Clime Investment Management
Company Announcements
Australian Stock Exchange, Sydney
26 August 2014
Announcement of Results – Year ended 30 June 2014
Please find attached the Appendix 4E and annual financial report for the year ended
30 June 2014.
Yours’ sincerely,
Richard Proctor
Company Secretary
Clime Investment Management Limited
Level 7, 1 Market Kent Street Sydney NSW 2000 Australia | P O Box Q1286 Queen Victoria Building NSW 1230
ABN 37 067 185 899 P 02 9252 8522 F 02 8917 2155 W www.clime.com.au T @climeinvest
Clime Investment Management
Appendix 4E
Preliminary Final Report
Lodged with the ASX under Listing Rule 4.3A
Year Ended 30 June 2014
(Previous corresponding period – 30 June 2013)
Results for Announcement to the Market
Revenue from ordinary activities
Profit from ordinary activities after tax
attributable to members
up
up
14%
to
$8,746,240
125%
to
$3,203,014
Dividends per share
Amount per security
Franked amount per
security
Final dividend – FY14 (proposed)
3.0 cents
3.0 cents
Record date for determining entitlements to the final dividend is
TBA
Explanation of revenue from ordinary activities
Revenues for the period rose to $8.75 million (FY13: $7.66 million).
Recurring management fees have increased by $2.3m.
FY13 revenue
Increase in management fees
Decrease in performance fees
Decrease in SIV revenue
Decrease in dividend income
Increase in consulting and other income
FY13 revenue
$7.66m
$2.28m
($0.54m)
($0.43m)
($0.35m)
$0.13m
$8.75m
Explanation of profit from ordinary activities after tax attributable to members
The Group generated an after-tax profit of $3.2 million for the year (FY13: profit of $1.42 million).
The primary drivers for the increased result
1. Revenue as per above.
2. Unrealised gains on re-classification of available-for-sale financial asset to Investments in
Associates were $2.70m.
3. Overheads increased to $6.71m (FY13: $6.05m), mainly arising from additional marketing and
commission costs (to drive FUM growth).
4. Net realised and unrealised (losses)/gains on financial assets at fair value through profit or loss
declined to $0.03m (FY13: $1.04m).
.
Clime Investment Management
Associates and Joint Venture entities
Name of the entities
Jasco Holdings Limited -
Associate (see note 1)
Stocks in value Pty Limited - Joint
Venture (see note 2)
Ownership
Interest
Contribution to net
profit/(loss)
Current
period
%
20.41
Previous
corresponding
period
%
-
Current
period
$
-
Previous
corresponding
period
$
-
50.0
50.0
(285,639)
(164,360)
1.
In the prior year, the Group held 19.82% interest in Jasco Holdings Limited (Jasco) and
accounted for the investment as an available-for-sale financial asset. Following the sale of
Jasco’s stationery business and resultant share buybacks, the holdings of the Group in Jasco
increased from 19.82% to 20.41% as at 27 June 2014. At 30 June 2014, the Group determined
that it held significant influence over Jasco and accordingly the investment was considered to
be an associate as at 27 June 2014.
The Group has accounted for 20.41% investment in Jasco as at 27 June 2014 as an investment
in associate, at a value as at that date of $7,876,831.
2. On 4 March 2013, the Group entered into a 50:50 joint venture with Eureka Report Pty Limited,
which is a 100% subsidiary of News Limited.
Audit
This report is based on accounts that have been audited. The unqualified audit report is attached on
page 60 of the attached audited financial statements.
Clime Investment Management
Limited
(ABN 37 067 185 899)
and Controlled Entities
ANNUAL REPORT - 30 June 2014
Clime Investment Management Limited
Level 7, 1 Market Street
Sydney NSW 2000
Telephone: +61 2 8917 2100
Facsimile: +61 2 8917 2155
ACN: 067 185 899 ABN: 37 067 185 899
www.clime.com.au
CLIME INVESTMENT MANAGEMENT LIMITED AND CONTROLLED ENTITIES
A.B.N. 37 067 185 899
ANNUAL REPORT 2014
CONTENTS
Report from the Board
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members
Shareholder Information
PAGE
1
4
15
16
22
59
60
62
REPORT FROM THE BOARD
for the year ended 30 June 2014
Dear Shareholder,
Clime Investment Management Limited and Controlled Entities
I am pleased to present the results of Clime Investment Management Limited (“the Group”) for FY14.
Profit before income tax for FY14 at $4.4 million compares to $2.2 million for FY13. The total comprehensive income result for FY14
was $3.2 million, compared to FY13 of $1.4 million.
The Board notes that the improved performance of the Group was driven by the following key factors:
1. Strong Funds Under Management (FUM) inflows across all portfolio streams under management;
2. Good growth in FUM emanating from the Clime’s investment performance; and
3. Solid returns from our balance sheet investments, especially in Jasco Holdings Ltd.
Review of Financial Results
Below is a simple format version of the Group’s Profit and Loss to enable shareholders to distinguish between the operational business
and the balance sheet income components.
Funds Management and related activities revenue
Administrative and Occupancy expenses – fixed in nature
Administration costs – 3rd Party Custody and Funds Administration services
Operating business activities revenue less fixed admin costs
Sales commission, performance incentives and marketing costs
Operating business margin
Balance sheet income & Associates
Cash profit
Impairment of receivables on disposal of held for sale investment
Amortisation of intangibles
Statutory profit before income tax
2014
$
7,486,943
(4,169,333)
(489,537)
2,828,073
(1,793,478)
1,034,595
3,667,887
4,702,482
-
(305,348)
4,397,134
2013
$
5,592,308
(3,864,813)
(373,734)
1,353,760
(1,536,142)
(182,382)
2,944,369
2,761,987
(249,414)
(305,348)
2,207,225
Operating Revenue
When looking at the statutory Statement of Profit and Loss, Group revenue has improved by 14%, from $7.7m in FY13 to $8.7m in
FY14. Funds Management fees increased from $4.7m to $7.0m on higher FUM. The Group’s FUM was $582 million at 30 June 2014,
compared to $448 million at 30 June 2013, an increase of 30%.
The Group had positive funds inflows from investors for the 12 months to 30 June 2014. Inflows were augmented by the investment
performance achieved by the Group on its managed funds.
The Group received only nominal performance fees during the year ($0.5m achieved in FY13).
Interest, dividend and other income combined decreased from $1.4m to $1.0m this year. The Group’s interest income declined in line
with lower average interest rates and a lower average cash balance held. The decrease in dividends from investments was primarily
due to the Group’s reduction in its Clime Capital holding.
1
REPORT FROM THE BOARD
for the year ended 30 June 2014
Full Year Result
Clime Investment Management Limited and Controlled Entities
The Group recorded an after-tax profit attributable to members of $3,203,014 for the year to 30 June 2014 (FY13 after-tax profit
attributable to members of $1,421,990). Key aspects of the result are as follows:
Increased operating revenue of $8,746,240 (FY13: $7,659,766) as outlined above.
Unrealised gains on re-classification of available-for-sale financial asset to Investments in Associates (The Groups interest in
Jasco Holdings Limited is now accounted for using the equity method) contributed $2,697,269. (In FY13 we received
$395,300 as dividend income)
$32,547 in net realised and unrealised losses on the Group’s listed investments and managed funds compared with a
$1,037,066 gain in FY13.
Administration and occupancy overheads increased to $6,757,696 (FY13: $6,080,038). In 2014 we increased headcount
resulting in $380,049 of extra salary costs; however we reduced our use of consultants by $297,364. In the year we have
generated significant organic FUM growth and performance with resulting higher incentive payments. Sales commissions
paid rose to $702,517 (FY13 $644,502), and incentive bonus payments rose to $767,747 (FY13 $422,862). The other
significant increase was for outsourced Administration and Custodian costs at $489,533 ($373,734 in FY13).
Amortisation was the same as FY13 at $305,348.
The profit result included an equity accounted loss for the year of $285,639 (FY13 loss of $160,155), primarily representing
the Group’s 50% share of the total after tax losses of its joint venture Stocks in Value Pty Limited. The joint venture was
strongly cash flow positive, however accounting standards require the amortisation of license fees resulting in the loss
reported by the joint venture.
Summary of Total Equity
The Total Equity at balance date comprised the following:
Cash and Cash Equivalents
Trade and other Receivables less Payables
Listed Investments – Clime Capital Limited
Listed Investments – Others
Unlisted Investments – Clime’s Managed Funds
Available for sale assets – Jasco Holdings Limited
Other Tangible Assets and Liabilities
Net Tangible Assets
Intangibles – Goodwill and Management Contracts
Deferred tax assets
Total Equity
No. of Ordinary Shares on Issue as at 30 June 2014
Equity per Share
Net Tangible Assets per Share
Operating Cash Flow
30 June 2014
$ 4,884,624
($454,924)
$ 6,231,735
$241,151
$ 967,200
$7,876,831
(2,754,145)
16,992,472
$6,201,433
$769,580
$ 23,963,485
46,944,834
51.05 cents
36.20 cents
Net cash inflow from operating activities was $5,224,347, an increase of $2,445,995 in comparison with the prior corresponding
period. This is primarily a function of the following:
A net increase of $2,005,981 from financial asset activities.
An increase in cash receipts from operating activities of $1,593,429.
A reduction in dividend income of $151,156.
Tax paid of $250,000.
Investing and Financing Activities
Proceeds from reducing our interest in assets held for sale generated $523,304.
Cash reserves were applied as follows:
Payments for acquisition of property plant & equipment of $181,330.
Share buybacks of $469,111.
Dividends to shareholders of $1,243,621.
Capital return to shareholders of $4,031,571.
2
REPORT FROM THE BOARD
for the year ended 30 June 2014
FY14 Year to Date Portfolio Performance
Clime Investment Management Limited and Controlled Entities
Following the performance of FY14, the funds management division continues to increase FUM, which in late August 2014 was $610
million, up 5% from 30 June 2014.
Our Plans for the Future
The Group’s commitment is to deliver real value to all our clients. We know that we will only achieve this if we meet our clients’
expectations in terms of investment performance, service delivery and the quality of our investment research. To deliver on that
commitment we hold clear our values of:
Integrity;
Transparency in everything we do; and
Having the courage to back our conviction.
We have a strong belief in managing our client’s capital to achieve absolute returns rather than market relative returns.
Our mission remains to protect and build the capital of our clients (Funds Management), and educate our clients about prudent value
investing so they are empowered to make sound investment decisions (using Stocks in Value).
In striving to achieve this mission, we adopt the following philosophies:
We believe in transparency – we make our investment methodology publicly available (through Stocks in Value);
We understand that preservation of capital is paramount;
We are a conviction based investor - we don’t follow the herd;
We believe in a disciplined value based process;
We adopt a prudent risk management approach; and
We invest in the capabilities of our team.
The Group aims to increase return on equity by continuing to outperform our peers in terms of long term investment returns, attracting
additional FUM, increasing the number of Stocks in Value clients, and prudent management of capital. The board and senior
management have detailed plans in place to reach our goals. Consistent with those plans we were very pleased in FY14 with the
successful introduction of our new “Clime International Fund” and the re-launch of our substantially improved Stocks in Value
product.
Finally, the board would like to commend the performance of the management team and all our staff in what has been a year of growth
and superior performance for the funds management business.
Neil Schafer
Chairman
3
DIRECTORS’ REPORT
for the year ended 30 June 2014
Your Directors present their report on the consolidated entity (Group), consisting of Clime Investment Management Limited and its
controlled entities for the financial year ended 30 June 2014.
Clime Investment Management Limited and Controlled Entities
DIRECTORS
The following persons were Directors of Clime Investment Management Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
N Schafer
J B Abernethy
M Osborn
D J Schwartz
RJA Proctor
A Chant
- Chairman
- Director
- Independent Director – resigned 26 August 2014
- Independent Director
- Director – appointed 24 February 2014
- Independent Director – appointed 9 July 2014
INFORMATION ON DIRECTORS
Mr. Neil Schafer BCom. (Econ)
Chairman, Independent Director
Experience and expertise
Mr. Neil Schafer was appointed Non-Executive Director in 2011. Mr. Schafer has extensive experience in funds management, banking
and financial services sector and holds a First Class Honour’s Degree in Applied Economics from the University of New England.
Former directorships in last 3 years
Mr. Schafer was a Non-Executive Director of RBS Infrastructure Fund and the Valad Core Plus Fund.
Special responsibilities
Chairman of the Board
Member of Remuneration Committee
Member of Audit Committee
Chairman of the Investment Sub Committee
Interests in shares and options
548,007 ordinary shares in Clime Investment Management Limited
Mr. John Abernethy BCom (Econ), LL.B
Director
Experience and expertise
Mr. John Abernethy was appointed Executive Director in 1994. Mr. Abernethy has over 30 years’ funds management experience in
Australia having been General Manager Investments of the NRMA. John holds a Bachelor of Commerce (Economics)/LLB from the
University of New South Wales.
Mr. Abernethy has been a Director of the Company for over 19 years.
Other current directorships
Mr. Abernethy is a Director of Clime Capital Limited, Jasco Holdings Limited, WAM Research Limited, WAM Active Limited,
Australian Leaders Fund Limited and Watermark Market Neutral Fund Limited.
Former directorships in last 3 years
None
Special responsibilities
None
Interests in shares and options
3,610,000 ordinary shares in Clime Investment Management Limited
4
DIRECTORS’ REPORT
for the year ended 30 June 2014
INFORMATION ON DIRECTORS (CONT.)
Clime Investment Management Limited and Controlled Entities
Mr. Mark Osborn BA (Hons) Exon
Independent Director
Experience and expertise
Mr. Osborn was appointed Non-Executive Director of the Company in March 2006. Mr. Osborn has accumulated a wealth of
experience in the financial services sector, having served in senior positions with large multi-national corporations in both the UK and
Australia. A qualified Chartered Accountant and Fellow of the Australian Institute of Company Directors, Mr. Osborn has worked for
Coopers & Lybrand, JP Morgan, Citibank, Bankers Trust and Prudential.
Other current directorships
Mr. Osborn is a Director of Protectsure Pty Limited.
Former directorships in last 3 years
Mr. Osborn has not held any other directorships of listed companies within the last three years.
Special responsibilities
Chairman of Audit Committee
Chairman of Remuneration Committee
Interests in shares and options
388,000 ordinary shares in Clime Investment Management Limited
Mr. David Schwartz
Independent Director
Experience and expertise
Mr. Schwartz has many years of experience in successfully managing manufacturing and distribution businesses in Australia and
South Africa. Mr. Schwartz has played an active role in utilising his network of contacts in Australian business to identify profitable
business and investment opportunities for the Group.
Mr. Schwartz has been a Director of the Company for almost 15 years.
Other current directorships
Mr. Schwartz is Chairman of Pascoes Pty Limited, a chemical manufacturer and distributor, ADG Global Supply Limited, ToLife
Technologies Pty Limited, Primewest and Stefani Australasia Pty Limited. Mr. Schwartz is also a Director of Schaffer Corporation
Limited and Betts Group Pty Limited.
Former directorships in last 3 years
None
Special responsibilities
None
Interests in shares and options
2,615,653 ordinary shares in Clime Investment Management Limited
Mr. Richard Proctor
Director
Experience and expertise
Mr. Proctor, Chief Operating Officer of the company since 2009, was appointed as a director on 24 February 2014. Mr. Proctor holds a
Bachelor of Business Studies (Hons) from the University of Brighton, UK and is a Chartered Accountant. Mr. Proctor has over 25
years’ experience in operations and finance and has held senior roles with Readers Digest, Time Warner, Heinz Food and Rothmans
Tobacco in Australia and Europe
Mr. Proctor is also the Joint Company Secretary of Company.
Other current directorships
None
Former directorships in last 3 years
None
Special responsibilities
None
Interests in shares and options
1,478,659 ordinary shares in Clime Investment Management Limited
5
DIRECTORS’ REPORT
for the year ended 30 June 2014
Mr. Allyn Chant
Clime Investment Management Limited and Controlled Entities
Independent Director
Experience and expertise
Mr. Allyn Chant was appointed as a director on 9 July 2014. Mr. Chant holds a Bachelor of Commerce degree and is a qualified
Chartered Accountant, a fellow of FINSIA and a Certified Financial Planner.
Mr. Chant has over 40 years’ experience both in Australian and overseas in auditing; financial planning and business management. Mr.
Chant was the founder of Community and Corporate Financial Services Pty Ltd (ComCorp) where he set up a network of financial
planners. Prior to establishing ComCorp, Mr. Chant has held roles with Coopers & Lybrand, MIM Holdings Limited and others.
