Clime Investment Management
Company Announcements
Australian Stock Exchange, Sydney
25 August 2015
Announcement of Results – Year ended 30 June 2015
Please find attached the Appendix 4E and annual financial report for the year ended
30 June 2015.
Yours’ sincerely,
Richard Proctor
Company Secretary
Clime Investment Management Limited
Level 7, 1 Market 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 2015
(Previous corresponding period – 30 June 2014)
Results for Announcement to the Market
Revenue from ordinary activities
Profit from ordinary activities after tax
attributable to members
up
up
10%
to
$9,653,739
3%
to
$3,288,651
Dividends per share
Amount per security
Franked amount per
security
Final dividend – FY15 (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 $9.65 million (FY14: $8.75 million).
Recurring management fees have increased by $0.81m.
FY14 revenue
Increase in management fees
Increase in performance fees
Decrease in dividend income
Decrease in consulting and other income
FY15 revenue
$8.75m
$0.81m
$0.83m
($0.43m)
($0.31m)
$9.65m
Explanation of profit from ordinary activities after tax attributable to members
The Group generated an after-tax profit of $3.3 million for the year (FY14: profit of $3.2 million).
The primary drivers for the increased result
1. Revenue as per above.
2. Equity accounted profit of $1.94m (FY14: $285k loss).
3. Unrealised gains on re-classification of available-for-sale financial asset to Investments in
Associates of zero ( FY14 $2.7m)
4. Administration and occupancy overheads increased by 4% to $7.03m (FY14: $6.76m) mainly from
increased headcount in client facing activities.
5. Net realised and unrealised losses on the Group’s listed investments and managed funds were
$314k (FY14: $32k net loss).
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
%
Previous
corresponding
period
%
Current
period
$
Previous
corresponding
period
$
21.75
20.41
$1,923,879
-
-
50.0
-
(285,639)
1. The Group has accounted for 21.75% investment in Jasco as at 30 June 2015 as an investment
in associate, with a carrying value of $8,977,530.
2. On 30 June 2015, the Group owns 100% of Stocks in Value Pty Limited after ceasing the 50:50
joint venture with Eureka Report Pty Limited, a subsidiary of News Limited.
Audit
This report is based on accounts that have been audited. The unqualified audit report is attached on
page 63 of the attached audited financial statements.
Clime Investment Management
Limited
(ABN 37 067 185 899)
and Controlled Entities
ANNUAL REPORT - 30 June 2015
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 2015
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
3
14
15
22
62
63
65
REPORT FROM THE BOARD
for the year ended 30 June 2015
I am pleased to present the results of Clime Investment Management Limited and its controlled entities (“the Group”) for the
financial year ended 30 June 2015 (FY15). The Group includes Clime Investment Management (Clime), Stocks in Value Pty Ltd (SIV)
and the 21.75% stake in Jasco Holdings Ltd (Jasco) that is equity accounted.
Clime Investment Management Limited and Controlled Entities
The Group recorded an after-tax profit attributable to members of $3,288,651 for the year to 30 June 2015 (FY15) compared with
$3,203,014 in FY14. Key aspects of the result are as follows:
Operating revenue increased by 10% to $9,653,739 (FY14: $8,746,240).
Jasco Holdings Limited contributed an equity accounted profit of $1,923,879 (FY14: $285,639 loss).
Administration and occupancy overheads increased by 4% to $7,031,265 (FY14: $6,757,696) from increased headcount in
client facing activities.
Net realised and unrealised losses on the Group’s listed investments and managed funds were $314,386 (FY14: $32,547 net
loss).
Clients that participated in the new Clime International Fund benefited from the sharp fall in the Australian dollar earlier
this year. This fund contributed a performance fee of $0.8 million in FY15.
Our substantially improved investor education program, Stocks in Value, became a wholly owned subsidiary on 30 June,
2015 and will be fully integrated to offer clients a seamless range of services.
Group profit before income tax for the financial year ended 30 June 2015 (FY15) was $4.2 million compared to $4.4 million in FY14.
The total comprehensive income result for FY15 after net of tax unrealized gains or losses on financial assets for sale was $3.3
million, compared with $3.2 million in FY14.
The Board notes that the improved performance of the Group was driven by the doubling of Investment Management contribution
arising from full year management fees flowing through from the increase in funds under management in the previous financial year
and solid returns from associate, Jasco.
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
investment management business and the balance sheet investment components.
Funds Management and related activities revenue
Administrative and Occupancy expenses – fixed in nature
Administration costs – 3rd Party Custody, Management & Funds Administration services
Operating business activities revenue less fixed admin costs
Sales commission, performance incentives and marketing costs
Contribution from Investment Management
Balance Sheet Investments & Associates
Cash profit
Amortisation of intangibles
Statutory profit before income tax
2015
$
9,154,444
(4,782,154)
(854,185)
3,518,104
(1,089,578)
2,428,527
2,103,661
4,532,188
(305,348)
4,226,840
2014
$
7,486,943
(4,100,938)
(557,932)
2,828,073
(1,793,478)
1,034,595
3,667,887
4,702,482
(305,348)
4,397,134
Operating Revenue
When looking at the Consolidated Statement of Profit and Loss, Group revenue has improved by 10%, from $8.7m in FY14 to $9.6m
in FY15. Investment Management fees increased from $7.0m to $7.8m on higher FUM. The Group’s gross FUM was $614 million at
30 June 2015, compared with $582 million at 30 June 2014, an increase of 6%. The Group received $0.8 million in performance fees
during the year (nil achieved in FY14).
The Group had positive funds inflows from investors for the 12 months to 30 June 2015. Inflows were augmented by the investment
performance achieved by the Group on its managed funds.
Interest, dividend and other income decreased from $0.8 m to $0.3m 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 reclassification of the Group’s interest in Jasco as an equity accounted associate towards the end of previous financial year.
1
REPORT FROM THE BOARD
for the year ended 30 June 2015
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 – Other
Unlisted Investments – Clime’s Managed Funds
Equity accounted investment – Jasco Holdings Limited
Other Tangible Assets and Liabilities
Net Tangible Assets
Intangibles – Goodwill and Management Contracts
Deferred tax assets
Total Equity
Clime Investment Management Limited and Controlled Entities
30 June 2015
$7,504,730
($635,455)
$5,314,385
$52,108
-
$8,977,530
(4,501,812)
16,711,486
$7,447,406
$798,910
$ 24,957,802
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
51.1 cents
36.2 cents
No. of Ordinary Shares on Issue as at 30 June 2015
Equity per Share
Net Tangible Assets per Share
48,344,834
51.6 cents
34.6 cents
Operating Cash Flow
Net cash inflow from operating activities was $4,353,461, a decrease of $870,886 in comparison with the prior corresponding period.
This is primarily a function of the following:
A net decrease of $636,728 from financial asset activities.
An increase in cash receipts from operating activities of $285,026.
An increase in dividend income of $585,889.
Tax paid of $603,246.
Investing and Financing Activities
Proceeds from sale of property, plant and equipment generated $1,004,872.
Cash acquired from acquisition of subsidiary $ 328,564 (formerly an Associate).
Cash reserves were applied as follows:
Payments for acquisition of property plant & equipment of $64,101.
Dividends to shareholders of $3,002,690.
Outlook for 2016 Financial Year
Directors and management expect 2016 to be a year of consolidation due to considerable volatility returning to financial markets.
Focus will be on investment returns generated across all portfolios, and growing and supporting our service offering to a wider group
of investors seeking intelligent long term wealth management outcomes.
Initial signs are encouraging with good returns across all core portfolios in July and a 5% gain in funds under management to $645
million.
Donald McLay
Chairman
2
DIRECTORS’ REPORT
for the year ended 30 June 2015
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 2015.
