42000

Rental income $0

Unfranked dividends $1200Assume Walter mentioned 3% return on his existing portfolio

Franked dividends $514 $1200/.70x.30

Franking (imputation) credits $0

Interest $300 $5000@6%=$300(fixed term deposit interest)

Other income, e.g. taxable benefits $0

Capital gains <1yr $0

Capital gains >1yr $0

Tax-free component of capital gains $0

Assessable income $44014

Deductible expenses $0

Rental expenses, repairs etc. $0

Taxable income $44014

Tax on taxable income 2009/10 $7054 $4350+30%>$35000

Medicare levy 2007/08 $660 $44014 x 1.5%

Medicare levy surcharge N/A

Franking rebate -$514 Tax Refund

Tax offsets (e.g. LITO/SATO)2009/10 -$790 LITO= $1350-[4%x($44014-$30000)]

Other rebates and offsets $0

Total tax $6410

Income after tax $37604 =assessable income – total tax

Notes

These figures are based on our assumption that you have received your dividend of 3%.

These figures are based on our assumption that you have received your fixed interest deposit of 6%.

February 2010 Page 18

Family cash flow

Walter

Income after tax (as calculated above) $37604

Investment expenses

Living expenses

Living Expenses $27400

Holiday $1500

Home mortgage $17256

Car Loan $6480

Total expenses $52636

Net cash flow -$15032

February 2010 Page 19

Assets and liabilities

Asset Owner Value Liabilities Net value Notes

Personal assets

Home Walter $520000 $202744 $317256 Mortgage applied

Savings Account

Walter $428500 $15032 $413468 $12000, Patricia’s Contribution & Car

($410000), Fixed term deposit+ interest ($5300),

portfolio dividends ($1200)-($15032) deficit

Walter’s Car Walter $32000 $15520 $16480 Car Loan applied

Total $980500 $233296 $747204

Investment assets

Shares Portfolio

Walter $40000 $40000

Employer Super

Walter $113780 $113780 Not Requiring Advice ($42000 @ 9%=$3780)

Total $153780 $153780

Net worth $900984

Liabilities

Loan Current debt Percentage deductible

Interest only Repayment

Home Loan Mortgage $202744 0% No -($1438x12=$17256)

Car Loan $15520 0% No -($540x12=$6480)

Total $218264

February 2010 Page 20

SOA Appendix 2 Cash flow projections after one year

- After implementation of strategy

Income and Expenses

Walter Notes

Taxable income

Salary $42000

Salary sacrifice $0 (state % if applicable)

Salary after salary sacrifice $42000

Rental income $0

Unfranked dividends $0

Franked dividends $1200Assume Walter mentioned 3% return on his existing portfolio

Franking (imputation) credits $514 $1200/.70x.30

Interest $7750

$5000@6%=$300(fixed term deposit interest prior to its investment elsewhere)

$40000@8%=$3200(balanced mgt.fund)

$50000@8.5%=$4250(growth mgt.fund)

Excluded: (Investment bond- no income tax liability): $80000@4.5%=$3600)

Other income, e.g. taxable benefits $0

Capital gains <1yr $0

Capital gains >1yr $0

Tax-free component of capital gains $0

Assessable income $51464

Deductible expenses $0

Rental expenses, repairs etc. $0

Taxable income $51464

Tax on taxable income 2009/10 $9289 $4350+30%>$35000

Medicare levy 2007/08 772 $51464 x 1.5%

Medicare levy surcharge N/A

Franking rebate -$514 Tax Refund

Tax offsets (e.g. LITO/SATO) 2009/10 -$492

LITO= $1350-[4%x($51464-$30000)]

Other rebates and offsets $0

Total tax $9055

Income after tax $42409 =assessable income – total tax

Inclusion Family Tax Benefit B $45084 $2675.45+Income after tax

February 2010 Page 21

Family cash flow

Walter

Income after tax (as calculated above) $45084

Investment expenses

Interest payments $0

Rental expenses $0

Other $0

Living expenses

General living expenses $27400

Home mortgage $0

Car payment $0

Credit cards $0

Holiday $1500

Children’s education $0

Other loans, e.g. personal $0

Other $0

Total expenses $28900

Net cash flow $16184

February 2010 Page 22

Assets and liabilities

Asset Owner Value Liabilities

Net value Notes

Personal assets

Family home Walter $520000 $520000

Savings Account

Walter $19400 $24400 Investment Interest added

($4250+$150)

Walter’s Car Walter $32000 $32000

Total $567000 $567000

Investment assets

Shares Portfolio

Walter $41200 $41200 Interest Reinvested

Employer super

Walter $113780 $113780 Not Requiring Advice

($42000@9%)=$378

Balanced Managed Fund

Walter $43200 $43200 Interest Reinvested

Growth Managed Fund

Walter $50000 $50000

Investment Bond

Walter $803200 $803200 Interest Reinvested

Total $1051380 $1051380

Net worth $1618380

Liabilities

Loan Current debt Percentage deductible

Interest only

Repayment

Home loan $0

Investment property $0

Other $0

Total $0

February 2010 Page 23

SOA Appendix 3 Cash flow projections

Projected returns for Walter’s growth managed investment fund

Opening Balance $50000Final Balance after year 1= $54250

Assumptions:Growth fund net return after fees= 8.5%Management Fee 1.2%Contribution Fee 0.5%

Projected returns for Walter’s balanced managed investment fund

Opening Balance $40000Final balance reinvested in 4 years time= $54419

Assumptions:Balanced fund net return after fees=8.0%Management fees 1.2%Contribution fee 0.5%

Projected returns for Walter’s growth investment bond

Opening Balance $80000Final Balance reinvested in 10 years time=$124237

AssumptionsGrowth investment bond net return after fees=4.5%Management fees 1.2%Contribution fee 0.5%

The table below shows a year by year estimate of your recommended investment portfolio. In addition, the table shows your growth managed fund being reinvested for illustrative purposes. Please refer to the assumptions as all illustrations are based on these assumptions. These illustrations are indicative only and are not guarantee of a future performance.

Investment Year 1 Year 2 Year 3 Year 4 Year 10

Growth Fund $54250 $58861 $63864 $69292

Balanced Fund $43200 $46656 $50388 $54419

Growth Investment Bond $83600 $87362 $91293 $95401 $124237

Net Assets $181050 $192879 $205545 $219112 $124237

February 2010 Page 24