Other current directorships
None
Former directorships in last 3 years
None
Special responsibilities
Member of Remuneration Committee
Member of Audit Committee
Interests in shares and options
883,600 ordinary shares in Clime Investment Management Limited
COMPANY SECRETARIES
Mr. Richard Proctor BBS (Hons), ACA
Mr. Richard Proctor was appointed to the position of Company Secretary on 1 January 2011.
Mr. Biju Vikraman Bcom, ACA, GradDipACG
Mr. Biju Vikraman was appointed to the position of Joint Company Secretary on 1 June 2013.
Mr. Vikraman holds a Bachelor of Commerce from the University of Mumbai, India and is an Australian and Indian Chartered
Accountant. Mr. Vikraman has over 15 years’ experience in audit and finance and has held senior roles with 4 big Accounting Firms
and listed entities within Australia, India and Africa.
Mr. Vikraman also holds a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia.
Interests in shares and options
13,895 ordinary shares in Clime Investment Management Limited
200,000 Options (EIS) over ordinary shares in Clime Investment Management Limited
6
DIRECTORS’ REPORT
for the year ended 30 June 2014
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June
2014, and the numbers of meetings attended by each Director were:
Clime Investment Management Limited and Controlled Entities
Director
A
7
Mr. Neil Schafer
7
Mr. Mark Osborn
7
Mr. David Schwartz
7
Mr. John Abernethy
Mr. Richard Proctor
3
A – Number of meetings eligible to attend
B – Number of meetings attended
Board
Meetings
Audit Committee
Meetings
Remuneration Committee
Meetings
B
7
7
6
7
3
A
2
2
-
-
-
B
2
2
-
-
-
A
2
2
-
-
-
B
2
2
-
-
-
ROTATION AND ELECTION OF DIRECTORS
In accordance with the Company’s Constitution:
Mr. Neil Schafer, Mr. Richard Proctor and Mr. Alyn Chant retire by rotation and, being eligible, offer themselves for re-election.
PRINCIPAL ACTIVITIES
The Group’s principal activity is investing in listed and unlisted securities for clients and operating under ASIC approved AFS licences
in the funds management industry.
There was no significant change in these activities during the current financial year.
OPERATING RESULT
The consolidated net profit after providing for tax amounted to $3,203,014 (2013: $1,421,990).
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended during the financial year are as follows:
Nil cents per share final ordinary dividend paid during the year in respect of the prior financial
year (2013: 2 cents)
2.5 cents per share interim ordinary dividend paid during the year in respect of the current
financial year (2013: 1.5 cents)
REVIEW OF OPERATIONS
2014
$
2013
$
-
984,701
1,243,621
744,295
In accordance with the relief provided by Class Order 98/2395, as issued by the Australian Securities and Investments Commission,
the Company is not required to reproduce information required in the Directors’ Report if it has been included elsewhere in the Annual
Report. As such, for a detailed Review of Operations of the Company, please refer to Report from the Board beginning on
page 1 of this Annual Report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There was no other significant change in the Group’s state of affairs during the financial year other than as disclosed in the financial
statements.
SUBSEQUENT EVENTS
A final fully franked dividend for the year ended 30 June 2014 of 3 cents per share, totalling $1,501,345 has been declared by the
directors. This provision has not been reflected in the accounts.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in future
financial years.
7
DIRECTORS’ REPORT
for the year ended 30 June 2014
FUTURE DEVELOPMENTS
The Company will continue to pursue investment management activities – primarily investing in equities listed on the Australian and
international securities exchange.
Clime Investment Management Limited and Controlled Entities
The Company’s future performance is dependent on the performance of the Company’s investments. In turn, the performance of these
investments is impacted by company-specific and prevailing industry conditions. In addition, a range of external factors including
economic growth rate, interest rates, exchange rates and macro-economic conditions impact the overall equity market and these
investments.
As such, we do not believe it is possible or appropriate to accurately predict the future performance of the Company’s investments nor
its mandates and therefore, the Company’s performance.
SHARES UNDER OPTION
Unissued ordinary shares of Clime Investment Management Limited under option at the date of this report are as follows:
Nature of options
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Employee Incentive Scheme
Date Options
Granted
3 January 2012
16 April 2012
19 April 2012
4 December 2012
14 December 2012
21 February 2013
22 August 2013
23 October 2013
25 October 2013
19 August 2014
Expiry Date
Exercise Price
3 January 2015
16 April 2015
19 April 2015
4 December 2015
14 December 2015
21 February 2016
22 August 2016
23 October 2016
25 October 2016
19 August 2017
$0.37
$0.395
$0.42
$0.48
$0.50
$0.66
$0.80
$0.815
$0.829
$0.85
Number under
Option
100,000
300,000
325,000
200,000
200,000
200,000
100,000
200,000
375,000
300,000
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
There have been no options granted over unissued shares or interests of any controlled entity within the group during or since the end
of the reporting period.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
There were no shares issued during the year as a result of the exercise of options. 800,000 (2013: nil) shares were issued to option
holders after the end of the financial year as a result of the exercise of options.
ENVIRONMENTAL ISSUES
The Group’s operations are not regulated by any significant law of the Commonwealth or of a State or Territory relating to the
environment.
8
DIRECTORS’ REPORT
for the year ended 30 June 2014
REMUNERATION REPORT – AUDITED
Clime Investment Management Limited and Controlled Entities
This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of the directors of
Clime Investment Management Limited (“the Company”) and its other key management personnel for the financial year ended 30
June 2014. The remuneration report is set out under the following main headings:
A
B
C
D
E
F
A
Director and other key management personnel details
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Directors and other key management personnel
The following persons acted as directors of the Company during or since the end of the financial year.
Neil Schafer
John Abernethy
Richard Proctor
Mark Osborn
David Schwartz
Allyn Chant
- Chairman
- Director
- Director – appointed 24 February 2014
- Independent Director – resigned 26 August 2014
- Independent Director
- Independent Director – appointed 9 July 2014
There were no additional persons not disclosed above who are considered key management personnel under the Corporations Act
2001.
B
Principles used to determine the nature and amount of remuneration
Directors and Key Management Personnel
Remuneration packages are set at levels that are intended to attract and retain first class executives capable of managing the Group’s
diverse operations and achieving the Group’s strategic objectives. The remuneration packages of executives are based on a three
tiered structure – they comprise a fixed component, a performance based component and an equity based component.
The fixed portion of the package reflects the core performance of their duties. The executives may be given an incentive via a
performance based bonus (as determined by the remuneration committee) and certain executives may be entitled to commission
payments commensurate with the level of revenue they generate. Equity based remuneration can be made via the options issued to the
executives under the Employee Incentive Scheme (“EIS”).
The Remuneration Committee is responsible for making recommendations to the Board on remuneration policies and packages
applicable to the Board members and senior executives of the Group. The Board’s remuneration policy is to ensure the remuneration
package properly reflects the person’s duties, responsibilities and the level of performance and that remuneration is competitive in
attracting, retaining and motivating people of the highest quality.
Directors
Fees and payments to Directors reflect the demands which are made on, and the responsibilities of, the Directors. Remuneration of
Independent Directors are determined by
the maximum amount approved by shareholders
from time to time. The payments to Independent Directors do not include retirement benefits other than statutory superannuation.
Consultation with Independent Directors outside their duties as Directors is treated as external consultation and is subject to additional
fees by consent of the Board. The Company has a policy that independent Directors are not entitled to retirement benefits, may not
participate in the Company’s bonus scheme, and may not participate in the EIS.
full Board within
the
Directors’ Fees
The current base remuneration was last reviewed with effect from 1 May 2014. The independent Directors’ fees are inclusive of
committee fees.
Independent Directors’ fees are determined within an independent Directors’ base remuneration pool, which is periodically
recommended for approval by shareholders. The Independent Directors’ base remuneration pool currently stands at $180,000 per
annum.
9
DIRECTORS’ REPORT
for the year ended 30 June 2014
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
B
Principles used to determine the nature and amount of remuneration (continued)
Executive remuneration
The executive remuneration framework has five components:
base pay and benefits;
commissions;
short-term performance incentives;
long-term incentives through participation in the Company’s EIS; and
other remuneration such as superannuation.
The combination of these comprises the executives’ total remuneration.
Base pay
Structured as a total remuneration package which may be delivered as a combination of cash and prescribed non-financial benefits at
the executives’ discretion.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for senior executives
is reviewed annually to ensure the executive’s pay is competitive with the market.
Benefits
Certain executives receive benefits which primarily include car parking allowances.
Commissions
Commissions did not form part of executive remuneration packages at any time during the year.
Short-term incentives (STI)
Executive Directors and Key management personnel have target short-term incentive opportunities depending on the accountabilities
of respective roles and their impact on organisation performance.
The intention of the STI plan is to recognise and reward the contributions and achievements of individuals for the achievement of their
relevant key performance indicators (“KPI’s”). Such KPI’s will generally include measures relating to both the Group and the relevant
individual, and may include financial, human resources, client service, strategy and risk measures where appropriate. The measures
are chosen such that they directly align the individual’s reward to the KPI’s of the Group and to its strategy and performance.
Each year the Remuneration Committee considers the appropriate targets and key performance indicators to link the short term
incentive plan and the level of payout if targets are met. This includes setting any maximum payout under the STI plan, and minimum
levels of performance to trigger payment of the STI. The Remuneration Committee also retains the capacity to pay discretionary
bonuses subject to the executives’ respective performances during the year.
Clime Investment Management Limited Employee Incentive Scheme
Information on the Company’s Employee Incentive Scheme is set out on pages 11 to 12.
C
Details of remuneration
Amounts of remuneration
Details of the remuneration of each Director of Clime Investment Management Limited and each of the other key management
personnel of the Group for the years ended 30 June 2014 and 30 June 2013 are set out in the following tables. The commission
payments are dependent on the level of revenue generated from consulting activities, cash bonuses are dependent on the satisfaction of
performance conditions as set out in the section headed Short-term incentives above, and share options do not vest unless the relevant
vesting hurdles are achieved. All other elements of remuneration are not directly related to performance.
10
DIRECTORS’ REPORT
for the year ended 30 June 2014
REMUNERATION REPORT (CONT.)
C
Details of remuneration (continued)
Directors of Clime Investment Management Limited
Clime Investment Management Limited and Controlled Entities
Short-term Employee Benefits
Cash salary, fees
and commissions
$
Cash
bonus
$
Non-monetary
benefits
$
Post-Employment
Benefits
Super-
annuation
$
Share-Based
Payments
Options
$
Termination
Benefits
$
65,541
-
246,472
246,472
49,958
55,028
193,984
146,829
-
-
663,471
340,813
-
7,200
-
-
-
7,200
-
3,528
3,528
-
5,090
12,146
-
-
-
-
-
-
-
-
-
-
Short-term Employee Benefits
Cash salary, fees
and commissions
$
Cash
bonus
$
Non-monetary
benefits
$
Post-Employment
Benefits
Super-
annuation
$
Share-Based
Payments
Options
$
Termination
Benefits
$
56,881
-
248,280
45,000
61,000
81,525
-
-
-
7,200
-
-
7,200
5,119
2,368
-
-
7,487
-
-
-
-
-
-
-
-
-
-
Total
$
65,541
451,184
396,829
49,958
60,118
1,023,630
Total
$
62,000
339,373
45,000
61,000
507,373
Total
411,161
81,525
Other key management personnel of the consolidated entity
There were no additional persons other than the directors in 2014 who were considered key management personnel under the
Corporations Act 2001.
Short-term Employee Benefits
Cash salary, fees
and commissions
$
Cash
bonus
$
Non-monetary
benefits
$
Post-Employment
Benefits
Super-
annuation
$
Share-Based
Payments
Options
$
Termination
Benefits
$
Total
$
2014
Name
Chairman
Neil Schafer
Directors
John Abernethy
Richard Proctor
David Schwartz
Mark Osborn
Total
2013
Name
Chairman
Mark Osborn
Directors
John Abernethy
David Schwartz
Neil Schafer
2013
Name
Chief Operating
Officer / Company
Secretary
Richard Proctor
Total
248,278
89,287
248,278
89,287
-
-
1,720
1,720
-
-
-
-
339,285
339,285
11
DIRECTORS’ REPORT
for the year ended 30 June 2014
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
Cash bonuses
$340,813 (2013: $170,812) cash bonuses were payable to key management personnel in respect of the year ended 30 June 2014. The
cash bonuses were paid at the discretion of the Remuneration Committee. The bonus therefore vested 100% during the financial year
ended 30 June 2014.
Share Options
For each grant of options included in the tables above, the percentage of the options that vested in the financial year and the percentage
that were forfeited because the person did not meet the service and performance criteria are set out below.
The options affecting remuneration during the current financial year were issued under the following scheme:
i)
The Employee Incentive Scheme (EIS), where options granted vest after the expiration of a lock period (3 years). No
options will vest if the vesting hurdles are not met, hence the minimum value of options yet to vest is nil. The maximum
value of the options yet to vest has been determined as the amount of the grant date fair value of the options that is yet to be
expensed.
Name
John Abernethy
Richard Proctor
Cash Bonus
Options
Paid (%)
Forfeited
(%)
Year
Granted
Vested
(%)
Forfeited
(%)
Financial years
in which options
may vest
Maximum total
value of options
yet to vest
100%
100%
0%
0%
-
2011
-
-
-
-
-
2014/2015
-
$45,000
Service Agreements
D
Remuneration and other terms of employment for the Executive Directors and certain other senior executives are formalised in service
agreements with annual adjustments (once agreed by the remuneration committee) notified in writing. Provisions relating to the term
of agreement, periods of notice required for termination and relevant termination payments are set out below.
Term of agreement – no fixed term
Mr. John Abernethy
Notice period for termination by employee – 3 months
Notice period for termination by company – 9 months
Director
Payment of a termination benefit on early termination by the Company – in lieu of 9 months’ notice and other than for gross
misconduct – the company has the right to request he works 3 months notice period at the time of termination.
Term of agreement – No fixed term
Mr. Richard Proctor
Notice period for termination by employee – 3 months
Notice period for termination by company – 9 months
Director and Joint Company Secretary
Payment of a termination benefit on early termination by the Company – in lieu of 9 months’ notice and other than for gross
misconduct – the Company has the right to request he works 3 months notice period at the time of termination.
E
Share-based compensation
Shares provided on exercise of remuneration options
No ordinary shares in the Company were provided as a result of the exercise of remuneration options via the ESOP during the year
(2013: nil).
12
DIRECTORS’ REPORT
for the year ended 30 June 2014
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
Additional information
F
Performance of Clime Investment Management Limited
The tables below set out the summary information regarding the economic entity’s earnings and movements in shareholder wealth for
the five years to 30 June 2014:
30 June 2011
$
Revenue
Net profit before tax
Net profit after tax
Share price at start of year
Share price at end of year
Interim dividend 1
Final dividend 1,2
Special dividend1,2
Capital return3
Basic EPS
Diluted EPS
1 Fully franked dividends (franked to 100% at 30% corporate tax rate)
2 Declared after each respective balance date and not reflected in the financial statements
3 In-specie distribution of 2 ordinary Mothercare Australia Limited shares for every 9 CIW ordinary shares held.
30 June 2012
$
5,475,497
835,297
1,007,217
$0.43
$0.44
-
2.00cps
-
2 MLC for 9 CIW
2.1cps
2.0cps
30 June 2013
$
7,659,766
2,207,225
1,421,990
$0.44
$0.70
1.5cps
0.00cps
-
-
3.0cps
2.9cps
30 June 2014
$
8,746,240
4,397,134
3,203,014
$0.70
$0.80
2.5cps
3.0cps
-
8.0cps
6.8cps
6.4cps
5,469,552
2,258,558
2,120,569
$0.41
$0.43
-
1.00cps
-
-
4.4cps
4.4cps
30 June 2010
$
6,041,597
4,199,038
3,132,907
$0.33
$0.41
1cps
1.25cps
1cps
-
6.4cps
6.4cps
Furthermore, during the five years to 30 June 2014, Clime Investment Management Limited bought back 4,683,664 fully paid ordinary
shares for total consideration of $2,163,082. These shares were repurchased at the prevailing market prices on the dates of the
respective transactions in accordance with the economic entity’s on-market buy-back scheme (within the 10/12 limit).
Relationship of Group performance to remuneration policies
The profitability of the Group is one of the key measures taken into consideration by the Remuneration Committee when determining
the quantum of bonuses payable under the STI plan in any given year. Other performance measures assessed by the Remuneration
Committee when determining remuneration packages for key management personnel include:
Growth in the Group’s level of Funds Under Management (“FUM”);
Retention and renewal rates for Funds Management clients;
Investment returns and performance generated by the Funds Management team in respect of its managed investment products;
Investment returns generated by the Group’s direct investments; and
Total shareholder return generated for shareholders in the listed ultimate parent entity, Clime Investment Management Limited.