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:
D McLay
J B Abernethy
RJA Proctor
N Schafer
A Chant
M Osborn
D J Schwartz
INFORMATION ON DIRECTORS
- Non-executive Chairman, - appointed 1 March 2015
- Director
- Director
- Independent Director
- Independent Director – appointed 9 July 2014
- Independent Director – resigned 26 August 2014
- Independent Director – resigned 28 February 2015
Mr. Donald McLay
Non-executive Chairman (from 16 July 2015), Director
Experience and expertise
Don has more than 35 years’ experience within financial markets, investment banking and broad business services. He has previously
held executive roles with a number of local and overseas investment managers and investment banking organisations, working in
London, Singapore, Auckland and Sydney.
Other current directorships
Currently Don is Chairman of Credit Corp Group Limited (ASX: CCP), appointed as a Non-Executive Director in March 2008 and
Chairman on 30 June 2008. He is also Chairman of Torres Industries Pty Limited, an unlisted company engaged in investment in
transport and financial services.
Don holds a Bachelor of Commerce degree, is a Chartered Accountant, a Chartered Secretary and a Senior Fellow of the Financial
Services Institute of Australasia.
Former directorships in last 3 years
None
Special responsibilities
Member of Remuneration Committee
Interests in shares and options
5,245,000 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
3
DIRECTORS’ REPORT
for the year ended 30 June 2015
INFORMATION ON DIRECTORS (CONT.)
Mr. Richard Proctor
Director
Clime Investment Management Limited and Controlled Entities
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
1,500,000 ordinary shares in Clime Investment Management Limited
Mr. Neil Schafer BApp Econ
Independent Director
Experience and expertise
Mr. Neil Schafer was appointed Non-Executive Director in 2011. Mr. Schafer has extensive experience in business leadership and
advice, funds management, and banking and holds a First Class Honour’s Degree in Applied Economics from the University of New
England.
Other current directorships
Mr. Schafer is also a director of KanukSchafer Partners and Monte St Angelo Mercy College.
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 (to 16 July 2015)
Chairman of Remuneration Committee
Chairman of Audit Committee
Chairman of the Investment Sub Committee
Interests in shares and options
548,007 ordinary shares in Clime Investment Management Limited
4
DIRECTORS’ REPORT
for the year ended 30 June 2015
INFORMATION ON DIRECTORS (CONT.)
Clime Investment Management Limited and Controlled Entities
Mr. Allyn Chant
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 2015.
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
115,000 ordinary shares in Clime Investment Management Limited
125,000 Options (EIS) over ordinary shares in Clime Investment Management Limited
5
DIRECTORS’ REPORT
for the year ended 30 June 2015
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
2015, and the numbers of meetings attended by each Director were:
Clime Investment Management Limited and Controlled Entities
Director
A
3
Mr. Donald McLay
11
Mr. Neil Schafer
11
Mr. John Abernethy
11
Mr. Richard Proctor
10
Mr. Allyn Chant
4
Mr. Mark Osborn
Mr. David Schwartz
8
A – Number of meetings eligible to attend
B – Number of meetings attended
Board
Meetings
Audit Committee
Meetings
Remuneration Committee
Meetings
B
3
11
10
11
8
4
7
A
-
2
-
2
-
2
-
B
-
2
-
2
-
2
-
A
-
1
-
1
-
1
-
B
-
1
-
1
-
1
-
ROTATION AND ELECTION OF DIRECTORS
In accordance with the Company’s Constitution:
Mr. Donald McLay retires by rotation and, being eligible, offers himself 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 $3,288,651 (2014: $3,203,014).
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended during the financial year are as follows:
3 cents per share final ordinary dividend paid during the year in respect of the prior financial
year (2014: nil cents)
3 cents per share interim ordinary dividend paid during the year in respect of the current
financial year (2014: 2.5 cents)
Total dividends paid
REVIEW OF OPERATIONS
2015
$
2014
$
1,501,345
-
1,501,345
3,002,690
1,243,621
1,243,621
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 2015 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.
6
DIRECTORS’ REPORT
for the year ended 30 June 2015
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
Date Options
Granted
19 April 2012
22 August 2013
25 October 2013
19 August 2014
25 February 2015
Expiry Date
Exercise Price
19 April 2015
22 August 2016
25 October 2016
19 August 2017
25 February 2018
$0.420
$0.800
$0.829
$0.850
$0.750
Number under
Option
100,000
100,000
375,000
300,000
75,000
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
750,000 shares (2014: 800,000 shares) were issued to option holders after the end of the 2015 financial year as a result of the
exercise of options. Refer note 27 for movement of in-substance options during the year.
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.
7
DIRECTORS’ REPORT
for the year ended 30 June 2015
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 2015. The remuneration report is set out under the following main headings:
A
B
C
D
E
F
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
A. Directors and other key management personnel
The following persons acted as directors of the Company during or since the end of the financial year.
Donald McLay
John Abernethy
Richard Proctor
Neil Schafer
Allyn Chant
Mark Osborn
David Schwartz
- Non-executive Chairman – appointed 1 March 2015
- Director
- Director
- Independent Director
- Independent Director – appointed 9 July 2014
- Independent Director – resigned 26 August 2014
- Independent Director – resigned 28 February 2015
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 include 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
full Board within 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 performance based incentives, and may not participate in the EIS.
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.
8
DIRECTORS’ REPORT
for the year ended 30 June 2015
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
B. Principles used to determine the nature and amount of remuneration (continued)
Executive Directors’ 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 executive Directors’ 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
accountabilities of respective roles and their impact on the organisation’s performance.
incentive opportunities depending on the
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 2015 and 30 June 2014 are set out in the following tables. The commission
payments are dependent on the level of revenue generated from consulting activities, short term incentives 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.
9
DIRECTORS’ REPORT
for the year ended 30 June 2015
REMUNERATION REPORT (CONT.)
C. Details of remuneration (continued)
Directors of Clime Investment Management Limited
Clime Investment Management Limited and Controlled Entities
2015
Name
Chairman
Donald McLay
Directors
John Abernethy
Richard Proctor
Neil Schafer (note a)
Allyn Chant
David Schwartz
Mark Osborn
2014
Name
Chairman
Neil Schafer
Directors
John Abernethy
Richard Proctor
David Schwartz
Mark Osborn
Short-term Employee Benefits
Cash salary, fees
and commissions
$
Short term
incentives
$
Non-monetary
benefits
$
Post-
Employment
Benefits
Super-
annuation
$
Share-Based
Payments
Options
$
Termination
Benefits
$
16,667
280,879
263,736
121,250
50,602
33,333
7,628
-
97,433
116,152
-
-
-
-
-
2,729
-
-
-
-
-
2,729
-
4,121
12,127
-
-
-
725
16,973
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term Employee Benefits
Cash salary, fees
and commissions
$
Short term
incentives
$
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
-
-
-
7,200
-
-
-
7,200
-
3,528
3,528
-
5,090
12,146
-
-
-
-
-
-
-
-
-
-
Total
$
16,667
385,162
392,016
121,250
50,602
33,333
8,352
1,007,382
Total
$
65,541
451,184
396,829
49,958
60,118
1,023,630
Total
774,094
213,586
Note a: includes $47,250 (2014: Nil) paid to Mr. N Schafer for project consultancy fees conducted, as approved by the Board of Directors.
Total
663,471
340,813
Other key management personnel of the consolidated entity
There were no additional persons other than the directors in 2015 and 2014 who were considered key management personnel under
the Corporations Act 2001.
10
DIRECTORS’ REPORT
for the year ended 30 June 2015
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
Short term incentives
$213,586 (2014: $340,813) short term incentives were paid/payable to key management personnel in respect of the year ended 30
June 2015. The short term incentives were paid at the discretion of the Remuneration Committee. The short term incentives
therefore vested 100% during the financial year ended 30 June 2015.
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
Short term incentives
Options
Paid (%)
Forfeited
(%)
Year
Granted
Vested
(%)
Forfeited
(%)
Financial years
in which
options vested
Maximum total
value of options
yet to vest
100%
100%
0%
0%
-
2011
-
-
-
-
-
2014/2015*
-
$45,000
* During the current financial year 450,000 EIS options were exercised.
D. Service Agreements
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
(2014: nil).
