Clime Investment Management Limited
Company Announcements
Australian Stock Exchange, Sydney
26 August 2019
Announcement of Results – Year ended 30 June 2019
Please find attached the Appendix 4E and the Annual report for the year ended 30 June 2019.
Yours sincerely,
Biju Vikraman
Company Secretary
Clime Investment Management Limited
Level 13, 20 Hunter Street Sydney NSW 2000 Australia | P O Box H90 Australia Square NSW 1215
ABN 37 067 185 899 P 02 8917 2100 F 02 8917 2155 W www.clime.com.au T @climeinvest
For personal use only
Clime Investment Management Limited
Appendix 4E
Preliminary Final Report
Lodged with the ASX under Listing Rule 4.3A
Year Ended 30 June 2019
(Previous corresponding period – 30 June 2018)
Results for Announcement to the Market
Revenue from ordinary activities
up
15%
to
$12,447,639
Profit before tax attributable to members
up
53%
to
$2,096,147
Profit after tax attributable to members
up
37%
to
$1,461,444
Dividends per share
Interim dividend – FY19 (paid on 12 April 2019)
Final dividend – FY19 (proposed)
Amount per
security
0.75 cents
1.50 cents
Franked amount
per security
0.75 cents
1.50 cents
Record date for determining entitlements to the final dividend is
20 September 2019
Explanation of Revenue from ordinary activities
Gross Funds Under Management (FUM) was $924 million as at 30 June 2019 compared with $855
million as at 30 June 2018. As at 31 July 2019 Gross FUM increased to $929 million.
Explanation of profit from ordinary activities after tax attributable to members
The Group generated an after-tax profit of $1.5 million for the year (FY18: $1.1 million). The
operating result is reported after depreciation and amortisation expense of $489,586 compared
with $603,418 during FY18.
Administrative expenses increased by 18% to $10.22 million, compared to $8.68 million in FY18.
Increase in administrative expenses is mainly due to an increase in headcount and redundancy
costs incurred in introducing Private Wealth Advisory services to enable Clime to meet a number
of wealth management needs of our clients. Clime currently has 5 highly experienced Private
Wealth advisers working from our offices in Sydney, Melbourne and Brisbane.
Please refer to the Annual Report for further information regarding Group performance.
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Clime Investment Management Limited
Associates and Joint Venture entities
Name of the entities
Ownership
Interest
Contribution to net profit
Current
period
%
50%
Previous
corresponding
period
%
Current
period
$
Previous
corresponding
period
$
50%
13,130
2,808
Clime Super Pty Ltd – Joint
Venture
Audit Status
This report is based on the Annual Report which is audited.
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Clime Investment Management Limited
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Clime Investment
Management Limited
2019 Annual Report
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Clime
Investment
Management
Limited
2019 Annual
Report
Contents
Chairman’s Report
The Clime Group
CEO Report
Report from the Board
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members
Shareholder Information
005
006
009
014
019
036
039
090
091
096
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only “ Gross Funds
Under
Management
grew during
the 2019
financial year
by $69
million to
$924 million”
Chairman’s
Report
The company has delivered a strong result
assisted by positive market conditions.
The CEO, Rod Bristow, discusses the
operational performance in greater detail
in his report.
The favourable investment environment
has allowed us to successfully implement
our new business initiatives which I
outlined in the Chairman’s report last
year. Some realignment of people and
objectives has taken place during the
past financial year to ensure we have the
staff capability to deliver the required
outcomes. The new business initiatives
are adjacencies to the traditional core
business and diversify our income streams
as well as widening the revenue base.
The financial year ending June 30, 2019
saw major disruption within the financial
advice industry as a result of the Hayne
Royal Commission which focused on poor
fiduciary behaviour and legacy issues
within mainstream financial advisory
businesses, principally operated by large
organisations, many of whom are now
exiting the industry. We seek to take
advantage of this short-term vacuum to
grow our new advisory and third-party
distribution capability without the burden
of past baggage.
The current financial year is the first
in our new three-year planning cycles.