END OF AUDITED REMUNERATION REPORT
13
DIRECTORS’ REPORT
for the year ended 30 June 2014
RISK AND COMPLIANCE CONTROL STATEMENT
Under ASX Listing Rules and the ASX Corporate Governance Council’s “Principles of Good Corporate Governance and Best Practice
Recommendations” (“the Principles”) the Company is required to disclose in its annual report the extent of its compliance with the
Principles.
Clime Investment Management Limited and Controlled Entities
The Directors have implemented internal control processes for identifying, evaluating and managing significant risks to the
achievement of the Company’s objectives. These internal control processes cover financial, operational and compliance risks. The
Company’s corporate governance practices are outlined in further detail in the Corporate Governance Statement, beginning on page 16
of the Annual Report.
The Directors have received and considered the annual control certification from the Executive Director and the Chief Operating
Officer in accordance with the Principles relating to financial, operational and compliance risks. Material associates, which the
Company does not control, are not dealt with for the purposes of this statement.
Throughout the reporting period, and as at the date of signing of this annual report, the Company was in compliance with the
Principles to the extent disclosed in the Corporate Governance Statement.
INSURANCE OF OFFICERS AND AUDITORS
During the financial year, the economic entity paid a premium for an insurance policy insuring all Directors and officers against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in their
capacity as Director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. In
accordance with common commercial practice, the insurance policy prohibits disclosure of the nature of the liability insured against
and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the Company or of any of its controlled entities against a liability incurred by an officer or
auditor.
PROCEEDINGS ON BEHALF OF GROUP
No person has applied for leave of Court to bring proceedings on behalf of the Group or to intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
NON-AUDIT SERVICES
The Group may decide to employ the auditor for assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Group and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor Moore Stephens Sydney for audit and non-audit services provided during the year
are set out in note 24 of the attached Financial Statements.
The Board of Directors have considered the position and, in accordance with the advice received from the Audit Committee is satisfied
that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied that the provision of non-audit services, as set out in note 24 of the attached
Financial Statements, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following
reasons:
all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of
the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 15.
Signed in accordance with a resolution of the Directors.
Neil Schafer
Chairman
Sydney, 26 August 2014
14
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
Auditor’s Independence Declaration
to the Directors of Clime Investment Management Limited
As lead auditor for the audit of Clime Investment Management Limited and controlled entities for the
year ended 30 June 2014, I declare that to the best of my knowledge and belief, there have been:
a.
b.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Clime Investment Management Limited and controlled entities during
the period.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney this Tuesday, 26 August 2014
Moore Stephens Sydney ABN 90 773 984 843. An independent member of Moore Stephens International Limited –
members in principal cities throughout the world. The Sydney Moore Stephens firm is not a partner or agent of any
other Moore Stephens firm.
15
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
Clime Investment Management Limited (“Company”) and the Board are committed to achieving and demonstrating the highest
standards of corporate governance. In ensuring the highest standard of ethical behaviour and accountability, the Board has included
in its corporate governance policies those matters contained in the ASX Recommendations where applicable. However, the Board also
recognises that full adoption of the above ASX Recommendations may not be practical nor provide the optimal result given the
particular circumstances and structure of the Company.
Clime Investment Management Limited and Controlled Entities
The Company and its controlled entities together are referred to as the Group in this statement.
The relationship between the Board and senior management is critical to the Group’s long term success. The Directors are responsible
to the shareholders for the performance of the Company in both the short and the longer term and seek to balance sometimes
competing objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of the shareholders and other
key stakeholders and to ensure the Group is properly managed.
Day to day management of the Group’s affairs and the implementation of corporate strategy and policy initiatives are delegated by the
Board to the Chief Operating Officer and senior executives as required.
A description of the Company’s main corporate governance practices is set out below. All these practices, unless otherwise stated,
were in place for the entire year.
The Board of Directors
The Board operates in accordance with the broad principles set out in its charter which is available from the corporate governance
section of the company website at www.clime.com.au. The charter details the Board’s composition and responsibilities.
Board composition
The composition of the Board is determined in accordance with the following principles:
the Board shall comprise not less than three members
the Board shall comprise a mix of Independent and Executive Directors
a Director need not be a member
the Board shall comprise Directors with an appropriate range of qualifications and experience
the Chairman should preferably be Non-Executive, is elected by the full Board and is required to meet regularly with the Chief
Operating Officer
During the financial year the names of each Director, their respective role, appointment date and classification were:
Name
N Schafer
J B Abernethy
M Osborn
D J Schwartz
R A Proctor
A Chant
Role
Chairman
Director
Director
Director
Director
Director
Appointed
7 January 2011
17 November 1994
30 March 2006
1 October 1999
24 February 2014
9 July 2014
Classification
Independent
Executive*
Independent
Independent*
Executive
Independent
*Meets the ‘substantial shareholder’ definition under section 9 of the Corporations Act 2001, due to a prescribed direct, indirect and
representative shareholding interest exceeding 5% of the total issued ordinary capital of the Company.
The Board is of the opinion that the current Directors add value to the Company by virtue of their financial commitment and
considerable experience in the Company’s business. The Board also believes that the alignment of the interests of directors with those
of shareholders is an efficient way to ensure the protection of shareholders’ interests.
Responsibilities
The responsibilities of the Board include:
overall strategic direction and leadership of the Company;
approving and monitoring the implementation by management of the Company’s objectives and strategies;
reviewing the Company’s performance against its stated objectives, by receiving regular management reports on its business
situation, opportunities and risk profile;
monitoring financial performance on a monthly basis in comparison with the budget;
approval of the annual and half-year financial statements and liaison with the Company’s auditors through its Audit Committee;
appointing and assessing the performance of the Executive Directors;
ensuring compliance with corporate governance principles by the Company and its officers;
ensuring adequate internal controls exist and are appropriately monitored for compliance with the Company’s regulatory
environment, which includes the Corporations Act 2001, the Listing Rules of the Australian Securities Exchange, taxation
legislation, the Trades Practices Act and its AFS licensing requirements;
establishing and ensuring compliance with ethical standards and determining the Company’s code of conduct; and
reviewing investment strategies, investment decisions and establishing executive authority limits (refer below).
16
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
Board investment authority
The Board has specific authority to review and approve investment decisions which exceed authority limits for management. These
meetings are conducted concurrently with Board Meetings on matters relating to investment decisions.
Clime Investment Management Limited and Controlled Entities
The charter for the Board in respect of investment decisions is as follows:
review investment strategies recommended by management for the Company;
review management strategies for existing investments including provision of additional capital, acquisition and exit strategies;
authorise individual investment proposals where such investments are of an amount requiring Investment Committee approval;
set delegated investment and trading limits for management;
ensure delegated investment and trading limits are adhered to by management;
review risk / return objectives set by management on individual investments to ensure these fit with the overall Company
objectives; and
review performance of individual investments to ensure these are in accordance with established budgets.
Board members
Details of the members of the Board, their experience, expertise, qualifications and term of office are set out in the Directors’ Report
under the heading “Directors”. There are four Non-Executive Directors, all of whom are deemed independent under the principles set
out below (including the Chairman), and two Executive Directors at the date of signing the Directors’ Report.
The Board seeks to ensure that:
at any point in time, its membership represents an appropriate balance between Directors with experience and knowledge of the
Group and Directors with an external or fresh perspective; and
the size of the Board is conducive to effective discussion and efficient decision-making.
Directors’ independence
The Board has adopted specific principles in relation to Directors’ independence. These state that to be deemed independent, a
Director must be a Non-Executive and must:
not be a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder
of the Company;
within the last three years, not have been employed in an executive capacity by the Company or any other group member, or been
a Director after ceasing to hold any such employment;
within the last three years not have been a principal of a material professional adviser or a material consultant to the Company or
any other group member, or an employee materially associated with the service provided;
not be a material supplier or customer of the Company or any other group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer;
have no material contractual relationship with the Company or a controlled entity other than as a Director of the Group;
not have been on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s
ability to act in the best interests of the Company; and
be free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interests of the Company.
Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of
the Company or Group or 5% of the individual Director’s net worth is considered material for these purposes. In addition, a
transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’ understanding of the
Director’s performance.
Nomination of directors
The Chairman is responsible for reviewing the membership of the Board and the nomination of Directors to the Board. Any review or
recommendation is considered by the full Board. Appropriate expertise and experience are essential attributes for any nominee.
Having regard to the size of the Board and the Company, a formal Nomination Committee is deemed neither appropriate nor
necessary.
Term of office
All Directors must retire from office no later than the third annual general meeting (AGM) following their last election. Any Directors
appointed by the Board must be duly re-elected at the next AGM.
Chairman
The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their role and
responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s senior executives.
17
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
Commitment
The Board considers corporate governance to be an important element of its responsibilities. As such, it meets at least six times
throughout the year and attends an annual corporate strategy workshop.
Clime Investment Management Limited and Controlled Entities
Non-Executive Directors are expected to spend at least 15 days a year preparing for, and attending, Board and Committee meetings
and associated activities.
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2014
and the number of meetings attended by each Director is disclosed in the Directors’ Report.
Conflict of interests
In accordance with the Board’s corporate governance practices, a Director that has a perceived or actual conflict of interest (as
determined by themselves, other Board Members or the Chairman) must declare their interest in those dealings by the Company and
take no part in decisions relating to them or the preceding discussions. In addition, the Directors should not receive any papers
pertaining to those dealings.
Independent professional advice
Directors and Board Committees have the right, in connection with their duties and responsibilities, to seek independent professional
advice at the Company’s expense. Prior written approval of the Chairman is required, but this will not be unreasonably withheld.
Performance assessment
The Board undertakes an annual self-assessment of its collective performance, the performance of the Chairman and of its
Committees. This review is coordinated by the Chairman and is assessed against both measurable and qualitative indicators.
Corporate reporting
The Executive Director and the Chief Operating Officer have made the following certifications to the Board for the year ended 30 June
2014:
that the Company’s financial statements are complete and present a true and fair view, in all material respects, of the financial
condition and operational results of the Company and Group and are in accordance with relevant accounting standards; and
that the above statement is founded on a sound system of risk management, internal compliance and control and which
implements the policies adopted by the Board and that the Company’s risk management, internal compliance and control is
operating efficiently and effectively in all material respects.
Board committees
The Board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of
complex issues. Current committees of the Board are the Remuneration and Audit Committees. It is the Company’s policy that each
Committee is comprised entirely of Non-Executive Directors. The committee structure and membership is reviewed on at least an
annual basis. All matters determined by the committees are submitted to the full Board as recommendations for Board decisions.
Remuneration Committee
The Remuneration Committee makes specific recommendations on remuneration packages and other terms of employment for
Executive Directors and senior management. Membership of the Committee will be reviewed annually.
The charter of the Remuneration Committee specifies that remuneration for Executive Directors and other terms of their employment
are reviewed annually by the Committee having regard to performance, relevant comparative information and, where appropriate,
independent expert advice. In addition to base salary, remuneration packages include superannuation, retirement and termination
entitlements, performance-related bonuses and fringe benefits. Non-Executive Directors are also eligible to participate in the
Company’s Employee Share Option Plan (ESOP).
Remuneration packages are set at levels that are intended to attract and retain first class executives capable of managing the Group’s
diverse operations and achieving the Company’s strategic objectives. The remuneration packages of executives are based on a three
tiered structure, comprising of a fixed component, a performance based component and an equity based component. The fixed portion
of the package reflects the core performance of their duties. The executives are given an incentive via a performance based bonus (as
determined by the Remuneration Committee). Equity based remuneration is made via the options issued to the executive under the
ESOP or EIS. The termination payments of Executive Directors and senior management have been determined in advance.
Further information on Directors’ and executives’ remuneration is set out in the Directors’ Report and in the notes to the financial
statements.
Remuneration and other terms of employment for the Executive Directors and certain other senior executives are formalised in service
agreements with annual adjustments (once agreed by the Remuneration Committee) notified in writing. Remuneration of Non-
Executive Directors is determined by the full Board within the maximum amount approved by the shareholders from time to time.
Currently the shareholders have approved a total Board base remuneration pool of $180,000 per annum. The payments to Non-
Executive Directors do not include retirement benefits other than statutory superannuation. Consultation with Non-Executive
Directors outside their duties as Directors is treated as external consultation and is subject to additional fees by consent of the Board.
18
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
The Company has a policy that Non-Executive Directors:
may not participate in the Company’s bonus scheme or Employee Incentive Scheme; and
may participate in the ESOP.
are not entitled to retirement benefits in addition to the statutory minimum;
Clime Investment Management Limited and Controlled Entities
The Remuneration Committee currently comprises Mr. M Osborn and Mr. N Schafer. The Remuneration Committee meets for the
annual reviews of senior management as well as any other time that an executive salary is negotiated. Details of these Directors’
attendance at Remuneration Committee meetings are set out in the Directors’ Report.
Audit Committee
The Audit Committee must comprise at least two members, all of whom will be Non-Executive Directors, who are independent of the
management of the Company. The Chairman of the Committee will be appointed by the Board from time to time. Due to the size and
structure of the Board, and considering the number of Non-Executive Directors, it is not always practicable for the Chairman of the
Committee to be both independent and someone other than the Chairman of the Board. Members will be selected on the basis of their
appropriate skills and at least one member will be financially literate. A quorum for any meeting will be two members of which two
shall be Non-Executive Directors. The Company Secretary will attend Audit Committee meetings and keep minutes.
The Audit Committee should meet at least two times a year. Additional meetings may be convened by the Chairman or the external
auditors as they see fit. The external auditors will be asked to make presentations to the Audit Committee at least twice a year. All
meetings will be minuted.
The charter for the Audit Committee is summarised as follows:
review the Company’s financial reporting processes, internal control and management of financial, business and investment risks
(risk management);
evaluate the processes in place, including communication to and training of staff, to ensure internal control, compliance with
codes of conduct and the management of risk;
review the annual financial statements and determine whether they are complete, consistent with committee members’
understanding of the business and reflect appropriate accounting principles and satisfy themselves that any announcements and
interim financial statements contain adequate and appropriate disclosures;
review the external auditors’ proposed audit scope and approach and ensure that no unjustified restrictions or limitations have
been placed on that scope. Review the performance of the external auditors. Ensure that significant findings and
recommendations made by the external auditors are received, discussed and acted on by the management of the Company on a
timely basis;
review the independence of the external auditors, taking into account the length of service and the provision of non-audit services.
Make recommendations to the Board regarding the reappointment of the external auditors;
review the provision of non-audit services by the external auditors to ensure independence; and
review the Company’s processes for ensuring compliance with laws and regulations. Be satisfied that all regulatory compliance
matters have been considered in the preparation of financial statements.
The Audit Committee currently comprises Mr. M Osborn (Chairman) and Mr. N Schafer. The Audit Committee meets at least two
times per year. Details of these Directors’ qualifications and attendance at Audit Committee meetings are set out in the Directors’
Report. Committee meetings are also attended by the Chief Operating Officer and Audit Partner by invitation as and when required.
External Auditor
The Company and Audit Committee policy is to appoint external auditors who clearly demonstrate quality and independence. The
performance of the external auditor is reviewed annually. Moore Stephens Sydney was appointed as the external auditor in November
2012. It is Moore Stephens Sydney’s policy to rotate audit engagement partners on listed companies in accordance with the
Corporations Act 2001.
An analysis of fees paid to the external auditor, including a break-down of fees for non-audit services, is provided in the notes to the
financial statements. It is the policy of the external auditor to provide an annual declaration of their independence to the Audit
Committee. A copy of this declaration is included on page 15 of this Annual Report.
The external auditor is requested to attend the AGM and be available to answer shareholder questions about the conduct of the audit
and the preparation and content of the audit report.
19
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
Risk Assessment and Management
The Board, through the Audit Committee, is responsible for ensuring there are adequate policies in relation to risk management,
compliance and internal control systems. These policies are available on the company website. In summary, the Company policies
are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and efficiently
managed and monitored to enable achievement of the Group’s business objectives.
Clime Investment Management Limited and Controlled Entities
Considerable importance is placed on maintaining a strong control environment. There is an organisation structure with clearly drawn
lines of accountability and delegation of authority. Adherence to the Code of Conduct is required at all times and the Board actively
promotes a culture of quality and integrity.
The Directors recognise that risk management is an essential element of the Company’s business planning and investment process.
Consolidated risk reviews are a key input in the Company’s annual corporate strategy workshops attended by the Board and senior
management. The identification of key business and financial risks facing the Company is required to ensure management has put in
place appropriate controls.
In addition, and as discussed above, the Board requires each major investment proposal submitted to it for decision to be accompanied
by a comprehensive risk assessment and, where required, management’s proposed mitigation strategies.