11
DIRECTORS’ REPORT
for the year ended 30 June 2015
REMUNERATION REPORT (CONT.)
Clime Investment Management Limited and Controlled Entities
F. Additional information
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 2015:
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 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
30 June 2015
$
9,653,739
4,226,840
3,288,651
$0.80
$0.75
3.0cps
3.0cps
-
-
6.9cps
6.6cps
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 2011
$
5,469,552
2,258,558
2,120,569
$0.41
$0.43
-
1.00cps
-
-
4.4cps
4.4cps
Furthermore, during the five years to 30 June 2015, Clime Investment Management Limited bought back 3,812,331 fully paid
ordinary shares for total consideration of $1,800,240. 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
END OF AUDITED REMUNERATION REPORT
12
DIRECTORS’ REPORT
for the year ended 30 June 2015
RISK AND COMPLIANCE CONTROL STATEMENT
Under Australian Securities Exchange (ASX) Listing Rules and the 3rd Edition of the ASX Corporate Governance Principles and
Recommendations issued by the ASX Corporate Governance Council, the Company is required to disclose in its annual report the
extent of its compliance with the ‘ASX Principles and Recommendations’.
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
15 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 23 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 23 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 14.
Signed in accordance with a resolution of the Directors.
Donald McLay
Chairman
Sydney, 25 August 2015
13
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 for the year ended 30 June
2015, 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 the entities it controlled
during the period.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney, 25 August 2015
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.
14
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
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 3rd Edition of Australian Securities Exchange’s (“ASX”) Corporate
Governance Principles and Recommendations of the ASX Corporate Governance Council (‘ASX Principles and 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.
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.
Principle 1: Lay Solid foundations for management and oversight
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 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 three Non-Executive Directors, of which two are deemed independent under the principles
set out below, and two Executive Directors at the date of signing the Directors’ Report. The Chairman is not deemed independent due to
his indirect interest in 10.0% of issued shares in the company.
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.
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.
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).
15
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
Board investment authority
The Board has specific authority to review and approve investment decisions which exceed authority limits for management. Such
investment 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.
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.
The Chairman of the Board and majority of the Board are not an independent directors. The Company believes that an independent
Chairman under recommendations 2.4 and 2.5 does not necessarily improve the function of the Board. The Company believes that
when the chairman is a significant driver behind the business, and is a sizable shareholder, as is the case with this Company, it adds
value to the company and all shareholders benefit.
Company Secretaries
The Company Secretaries are directly accountable to the Chair on all matters to do with the proper function of the Board.
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.
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.
Principle 2: Structure the board to add value
Board composition
The composition of the Board is determined in accordance with the following principles:
the Board shall comprise not fewer than three members
the Board shall comprise a mix of Independent and Executive Directors
a Director need not be a shareholder
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
16
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
During the financial year the names of each Director, their respective role, appointment date and classification were:
Clime Investment Management Limited and Controlled Entities
Name
D McLay
J B Abernethy
R A Proctor
N Schafer
A Chant
D J Schwartz
M Osborn
Role
Chairman
Director
Director
Director
Director
Director
Director
Appointed/Resigned
1 March 2015
17 November 1994
24 February 2014
7 January 2011
9 July 2014
1 October 1999 to 28 February 2015
30 March 2006 to 26 August 2014
Classification
Non-executive*
Executive*
Executive
Independent
Independent
Independent*
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 and other commitment and
considerable industry experience. 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.
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.
The Board is committed to undertaking appropriate checks before appointing a person or putting forward to shareholders a candidate
for election as a director and to providing shareholders with all material information in its possession relevant to a decision on whether
to elect or re-elect a director.
Having regard to the size of the Board and the Company, a formal Nomination Committee is deemed neither appropriate nor necessary.
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.
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. 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 2015
and the number of meetings attended by each Director is disclosed in the Directors’ Report.
17
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
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.
Clime Investment Management Limited and Controlled Entities
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.
Induction for Directors
New directors will be familiarized with the Company by undertaking an induction program, which is arranged by the Companies
Secretaries.
Principle 3: Promote ethical and responsible decision making
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.
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.
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.
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.
18
Clime Investment Management Limited and Controlled Entities
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
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.
Principle 4: Safeguard integrity in financial reporting
Financial reporting
The Executive Director and the Chief Operating Officer have made the following certifications to the Board for the year ended 30 June
2015:
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.
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 all members of the
Committee to be independent. 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. N Schafer (Chairman), Mr. A Chant and Mr. Richard Proctor. 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.
19
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
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.
Clime Investment Management Limited and Controlled Entities
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 14 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.
Principle 5 and 6: Make timely and balanced disclosure and respect the rights of Shareholders
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.
Company Secretaries are nominated 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.
Principle 7: Recognise and manage risk
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.
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.
Principle 8: Remunerate fairly and responsibly
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).
20
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
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.
Clime Investment Management Limited and Controlled Entities
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.
are not entitled to retirement benefits in addition to the statutory minimum;
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.
The Remuneration Committee currently comprises Mr. N Schafer (Chairman), Mr. A Chant and Mr. Richard Proctor. 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.
21
FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
Clime Investment Management Limited
Financial Statements - 30 June 2015
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
62
63
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 3-13, 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 2015
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) on financial assets at fair value through
profit or loss
Occupancy expenses
Administrative expenses
Share of profit/(loss) of associate and joint venture
Profit/(loss) on disposal of property, plant and equipment
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income, net of income tax
Net value gain/(loss) on available for sale financial assets
Net movement in other reserves
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Notes
5
13(a)
13(d)
6
8(a)
22(a)
22(a)
2015
$
9,653,739
2014
$
8,746,240
-
2,697,269
(314,386)
(159,122)
(6,872,143)
1,923,879
(5,127)
(32,547)
(44,409)
(6,713,287)
(285,639)
29,507
4,226,840
4,397,134
(938,189)
3,288,651
(1,194,120)
3,203,014
-
84,042
84,042
3,372,693
(18,303)
-
(18,303)
3,184,711
Profit attributable to members of Clime Investment Management Limited
3,288,651
3,203,014
Total comprehensive income attributable to members of Clime Investment
Management Limited
3,372,693
3,184,711
Earnings per share
Basic - cents per share
Diluted - cents per share
24(a)
24(b)
6.9
6.6
6.8
6.4
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 2015
Clime Investment Management Limited and Controlled Entities
Notes
2015
$
2014
$
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
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
15
16
17
18
19
20
7,504,730
1,313,959
124,014
5,366,494
14,309,197
8,977,530
146,143
798,910
7,447,408
17,369,991
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
31,679,188
28,835,437
1,949,417
1,508,912
551,336
235,433
4,245,098
1,852,567
222,951
236,312
157,369
2,469,199
2,476,288
2,476,288
2,402,753
2,402,753
6,721,386
4,871,952
24,957,802
23,963,485
21
22(a)
22(b)
21,377,217
207,847
3,372,738
24,957,802
20,701,542
175,166
3,086,777
23,963,485
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 2015
Clime Investment Management Limited and Controlled Entities
Consolidated
Issued
capital
Notes
$
Share-
based
payments
reserve
$
Available
for sale
reserve
Other
Reserves
Retained
earnings
Total
$
$
$
$
Balance as at 1 July 2013
25,202,224
115,146
18,303
Profit for the year
Other comprehensive income /
(loss) for the year net of tax
Total comprehensive income /
(loss) 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 paid or provided
for
-
-
-
(4,031,571)
-
-
-
-
27(b)
21(b)
9(a)
-
60,020
(469,111)
-
-
-
Balance as at 30 June 2014
20,701,542
175,166
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
- Transfer of loan repayment to
issued capital on completion
of EIS loan term
- Transfer from share-based
payments reserve to issued
capital on completion of EIS
loan term
- Dividends provided for or
paid
-
-
-
-
-
-
-
73,939
27(b)
21(b)
550,375
-
21(b)
9(a)
125,300
(125,300)
-
-
Balance as at 30 June 2015
21,377,217
123,805
-
(18,303)
(18,303)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,127,384
26,463,057
3,203,014
3,203,014
-
(18,303)
3,203,014
3,184,711
-
-
-
(4,031,571)
60,020
(469,111)
(1,243,621)
(1,243,621)
3,086,777
23,963,485
3,288,651
3,288,651
84,042
-
84,042
84,042
3,288,651
3,372,693
-
-
-
-
-
-
-
73,939
550,375
-
(3,002,690)
(3,002,690)
84,042
3,372,738
24,957,802
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 2015
Clime Investment Management Limited and Controlled Entities
Notes
2015
$
2014
$
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
2,186,411
(427,204)
1,759,207
9,127,403
(7,291,510)
1,234,272
127,335
(603,246)
3,900,980
(1,505,045)
2,395,935
8,842,377
(6,580,613)
648,383
168,265
(250,000)
Net cash inflow from operating activities
7(b)
4,353,461
5,224,347
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of available-for-sale financial assets
Acquisition of subsidiaries net of cash acquired
Payments for property, plant and equipment
Net cash inflow from investing activities
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 increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
1,004,872
-
328,564
(64,101)
-
523,304
-
(181,330)
1,269,335
341,974
-
-
(3,002,690)
(469,111)
(4,031,571)
(1,243,621)
(3,002,690)
(5,744,303)
2,620,106
(177,982)
4,884,624
5,062,607
Cash and cash equivalents at end of the year
7(a)
7,504,730
4,884,624
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 2015
NOTE 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 28.