Our industry has reasonable lead times
for both client acquisition and product
development. The board believes that
3 years is an appropriate timeframe
for strategic planning and performance
management. We expect to see
considerable growth in revenue, operating
earnings and assets under management
during this time frame.
Senior management has been
strengthened and the CEO has assembled
a group of experienced executives as
his key reports to achieve the business
initiatives. Our founder and Executive
Director, John Abernethy, has facilitated
this transition. John’s principal focus is
now providing high-quality investment
market insights for internal teams and
external clients.
Clime is almost unique as an investment
manager who is prepared to invest
time and resources seeking redress for
investment clients who have lost money
as a result of inappropriate corporate
behaviour. Two years ago we initiated
a shareholder class action against
UGL Pty Limited because they failed to
inform the Australian market about a
deterioration in operating conditions
that was disclosed to US investors. I am
pleased to report that this action has now
been successfully settled with the affected
clients about to receive some clawback for
the underperformance arising from this
inappropriate corporate behaviour.
Directors are proposing a fully franked
final dividend of 1.5 cents to be paid on 3
October 2019 which together with the fully
franked interim dividend of 0.75 cents,
makes a total of 2.25 cents per share
which is lower from last year.
I would like to thank Rod and his team for
the very strong foundations that they have
been laying for our business expansion.
All our 31 staff have clarity and direction
in their roles and understand the outputs
they need to deliver. Thank you.
Finally, thank you to my fellow directors.
Change has been evolutionary and is now
tangible. This change would not have been
possible without the focus, persistence
and support of my fellow directors, John
Abernethy, Allyn Chant and Neil Schafer.
Donald McLay
Chairman
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For personal use only The Clime Group
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Fund Ratings
Clime Smaller
Companies Fund
Clime Australian
Income Fund
Clime
International Fund
Clime CBG
Australian Equities Fund
66PRESENTATIONS
INCLUDING CLIENT LUNCHES
AND DINNERS
41
NEWSLETTERS
CLIME WEEKLY INVESTMENT
REPORT
32,976
PEOPLE
NEWSLETTER OPENS
176FUND REPORTS
97
WEBINAR PARTICIPANTS
347,057
WEBSITE VISITS
95+
MEDIA
MENTIONS
211
ARTICLES
PUBLISHED
1,275
CLIME DIRECT
CALLS
$
$
$
1,226
WEALTH MANAGEMENT
CLIENT ENGAGEMENT
$
MORE THAN
$23M
RETURNED TO SHAREHOLDERS IN DIVIDENDS
AND CAPITAL RETURNS OVER THE LAST 10 YEARS.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only CEO Report
I am pleased to present Clime’s results for the 2019
financial year, my first as Chief Executive.
We have achieved sound results across our
underlying operating business, driven in large part by
outstanding investment performance for our clients.
This performance was achieved through evolution
of our group investment process and methodology
to focus on investing in quality companies with a
strong valuation discipline. In addition, we launched
two new strategic initiatives during the year: Private
Wealth Advisory and third-party distribution of Clime
investment products. These initiatives will build on
our operating business to deliver improved results for
shareholders over the medium term.
Financial Highlights
The underlying cash profit for the Group was $3,218,150, up $1,009,490 or
46% of the prior corresponding period (PCP). Statutory profit before income
tax was $2,096,147, up $728,851 or 53% on PCP. Statutory profit after income
tax was $1,461,444, up $397,185 or 37% on PCP. These are pleasing results in
a transformational year for Clime.
This year’s performance has been the result of a disciplined approach to
execution of strategy. The markets Clime operates in are highly competitive
and to succeed requires consistent investment performance; a deep
understanding of our clients and how we meet their needs; and disciplined
execution. We have introduced and built on these focus areas during the
course of the year.
“ Profit
before tax
attributable
to members
was $2.10M,
up 53% on
the prior
corresponding
period”
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For personal use only Strategic Highlights
Clime initiated a review of group strategy and operations in Q3 of the financial
year. The review identified the opportunity to focus on generating increased
return on equity via growing group assets under management; evolving Clime’s
investment process and methodology; bringing forward our Private Wealth
Advisory initiative; commencing distribution of Clime’s investment products
through third parties (financial advisers); and ensuring Clime attracts and retains
the best possible team members to execute on our strategy. Subsequently,
these initiatives were commenced during the 2019 financial year.