Code of Conduct
The Company has developed a statement of values and a Code of Conduct (the Code) which has been fully endorsed by the Board and
applies to all Directors and employees. The Code is reviewed and updated as necessary to ensure it reflects the highest standards of
behaviour and professionalism and the practices necessary to maintain confidence in the Group’s integrity.
In summary, the Code requires that at all times all company personnel act with the utmost integrity, objectivity and in compliance with
the letter and spirit of both the law and Company policies.
A copy of the Code is available on the Company’s website.
Diversity
The Group’s workforce is comprised of people from diverse backgrounds with a range of skills, values and experiences. Diversity
includes, but not limited to, gender, age, ethnicity and cultural background. The Group is committed to providing an environment in
which all employees are treated with fairness and respect, and have equal access to opportunities available in the workplace.
The key element of the diversity policy of the Group is that the Group will seek the best person available for the position which will
not be influenced by gender, age, ethnicity or cultural background. In relation to the appointment of a new director, the board will
seek male and female candidates with the appropriate skills and investment/industry experience to complement the current directors.
Trading in Company Shares or Securities
The Board of the Company has established a set of guidelines governing the trading in the Company’s shares or securities by Directors
and management. These guidelines are designed to supplement (not replace) the legislative and reporting requirements already
established for Directors under the Corporations Act 2001 and the ASX Listing Rules.
The guidelines grant authority to the Board to determine periods during which Directors and management will be prevented from
dealing in Company shares or securities as follows:
at any time the Board believes that the Directors or management are in possession of price sensitive information;
during specified ‘black-out’ periods approaching the release of annual and half-year financial results, and any other Board-
imposed black-out periods that may apply from time to time;
Directors are required to notify the Chairman of their intention to trade in the Company’s shares prior to doing so; and
all other employees should notify the Chief Investment officer/Portfolio Manager prior to trading in any shares.
Directors are required to notify the ASX via the Company Secretary within five business days of any dealing in the Company’s shares.
The Company’s policy for staff, Executive Directors and Non-Executive Directors is that they should not buy and sell the Company’s
shares if they are aware of any undisclosed price-sensitive information about the Company. If they are aware of such information they
may not:
either on behalf of themselves or anyone else, buy, sell or otherwise deal in any shares or other securities which are affected by
the information;
either on behalf of themselves or anyone else, cause or procure any other person to buy, sell or otherwise deal in those securities;
and
communicate the information to anyone else, if they know or reasonably should know that they will use the information, directly
or indirectly, for dealing in the securities.
All Directors and employees are expressly prohibited from trading in Company securities at any time where that trading amounts to
‘short-selling’. For this purpose, ‘short-selling’ amounts to disposing of securities within 3 months of their acquisition.
20
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2014
Trading in Other Listed Shares or Securities
The Board of the Company has established a set of guidelines governing the restrictions on Directors trading in listed shares or
securities in which the Company may have an interest, being financial, advisory, consulting or research in order to remove any
potential conflict of interest.
Clime Investment Management Limited and Controlled Entities
These guidelines are designed to supplement (not replace) the legislative and reporting requirements already established for Directors
under the Corporations Act 2001 and the ASX Listing Rules.
These guidelines include:
the circulation by the Company Secretary of any listed shares or securities deemed by the Chief Investment Officer to be part of
the “Restricted Securities List”;
Directors and officers are required to notify the Chairman of any listed shares or securities which they currently own, that appear
on the most current “Restricted Securities List”;
Directors and officers are required to notify the Chairman of any intention to trade in listed shares or securities that appear on the
most current “Restricted Securities List”; and
for the purposes of the guidelines, Directors’ or officers’ interests in listed shares and securities shall include direct holdings and
beneficial interests.
A copy of the trading policy is also available on the Company’s website.
The Directors are satisfied that the Group has complied with its policies on trading in the Company’s securities.
Continuous Disclosure and Shareholder Communication
The Company has policies and procedures on information disclosure that focus on continuous disclosure of any information
concerning the Company and its controlled entities that a reasonable person would expect to have a material effect on the price of the
Company’s securities. The Company also takes measures to promote communication with shareholders and to encourage effective
participation at general meetings. A summary of these policies and procedures is available on the Company’s website.
The Company Secretary has been appointed as the person responsible for communications with the Australian Securities Exchange
(ASX).
This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and
overseeing and co-coordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
All shareholders receive a copy of the Company’s annual and half yearly reports. In addition, the Company seeks to increase access to
its relevant information via electronic means. Recent initiatives to facilitate this include making all company announcements, media
briefings, details of Company meetings, press releases and financial reports available on the Company’s website.
21
FINANCIAL STATEMENTS
for the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
Clime Investment Management Limited
Financial Statements - 30 June 2014
Contents
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Page
23
24
25
26
27
59
60
These Financial Statements cover the consolidated entity consisting of Clime Investment Management Limited and its
controlled entities.
Clime Investment Management Limited is a company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Clime Investment Management Limited
Level 7, 1 Market Street
Sydney NSW 2000
A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’
Report on pages 4-14, which is not part of these financial statements.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete and accessible at
minimum cost to the company. All press releases, financial statements and other information are available at the Reports
section of our website at www.clime.com.au
22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
Revenue
Unrealised gains on re-classification of available-for-sale financial asset to
Investments in Associates
Net realised and unrealised (losses)/gains on financial assets at fair value
through profit or loss
Occupancy expenses
Administrative expenses
Share of net loss of joint venture and associates
Profit on disposal of property, plant and equipment
Impairment of receivables in relation to the disposal of held-for-sale investment
Profit before income tax
Income tax expenses
Profit for the year
Other comprehensive income, net of income tax
Net value (loss)/gain on available for sale financial assets
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Notes
5
2014
$
8,746,240
2013
$
7,659,766
13(a)
2,697,269
-
(32,547)
(44,409)
(6,713,287)
(285,639)
29,507
-
1,037,066
(34,323)
(6,045,715)
(160,155)
-
(249,414)
4,397,134
2,207,225
(1,194,120)
3,203,014
(785,235)
1,421,990
13(d)
6
8(a)
23(a)
(18,303)
18,303
(18,303)
3,184,711
18,303
1,440,293
Profit attributable to members of Clime Investment Management Limited
3,203,014
1,421,990
Total comprehensive income attributable to members of Clime Investment
Management Limited
3,184,711
1,440,293
Earnings per share
Basic - cents per share
Diluted - cents per share
25(a)
25(b)
6.8
6.4
3.0
2.9
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
Clime Investment Management Limited and Controlled Entities
Notes
2014
$
2013
$
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial assets at fair value through profit or loss
Total Current Assets
Non-Current Assets
Investments accounted for using the equity method
Available-for-sale financial assets
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Unearned revenue
Current tax liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued Capital
Reserves
Retained earnings
Total Equity
7(a)
10
11
12
13
14
15
16
17
18
19
20
21
4,884,624
1,397,642
120,890
7,440,086
13,843,242
7,876,831
-
-
144,350
769,581
6,201,433
14,992,195
5,062,607
990,965
113,221
9,756,530
15,923,323
285,639
5,813,549
-
1,046,588
885,899
6,506,781
14,538,456
28,835,437
30,461,779
1,852,567
222,951
236,312
157,369
2,469,199
1,352,736
668,745
-
160,472
2,181,953
2,402,753
2,402,753
1,816,769
1,816,769
4,871,952
3,998,722
23,963,485
26,463,057
22
23(a)
23(b)
20,701,542
175,166
3,086,777
23,963,485
25,202,224
133,449
1,127,384
26,463,057
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
Consolidated
Issued
capital
Notes
$
Share-
based
payments
reserve
$
Available
for sale
reserve
Retained
earnings
Total
$
$
$
Balance as at 1 July 2012
25,391,513
86,433
Profit for the year
Other comprehensive income for
the year net of tax
Total comprehensive income for
the year net of tax
Transactions with equity holders
in their capacity as equity
holders:
- Recognition of share-based
Payments
- On-market share buy- back,
including transaction costs
- Dividends provided for or paid
28(b)
22(b)
9(a)
-
-
-
-
(189,289)
-
-
-
-
28,713
-
-
-
-
18,303
18,303
-
-
-
1,434,390
26,912,336
1,421,990
1,421,990
-
-
-
18,303
18,303
28,713
-
(1,728,996)
(189,289)
(1,728,996)
Balance as at 30 June 2013
25,202,224
115,146
18,303
1,127,384
26,463,057
Profit for the year
Other comprehensive income for
the year net of tax
Total comprehensive income for
the year net of tax
Transactions with equity holders
in their capacity as equity
holders:
- Return of capital
- Recognition of share-based
Payments
- On-market share buy- back,
including transaction costs
- Dividends provided for or paid
22(b)
28(b)
22(b)
9(a)
-
-
-
(4,031,571)
-
-
-
-
-
60,020
(469,111)
-
-
-
Balance as at 30 June 2014
20,701,542
175,166
-
3,203,014
3,203,014
(18,303)
(18,303)
-
-
-
-
-
-
-
-
-
(18,303)
(18,303)
(4,031,571)
60,020
-
(1,243,621)
(469,111)
(1,243,621)
3,086,777
23,963,485
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
25
CONSOLIDATED STATEMENT OF CASH FLOWS
As at 30 June 2014
Clime Investment Management Limited and Controlled Entities
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for financial assets at fair value through profit or loss
Fees received in the course of operations
Expense payments in the course of operations
Dividends received
Interest received
Income taxes paid
Notes
2014
$
2013
$
3,900,980
(1,505,045)
2,395,935
8,842,377
(6,580,613)
648,383
168,265
(250,000)
2,527,719
(2,137,765)
389,954
7,248,948
(5,854,726)
799,899
194,277
-
Net cash inflow from operating activities
7(b)
5,224,347
2,778,352
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets held for sale
Proceeds from disposal of available-for-sale financial assets
Payments for acquisition of available-for-sale financial assets
Payments for acquisition of business assets
Proceeds from disposal of investment accounted for using the equity method
Payments for property, plant and equipment
-
523,304
-
-
-
(181,330)
6,000
-
(31,279)
(312,716)
59,954
(15,532)
Net cash inflow from / (used in) investing activities
341,974
(293,573)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for shares bought back (including transaction costs)
Capital returns to shareholders
Dividends paid to company’s shareholders
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
(469,111)
(4,031,571)
(1,243,621)
(189,289)
-
(1,728,996)
(5,744,303)
(1,918,285)
(177,982)
566,494
5,062,607
4,496,113
Cash and cash equivalents at end of the year
7(a)
4,884,624
5,062,607
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
26
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
1. CORPORATE INFORMATION
Clime Investment Management Limited and Controlled Entities
Clime Investment Management Limited (the Company) is a limited company incorporated in Australia. The addresses of its registered
office and principal place of business are disclosed in the introduction to the annual report. The principal activities of the Company
and its subsidiaries (the Group) are described in note 29.
The financial statements of Clime Investment Management Limited for the year ended 30 June 2014 were authorised for issue in
accordance with a resolution of the directors on 26 August 2014 and covers the consolidated entity consisting of Clime Investment
Management Limited and its subsidiaries as required by the Corporations Act 2001.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards, including Australian Accounting Interpretations, the Corporations Act 2001 and other authoritative
pronouncements of the Australian Accounting Standards Board. These financial statements are presented in Australian dollars, which
is the Group’s functional and presentation currency. The Group is a for profit entity for financial reporting purposes under Australian
Accounting Standards.
The financial statements include the consolidated entity consisting of Clime Investment Management Limited and its subsidiaries.
Clime Investment Management Limited is a publicly listed company, incorporated and domiciled in Australia.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance
with AIFRS ensures that the consolidated financial statements and notes of Clime Investment Management Limited comply with
International Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss and certain classes
of property, plant and equipment.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher
degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed
in note 4.
(b) Principles of consolidation
Subsidiaries
(i)
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Clime Investment Management
Limited (“Company” or “Parent Entity”) as at 30 June 2014 and the results of all subsidiaries for the year then ended. Clime
Investment Management Limited and its subsidiaries together are referred to in these financial statements as the “Group” or the
“Consolidated Entity”.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to
note 2(f)).
Intercompany transactions and balances between Group companies are eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income
and statement of financial position respectively.
27
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(b) Principles of consolidation (continued)
Associates
(ii)
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights and the power to participate in the financial and operating policy decisions of the entity.
Investments in associates are accounted in the consolidated financial statements using the equity method of accounting, after initially
being recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified
on acquisition (refer to note 13).
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the profit or loss, and its share of
post-acquisition movements in reserves is recognised in the statement of changes in equity. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. Dividends received or receivable from associates in the
consolidated financial statements reduce the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Joint venture entities
(iii)
A joint venture is either an entity or operation over whose activities the Group has joint control, established by contractual agreement.
Investments in joint venture entities are accounted for using the equity method. Investments in joint venture entities are assessed for
impairment when indicators of impairment are present and if required, written down to the recoverable amount.
The Group’s share of joint venture entity’s net profit and other comprehensive income is recognised in the statement of profit or loss
and other comprehensive income respectively from the date joint control commences until the date joint control ceases. Other
movements in reserves are recognised directly in reserves.
If the Group’s share of losses exceeds its interest in a joint venture entity, their carrying value is reduced to nil and recognition of
further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on
behalf of the joint venture entity.
Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is accounted for in accordance with the
Group’s accounting policy for goodwill arising in acquisition of asset. Refer to note 2(f).
Transactions with the joint venture are eliminated to the extent of the Group’s interest in the joint venture until such time as they are
realised by the joint venture on consumption or sale.
(c) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are stated net of the
amounts of goods and services tax paid. Revenue is recognised for the major business activities as follows:
(i)
Refer to note 2(j).
Investment income (excluding dividend and interest income)
Dividend income (excluding dividends received from associates)
(ii)
Dividend income is recorded in the profit or loss on an accruals basis when the Group obtains control of the right to receive the
dividend.
Services income
(iii)
Fees and commissions that relate to specific transactions or events are recognised as revenue in the period that the services are
provided. When they are charged for services provided over a period, they are recognised as revenue on an accruals basis as the
services are provided.
Investment education and software
(iv)
The Group operates and distributes the online, web-based equity valuation tool, MyClime. Client subscriptions comprise both online
access to the valuation tool as well as access to member training and education services over the period of subscription. Revenue
received in respect of client subscriptions is recognised on an accruals basis and amortised over the period of the subscription.
Interest income
(v)
Interest income is recorded in the profit or loss when earned on an accruals basis using the effective interest method. The effective
interest method uses the effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the
expected life of the financial asset.
28
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(d) Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the notional
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An
exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset
or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that
at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and for unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in other comprehensive income and equity are also
recognised directly in other comprehensive income and equity, respectively.
Clime Investment Management Limited and its wholly owned subsidiaries have implemented the tax consolidation legislation for the
whole of the financial year. Clime Investment Management Limited is the head entity in the tax consolidated group. These entities are
taxed as a single entity.
(e) Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other long
term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the
finance balance outstanding. The interest element of the finance cost is charged to the profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and
equipment acquired under finance leases are depreciated over the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-
line basis over the period of the lease.
(f) Acquisitions of assets
The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of
whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or
liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in an acquisition, the value of the
instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the
published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a
more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Acquisition-related costs are recognised in profit or loss as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair
value of the Group’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 2(m)). If the cost of acquisition
is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the profit or loss, but only
after a reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their net present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
(g) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
29
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(h) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities on the statement of financial position.
(i) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for doubtful debts
and have a repayment terms between 30 and 90 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An
allowance for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of receivables. The amount of the allowance is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the allowance is
recognised in the profit or loss.
(j) Investments and other financial assets
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which
the investments were acquired. Management determines the classification of its investments at initial recognition.
Financial assets at fair value through profit or loss
(i)
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on
initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term or
if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be
sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also classified as held for trading unless
they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected
to be realised within 12 months of the reporting date.
The Group’s listed trading investments and its unlisted investments (excluding equity accounted investments) are classified as
financial assets at fair value through profit or loss.
Loans and receivables
(ii)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are
included in current assets, except for those with maturities greater than 12 months after the balance date which are classified as non-
current assets. Loans and receivables are included in receivables in the statement of financial position.
Held-to-maturity investments
(iii)
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. Loans and receivables and held-to-maturity investments
are carried at amortised cost using the effective interest method.
Available-for-sale financial assets
(iv)
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within 12 months of the reporting date.
Purchases and sales of investments are recognised on the trade date – the date on which the Group commits to purchase or sell the
asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.
Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or
loss’ category are included in the profit or loss in the period in which they arise. Unrealised gains and losses arising from changes in
the fair value of non-monetary securities classified as available-for-sale are recognised in equity in the available-for-sale investments
revaluation reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are
included in the profit or loss as gains and losses from investment securities.