The financial statements of Clime Investment Management Limited for the year ended 30 June 2015 were authorised for issue in
accordance with a resolution of the directors on 25 August 2015 and covers the consolidated entity consisting of Clime Investment
Management Limited and its subsidiaries as required by the Corporations Act 2001.
NOTE 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 2015 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.
Non-controlling interest 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 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(b) Principles of consolidation (continued)
Clime Investment Management Limited and Controlled Entities
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 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 accrual 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 accrual basis as the
services are provided.
Investment education and software
(iv)
The Group operates and distributes the online, web-based equity valuation tool, Stocks in Value. 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 accrual basis and amortised over the period of the
subscription.
28
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(c) Revenue recognition (Continued)
Clime Investment Management Limited and Controlled Entities
Interest income
(v)
Interest income is recorded in the profit or loss when earned on an accrual 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.
(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.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset consumed. Contingent
rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The
aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(f) Business combinations
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.
29
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(f) Business combinations (continued)
Clime Investment Management Limited and Controlled Entities
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 non-controlling 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).
(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, if any, 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.
30
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(j) Investments and other financial assets (continued)
Clime Investment Management Limited and Controlled Entities
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.
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.
31
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(l) Property, plant and equipment
Clime Investment Management Limited and Controlled Entities
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:
- Plant and equipment
3-20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
(m) Intangible assets
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 recognised 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.
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 profit or loss and other comprehensive income. An impairment loss recognised 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.
Intangible assets acquired separately
(ii)
Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted
for on a prospective basis.
Intangible assets acquired in a business combination
(iii)
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair
value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Investment Management contracts and relationships
(iv)
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.
32
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(m) Intangible assets (continued)
Clime Investment Management Limited and Controlled Entities
Software licence, customer relationship and customer list
(v)
Software licence, customer relationships and customer lists 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 software licence,
customer relationship and customer list over their useful life of 3 to 10 years. Software license, customer relationship and customer
list 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 recognised 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
the 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.
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.
33
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(o) Employee benefits (continued)
Clime Investment Management Limited and Controlled Entities
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.
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.
34
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(s) Earnings per share
Clime Investment Management Limited and Controlled Entities
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 2014:
AASB 2012-3: Amendments to Australian accounting Standards Offsetting Financial Asset and Financial liabilities
i)
AASB 2012-3 adds application guidance to AASB 132 Financial instruments: Presentation to address inconsistencies identified in
applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of
set-off” and that some gross settlement systems may be considered equivalent to net settlement. There will be no significant impact
on the Group as there are no netting arrangements.
ii) AASB 1031: Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued in December
2013) that contains guidance on materiality. AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and
Interpretations are removed. AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards
to delete their references to AASB 1031. There will be no significant impact on the Group on account of this amendment.
(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 2015
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 and its consequential amendments
i)
This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2018.
This standard introduces new classification and measurement models for financial assets, using a single approach to determine
whether a financial asset is measured at amortised cost or fair value. The accounting for financial liabilities continues to be classified
and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the
entity's own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. Chapter 6
'Hedge Accounting' supersedes the general hedge accounting requirements in AASB 139 and provides a new simpler approach to
hedge accounting that is intended to more closely align with risk management activities undertaken by entities when hedging
financial and non-financial risks.
The consolidated entity will adopt this standard and the amendments from 1 January 2018 but the impact of its adoption is yet to be
assessed by the consolidated entity.
35
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Clime Investment Management Limited and Controlled Entities
(v) New accounting standards and interpretations for application in future periods (continued)
AASB 2014–1: Amendments to Australian Accounting Standards (Parts A to C)
(ii)
Parts A to C of these amendments is applicable to annual reporting periods beginning on or after 1 July 2014 and affects the
following standards:
AASB 2 'Share-based Payment': clarifies the definition of 'vesting condition' by separately defining a 'performance condition'
and a 'service condition' and amends the definition of 'market condition';
AASB 3 'Business Combinations': clarifies that contingent consideration in a business combination is subsequently measured at
fair value with changes in fair value recognised in profit or loss irrespective of whether the contingent consideration is within
the scope of AASB 9;
AASB 8 'Operating Segments': amended to require disclosures of judgements made in applying the aggregation criteria and
clarifies that a reconciliation of the total reportable segment assets to the entity's assets is required only if segment assets are
reported regularly to the chief operating decision maker;
AASB 13 'Fair Value Measurement': clarifies that the portfolio exemption applies to the valuation of contracts within the scope
of AASB 9 and AASB 139;
AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets': clarifies that on revaluation, restatement of
accumulated depreciation will not necessarily be in the same proportion to the change in the gross carrying value of the asset;
The adoption of these amendments from 1 July 2015 will not have a material impact on the consolidated entity.
(iii) AASB 2014-4 Amendments to Australian Accounting Standards - Clarification of Acceptable Methods of Depreciation and
Amortisation
These amendments are applicable to annual reporting periods beginning on or after 1 January 2016. AASB 2014-4 amends AASB 116
and AASB 138 to clarify that depreciation and amortisation should be based on the expected pattern of consumption of an asset,
that the use of revenue based methods to calculate depreciation is not appropriate, and that there is a rebuttable presumption that
revenue is an inappropriate basis for measuring the consumption of the economic benefit embodied in an intangible asset.
The adoption of these amendments from 1 January 2016 will not have a material impact on the consolidated entity.
(iv) IFRS 15 Revenue from Contracts with Customers
This standard is expected to be applicable to annual reporting periods beginning on or after 1 January 2017. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be
identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the
time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather
than adjusted to revenue.
For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the
performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For
performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much
revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's
statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the
entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and any
assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will adopt this standard from
1 January 2017 but the impact of its adoption is yet to be assessed by the consolidated entity.
36
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
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. The Group
does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
(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% at the end of the
reporting period. 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)
$1,098,208
($1,098,208)
$1,093,476
($1,093,476)
30 June 2015
30 June 2014
5% Increase in
Market Prices
5% Decrease in
Market Prices
5% Increase in
Market Prices
5% Decrease in
Market Prices
The Group’s sensitivity to equity prices has not changed significantly from the prior year.
(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) at the end of the reporting period. 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 (2.25% weighted average interest
rate in 2015 and 2.99% weighted average interest rate in 2014).
30 June 2015
30 June 2014
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)
$56,669
($56,669)
$56,321
($56,321)
37
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
3. FINANCIAL RISK MANAGEMENT (CONT.)
(b) Credit risk
Clime Investment Management Limited and Controlled Entities
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from
defaults.