We continued to leverage our core strengths while investing in new strategic
initiatives that will deliver diversified income streams and a broader revenue
base in coming years. These investments have been made without a
requirement for additional capital from shareholders. This is facilitating a
transition of our business from an asset manager to an integrated wealth
management business offering asset management, private wealth advisory,
investment management products and services for third parties (financial
advisers), SMSF administration and a self-directed investor platform.
We also saw a significant uplift in investment performance in the second half
of the year, in turn resulting in record performance fees generated. This was
a pleasing result and reflective of the deep knowledge and experience of the
Clime Investment Team, with over 150 years’ collective experience. With the
evolution introduced in FY2019, Clime’s investment portfolios are managed
reflecting our style of investing in quality stocks using a strong valuation
discipline. Our objective is to achieve strong returns for clients in excess of the
relevant benchmark for lower levels of risk, allowing Clime to grow and protect
client capital in the accumulation phase and generate meaningful income in the
retirement phase.
After receipt of ASIC approval of a variation to our Australian Financial Services
License to offer private wealth advice, Clime Private Wealth was launched in
November 2018. Clime has made a substantial investment in this new initiative
and is now providing private wealth advisory services for high net worth and
sophisticated investors. This includes offering tailored fee for service advisory
support, which exceeded initial expectations in terms of client demand. Clime’s
multi-asset class investment solutions across Australian and International
Equities, Fixed Income and Property offer clients diverse investment solutions
that meet their needs for income generation and capital growth.
To support third party distribution, we converted a number of Clime managed
funds from wholesale only to having wholesale and retail units available for
investors. We also commenced the process of having these funds rated by
independent ratings agencies. All of the funds rated received high quality
investment ratings, demonstrating the capability of Clime’s investment team
and the quality of the products themselves. These ratings will be important in
financial advisers having confidence to invest their clients’ funds into
Clime products.
“ Clime saw
a significant
uplift in
investment
performance
in the second
half of the
year, in turn
resulting
in record
performance
fees
generated.”
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only “ We also
continued
our focus on
educating
investors,
conducting
more than 50
seminars and
events around
the country
during the
year”
Operations
With the acquisition of CBG Asset Management in July 2017, the final
stages of integrating the investment teams and consolidating the group
investment process and methodology into a single approach was achieved
during the year.
In terms of products and services, we launched the Clime Fixed Interest Fund
(CFIF) in April 2019. Recognising the ‘lower for longer’ interest rate scenario
playing out, this Fund offers investors a low risk product with a target return
of 1.5 – 2% above the RBA cash rate via investing in a range of fixed income
opportunities. The CFIF is a core part of Clime’s multi-asset class investment
framework for clients. We also commenced the process of combining
the two Listed Investment Companies (LIC’s) managed by the group via a
takeover; and bringing together a number of investment products with
similar styles into single investment vehicles. Simplifying the investment
products and strategies we manage is key to being able to operate efficiently
and in a targeted manner to meet client needs now and into the future.
We also continued our focus on educating investors, conducting more than
50 seminars and events around the country during the year. The goal of
Clime’s investor education is to inspire event attendees to take positive
action to improve their wealth. This is also important strategically as a new
client acquisition strategy for our Private Wealth business. The process of
conducting seminars and events and growing our database of over 40,000
subscribers has now been fully automated, allowing for Clime to tailor
relevant content to specific audience requirements.
From a wealth management industry perspective, the 2019 financial year
will be viewed through the lens of history as transformational; driven in
large part by the Royal Commission into Banking and Financial Services. The
stories from the Commission hearings were confronting and raised many
questions about the financial services industry. For Clime, the Commission
represented an opportunity given our strategic decision to commence
offering Private Wealth Advisory services for wholesale clients. The
Commission recommendations have been encapsulated in the Clime Private
Wealth offering, providing a fresh start and a contemporary approach to
providing services for wholesale clients.