30
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(j) Investments and other financial assets (continued)
The fair values of quoted investments are determined by reference to the their quoted market price, as quoted on its primary stock
exchange on the day of valuation, or an alternative basis if deemed more appropriate. Given the size and nature of the Group’s listed
investments, however, the closing bid price may not always be the most appropriate basis for determining fair value. The Directors
will consider the valuations of each of the Group’s listed investments in accordance with this accounting policy at each reporting date.
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a
security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss.
Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale investments are not reversed
through the profit or loss.
(k) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted
market prices at the reporting date. Refer to note 2(j) for further information.
The fair value of financial instruments that are not traded in an active market (for example, unlisted securities) is determined using
alternative valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions
existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments
held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial
instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial instruments.
(l) Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.
Depreciation of assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual
values, over their estimated useful lives, as follows:
- Buildings
- Plant and equipment
50 years
3-20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 2(g)).
Properties in the process of construction for administrative purposes are carried at cost, less any recognized impairment loss. Cost
includes professional fees. Depreciation of these assets commences when the assets are ready for their intended use.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in profit or loss.
When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to
retained earnings.
31
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(m) Intangible assets
Goodwill
(i)
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates is included in investments in associates.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or group of cash-generating
units) that is expected to benefit from the synergies of the combination.
Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. 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 the goodwill is recognized directly in profit or loss in the consolidated statement of
comprehensive income. An impairment loss recognized for goodwill is not reversed in subsequent periods. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Investment Management contracts and relationships
(ii)
Investment Management contracts have a finite useful life and are carried at cost less accumulated amortisation and impairment losses.
Amortisation is calculated using the straight line method to allocate the cost of investment management contracts over their estimated
useful lives (which vary from 10 to 15 years). Investment Management contracts are tested for impairment annually.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition. They are recognized initially at fair value and
subsequently measured at amortised cost using the effective interest method.
(o) Employee benefits
Wages and salaries, annual leave and long service leave
(i)
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities recognised in respect of long service leave are measured as the
present value of the estimate future cash outflows to be made by the Group in respect of services provided by employees up to
reporting date.
Bonus plans
(ii)
A liability for employment benefits in the form of bonus plans is recognised when there is no realistic alternative but to settle the
liability and at least one of the following conditions is met:
there are formal terms in the plan for determining the amount of the benefit;
the amounts to be paid are determined before the time of completion of the financial statements; or
past practice gives clear evidence of the amount of the obligation.
Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they
are settled.
(iii)
Contributions are made by the Group to employee superannuation funds and are charged as expenses when incurred.
Superannuation
Employee benefit on-costs
(iv)
Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the
employee benefits to which they relate are recognised as liabilities.
Share-based payments
(v)
Share-based compensation benefits are provided to employees via the Clime Investment Management Limited Employee Incentive
Scheme.
32
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(o) Employee benefits (continued)
Employee Incentive Scheme (EIS)
The Clime Investment Management Limited Employee Incentive Scheme (EIS) was approved by shareholders at the Company’s
Annual General Meeting held in October 2007.
The EIS provides an opportunity for eligible employees, as determined by the Board from time to time, to purchase shares in the
Company via the provision of an interest-free, non-recourse loan. Shares issued in accordance with the EIS are subject to certain
restrictions for the duration of the loan, including continued employment with the Company and share transfer locks. Upon the
expiration of the loan term, and the repayment of the outstanding loan balance by relevant employees, the shares become
unconditional.
Due to certain aspects of the EIS - specifically the share transfer locks and non-recourse nature of the loans - the Company is required
to classify shares issued under the EIS as ‘in-substance options’ in accordance with AASB 2 Share-based Payment.
As such, the underlying instruments, consisting of the outstanding employee loans and the issued fully paid ordinary shares, are not
recognised in the financial statements. Instead, the fair value of the ‘in-substance options’ granted is recognised as an employee
benefit expense with a corresponding increase in the share-based payments reserve. The fair value is measured at grant date and
recognised on a straight-line basis over the term of the loans.
The fair value of the ‘in-substance options’ at grant date is determined using a binomial distribution to statistically estimate the value
of the benefits granted. The valuation model takes into account the share issue price, the term of the loan, the current price and
expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the loan.
In order to recognise the impact of employee departures and the resultant early termination of their respective loan agreements, at each
balance date the Company revises its estimate of the number of shares that may ultimately become unconditional. The employee
benefit expense recognised each period takes into account the most recent estimate.
Following the expiration of the term of the loan, any repayment received from employees in respect of the amortised loan balance is
recognised in contributed equity in the statement of financial position. The balance of the share-based payments reserve relating to
those shares is also transferred to contributed equity.
To the extent that an employee chooses not to repay the amortised loan balance at the completion of the loan term (i.e. where the value
of the shares is less than the amortised loan balance), then the Company will buy back those shares and the balance of the share-based
payments reserve relating to those shares is transferred to a lapsed option reserve.
It should be noted that the application of this accounting policy will result in differences between the number of shares on issue as
disclosed in the Group’s statutory reports, and the number of shares on issue as advised to the Australian Securities Exchange.
(p) 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 the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. When 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 (where the effect of
the time value of money is material).
(q) Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual
agreement.
Ordinary shares are classified as equity.
33
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(q) Financial liabilities and equity instruments (continued)
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included
in the cost of the acquisition as part of the purchase consideration.
Repurchase of Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Financial liabilities are classified as ‘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 costs 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.
(r) Dividends
A liability is recorded for the amount of any dividend declared on or before the end of the period but not distributed at reporting date.
(s) Earnings per share
Basic earnings per share
(i)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period, adjusted
for bonus elements in ordinary shares issued during the period.
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to potential dilutive ordinary shares.
(t) Goods and service tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (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
for receivables and payables which are recognised inclusive of GST.
(ii)
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 within operating cash flows.
(u) New accounting standards and interpretations adopted by the Group
The Group has adopted the following new and amended Australian Accounting Standards and interpretations that are mandatorily
effective for the first time for the financial year beginning 1 July 2013:
i) AASB 10: Consolidated Financial Statements
AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate
Financial Statements dealing with the accounting for consolidated financial statements. The new control model broadens the situations
when an entity is considered to be controlled by another entity. Consequential amendments were also made to this and other standard
via AASB 2011-7 and AASB 2012-10. The Group has considered the adoption of this standard and has reviewed all subsidiaries
including investments in Associates to confirm their inclusion for consolidation purposes. This has resulted in no impact on the
amounts recognised in the consolidated financial statements.
ii) AASB 11: Joint Arrangements
AASB 11 requires joint arrangements to be classified as either “joint operations” (where the parties that have joint control of the
arrangement have rights to the assets and obligations for liabilities) or “joint ventures” (where the parties that have joint control of the
arrangement have rights to the net assets of the arrangement). Stocks in Value Pty Limited is a separately identifiable entity. Under
AASB 131, consistent with its legal structure, the Group’s interest in Stocks in Value Pty Limited was classified as a joint venture. AS
the Group’s interest in Stocks in Value Pty Limited provides the Group and the other joint venturer with rights to the net assets of the
entity, under AASB 11 the Group’s interest in Stocks in Value Pty Limited is classified as a joint venture.
34
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(u) New accounting standards and interpretations adopted by the Group (continued)
iii) AASB 12: Disclosure of Interests in Other Entities
AASB 12 includes all disclosures relating to an entity’s interest in subsidiaries, joint arrangements, associates and structured entities.
New disclosures have been introduced about the judgments made by the management to determine whether control exists, and to
require summarised information about joint arrangements, associates, structured entities and subsidiaries with non-controlling
interests. The application of AASB 12 does not have any material impact on the amounts recognised in the consolidated financial
statements.
iv) AASB 13: Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
Change in accounting policy: fair value measurement
AASB 13 Fair Value Measurement aims to improve consistency and reduce complexity by providing a precise definition of fair value
and a single source of fair value measurement and disclosure requirements for use across Australian Accounting Standards. The
standard does not extend the use of fair value accounting but provides guidance on how it should be applied where its use is already
required or permitted by other Australian Accounting Standards.
The Group has adopted AASB 13 Fair Value Measurement with effect from 1 July 2013. As a result, the Group has adopted a new
definition of fair value, as set out below. The change had no material impact on the measurement of the Group's assets and liabilities.
However the Group has included new disclosures in the financial statements which are required under AASB 13. Refer to Note 2(k)
for further information.
AASB 13 removes the requirement to use bid/ask prices for actively quoted financial instruments. Rather the most representative price
within the bid/ask spread is used. Management has elected to use last traded price, consistent with its securities pricing policy. Where
last traded price is used by an entity, management has ensured at balance date that the last traded price falls within the bid/ask spread
as at that date. Where it falls outside the bid/ask spread, an alternative basis most representative of fair value within the bid/ask spread
will be used.
(v) New accounting standards and interpretations for application in future periods
The AASB has issued certain new and amended Accounting Standards and Interpretations that are not mandatory for 30 June 2014
reporting period and hence have not been early adopted by the Group. The Group’s assessment of the new and amended
pronouncements that are relevant to the Group but applicable in future reporting periods is set out below:
AASB 9: Financial Instruments (2009 or 2010 version) , AASB 2009-11 Amendments to Australian Accounting Standards
i)
arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010),
AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective Date of AASB 9 and Transition Disclosures
and AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments
(effective from 1 January 2018)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities.
It has now also introduced revised rules around hedge accounting. The standard is not applicable until 1 January 2018 but is available
for early adoption. The directors do not expect this to have a significant impact on the recognition and measurement of the Company’s
financial instruments as they are carried at fair value through profit or loss. The derecognition rules have not been changed from the
previous requirements, and the Company does not apply hedge accounting. The Company has not yet decided when to adopt AASB 9.
AASB 2012–3: Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
(ii)
(effective for annual reporting periods beginning on or after 1 January 2014)
AASB 2012-3 clarifies the offsetting criteria in AASB 132 Financial Instruments: Presentation and address inconsistencies in their
application. This includes clarifying the meaning of ‘currently has a legally enforceable right of set-off and that some gross settlement
arrangements may be considered equivalent to net settlement. The standard is effective for annual reporting periods beginning on or
after 1 January 2014. The directors do not expect this to have a significant impact on the Company’s financial statements.
AASB 2013–3: Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets (applicable for
(iii)
annual reporting periods commencing on or after 1 January 2014).
This Standard amends the disclosure requirements in AASB 136: Impairment of Assets pertaining to the use of fair value in
impairment assessment and is not expected to significantly impact the Group’s financial statements.
35
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
3. FINANCIAL RISK MANAGEMENT
Clime Investment Management Limited and Controlled Entities
The Group’s activities expose it to various financial risks, including primarily market risk, credit risk and liquidity risk. Risk
management is carried out by senior management under policies and strategies approved by the Board and Audit Committee. There
has been no substantive changes to the Group’s exposure to financial instrument risk, its objectives, polices and processes for
managing those risks and the methods used to measure them from previous periods unless otherwise stated in the note.
(a) Market risk
(i) Price risk
The Group’s activities expose it primarily to equity securities price risk. This arises from the following:
Investments held by the Group and classified on the statement of financial position as either available-for-sale or at fair value
through profit or loss; and
Exposure to adverse movements in equity prices which may have negative flow-on effects to the revenue derived from the
management of clients’ investment portfolios.
The Group is not directly exposed to commodity price risk.
The Group seeks to reduce market risk by adhering to the prudent investment guidelines of its Investment Committee. These
guidelines include ensuring that the Group is not overly exposed to any one security and/or sector of the market, and must operate
within set parameters.
Price Risk Sensitivity Analysis
The table below summarises the pre-tax impact of both a general fall and general increase in market prices by 5%. The analysis is
based on the assumption that the movements are spread equally over all assets in the investment and trading portfolios.
Impact on profit (pre-tax)
Impact on equity (pre-tax)
30 June 2014
30 June 2013
5% Increase in
Market Prices
5% Decrease in
Market Prices
5% Increase in
Market Prices
5% Decrease in
Market Prices
$1,093,476
-
($1,093,476)
-
$744,289
$290,678
($744,289)
($290,678)
(ii) Interest rate risk management
The Group is exposed to interest rate risk because at balance date, the Group has a significant proportion of its assets held in interest-
bearing bank accounts and deposits at call. As such, the Group’s revenues and assets are subject to interest-rate risk to the extent that
the cash rate falls over any given period. Given that the Group does not have – nor has it ever had - any material interest-bearing
borrowings/liabilities at balance date, the Board and management do not consider it necessary to hedge the Group’s exposure to
interest rate risk.
Interest Rate Risk Sensitivity Analysis
The table below summarises the pre-tax impact on the Group’s profits due to both a decrease and increase in interest rates by 100 basis
points (one percentage point). The analysis is based on the assumption that the change is based on the weighted average rate of
interest on cash at bank and cash on deposit for the year (2.99% weighted average interest rate in 2014 and 3.86% weighted average
interest rate in 2013).
30 June 2014
30 June 2013
100 bps Increase in
Interest Rate
100 bps Decrease in
Interest Rate
100 bps Increase in
Interest Rate
100 bps Decrease in
Interest Rate
Impact on profit (pre-tax)
$56,321
($56,321)
$48,117
($48,117)
36
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
3. FINANCIAL RISK MANAGEMENT (CONT.)
(b) Credit risk
Clime Investment Management Limited and Controlled Entities
(i) Cash and cash equivalents
The credit risk of the Group in relation to cash and cash equivalents is the carrying amount and any accrued unpaid interest. The
average weighted maturity of the cash portfolio at any given time is no greater than 90 days. The credit quality of material deposits of
cash and cash equivalents can be assessed by reference to external credit ratings.
Cash at bank and short-term bank deposits
A-1+
A-1
2014
$
2013
$
2,638,595
2,246,029
1,484,495
3,578,112
(ii) Trade and sundry receivables
The credit risk of the Group in relation to trade and sundry receivables is their carrying amounts. This risk is largely mitigated by
automated systems in place which support collectability of debts on a timely basis.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the ability to close-out market
positions. The Group’s management and its Board actively review the liquidity position on a regular basis to ensure the Group is
always in a position to meet its debts and commitments on a timely basis.
(i) Maturities of financial assets and liabilities
The following table details the Group’s remaining contractual maturity for its non-derivative financial assets and liabilities. The table
has been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is liable
to meet its obligations. The table includes both interests (where applicable) and principal cash flows.
Maturity analysis – Group 2014
Financial liabilities
Trade and other payables
Total financial liabilities
Financial assets
Trade and other receivables – current
Total financial assets
Maturity analysis – Group 2013
Financial liabilities
Trade and other payables
Total financial liabilities
Financial assets
Trade and other receivables – current
Total financial assets
Carrying
amount
$
Contractual
cash flows
$
Less than 6
months
$
6 – 12
months
$
1-3 years
$
1,642,054
1,642,054
1,642,054
1,642,054
1,642,054
1,642,054
-
-
1,397,643
1,397,643
1,397,643
1,397,643
1,372,643
1,372,643
25,000
25,000
1,142,281
1,142,281
1,142,281
1,142,281
1,142,281
1,142,281
-
-
990,965
990,965
990,965
990,965
865,965
865,965
125,000
125,000
-
-
-
-
-
-
-
-
Trade and sundry creditors are non-interest bearing, unsecured and generally payable within 30 days from the date of service / supply.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
(d) Fair value risk
(i) Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the assets or liability that are
not based on observable market data (unobservable inputs).
37
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
3. FINANCIAL RISK MANAGEMENT (CONT.)
(d) Fair value risk (continued)
Clime Investment Management Limited and Controlled Entities
All financial instruments that are measured subsequent to initial recognition at fair value comprise financial assets at fair value through
profit or loss, available-for-sale financial assets and contingent consideration.
At 30 June 2014
Financial assets at fair value through profit or loss
Level 1
$
Level 2
$
Level 3
$
Total
$
-
Listed equities and funds
-
Listed preference shares
-
Listed options
- Unlisted funds
At 30 June 2013
Financial assets at fair value through profit or loss
-
Listed equities and funds
-
Listed preference shares
- Unlisted managed funds
Available for sale financial assets
- Unquoted equities
5,717,051
649,646
106,189
-
6,472,886
-
-
-
967,200
967,200
Level 1
$
Level 2
$
Level 3
$
7,795,119
1,297,089
-
-
9,092,208
-
-
664,322
-
664,322
5,813,549
5,813,549
-
-
-
-
-
-
-
-
5,717,051
649,646
106,189
967,200
7,440,086
Total
$
7,795,119
1,297,089
664,322
5,813,549
15,570,079
(ii) Reconciliation of Level 3 fair value measurements of financial assets
Available-for-sale investments
Opening balance
Partial disposals during the year
Fair value gains recognised in profit or loss on gaining significant influence
Total gains recognised in other comprehensive income
Reclassification of interests in Jasco Holdings Limited from available-for-sale to
investments in associate on gaining significant influence (see note 13)
Closing balance
Unquoted
equities
2014
$
5,813,549
(615,684)
2,678,966
-
Unquoted
equities
2013
$
5,787,402
-
-
26,147
(7,876,831)
-
-
5,813,549
(iii) Valuation technique
Listed Investment in equity and preference securities and managed funds
When fair values of publicly traded equities and preference securities and managed funds are based on quoted market prices in an
active market, the instruments are included within Level 1 of the hierarchy. The Group values these investments at closing prices at
year end.