(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
2015
$
2014
$
5,436,541
2,068,189
2,638,595
2,246,029
(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. The contractual maturity
is based on the earliest date on which the Group may be required to pay.
Maturity analysis – Group 2015
Financial liabilities
Trade and other payables
Total financial liabilities
Financial assets
Trade and other receivables – current
Total financial assets
Maturity analysis – Group 2014
Financial liabilities
Trade and other payables
Total financial liabilities
Financial assets
Trade and other receivables – current
Total financial assets
Carrying
amount
$
1,604,896
1,604,896
Contractual
cash flows
$
1,604,896
1,604,896
Less than 6
months
$
1,604,896
1,604,896
1,313,959
1,313,959
1,313,959
1,313,959
1,313,959
1,313,959
1,642,054
1,642,054
1,642,054
1,642,054
1,642,054
1,642,054
6 – 12
months
$
1-3 years
$
-
-
-
-
-
-
1,397,642
1,397,642
1,397,642
1,397,642
1,372,642
1,372,642
25,000
25,000
-
-
-
-
-
-
-
-
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.
38
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
3. FINANCIAL RISK MANAGEMENT (CONT.)
(d) Fair value risk
Clime Investment Management Limited and Controlled Entities
(i) Fair value measurements recognised in the consolidated 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).
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.
Level 1
$
Level 2
$
Level 3
$
Total
$
At 30 June 2015
Financial assets at fair value through profit or loss
-
-
-
Listed equities and funds
Listed preference shares
Listed options
At 30 June 2014
Financial assets at fair value through profit or loss
-
-
-
-
Listed equities and funds
Listed preference shares
Listed options
Unlisted funds
5,241,090
117,200
8,204
5,366,494
-
-
-
-
Level 1
$
Level 2
$
Level 3
$
5,717,051
649,646
106,189
-
6,472,886
-
-
-
967,200
967,200
(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
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
2015
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,241,090
117,200
8,204
5,366,494
Total
$
5,717,051
649,646
106,189
967,200
7,440,086
Unquoted
equities
2014
$
5,813,549
(615,684)
2,678,966
(7,876,831)
-
(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 Net Asset Value (NAV) of these funds may be used as an input into measure their fair value. In measuring this fair
value, consideration 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.
39
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
3. FINANCIAL RISK MANAGEMENT (CONT.)
(d) Fair value risk (Continued)
Clime Investment Management Limited and Controlled Entities
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 NAV 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.
4. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Critical accounting estimates and assumptions
In the application of the Group’s accounting policies, which are described in note 1, the directors of the Company are required to
make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered
to be relevant. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the
revision affects both the current and future periods.
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, investment management contracts, software licences and customer relationships
The Group tests annually whether goodwill, investment management contracts, software licenses and customer 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, Clime Investors
Education Pty Limited and Stocks in Value Pty Limited, the Group holds no interests in other entities that would provide the Group
with control over those entities.
(c) 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.
40
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
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 28(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
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
7,829,091
831,587
206,000
70,000
211,555
127,335
160,405
217,766
9,653,739
3,998,389
257,766
73,939
144,110
67,248
305,348
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
7,504,730
7,504,730
4,884,624
4,884,624
Cash at bank is interest bearing. Cash at bank and deposits at call bear floating interest rates between 1.9 and 2.4% (2014: 2.2 and
3.4%).
Cash and bank balances above includes deposits of $256,591 (2014: 256,818) that has been pledged as security for the currently
occupied office space in Sydney.
b) Reconciliation of profit for the year to net cash flows from operating
activities:
Profit for the year
Depreciation and amortisation
Loss on disposal of associate/available-for-sale financial assets
Loss/(gain) on disposal of Property, plant and equipment
Non-cash employee benefits expense
Share of (profit)/loss of associates and joint venture
Unrealised gains on re-classification of available-for-sale financial asset
Dividends received from associate
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
3,288,651
372,596
-
5,127
73,939
(1,923,879)
-
943,241
(873,489)
2,073,593
22,236
315,176
19,767
36,503
4,353,461
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
41
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
8. INCOME TAX EXPENSE
(a) Income tax expenses
Current tax expense
Deferred tax expense
Deferred income tax expense included in income tax expense comprises:
(Increase)/decrease in deferred tax assets (note 16)
Increase in deferred tax liabilities (note 20)
(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% (2014: 30%)
Tax effect of amounts which are not deductible / (taxable) in calculating
taxable income:
Amortisation of intangibles
EIS expense
Dividends received
Sundry items
Under /(over) provision of prior year tax
Previously unrecognised tax losses brought to account
Income tax expense
9. DIVIDENDS
(a) Dividends provided for or paid during the year
Final dividend in respect of the previous financial year – 3 cents per share
fully franked (2014: nil cents per share fully franked)
Interim dividend in respect of the current financial year – 3 cents per share
fully franked (2014: 2.5 cents per share fully franked)
Fully franked portion
(b) Dividends not recognised at year end
2015
$
2014
$
918,421
19,768
938,189
(17,748)
37,516
19,768
483,974
710,146
1,194,120
116,318
593,828
710,146
4,226,840
4,397,134
1,268,052
1,319,140
91,604
22,182
(475,152)
2,965
909,651
28,538
-
938,189
91,604
18,006
(192,858)
4,583
1,240,475
(46,355)
-
1,194,120
1,501,345
1,501,345
3,002,690
-
1,243,621
1,243,621
3,002,690
1,243,621
Proposed fully franked dividend – 3 cents per share (2014: 3 cents)
1,501,345
1,501,345
(c) Franking account balance
Amount of franking credits available for subsequent financial years are:
Franking account balance brought forward
Franking credits arising from income tax paid
Franking credits from dividends received from other corporations
Franking debits from payment of dividends
Balance of franking account at year end adjusted
20,135
590,944
678,786
(1,286,867)
2,998
27,604
250,000
275,511
(532,980)
20,135
Impact on franking account of proposed dividend not recognised at year
643,434
643,434
end
42
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
10. TRADE AND OTHER RECEIVABLES - CURRENT
Trade receivables (note a)
Sale consideration receivable (note b)
Other receivables
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
1,246,316
-
67,643
1,313,959
332,642
1,040,000
25,000
1,397,642
(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
Investment in listed, registered managed investment scheme
124,014
120,890
5,366,494
-
-
5,366,494
6,410,139
967,200
62,747
7,440,086
43
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investments comprise:
Investment in associate
Investment in joint venture
(a) Carrying amounts
Information relating to associate and joint venture are set out below.
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
8,977,530
-
8,977,530
7,876,831
-
7,876,831
Name of Companies
Unlisted
JASCO Holdings Ltd
(Associate) (i)
Stocks in Value Pty Limited
(Joint Venture) (ii)
Principal
Activity
2015
%
2014
%
2015
$
2014
$
Carrying amounts
Importing and distribution
21.75
20.41
8,977,530
7,876,831
Investment valuation
services
-
50.00
-
8,977,530
-
7,876,831
The above associate is incorporated in Australia
(i) Jasco Holdings Limited
At 30 June 2015
As at 30 June 2015, the Group has accounted for 21.75% (2014: 20.41%) investment in Jasco as an investment in associate, at a
carrying value of $8,977,530 (2014: $7,876,831).
At 30 June 2014
During the previous financial year, the Group determined that it held significant influence over Jasco Holdings Limited and
accordingly the investment as considered to be an associate from 27 June 2014.
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 had resulted in the recognition of a gain in profit or loss, calculated as follows
Fair value of investments retained 2014: 20.41%
Transfer of available for sale reserve to income statement
Less: Carrying amount on investment on the date of gaining of significant influence
2014
$
7,876,831
18,303
(5,197,865)
2,697,269
(ii) Stocks in Value Pty Limited
As at 30 June 2015, the Group entered into an agreement to acquire the remaining 50% of Stocks in Value Pty Limited (Stocks in
Value) from Eureka Report Pty Limited (Eureka). The 50:50 joint venture has been dissolved and is replaced by an agreement to
provide each other with continuing support and service on a commercial basis.
As a result, from 30 June 2015, the Group has consolidated 100% of Stocks in Value as a subsidiary, as it gained control on this date
in accordance with AASB 10 Consolidated Financial Statements. Refer note 29 for acquisition of stocks in value.
44
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Available-for-sale financial assets reclassified as Investments in Associates (note 13(a))
Share of profit/(loss) after income tax
Share of increase in reserves
Dividends received/receivable
Dividends reinvested
Carrying amount at the end of the financial year
(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 benefit
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 joint venture for the year*
Cumulative share of loss of joint venture*
(f) Summarised financial information of joint venture and associates
2015
$
2014
$
7,876,831
-
1,923,879
120,061
(1,295,543)
352,302
8,977,530
285,639
7,876,831
(285,639)
-
-
-
7,876,831
-
-
-
(285,639)
-
(285,639)
1,002,240
921,639
1,923,879
-
-
-
-
1,923,879
1,923,879
(285,639)
-
(285,639)
-
-
(126,436)
(126,436)
Summarised financial information in respect of the Group’s associates and joint ventures is set out below. The summarised financial
information below represents amounts shown in the associate’s financial statements prepared in accordance with AASBs adjusted by
the Group for equity accounting purposes.
2015
Jasco Holdings Limited (associate)
Stocks in Value Pty Limited (joint venture)*
2014
Jasco Holdings Limited (associate)
Stocks in Value Pty Limited (joint venture)
Assets
$
12,594,120
-
12,594,120
12,474,184
677,705
13,151,889
Group’s share of:
Liabilities
$
Revenues
$
3,616,590
-
3,616,590
4,597,353
802,463
5,399,816
8,886,180
-
8,886,180
-
412,088
412,088
Profit/(loss)
after tax
$
1,923,879
-
1,923,879
-
(285,639)
(285,639)
*From 30 June 2015, the Group has consolidated 100% of Stocks in Value as a subsidiary, as it gained control on this date in
accordance with AASB 10 Consolidated Financial Statements. Refer note 29 Acquisition of Subsidiary for details. Up to the date of
acquisition, the Group has not recognised its equity accounted share of operations from Stocks in Value due to the equity accounted
value being nil.
45
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
14. INVESTMENTS IN SUBSIDIARIES
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
(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
Country of incorporation
Class of shares
Equity holding*
2014
2015
%
%
Clime Asset Management Pty Ltd
Clime Investors Education Pty Ltd
Stocks In Value Pty Ltd (i)
Australia
Australia
Australia
Fully Paid Ordinary
Fully Paid Ordinary
Fully Paid Ordinary
100
100
100
100
100
50
* The proportion of ownership interest is equal to the proportion of voting power held.
(i) Stocks in Value Pty Ltd was classified as a joint venture as at 30 June 2014 (note 13), where as from 30 June 2015, the Group has
consolidated 100% of Stocks in Value as a subsidiary, as it gained control on this date in accordance with AASB 10 Consolidated
Financial Statements. Refer note 29 for acquisition of stocks in value.
15. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment - at cost
Accumulated depreciation and impairment
Written down value of property, plant and equipment
Reconciliation
a) Plant and equipment
Carrying value at beginning
Additions during the year
Acquisition through business combination
Disposals during the year
Depreciation charge for the year
Depreciation on disposals
Carrying amount at end
16. DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Employee benefits
Accrued expenses
Financial assets at fair value through profit or loss
Acquisition of subsidiary
Available for sale and equity accounted investments
Realised tax losses carried forward – capital
Deferred tax assets
Movements:
Opening balance at 1 July
Acquisition of subsidiary
Credited/(charged) to profit or loss (note 8)
Closing balance at 30 June
418,070
(271,927)
146,143
353,056
(208,706)
144,350
144,350
64,100
4,941
(4,028)
(67,248)
4,028
146,143
70,630
22,294
-
11,581
135,000
559,405
798,910
769,581
11,581
17,748
798,910
49,564
145,423
-
(37,348)
(46,259)
32,970
144,350
47,211
17,148
12,484
-
135,000
557,738
769,581
885,899
-
(116,318)
769,581
46
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
17. INTANGIBLE ASSETS
Goodwill at cost
Investment management contracts and relationships:
At cost
Accumulated amortisation
Software licences at cost
Customer relationship and customer list at cost
Closing balance at 30 June
(a) Reconciliations
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
3,351,564
3,026,564
4,790,000
(1,920,478)
2,869,522
576,300
650,022
4,790,000
(1,615,131)
3,174,869
-
-
7,447,408
6,201,433
2015 – Consolidated
Carrying amount at beginning of year
Acquisitions through business combination
Amortisation expense1
Carrying amount at end of year
2014 – Consolidated
Carrying amount at beginning of year
Amortisation expense1
Carrying amount at end of year
Goodwill
$
3,026,564
325,000
-
3,351,564
3,026,564
-
3,026,564
Investment
management
contracts and
relationships
$
3,174,869
-
(305,348)
2,869,521
3,480,217
(305,348)
3,174,869
Software
licences
$
-
576,300
-
576,300
-
-
-
Customer
relationships
and customer
lists
$
-
650,023
-
650,023
-
-
-
Total
$
6,201,433
1,551,323
(305,348)
7,447,408
6,506,781
(305,348)
6,201,433
1Amortisation of $305,348 (2014: $305,348) is included in the consolidated statement of profit or loss and other comprehensive
income
(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
2015 - Consolidated
Balance at the beginning of the year
Amounts recognised from business combinations occurring
during the year (note 29)
Balance at end of year
2014 - Consolidated
Balance at the beginning of the year
Movements during the year
Balance at end of year
Funds
Management
$
Investment
Software and
Education
$
Total
$
3,026,564
-
3,026,564
3,026,564
-
3,026,564
-
3,026,564
325,000
325,000
325,000
3,351,564
-
-
-
3,026,564
-
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.
47
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
18. TRADE AND OTHER PAYABLES
Unsecured:
Trade payables
Accruals
Amount payable to joint venture
Other payables
19. PROVISIONS
Employee benefits (i)
2015
$
2014
$
494,433
1,102,716
-
352,268
1,949,417
314,909
1,231,915
40,454
265,289
1,852,567
235,433
157,369
(i)
The provision for employee benefits represents annual leave and vested long service leave entitlements accrued.
20. 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 22)
Closing balance at 30 June
2015
$
2014
$
-
2,369,310
106,978
23,843
2,144,792
234,118
2,476,288
2,402,753
2,402,753
37,516
36,018
2,476,288
1,816,769
593,828
(7,844)
2,402,753
48
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
21. ISSUED CAPITAL
Clime Investment Management Limited and Controlled Entities
Parent Entity
2015
Shares
2014
Shares
Parent Entity
2015
$
2014
$
Notes
(a) Share capital
Ordinary shares
Fully paid
(b),(d)
48,344,834
46,944,834
21,377,217
20,701,542
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
Notes
Number of
shares
$
30 June 2013
November 2013
July 2013 to June 2014
Various
30 June 2014
Various
Various
30 June 2015
Balance
Capital Return
Shares bought back on-market and cancelled
Transaction costs arising from on-market buy-back
Balance
Transfer of loan repayment to issued capital on
completion of EIS loan term
Transfer from share-based payments reserve to issued
capital on completion of EIS loan term
Balance
(d)
47,594,641
-
(649,807)
-
46,944,834
25,202,224
(4,031,571)
(468,915)
(196)
20,701,542
1,400,000
550,375
-
125,300
48,344,834
21,377,217
(c) 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.
(d) On-market share buy-back
2015
During the financial year ended 30 June 2015, Clime Investment Management Limited did not buy-back any shares in accordance
with its on-market buy-back scheme.
2014
During the previous financial year ended 30 June 2014, Clime Investment Management Limited, in accordance with its on-market
share buy-back scheme, bought back 649,807 shares. The number of shares bought back and cancelled 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. The total cost of $469,111, including $196 of transaction costs, was deducted from
contributed equity. The Shares bought back in the current year were cancelled immediately.