Unlisted managed funds
The Group invests in managed funds, which are not quoted in an active market. The Group considers the valuation techniques and
inputs used in valuing these funds as part of its due diligence prior to investing, to ensure they are reasonable and appropriate and
therefore the NAV of these funds may be used as an input into measure their fair value. In measuring this fair value, consider is also
paid to any transactions in the shares of the fund. Depending on the nature and level of adjustments needed to the NAV and the level
of trading in the fund, the Group classified these funds as Level 2.
Unlisted equity investments
The Group invested in a public unlisted company which are not quoted in an active market. Transactions in such investments do not
occur on a regular basis. The Group used a combination of net asset value method based on the value of the assets of the business less
its liabilities adjusted for fair value and market based valuation technique for valuing these positions. The Group classifies the fair
value of these investments as Level 3.
38
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
4. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Critical accounting estimates and assumptions
Clime Investment Management Limited and Controlled Entities
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Estimated impairment of goodwill and investment management contracts and relationships
The Group tests annually whether goodwill and investment management contracts and relationships have suffered any impairment, in
accordance with the accounting policy stated in note 2(m). The recoverable amounts of cash generating units have been determined
based on fair value less costs to sell. The fair values of cash generating units have been determined in accordance with the Directors’
assessments of their values based on arms’ length transactions between knowledgeable and willing parties on the basis of the best
information available. In determining these amounts, the Directors have considered the outcomes of recent transactions for similar
assets and businesses.
The Directors’ assessments of the fair values of cash generating units are subject to an element of subjectivity concerning the selection
of appropriate benchmarks and transactions. A material adverse change in one or more of the underlying variables applied in the
estimates of fair values, therefore, may impact their recoverable amounts and result in alternative outcomes for the purposes of
impairment testing.
(b) Subsidiaries
The Group assessed its interests in other entities and concluded that its accounting for the arrangements under AASB 10: Consolidated
Financial Statements would not change from the Group’s accounting for its interests in other entities under AASB 127: Consolidated
and Separate Financial Statements. Other than its interest in Clime Asset Management Pty Limited and Clime Investors Education Pty
Limited, the Group holds no interests in other entities that would provide the Group with control over those entities.
(c) Joint Arrangements
The Group assessed its interests in its joint arrangements and concluded that its accounting for the arrangements under AASB 11: Joint
Arrangements would not change from the Group’s accounting for the arrangements under AASB 131: Interests in Joint Ventures.
(d) Associates
The Group assessed its interests in other entities and concluded that its accounting for the arrangements under AASB 12: Disclosure of
Interests in Other Entities would not change from the Group’s accounting for its interests in other entities under AASB 128:
Investments in Associates and Joint Ventures. Other than its interest in Jasco Holdings Limited, the Group holds no interests in other
entities that would provide the Group with significant influence over those entities.
5. REVENUE
Management fees and commissions
Performance fees
Consulting fees
Director fees
Dividends received
Interest received
Investment software and education
Other income
Total revenue
See note 29(a) for an analysis of revenue by major products and services
6. EXPENSES
Profit before income tax includes the following specific expenses:
Employee benefits expense (excluding superannuation)
Defined contribution superannuation expense
Share-based payment expense recognised
Rental expense relating to operating leases
Minimum lease payments
Depreciation of plant and equipment
Amortisation of investment management contracts
2014
$
2013
$
7,015,238
4,438
218,000
63,750
643,789
168,265
447,243
185,517
8,746,240
4,293,111
201,591
60,020
3,469
73,076
305,348
4,736,143
546,975
88,867
60,000
996,421
194,277
876,760
160,323
7,659,766
3,504,452
176,758
28,713
-
50,056
305,348
39
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
7. STATEMENTS OF CASH FLOWS
a) Reconciliation of cash
For the purposes of the statement of financial position and statement of cash
flows, cash and cash equivalents comprise:
Cash and bank balances
Short term bank deposits with maturity of less than three months
Clime Investment Management Limited and Controlled Entities
2014
$
2013
$
4,884,624
-
4,884,624
5,027,764
34,843
5,062,607
Cash at bank and in hand is interest bearing. Cash at bank and deposits at call bear floating interest rates between 2.2 and 3.4%
(2013: 2.1 and 4.1%).
b) Reconciliation of profit after income tax to net cash inflow from operating
activities:
Profit for the year
Depreciation and amortisation
Loss/(gain) on disposal of associate/available-for-sale financial assets
Impairment of receivable in relation to the disposal of held-for-sale investment
Gain on disposal of Property, plant and equipment
Non-cash employee benefits expense
Share of loss of joint venture and associates
Gain on revaluation of contingent consideration payable
Unrealised gains on re-classification of available-for-sale financial asset
Other non-cash movements recognised in profit or loss
Change in operating assets and liabilities
Trade and sundry debtors and other assets
Financial assets at fair value through profit or loss
Trade and sundry creditors
Current tax liability
Deferred tax assets and liabilities
Provisions and other non-current operating liabilities
Net cash inflow from operating activities
8. INCOME TAX EXPENSE
(a) Income tax (benefit) / expense
Current tax expense
Deferred tax expense
Deferred income tax expense included in income tax expense comprises:
Decrease in deferred tax assets (note 17)
Increase in deferred tax liabilities (note 21)
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2013: 30%)
Tax effect of amounts which are not deductible / (taxable) in calculating taxable
income:
Amortisation of intangibles
EIS expense
Dividends received
Sundry items
(Over)/Under provision of prior year tax
Previously unrecognised tax losses brought to account
Income tax expense
3,203,014
378,424
92,380
-
(29,507)
60,020
285,639
-
(2,697,269)
-
625,654
2,316,444
54,037
236,312
702,302
(3,103)
5,224,347
483,974
710,146
1,194,120
116,318
593,828
710,146
1,421,990
355,404
(12,248)
249,414
-
28,713
160,155
(25,117)
-
97,185
223,389
(844,937)
293,550
-
793,079
37,775
2,778,352
-
785,235
785,235
605,428
179,807
785,235
4,397,134
2,207,225
1,319,140
662,168
91,604
18,006
(192,858)
4,583
1,240,475
(46,355)
-
1,194,120
91,604
8,614
(254,601)
(4,663)
503,122
282,113
-
785,235
40
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
9. DIVIDENDS
(a) Dividends provided for or paid during the year
Final dividend in respect of the previous financial year – nil per share fully
franked (2013: 2 cents per share fully franked)
Interim dividend in respect of the current financial year – 2.5 cents per share
fully franked (2013: 1.5 cents per share fully franked)
Fully franked portion
(b) Dividends not recognised at year end
Clime Investment Management Limited and Controlled Entities
2014
$
2013
$
-
984,701
1,243,621
1,243,621
744,295
1,728,996
1,243,621
1,728,996
Proposed fully franked dividend –3 cents per share (2013: nil)
1,501,345
-
(c) Return of capital not recognised at year end
Proposed return of capital – nil cents per share (2013: 8 cents per share)
-
3,977,571
(d) Franking account balance
Amount of franking credits available for subsequent financial years are:
Franking account balance brought forward
Fully franked final dividend paid
Franking credits arising from tax paid
Franked dividends received from other corporations
Balance of franking account at year end adjusted for franking credits that
will arise from the payment of the current tax liability
Impact on franking account of proposed dividend not recognised at year end
10. TRADE AND OTHER RECEIVABLES - CURRENT
Trade receivables (note a)
Sale consideration receivable (note b)
Other receivables
27,604
(532,980)
250,000
275,511
20,135
643,434
332,642
1,040,000
25,000
1,397,642
392,515
(740,999)
-
376,088
27,604
-
865,965
-
125,000
990,965
(a) Trade receivables are non-interest bearing and are generally subject to 30 day terms.
(b) Sale consideration receivable represents amounts receivable from the disposal of property, plant and equipment.
(c) Apart from the sale consideration receivable as per note (b) above, the Group did not have any significant credit risk exposure to
any single counterparty or any group of counterparties having similar characteristics.
(d) Financial assets that are neither past due nor impaired
Trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of the respective clients,
it is expected that these amounts will be received when due. The receivables primarily relate to management fees receivable which
are considered low risk.
(e) Fair value
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
11. OTHER CURRENT ASSETS
Prepayments
12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
CURRENT
Investments comprise:
Shares in other corporations listed on a prescribed stock exchange
Investment in unlisted, unregistered managed investment scheme, the Clime
International Fund
Investment in unlisted, registered managed investment scheme, the Clime Australian
Value Fund
Investment in listed, registered managed investment scheme, Rural Funds
Management Limited
120,890
113,221
6,410,139
9,092,208
967,200
-
-
588,249
62,747
7,440,086
76,073
9,756,530
41
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investments comprise:
Investments in associate
Investments in joint venture
(a) Carrying amounts
Information relating to associate and joint venture are set out below.
Clime Investment Management Limited and Controlled Entities
2014
$
7,876,831
-
7,876,831
2013
$
-
285,639
285,639
Name of Companies
Unlisted
JASCO Holdings Ltd
(Associate) (i)
Stocks in Value Pty Limited
(Joint Venture) (ii)
Principal
Activity
2014
%
2013
%
2014
$
2013
$
Carrying amounts
Importing and distribution
20.41
19.82
7,876,831
Investment valuation
services
50.00
50.00
-
7,876,831
-
285,639
285,639
The above associate and joint venture are incorporated in Australia
(i) Jasco Holdings Limited
In the prior year, the Group held 19.82% interest in Jasco Holdings Limited (Jasco) and accounted for the investment as an available-
for-sale financial asset. Following the sale of Jasco’s stationery business and resultant share buybacks, the holdings of the Group in
Jasco increased from 19.82% to 20.41% as at 27 June 2014. At 30 June 2014, the Group determined that it held significant influence
over Jasco Holdings Limited and accordingly the investment was considered to be an associate as at 27 June 2014.
The Group has accounted for 20.41% investment in Jasco as at 27 June 2014 as an investment in associate, at a value as at that date of
$7,876,831.
The Group used a combination of net asset value method based on the value of the assets of the business less its liabilities adjusted for
fair value and market based valuation technique for valuing its investment in Jasco. The Group determined comparable public
companies (peers) based on industry, size, leverage and strategy, and calculates an appropriate trading multiple for each comparable
company by an earning measure. The trading multiple was then discounted for considerations such as illiquidity and size difference
between comparable companies based on company-specific facts and circumstances. The discounted multiple was applied to the
corresponding earning measure of the investee company to measure the fair value. The fair value is then compared to the net asset
value of the business at fair value to assess the carrying value.
This transaction has resulted in the recognition of a gain in profit or loss, calculated as follows
Fair value of investments retained (20.41%)
Transfer of available for sale reserve to income statement
Less: Carrying amount on investment on the date of gaining of significant influence
(ii) Stocks in Value Pty Limited
2014
$
7,876,831
18,303
(5,197,865)
2,697,269
On 4 March 2013, the Group entered into a 50:50 joint venture with Eureka Report Pty Limited, which is a 100% subsidiary of News
Limited (note 30).
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Contribution to the joint venture entity at fair value
Available-for-sale financial assets reclassified as Investments in Associates (note 13(a))
Share of loss after income tax
Disposal of investment in associate
Carrying amount at the end of the financial year
2014
$
285,639
-
7,876,831
(285,639)
-
7,876,831
2013
$
43,500
450,000
-
(160,155)
(47,706)
285,639
42
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)
Clime Investment Management Limited and Controlled Entities
(c) joint venture and associates’ profits/(losses)
Joint venture
Share of net loss of joint venture before income tax
Income tax expense
Loss after income tax
Associates
Net profit of Associate before income tax
Income tax expense
Profit after income tax
(d) Reconciliation to share of net profits of joint venture and associates accounted using the
equity method
Share of net loss of joint venture
Share of net profit of Associate
Share of loss of associate and joint venture
(e) Unrecognised share of losses of a joint venture
Unrecognised share of loss of a joint venture for the year
Cumulative share of loss of a joint venture
(f) Summarised financial information of joint venture and associates
2014
$
(285,639)
-
(285,639)
2013
$
(164,360)
-
(164,360)
-
-
-
12,014
(3,604)
8,410
(285,639)
-
(285,639)
(164,360)
4,205
(160,155)
(126,436)
(126,436)
-
-
2014
Jasco Holdings Limited (associate)
Stocks in Value Pty Limited (joint venture)
2013
Stocks in Value Pty Limited (joint venture)
Total Fund Services Ltd (associate)
Assets
$
Liabilities
$
Revenues
$
Group’s share of:
12,474,184
677,705
13,151,889
889,755
-
889,755
4,597,353
802,463
5,399,816
604,116
-
604,116
-
412,088
412,088
51,999
221,782
273,781
(Loss)/profit
after tax
$
-
(285,639)
(285,639)
(164,360)
4,205
160,155
14. AVAILABLE FOR SALE FINANCIAL ASSETS
Investments comprise:
NON-CURRENT
Shares in Jasco Holdings Limited at fair value
2014
$
2013
$
-
5,813,549
The Group hold 20.41% (2013: 19.82%) interest in Jasco Holdings Limited and has accounted the investment using the equity
method. Increased ownership interest resulted from buy back activity in Jasco Holdings Limited. Refer note 13 on Investments in
associates and Joint venture for further details.
During 2013, the fair value of the non-controlling interest in Jasco Holdings Limited, an unlisted company, was estimated by
applying a multiple-to-equity valuation approach. The fair value estimates are based on:
-
A required return of 13.5%, comprised of long term bond rates plus an equity market risk premium and a company specific
premium
Assumed sustainable long term normalised return on equity of 13.50%
An average payout ratio of 65%
Assumed adjustments relating to lack of marketability, carrying value of assets and historical operating cash flow relative to
reported profits.
-
-
-
43
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
15. OTHER FINANCIAL ASSETS
NON-CURRENT
Clime Investment Management Limited and Controlled Entities
2014
$
2013
$
-
-
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 2(b).
Name of entity
Clime Asset Management Pty Ltd
Clime Investors Education Pty Ltd
Clime AFM Pty Ltd (de-registered on 2 July 2013)
Country of
incorporation
Australia
Australia
Australia
* The proportion of ownership interest is equal to the proportion of voting power held.
16. PROPERTY, PLANT AND EQUIPMENT
Building - at cost
Accumulated depreciation and impairment
Written down value
Plant and equipment - at cost
Accumulated depreciation and impairment
Written down value
Total property, plant and equipment
Reconciliation
a) Building
Carrying value at beginning
Additions
Disposals
Depreciation charge for the year
Depreciation eliminated on disposals
Carrying amount at end
b) Plant and equipment
Carrying value at beginning
Additions
Disposals
Depreciation charge for the year
Depreciation eliminated on disposals
Carrying amount at end
Class of shares
Equity holding*
2013
2014
%
%
Fully Paid Ordinary
Fully Paid Ordinary
Fully Paid Ordinary
100
100
-
100
100
100
2014
$
2013
$
-
-
-
353,056
(208,706)
144,350
1,036,459
(39,435)
997,024
240,610
(191,046)
49,564
144,350
1,046,588
997,024
7,305
(1,043,265)
(26,817)
65,753
-
49,564
145,423
(37,348)
(46,259)
32,970
144,350
1,012,672
5,050
-
(20,698)
-
997,024
68,440
10,482
(4,956)
(29,358)
4,956
49,564
44
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
17. DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Clime Investment Management Limited and Controlled Entities
2014
$
2013
$
Employee benefits
Accrued expenses
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Available for sale and equity accounted investments
Realised tax losses carried forward – revenue
Realised tax losses carried forward – capital
Deferred tax assets
Movements:
Opening balance at 1 July
Charged to profit or loss (note 8)
Closing balance at 30 June
18. INTANGIBLE ASSETS
Investment management contracts and relationships:
At cost
Accumulated amortisation
Goodwill at cost
Closing balance at 30 June
(a) Reconciliations
47,211
17,148
12,484
-
135,000
-
557,738
769,581
48,142
22,623
-
58,777
-
159,450
596,907
885,899
885,899
(116,318)
769,581
1,491,327
(605,428)
885,899
4,790,000
(1,615,131)
3,174,869
4,790,000
(1,309,783)
3,480,217
3,026,564
3,026,564
6,201,433
6,506,781
Investment
management contracts
and relationships
$
Goodwill
$
Total
$
2014 – Consolidated
Carrying amount at beginning of year
Amortisation expense1
Carrying amount at end of year
2013 – Consolidated
Carrying amount at beginning of year
Derecognised on disposal of business assets to joint venture
Amortisation expense1
Carrying amount at end of year
3,480,217
(305,348)
3,174,869
3,785,565
-
(305,348)
3,480,217
3,026,564
-
3,026,564
3,476,564
(450,000)
-
3,026,564
6,506,781
(305,348)
6,201,433
7,262,129
(450,000)
(305,348)
6,506,781
1Amortisation of $305,348 (2013: $305,348) is included in the statement of profit or loss and other comprehensive income
45
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
18. INTANGIBLE ASSETS (CONT.)
Clime Investment Management Limited and Controlled Entities
(b) Impairment testing of goodwill
Goodwill acquired through business combinations has been allocated to the applicable cash generating unit for impairment testing.