(e) Employee Incentive Scheme (“EIS”)
As at 30 June 2015, there are 1,700,000 (2014: 2,800,000) 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 27(a) for a schedule of the
movements in EIS options on issue during the year.
(f) 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 2014.
49
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
22. RESERVES AND RETAINED PROFITS
(a) Reserves
Available-for-sale revaluation reserve
Share-based payments reserve
Other reserves
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 16, 20)
Balance 30 June
Share-based payments reserve
Balance 1 July
Employee share option written off
Transfer to issued capital on completion of EIS loan term
Balance 30 June
Other reserves
Balance 1 July
Movements during the year
Deferred tax liability
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
-
123,805
84,042
207,847
-
-
-
-
-
175,166
73,939
(125,300)
123,805
-
120,060
(36,018)
84,042
-
175,166
-
175,166
18,303
-
(26,147)
7,844
-
115,146
60,020
-
175,166
-
-
-
-
3,086,777
3,288,651
(3,002,690)
3,372,738
1,127,384
3,203,014
(1,243,621)
3,086,777
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.
Other reserves
Group’s share of various reserves from equity accounted associate, including foreign currency translation reserves.
50
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
Clime Investment Management Limited and Controlled Entities
2015
$
2014
$
23. 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
67,920
-
18,425
86,345
56,673
12,488
10,700
79,861
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.
24. 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
2015
Cents
2014
Cents
6.9
6.6
6.8
6.4
$3,288,650
$3,203,014
$3,288,650
$3,203,014
2015
Number
2014
Number
47,885,176
47,246,245
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share
49,585,176
50,046,245
(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
(f) Information concerning the classification of securities
47,885,176
47,246,245
1,700,000
2,800,000
49,585,176
50,046,245
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.
51
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
25. 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:
2015
Remuneration of Directors and other
key management personnel
2014
Short-term
Employee Benefits
$
Post-Employment
Benefits
$
Share-Based
Payments
$
Termination
Benefits
$
Total
$
990,409
16,973
-
-
1,007,382
Short-term
Employee Benefits
$
Post-Employment
Benefits
$
Share-Based
Payments
$
Termination
Benefits
$
Total
$
Remuneration of Directors and other
key management personnel
1,011,484
12,146
-
-
1,023,630
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 8 to 12 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 9 to 11.
(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.
2015
Balance at
the start of
the year
Granted/Transferred
during the year as
remuneration
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
Directors of Clime Investment Management Limited
Mr. Donald McLay
Mr. John Abernethy
Mr. Richard Proctor
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Mark Osborn
Mr. David Schwartz
-
-
450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(450,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2014
Name
Balance at
the start of
the year
Granted/Transferred
during the year as
remuneration
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
Directors of Clime Investment Management Limited
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Mr. Richard Proctor
-
-
-
-
450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
450,000
-
-
-
-
-
-
-
-
-
-
-
-
52
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
25. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT.)
Clime Investment Management Limited and Controlled Entities
(b) Equity instrument disclosures relating to directors and other key management personnel (continued)
(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.
2015
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. Donald McLay
Mr. John Abernethy
Mr. Richard Proctor
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Mark Osborn
Mr. David Schwartz
2014
Name
Directors of Clime Investment Management Limited
Ordinary shares
Mr. Mark Osborn
Mr. John Abernethy
Mr. David Schwartz
Mr. Neil Schafer
Mr. Richard Proctor
-
3,610,000
1,028,659
548,007
-
388,000
2,615,653
-
-
450,000
-
-
-
-
5,245,000
-
21,341
883,600
(388,000)
(2,615,653)
5,245,000
3,610,000
1,500,000
548,007
883,600
-
-
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
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
(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 27(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 27(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 $86,937 (2014: $126,364) that resulted from transactions, other
than compensation or loans with key management personnel or their related entities.
53
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
26. 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 14.
(c) Joint venture and Associate
Interests in joint venture and associate are set out in note 13.
During the year, the Group entities entered into the following trading transactions with joint venture and associate up to the date
they were not members of the Group.
(i) The Group received $200,000 (2014: $200,000) as consultancy fees for providing inputs to the Stocks in Value website and
$332,021 (2014: $164,031) towards reimbursement of expenses incurred on behalf of Stocks in Value Pty Limited. Clime
Investment Management Limited incurred/paid $179,068 (2014: $179,872) (Ex-GST) as referral fees/reimbursement of expense
incurred on behalf of the Group to Stocks in Value Pty Limited as at 30 June 2015.
(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
2015
$
-
-
-
2014
$
56,112
25,000
40,454
The amounts outstanding are unsecured and will be settled in cash. From 30 June 2015, the Group has consolidated 100% of Stocks
in Value as a subsidiary, as it gained control on this date in accordance with AASB 10 Consolidated Financial Statements. Refer note
29 Acquisition of Subsidiary for details. 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 25.
(e) Other related party transactions
Clime Capital Limited
(i) Mr. John Abernethy is a Director in Clime Capital Limited. The Group received $59,000 (2014: $57,750) 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 6.97% of the fully paid ordinary shares of Clime Capital Limited as at 30 June 2015. Clime
Investment Management Limited through Clime Asset Management Pty Limited (a wholly owned subsidiary) has the indirect
power to dispose 9.52% of Clime Capital Limited’s shares held by the Investment Mangers discretionary share portfolio clients as
at 30 June 2015.
(ii) Clime Asset Management Pty Limited during the year received $720,529 (2014: $702,831) as management 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), during the year received $1,792,519 (2014: $166,095) as
management, performance and recoverable fees as remuneration for managing the investment portfolios on behalf of Clime
International Fund.
54
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
27. 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:
2015
Grant Date
Vesting Date
Exercise
Price
Balance at
start of
the year
Granted
during
the year
Exercised
during 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
19 August 2014
25 February 2015
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
19 August 2017
25 February 2018
$0.380
$0.380
$0.370
$0.395
$0.420
$0.480
$0.500
$0.660
$0.800
$0.815
$0.829
$0.850
$0.750
Weighted average exercise price
2014
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
-
-
-
-
-
-
-
-
-
-
-
300,000
-
300,000
$0.756
Number
(450,000)
(350,000)
(100,000)
(300,000)
(75,000)
(125,000)
-
-
-
-
-
-
-
(1,400,000)
Grant Date
Vesting Date
Exercise
Price
Balance at
start of
the year
Granted
during
the year
Exercised
during the
year
Transferred
/ Forfeited
during the
year
Number
-
-
-
-
-
(75,000)
-
-
-
-
-
-
75,000
-
Balance at
the end of
the year
Number
-
-
-
-
250,000
-
200,000
200,000
100,000
200,000
375,000
300,000
75,000
1,700,000
Vested and
exercisable
at end of
the year
Number
-
-
-
-
250,000
-
-
-
-
-
-
-
-
250,000
Transferre
d/
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of
the year
Number
Number
Number
Number
Number
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
$0.380
$0.380
$0.370
$0.395
$0.420
$0.480
$0.500
$0.660
$0.800
$0.815
$0.829
Weighted average exercise price
450,000
350,000
100,000
300,000
325,000
200,000
200,000
200,000
-
-
-
2,125,000
-
-
-
-
-
-
-
-
100,000
200,000
375,000
675,000
$0.527
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
55
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
27. SHARE-BASED PAYMENTS (CONT.)
Clime Investment Management Limited and Controlled Entities
The weighted average contractual life of in-substance options outstanding at the end of the period was 1.41 years (2014 – 1.37
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.
The model inputs for in-substance options granted during the year ended 30 June 2015 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 vesting 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 $0.76 per share (for in-substance options
issued with a three year term);
vesting date: 3 years from the grant date;
expected price volatility of the Company’s shares: between 30% and 35%;
risk-free interest rate: between 2.5% and 3.0%; and
discount rate: 14%.
The resulting fair values per in-substance option are:
Number of Options
Grant Date
Exercise price
200,000
200,000
100,000
200,000
375,000
300,000
75,000
15 December 2012
21 February 2013
22 August 2013
23 October 2013
25 October 2013
19 August 2014
25 February 2015
$0.50
$0.66
$0.80
$0.815
$0.829
$0.850
$0.750
Value per option at
grant date
$0.100
$0.120
$0.140
$0.140
$0.140
$0.140
$0.134
Vesting Date
14 December 2015
21 February 2016
22 August 2016
23 October 2016
25 October 2016
19 August 2017
25 February 2018
Refer to Section C of the Remuneration Report on pages 9 to 12, and note 25, for additional information in relation to the EIS.
(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
2015
$
73,939
73,939
2014
$
60,020
60,020
Refer to Section C of the Remuneration Report on pages 9 to 12, and note 25, for additional information in relation to the Employee
Share Option Plan.
56
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
28. 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.
There have been no changes in basis of segmentation or basis of segmental profit or loss since the previous financial report.
(b) Reportable Segments
2015
Segment revenue
Sales to external customers
Share of profits from investments in
associate
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
$
9,050,444
160,405
-
104,000
9,314,849
-
-
9,050,444
-
-
160,405
1,923,879
24,504
1,948,383
-
-
104,000
1,923,879
24,504
11,263,232
3,189,935
160,405
1,948,383
(1,071,883)
4,226,840
(938,189)
3,288,651
Depreciation and amortisation expense
359,146
-
-
13,450
372,596
57
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
28. SEGMENT INFORMATION (CONT.)
(b) Reportable Segments (continued)
Clime Investment Management Limited and Controlled Entities
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)
(c) Segment assets and liabilities
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 $9.05 million (2014: $7.4 million) (see 28 (b) above) are
revenues of approximately $0.7 million (2014: $0.7 million) which arose from sales to the Group’s largest customer.
58
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
29. ACQUISITION OF SUBSIDIARY
Clime Investment Management Limited and Controlled Entities
Stocks in Value is an online equity valuation and research tool. The tool provides self-directed investors with the same insights and
conclusions on stocks that institutional investors benefit from, at a low cost as a subscription service.
As at 30 June 2015, the Group entered into an agreement to acquire the remaining 50% of Stocks in Value Pty Limited (Stocks in
Value) from Eureka Report Pty Limited (Eureka). The 50:50 joint venture has been dissolved and is replaced by an agreement to
provide each other with continuing support and service on a commercial basis. From 30 June 2015, the Group has consolidated 100%
of Stocks in Value as a subsidiary, as it gained control on this date in accordance with AASB 10 Consolidated Financial Statements.
a. Consideration transferred
Under the terms of the agreement, the Group transferred $1 to Eureka to acquire the remaining 50% interest.
Acquisition-related costs amounting to $2,883 has been excluded from the consideration transferred and have been recognised as an
expense in profit or loss in the current year.
b. Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Stocks in Value as at the date of acquisition were:
Current assets
Cash and cash equivalents
Trade and other receivables
Non-current assets
Plant and equipment
Intangible assets
Deferred tax assets
Current liabilities
Trade and other payables
Unearned revenue
Total identifiable net assets at fair value
c. Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Purchase consideration transferred
Pre-existing liabilities
Fair value of identifiable net assets assumed (as above)
Goodwill arising on acquisition
2015
$
328,565
87,042
4,941
1,226,322
11,581
(212,084)
(1,446,366)
1
$
1
325,000
(1)
325,000
Goodwill of $325,000 comprises the value of expected synergies, revenue growth, future market/product offering and the
assembled workforce arising from the acquisition. These benefits are not recognised separately from goodwill because they do not
meet the recognition criteria for identifiable intangible assets.
None of the goodwill recognised is expected to be deductible for income tax purposes.
d. Net cash inflow on acquisition
Consideration paid in cash
Cash and cash equivalent balances acquired with the subsidiary
$
(1)
328,565
328,564
59
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
29. ACQUISITION OF SUBSIDIARY (continued)
e.
Impact on the financial results of the Group
Clime Investment Management Limited and Controlled Entities
Group’s revenue and pre-tax profit for the year ended 30 June 2015 does not include any loss generated by Stocks in Value as control
was obtained on 30 June 2015.
Had this business combination been effected at 1 July 2014, the revenue of the Group from continuing operations would have been
$1.2 million higher and the consolidated pre-tax profit for the year from continuing operations would have been lower by $0.6
million.
30. SUBSEQUENT EVENTS
A final fully franked dividend for the year ended 30 June 2015 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.
31. CONTINGENT LIABILITIES, CONTINGENT ASSETS AND COMMITMENTS
The Group has no material contingent liabilities or contingent assets as at 30 June 2015 (2014: Nil).
COMMITMENTS FOR EXPENDITURE
Capital expenditure commitments
The Group has no material capital expenditure commitments to acquire property, plant and equipment as at 30 June 215 (2014: Nil)
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 commitments with respect to rent payable under the lease
agreement are as follows.
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2015
$
175,190
585,105
-
760,295
2014
$
116,130
810,065
-
926,195
60
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2015
32. 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
2015
$
2014
$
7,729,169
18,046,516
25,775,685
26,837,454
1,441,643
28,279,097
(2,503,412)
10,181,392
15,246,976
25,428,368
21,708,441
1,800,762
23,509,203
1,919,165
21,377,217
(24,004,434)
20,701,542
(18,957,543)
-
123,805
(2,503,412)
-
175,166
1,919,165
(2,043,076)
16,417
(2,038,399)
(18,303)
(2,026,659)
(2,056,702)
(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 (2014: nil) for the acquisition of property, plant and equipment and $760,295 (2014:
$926,195) for the operating lease commitments.
61
DIRECTORS’ DECLARATION
for the year ended 30 June 2015
The Directors declare that:
Clime Investment Management Limited and Controlled Entities
(a)
(b)
(c)
(d)
(e)
in the directors’ opinion, the attached
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 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:
Donald McLay
Chairman
Date: 25 August 2015
62
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”), which comprises the consolidated statement of financial position as at 30 June 2015,
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 consolidated entity comprising Clime Investment Management
Limited and the entities it controlled at the year’s end and from time to time during the financial
year.
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.
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.
63
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
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 Company’s financial position as at 30 June 2015 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 8 to 12 of the directors’ report for the
year ended 30 June 2015. 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 2015 complies with section 300A of the Corporations Act 2001.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney, 25 August 2015
64
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
The shareholder information set out below was applicable as at 20 August 2015.
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
29
174
103
279
45
630
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 P/L
Torres Industries Pty Limited
Double Pty Limited
Mr David Schwartz
Healthy Wealth Pty Ltd
Capital Property Corporation Pty Limited
Clodene Pty Ltd
Mr Philip Leslie Bish
Robansheil Pty Limited
Max Beauvais Pty Ltd
FD Management Pty Ltd & Halva Holdings Pty Ltd
Ruminator Pty Ltd
Di Iulio Homes Pty Limited
Mr Darren Rael Katz
Mr Robert Archer Black
J P Morgan Nominees Australia Limited
Barrob Bondi Pty Ltd
Mr Neil Edward Schafer & Mrs Molly Clark Schafer
Arcelia Pty Ltd
Tampaul Pty Ltd
Ordinary Shares
No. of
Shares
10,293,866
5,245,000
3,610,000
2,612,153
1,500,000
1,241,122
1,214,121
1,145,000
1,130,446
1,110,430
883,600
871,419
850,000
806,706
700,000
648,358
561,066
548,007
485,334
400,000
35,856,628
Percentage
of issued
shares
20.967
10.683
7.353
5.321
3.056
2.528
2.473
2.332
2.303
2.262
1.799
1.775
1.731
1.643
1.426
1.321
1.143
1.116
0.989
0.815
73.036
Quoted equity securities issued under Employee Incentive scheme not yet vested
Shares issued under the Employee Incentive Scheme to take up ordinary shares
Ordinary Shares
Number
on issue
950,000
Number
of holders
12
65
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
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
5,245,000
3,610,000
2,612,153
20.967
10.683
7.353
5.321
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 12 November 2015.
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 25 August 2015 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
66