Each cash generating unit represents a business operation of the Group.
Cash generating unit
2014 - Consolidated
Balance at the beginning of the year
Movements during the year
Balance at end of year
2013 - Consolidated
Balance at the beginning of the year
De-recognition on disposal of business of subsidiary (note 30)
Re-allocation of goodwill as a result of the set-up of the joint
venture attributable to the funds management cash generating unit
Balance at end of year
Funds
Management
$
Investment
Software and
Education
$
3,026,564
-
3,026,564
2,660,277
-
366,287
3,026,564
-
-
-
816,287
(450,000)
(366,287)
-
Total
$
3,026,564
-
3,026,564
3,476,564
(450,000)
-
3,026,564
The recoverable amounts of all cash generating units have been determined based on fair value less costs to sell. The fair values of
cash generating units have been determined in accordance with the Directors’ assessments of their values based on arms’ length
transactions between knowledgeable and willing parties on the basis of the best information available. In determining these amounts,
the Directors have considered the outcomes of recent transactions for similar assets and businesses.
19. TRADE AND OTHER PAYABLES
Unsecured:
Trade payables
Accruals
Amount payable to joint venture
Other payables
20. PROVISIONS
Employee benefits (i)
2014
$
2013
$
314,909
1,231,915
40,454
265,289
1,852,567
308,247
558,900
248,878
236,711
1,352,736
157,369
160,472
(i) The provision for employee benefits represents annual leave and vested long service leave entitlements accrued.
21. DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Interest and dividends receivable
Available for sale and equity accounted investments
Sundry items
Deferred tax liabilities
Movements:
Opening balance at 1 July
Charged to the profit or loss (note 8)
Charged / (debited) directly to equity (note 23)
Closing balance at 30 June
2014
$
2013
$
23,843
2,144,792
234,118
31,118
1,450,646
335,005
2,402,753
1,816,769
1,816,769
593,828
(7,844)
2,402,753
1,629,118
179,807
7,844
1,816,769
46
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
22. ISSUED CAPITAL
Clime Investment Management Limited and Controlled Entities
Parent Entity
2014
Shares
2013
Shares
Notes
Parent Entity
2014
$
2013
$
(a) Share capital
Ordinary shares
Fully paid
(b),(d)
46,944,834
47,594,641
20,701,542
25,202,224
1 Note that the number of shares on issue above will differ from the number of shares on issue as notified to the Australian Securities and Investments
Commission and the Australian Securities Exchange. This is due to the application of AASB 2 Share-based Payment which treats the shares issued
under the Employee Incentive Scheme as ‘in-substance options’ for statutory reporting purposes. Refer to note 2(o)(v) for further information.
(b) Movements in ordinary share capital
Details
30 June 2012
July 2012 to June 2013
Various
30 June 2013
November 2012
July 2013 to June 2014
Various
30 June 2014
Balance
Shares bought back on-market and cancelled
Transaction costs arising from on-market buy-back
Balance
Capital Return
Shares bought back on-market and cancelled
Transaction costs arising from on-market buy-back
Balance
(c) Terms and conditions
Notes
Number of
shares
$
(d)
(d)
47,960,740
(366,099)
-
47,594,641
-
(649,807)
-
46,944,834
25,391,513
(189,065)
(224)
25,202,224
(4,031,571)
(468,915)
(196)
20,701,542
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and
creditors and are fully entitled to any proceeds of liquidation.
(d) On-market share buy-back
In accordance with its on-market share buy-back scheme, Clime Investment Management Limited bought back 649,807 (2013:
366,099) shares during the year. The number of shares bought back and cancelled during the 12 month period was within the ‘10/12
limit’ imposed by s257B of the Corporations Act 2001, and as such, shareholder approval was not required. The shares were acquired
at an average price of 72.20 cents per share (2013: 48.55 cents per share), with prices ranging from 72 cents to 73 cents. The total cost
of $469,111 (2013: $189,289), including $196 (2013: $224) of transaction costs, was deducted from contributed equity.
The Shares bought back in the current year were cancelled immediately.
(e) Employee Share Option Plan (“ESOP”)
As at 30 June 2014, there are nil (2013: nil) ESOP options outstanding over unissued ordinary shares since the options issued were
forfeited during the previous financial year. Share options granted under the Company’s employee share option plan carried no rights
to dividends and no voting rights.
(f) Employee Incentive Scheme (“EIS”)
As at 30 June 2014, there are 2,800,000 (2013: 2,125,000) EIS ‘in-substance’ options on issue. Share options granted under the
Company’s employee incentive scheme carry no rights to dividends and no voting rights. Refer to note 28(a) for a schedule of the
movements in EIS options on issue during the year.
(g) Capital Risk Management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue
to provide returns for shareholders, to maintain an optimal capital structure and to minimise the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to shareholders,
issue new shares from time to time or buy back its own shares.
The Group’s strategy is unchanged from 2013.
47
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
23. RESERVES AND RETAINED PROFITS
(a) Reserves
Available-for-sale revaluation reserve
Share-based payments reserve
Movements:
Available-for-sale revaluation reserve
Balance 1 July
Revaluation – gross
Reversed on reclassification of Available-for-sale assets to investments in Associates
Deferred tax (notes 17, 21)
Balance 30 June
Share-based payments reserve
Balance 1 July
Employee share option written off
Balance 30 June
(b) Retained earnings
Movements in retained profits were as follows:
Balance 1 July
Net profit for the year
Dividends (note 9)
Balance 30 June
(c) Nature and purpose of reserves
2014
$
2013
$
-
175,166
175,166
18,303
-
(26,147)
7,844
-
115,146
60,020
175,166
18,303
115,146
133,449
-
26,147
-
(7,844)
18,303
86,433
28,713
115,146
1,127,384
3,203,014
(1,243,621)
3,086,777
1,434,390
1,421,990
(1,728,996)
1,127,384
Available-for-sale investments revaluation reserve
Changes in the fair value and exchange differences arising on translation of investments, such as equities, classified as available-for-
sale financial assets, are taken to the available-for-sale investments revaluation reserve, as described in note 2(j)(iv). Amounts are
recognised in profit and loss when the associated assets are sold or impaired.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued to employees but not exercised.
24. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the
auditor of the parent entity, its related practices and non-related audit firms:
Audit and review of financial statements
- Moore Stephens Sydney
- Grant Thornton Audit Pty Limited
Taxation matters – Moore Stephens Sydney Pty Limited
2014
$
2013
$
56,673
12,488
10,700
79,861
47,000
15,729
8,250
70,979
It is the Group’s policy to employ Moore Stephens Sydney, or its related practices, on assignments additional to their statutory audit
duties where Moore Stephens Sydney’s expertise and experience within the Group is considered.
48
Clime Investment Management Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
25. EARNINGS PER SHARE
(a) Basic earnings per share
Profit attributable to the ordinary equity holders of the Group
(b) Diluted earnings per share
Profit attributable to the ordinary equity holders of the Group
(c) Reconciliations of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit for the year attributable to owners of the Group
Profit attributable to the ordinary equity holders of the Group used in calculating
basic and diluted earnings per share
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used in calculation of basic
earnings per share
2014
Cents
2013
Cents
6.8
6.4
3.0
2.9
$3,203,014
$1,421,990
$3,203,014
$1,421,990
2014
Number
2013
Number
47,246,245
47,715,827
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share
50,046,245
49,840,827
(e) Reconciliations of weighted average number of shares:
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
Shares deemed to be issued for no consideration in respect of
- Employee incentive scheme
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share
47,246,245
47,715,827
2,800,000
2,125,000
50,046,245
49,840,827
(f) Information concerning the classification of securities
Options
Options granted to employees under the Employee Share Option Plan and Employee Incentive Scheme are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The
options have not been included in the determination of basic earnings per share.
49
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
26. KEY MANAGEMENT PERSONNEL DISCLOSURES
Clime Investment Management Limited and Controlled Entities
(a) Remuneration of Directors and Other Key Management Personnel
A summary of the remuneration of Directors and other key management personnel for the current and previous financial year is set out
below:
2014
Remuneration of Directors and other
key management personnel
2013
Short-term
Employee Benefits
$
Post-Employment
Benefits
$
Share-Based
Payments
$
Termination
Benefits
$
Total
$
1,011,484
12,146
-
-
1,023,630
Short-term
Employee Benefits
$
Post-Employment
Benefits
$
Share-Based
Payments
$
Termination
Benefits
$
Total
$
Remuneration of Directors and other
key management personnel
837,451
9,207
-
-
846,658
Further information regarding the identity of key management personnel and their compensation can be found in the Audited
Remuneration Report contained in the directors’ report on pages 9 to 13 of this annual report.
(b) Equity instrument disclosures relating to directors and other key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of
the options, can be found in section C of the remuneration report on pages 10 to 12.
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each director of Clime Investment
Management Limited and each of the other key management personnel of the consolidated entity, including their personally-related
entities, are set out below. No options are vested and unexercisable at the end of the year.
2014
Balance at
the start of
the year
Granted/Transferred
during the year as
remuneration
Name
Directors of Clime Investment Management Limited
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Mr. Richard Proctor
-
-
-
-
450,000
-
-
-
-
-
2013
Balance at
the start of
the year
Granted/Transferred
during the year as
remuneration
Name
Directors of Clime Investment Management Limited
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Other key management personnel of the consolidated entity
Mr. Richard Proctor
450,000
-
-
-
-
-
-
-
-
-
Exercised
during the
year
Other changes
during the year
Balance at
the end of the
year
Vested and
exercisable at the
end of the year
Exercised
during the
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
450,000
-
-
-
-
-
-
-
Other changes
during the year
Balance at
the end of the
year
Vested and
exercisable at the
end of the year
-
-
-
-
450,000
-
-
-
-
-
-
-
50
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
26. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT.)
(b) Equity instrument disclosures relating to directors and other key management personnel (continued)
Clime Investment Management Limited and Controlled Entities
(iii) Share holdings
The numbers of shares in the Company held during the year by each director of Clime Investment Management Limited and each of
the other key management personnel of the consolidated entity, including their personally-related entities, are set out below.
2014
Balance at the start
of the year
Received during the
year on the exercise of
options
Other changes
during the year
Balance at the
end of the year
Name
Directors of Clime Investment Management Limited
Ordinary shares
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Mr. Richard Proctor
303,000
3,610,000
2,615,653
548,007
2,208,382
-
-
-
-
-
85,000
-
-
-
(1,179,723)
388,000
3,610,000
2,615,653
548,007
1,028,659
2013
Balance at the start
of the year
Name
Directors of Clime Investment Management Limited
Ordinary shares
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Other key management personnel of the consolidated entity
Ordinary shares
Mr. Richard Proctor
170,000
3,610,000
2,615,653
548,007
2,208,382
Received during the
year on the exercise of
options
Other changes
during the year
Balance at the
end of the year
-
-
-
-
-
133,000
-
-
-
303,000
3,610,000
2,615,653
548,007
-
2,208,382
(c) Loans to directors and other key management personnel
Loans to key management personnel were in place during the year in accordance with shares issued under the Employee Incentive
Scheme (refer note 28(a)). There were no other loans made to directors of Clime Investment Management Limited or the other key
management personnel of the consolidated entity, including their personally related entities, at any stage during the financial year. As
described in note 28(a), notional non-recourse loans exist in relation to “in substance” options issued under the Employee Incentive
Scheme.
(d) Other transactions with directors and other key management personnel
Profit for the year includes placement fees received amounting to $126,364 (2013: $88,687) that resulted from transactions, other than
compensation or loans with key management personnel or their related entities.
51
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
27. RELATED PARTY TRANSACTIONS
Clime Investment Management Limited and Controlled Entities
Balances and transactions between the Company and its controlled entities which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are
disclosed below.
All transactions with related entities were made on normal commercial terms and conditions no more favourable than transactions with
other parties unless otherwise stated.
(a) Parent Entity
The parent entity (and ultimate parent entity) within the Group is Clime Investment Management Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 15.
(c) Joint venture and Associates
Interests in joint venture and associates are set out in note 13.
During the year, the Group entities entered into the following trading transactions with joint venture and associate that are not
members of the Group.
(i) The Group received $200,000 (2013: $66,667) as consultancy fees for providing inputs to the Stocks in Value website and
$164,031 (2013: $263,324) towards reimbursement of expenses incurred on behalf of Stocks in Value Pty Limited. Clime
Investment Management Limited incurred/paid $179,872 (2013: $50,301) (Ex-GST) as referral fees/reimbursement of expense
incurred on behalf of the Group to Stocks in Value Pty Limited as at 30 June 2014.
(ii) The following balances were outstanding from joint venture and associate at the end of the reporting period:
Stocks in Value Pty Limited
Trade receivables
Loan given
Trade payables
2014
$
56,112
25,000
40,454
2013
$
156,267
125,000
248,878
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No expenses have
been recognised in the current or prior periods for bad or doubtful debts in respect of the amounts owed by related parties.
(d) Key Management Personnel
Disclosures relating to key management personnel are set out in note 26.
(e) Other related party transactions
Clime Capital Limited
(i) Mr. John Abernethy is a Director in Clime Capital Limited. The Group received $57,750 (2013: $54,000) as management fees for
the services rendered by Mr. John Abernethy as chairman and Mr. Richard Proctor as Company Secretary to Clime Capital
Limited. The Group directly owns 6.98% of the fully paid ordinary shares of Clime Capital Limited as at 30 June 2014. Clime
Investment Management Limited through Clime Asset Management Pty Limited (a wholly owned subsidiary) has the indirect
power to dispose 9.99% of Clime Capital Limited’s shares held by the Investment Mangers discretionary share portfolio clients as
at 30 June 2014.
(ii) Clime Asset Management Pty Limited during the year received $702,831 (2013: $568,427) as management and performance fees
as remuneration for managing Clime Capital Limited’s investment portfolio.
(iii) All dividends paid and payable by Clime Capital Limited to its Directors and Director related entities are on the same basis as to
other shareholders.
Clime International Fund
(i) Clime Asset Management Pty Limited (a wholly owned subsidiary) and the trustee company of Clime International Fund, during
the year received $166,095 (2013: nil) as management and recoverable fees as remuneration for managing the investment
portfolios on behalf of Clime International Fund.
52
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
28. SHARE-BASED PAYMENTS
(a) Employee Incentive Scheme (EIS)
Clime Investment Management Limited and Controlled Entities
The Clime Investment Management Limited Employee Incentive Scheme (“EIS”) was approved by shareholders at the Company’s
Annual General Meeting held on 25 October 2007.
The EIS provides an opportunity for eligible employees, as determined by the Board from time to time, to purchase shares in the
Company via the provision of an interest-free, non-recourse loan. Shares issued in accordance with the EIS are subject to certain
restrictions for the duration of the loan, including continued employment with the Company and share transfer locks. Upon the
expiration of the loan term, and the repayment of the outstanding loan balance by relevant employees, the shares become
unconditional. Shares issued under the EIS rank equally with other fully paid ordinary shares.
Due to certain aspects of the EIS - specifically the share transfer locks and non-recourse nature of the loans - the Company is required
to classify shares issued under the EIS as ‘in-substance options’ in accordance with AASB 2 Share-based Payment. It should be noted
that the application of this accounting policy will therefore result in differences between the number of shares on issue as disclosed in
the Company’s statutory reports, and the number of shares on issue as advised to the Australian Securities Exchange.
Set out below is a summary of in-substance options granted under the plan:
2014
Grant Date
Expiry Date
Exercise
Price
Balance at
start of the
year
Granted
during
the year
Exercised
during the
year
Transferred/
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of the
year
18 July 2011
9 August 2011
3 January 2012
16 April 2012
19 April 2012
4 December 2012
15 December 2012
21 February 2012
22 August 2013
23 October 2013
25 October 2013
Total
18 July 2014
8 August 2014
3 January 2015
16 April 2015
19 April 2015
4 December 2015
15 December 2015
21 February 2016
22 August 2016
23 October 2016
25 October 2016
$0.38
$0.38
$0.37
$0.395
$0.42
$0.48
$0.50
$0.66
$0.80
$0.815
$0.829
Weighted average exercise price
2013
Number
450,000
350,000
100,000
300,000
325,000
200,000
200,000
200,000
-
-
-
2,125,000
Number
-
-
-
-
-
-
-
-
100,000
200,000
375,000
675,000
$0.527
Number
-
-
-
-
-
-
-
-
-
-
-
-
Number
-
-
-
-
-
-
-
-
-
-
-
-
Number
450,000
350,000
100,000
300,000
325,000
200,000
200,000
200,000
100,000
200,000
375,000
2,800,000
-
Number
-
-
-
-
-
-
-
-
-
-
-
-
Grant Date
Expiry Date
Exercise
Price
Balance at
start of the
year
Granted
during
the year
Exercised
during the
year
Transferred/
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of the
year
18 July 2011
9 August 2011
3 January 2012
16 April 2012
19 April 2012
4 December 2012
15 December 2012
21 February 2012
Total
18 July 2014
8 August 2014
3 January 2015
16 April 2015
19 April 2015
4 December 2015
15 December 2015
21 February 2016
$0.38
$0.38
$0.37
$0.395
$0.42
$0.48
$0.50
$0.66
Weighted average exercise price
No in-substance options were exercised during the year.
Number
450,000
350,000
100,000
300,000
325,000
-
-
-
1,525,000
Number
-
-
-
-
-
200,000
200,000
200,000
600,000
$0.434
Number
-
-
-
-
-
-
-
-
-
Number
-
-
-
-
-
-
-
-
-
Number
450,000
350,000
100,000
300,000
325,000
200,000
200,000
200,000
2,125,000
-
Number
-
-
-
-
-
-
-
-
-
The weighted average contractual life of in-substance options outstanding at the end of the period was 1.37 years (2013 – 1.82 years).
The assessed fair value at grant date of in-substance options granted to the individuals is allocated equally over the period from grant
date to vesting date. Fair values at grant date are determined by using a binomial distribution model to statistically estimate the future
probability of the in-substance options vesting and the amounts that these in-substance options would be worth. The valuation was
performed as at the grant date of each in-substance option issued.
53
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
28. SHARE-BASED PAYMENTS (CONT.)
Clime Investment Management Limited and Controlled Entities
The model inputs for in-substance options granted during the year ended 30 June 2014 included:
in-substance options are granted via an interest-free, non-recourse loan and vest based on the terms discussed above. In-substance
options become unconditional on the date of their expiry following the repayment of the outstanding loan balance;
exercise price: The forecast outstanding loan principal at the expiration of the loan term is equivalent to the exercise price variable
in a standard option valuation. The forecast outstanding loan principal is $0.53 per share (for in-substance options issued with a
three year term);
expiry date: 3 years from the grant date;
expected price volatility of the Company’s shares: between 30% and 35%;
risk-free interest rate: between 5% and 5.5%; and
discount rate: 15%.
The resulting fair values per in-substance option are:
Number of Options
Grant Date
Exercise price
450,000
350,000
100,000
300,000
325,000
200,000
200,000
200,000
100,000
200,000
375,000
18 July 2011
9 August 2011
3 January 2012
16 April 2012
19 April 2012
4 December 2012
14 December 2012
21 February 2013
22 August 2013
23 October 2013
25 October 2013
$0.38
$0.38
$0.37
$0.395
$0.42
$0.48
$0.50
$0.66
$0.80
$0.815
$0.829
Value per option at
grant date
$0.076
$0.076
$0.085
$0.096
$0.096
$0.100
$0.100
$0.120
$0.140
$0.140
$0.140
Vesting Date
18 July 2014
8 August 2014
3 January 2015
16 April 2015
19 April 2015
4 December 2015
14 December 2015
21 February 2016
22 August 2016
23 October 2016
25 October 2016
Refer to Section C of the Remuneration Report on pages 10 to 13, and Note 26, for additional information in relation to the Employee
Incentive Scheme.
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of the employee benefit expense
were as follows:
Option expense - Employee Incentive Scheme
2014
$
60,020
60,020
2013
$
28,713
28,713
Refer to Section C of the Remuneration Report on pages 10 to 13, and Note 26, for additional information in relation to the Employee
Share Option Plan.
54
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
29. SEGMENT INFORMATION
(a) Description of segments
Clime Investment Management Limited and Controlled Entities
Our internal reporting system produces reports in which business activities are presented in a variety of ways. Based on these reports,
the Executive Board, which is responsible for assessing the performance of various components of the business and making resource
allocation decisions as our Chief Operating Decision Maker (CODM), evaluates business activities in a number of different ways. The
Group’s reportable segments under AASB 8 are as follows:
- Funds management
- Investment software
- Direct investments
Funds Management
The Group’s Funds Management business, Clime Asset Management Pty Ltd is based in Sydney. This business generates operating
revenue (investment management and performance fees) as remuneration for managing the investment portfolios of individuals and
corporations.
Investment Software
Consulting revenue is generated from the provision of investment research analysis to institutional clients, and wealth structuring and
taxation advice to high net worth private clients. Revenue generated from external subscriptions to the Group’s proprietary web-based
investment software, Stocks in Value, is also included within this division.
Direct Investments
Includes revenue generated by the Group’s direct investments in listed and unlisted securities and managed investment schemes. A
significant proportion of the Group’s direct investments are ‘self-managed’ and include material investments in the ASX listed
company Clime Capital Limited, the unlisted, registered managed investment scheme, the Clime Australian Value Fund and the
unlisted, unregistered managed fund the Clime International Fund.
There have been no changes in basis of segmentation or basis of segmental profit or loss since the previous financial report.
(b) Reportable Segments
2014
Segment revenue
Sales to external customers
Unrealised gains on re-classification of
available-for-sale financial asset to
Investments in Associates
Investment income
Total segment revenue
Net group result
Net group result before tax
Income tax expense
Profit for the year
Funds
Management
$
Investment
Software
$
Direct
Investments
$
Inter Segment
/ unallocated
$
Consolidated
$
7,399,174
447,263
-
87,750
7,934,187
-
-
7,399,174
-
-
447,263
2,697,269
779,506
3,476,775
-
-
87,750
2,697,269
779,506
11,410,962
1,733,363
446,247
3,476,775
(1,259,251)
4,397,134
(1,194,120)
3,203,014
Share of net loss of joint venture
Depreciation and amortisation expense
Net value gain on available-for-sale
financial assets
-
363,809
-
-
-
-
-
-
(285,639)
14,615
(285,639)
378,424
(18,303)
-
(18,303)
55
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
Clime Investment Management Limited and Controlled Entities
2013
Segment revenue
Sales to external customers
Investment income
Total segment revenue
Net group result
Net group result before tax
Income tax expense
Profit for the year
Funds
Management
$
Investment
Software
$
Direct
Investments
$
Inter Segment
/ unallocated
$
Consolidated
$
5,477,727
-
5,477,727
895,093
-
895,093
-
2,240,012
2,240,012
84,000
-
84,000
6,456,820
2,240,012
8,696,832
818,692
202,861
2,240,012
(1,054,340)
2,207,225
(785,235)
1,421,990
(160,155)
355,404
-
-
(160,155)
25,028
18,303
-
18,303
Share of net profits of associates
Depreciation and amortisation expense
Net value gain on available-for-sale
financial assets
(c) Segment assets and liabilities
-
330,376
-
-
-
-
Information about the segment assets and liabilities are not regularly reviewed by the CODM. As a result information relating to
segment assets and liabilities are not presented.
(d) Information about major customers
Included in revenues arising from the funds management business of $7.40 million (2013: $5.48 million) (see 32 (b) above) are
revenues of approximately $0.7 million (2013: $0.6 million) which arose from sales to the Group’s largest customer.
30. ACQUISITION OF BUSINESS
2014
There were no acquisitions in 2014.
2013
Investments in joint venture
On 4 March 2013, the economic entity transferred the business assets held in the wholly-owned subsidiary Clime Investors Education
Pty Limited to the newly constituted 50:50 Joint Venture Stocks in Value Pty Limited.
a. Fair value of assets transferred to Joint venture
Customer base
Software license
Investments in joint venture at fair value
b. Analysis of assets and liabilities over which control was lost
Property, plant and equipment
Goodwill
Cost of assets transferred to Joint venture
c. Goodwill
Cost of assets transferred to joint venture
Investments in Joint venture
Goodwill on investments in joint venture
2013
$
200,000
250,000
450,000
-
450,000
450,000
450,000
(450,000)
-
56
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
31. SUBSEQUENT EVENTS
Clime Investment Management Limited and Controlled Entities
A final fully franked dividend for the year ended 30 June 2014 of 3 cents per share, totalling $1,501,345 has been declared by the
directors. This provision has not been reflected in the accounts.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in future
financial years.
32. CONTINGENT LIABILITIES, CONTINGENT ASSETS AND COMMITMENTS
The Group has no material contingent liabilities or contingent assets as at 30 June 2014 (2013: Nil).
COMMITMENTS FOR EXPENDITURE
Capital expenditure commitments
Property, plant and equipment
Within one year
Later than one year but not later than five years
2014
$
2013
$
-
-
-
75,000
-
75,000
Operating lease commitments
Towards the end of the 2014 financial year, the Company entered into an operating lease agreement for office premises for a period of
5 years, terminating on 31 August 2019. The expenditure commitment with respect to rent payable under the lease agreement is
$926,195 (2013: nil)
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2014
$
116,130
810,065
-
926,195
2013
$
-
-
-
-
57
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
33. PARENT ENTITY DISCLOSURES
Clime Investment Management Limited and Controlled Entities
The following information relates to the parent entity Clime Investment Management Limited. The information presented has been
prepared using accounting policies that are consistent with those presented in note 2.
(a) Financial Position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Accumulated losses
Reserves
Available-for-sale revaluation
Share-based payments
Total Equity
(b) Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
2014
$
2013
$
10,181,392
15,246,976
25,428,368
21,708,441
1,800,762
23,509,203
1,919,165
11,814,602
14,503,354
26,317,956
15,575,854
1,081,952
16,657,806
9,660,150
20,701,542
(18,957,543)
25,202,224
(15,675,523)
-
175,166
1,919,165
18,303
115,146
9,660,150
(2,038,399)
(18,303)
(3,729,908)
18,303
(2,056,702)
(3,711,605)
(c) Assets classified as held for sale
The parent entity holds no assets classified as held for sale.
(d) Contingent liabilities of the parent entity
The parent entity has no contingent liabilities.
(e) Commitments for the acquisition of property, plant and equipment by the parent entity
The parent entity has a commitment of nil (2013: $75,000) for the acquisition of property, plant and equipment and $926,195 (2013:
nil) for the operating lease commitments.
58
DIRECTORS’ DECLARATION
for the year ended 30 June 2014
The Directors declare that:
Clime Investment Management Limited and Controlled Entities
(a)
(b)
(c)
(d)
(e)
the directors’ opinion,
in
in accordance with
the Corporations Act 2001, including compliance with Accounting Standards, and giving a true and fair view of the financial
position and performance of the Group;
financial statements and notes
the attached
thereto are
in the director’s opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable;
in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting
Standards, as stated in Note 2 to the financial statements;
the directors have been given the declarations required by section 295A of the Corporations Act 2001; and
the remuneration disclosures contained in the Remuneration Report comply with S300A of the Corporations Act 2001.
Signed in accordance with a resolution of the Board of Directors made pursuant to S295(5) of the Corporations Act 2001
on behalf of the Directors by:
Neil Schafer
Chairman
Date: 26 August 2014
59
Independent Auditor’s Report
To the Members of Clime Investment Management Limited
A.B.N. 37 067 185 899
Report on the Financial Report
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
We have audited the accompanying financial report of Clime Investment Management Limited (the
“Company”) and its controlled entities (the “Group”), which comprises the consolidated statement of
financial position as at 30 June 2014, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information and the directors’ declaration of the Group comprising the
Company and the entities it controlled at the year’s end.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation and fair presentation of the
financial report that gives a true and fair view in accordance with Australian Accounting Standards
and the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement, whether
due to fraud or error. In Note 2, the directors also state that, in accordance with Accounting Standard
AASB 101: Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards (IFRS).
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
60
Moore Stephens Sydney ABN 90 773 984 843. An independent member of Moore Stephens International Limited –
members in principal cities throughout the world. The Sydney Moore Stephens firm is not a partner or agent of any
other Moore Stephens firm.
Auditor’s Opinion
In our opinion:
a)
the financial report of Clime Investment Management Limited and its controlled entities is in
accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2014 and of their
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b)
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 13 of the directors’ report for the
year ended 30 June 2014. The directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the remuneration report of Clime Investment Management Limited for the year ended
30 June 2014 complies with section 300A of the Corporations Act 2001.
Matters Relating to the Electronic Publication of the Audited Financial Report
This auditor’s report relates to the financial report for the year ended 30 June 2014 included on
Clime Investment Management Limited’s website. The Company’s directors are responsible for the
integrity of Clime Investment Management Limited’s website. We have not been engaged to report
on the integrity of Clime Investment Management Limited’s website. The auditor’s report refers only
to the subject matter described above. It does not provide an opinion on any other information
which may have been hyperlinked to/from these statements. If users of the financial report are
concerned with the inherent risks arising from publication on a website, they are advised to refer to
the hard copy of the audited financial report to confirm the information contained in this website
version of the financial report.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney Tuesday, 26 August 2014
61
SHAREHOLDER INFORMATION
for the year ended 30 June 2014
The shareholder information set out below was applicable as at 22 August 2014.
Clime Investment Management Limited and Controlled Entities
A. Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
Ordinary Shares
No. of Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
27
181
110
264
46
628
B. Equity Security Holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
RBC Investor Services Australia Nominees Pty Limited
Torres Industries Pty Ltd
Mr John Bruce Abernethy
Mr David Schwartz
Mr Richard Proctor
Mr Lachlan Taylor Hughes & Mrs Elizabeth Hughes
Capital Property Corporation Pty Limited
Clodene Pty Ltd
Mr Philip Leslie Bish
Mr Darren Katz
Robansheil Pty Limited
Di Iulio Homes Pty Limited
Mr. Allyn Chant
Ruminator Pty Ltd
Mr Robert Archer Black
Mr Neil Edward Schafer & Mrs Molly Clark Schafer
Arcelia Pty Ltd
J P Morgan Nominees Australia Limited
Tampaul Pty Ltd
Mr. Mark Osborn
Unquoted equity securities
Shares issued under the Employee Incentive Scheme to take up ordinary shares
Ordinary Shares
No. of
Shares
10,293,866
5,005,000
3,610,000
2,615,653
1,478,659
1,402,090
1,241,122
1,214,121
1,145,000
1,000,000
940,446
900,000
883,600
871,419
826,252
548,007
485,334
413,022
400,000
388,000
35,661,591
Percentage
of issued
shares
20.569
10.001
7.214
5.227
2.955
2.802
2.480
2.426
2.288
1.998
1.879
1.798
1.766
1.741
1.651
1.095
0.970
0.825
0.799
0.775
71.259
Ordinary Shares
Number
on issue
2,300,000
Number
of holders
13
62
SHAREHOLDER INFORMATION
for the year ended 30 June 2014
C. Substantial Holders
Substantial holders in the company are set out below:
Clime Investment Management Limited and Controlled Entities
Ordinary shares
Wilson Management Group
Torres Industries Pty Ltd
Mr. John Abernethy
Mr David Schwartz
D. Voting Rights
Number held
Percentage
10,293,866
5,005,000
3,610,000
2,615,653
20.569
10.001
7.214
5.227
Subject to any restrictions from time to time affecting any class of shares, on a show of hands every member present in person shall
have one vote and upon a poll every member present or by proxy or attorney shall have one vote for each share held.
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and
creditors and are fully entitled to any proceeds of liquidation.
E. Other Information
Annual General Meeting
The Annual General Meeting of Clime Investment Management Limited is expected to be held on 13 November 2014.
Stock Exchange Listing
The shares of the Company are listed on the Australian Securities Exchange Limited. Quotation has been granted for all the ordinary
shares of the company on all member exchanges of the Australian Securities Exchange Limited. The home exchange is Sydney.
On-Market Buyback Scheme
As at 26 August 2014 an on-market buy-back scheme existed and continues to be in operation as at the date of this report.
Contact Details
The names of the Company Secretaries are Mr. Richard Proctor and Mr. Biju Vikraman.
The address of the registered office and principal place of business in Australia is:
Level 7
1 Market Street
Sydney NSW 2000
Telephone: (02) 8917 2100
63