Part of this is reflected in Clime’s culture, based on our values of Integrity,
Transparency and Conviction. A new Group HR framework, implemented in
December 2018, provides clarity for all team members about group strategy
and their role in delivery. Importantly, this includes appropriately weighting
business outcomes (financial, risk management and compliance) and
behavioural outcomes (values and behaviours, client focus) in performance
appraisal. Clime considers how we achieve to be just as important as
what we achieve. This is critical when developing and shaping the culture
necessary for developing and sustaining the trust our clients have in the
financial services we provide.
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For personal use only Finally, Clime has been selective in recruiting key executives to our business
to take our organisation forward. This has included new leaders in our
Investment, Private Wealth and Distribution and Operations teams. The
Clime Group leadership team now has significant experience and breadth of
capability to lead the organisation for successful implementation of group
strategy. These changes have set up Clime for future success, noting higher
one-off restructuring costs than in the prior corresponding period as a result.
Looking Ahead
The outlook for 2020 is positive. Much like the companies in which we
invest, our focus remains on generating sustainable, self-funded growth and
expanding profitability.
To achieve these goals, we will continue to invest in our core business and
new products and services where we achieve our target rate of return,
including expanding our new strategic initiatives of Private Wealth Advice and
third-party distribution. Importantly, we will also ensure we attract and retain
high quality team members and exceed the expectations of our clients. While
there remains much to do, the foundations are now in place for a successful
period into the future.
I would like to thank all of the Clime Staff who have managed well through a
period of significant change.
Finally, I’d like to thank the Clime Board, in particular Founder John
Abernethy, for the smooth transition into the role and ongoing advice
and support.
Rod Bristow
Chief Executive Officer
Clime Investment Management Limited
“ The outlook
for 2020
is positive.
Much like the
companies
in which we
invest, our
focus remains
on generating
sustainable,
self-funded
growth and
expanding
profitability.”
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 0 1 3
For personal use only Report from the
Board
We are pleased to present the results of Clime Investment Management
Limited and its controlled entities (“the Group”) for the financial year ended
30 June 2019 (FY19).
Key Highlights
For FY19 the Group recorded a net profit before tax of $2,096,147 compared
with $1,367,296 in FY18. Net profit after tax attributable to members was
$1,461,444 for FY19 compared with $1,064,259 in FY18.
Group revenue increased by 15%, from $10.9 million in FY18 to $12.4
million in FY19. The Group’s Gross FUM was $924 million as at 30 June 2019,
compared with $855 million as at 30 June 2018.
The Group received performance fees during the year at $2,727,511 (FY18:
$1,081,205) while revenue from Investment Software was $0.4 million
compared to $0.5 million in FY18 in Stocks In Value Pty Ltd.
Interest and dividend income remained at $371,000 this year. The Group’s
interest income declined in line with lower average interest rates and a
lower average cash balance held.
Depreciation and amortisation expense decreased from $603,000 in FY18 to
$490,000 in FY19. The decrease was mainly due to the full amortisation of
one of its existing intangible assets in FY18.
Administration expenses were $10.2 million (compared to $8.7 million in
FY18). As announced in the Company’s Annual Report for the year ended
30 June 2018, this includes introducing Private Wealth Advisory services to
enable Clime to meet a number of wealth management needs for our clients.
Clime currently has 5 highly experienced Private Wealth advisers in our
offices in Sydney, Melbourne and Brisbane.
“ Directors are
proposing a
fully franked
final dividend
of 1.5 cents,
making a total
of 2.25 cents
per share for
the year.”
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Review of Financial Results
Below is a summary of the Group’s profit and loss on a sector basis to enable shareholders to distinguish
between the operational investment management business and the direct investment components.
2019
($)
2018
($)
Funds management and related activities revenue
8,900,938
8,865,132
Investment software revenue
Administrative and occupancy expenses
448,269
546,830
(7,208,067)
(5,701,648)
Third party custody, management & funds administration services
(1,154,474)
(1,095,640)
Operating business activities revenue less administrative costs
986,666
2,614,674
FUM growth incentives and marketing
Operating business margin
Performance fees
Short-term incentives
Direct investment income
Income from joint venture
Underlying cash profit
Redundancy costs
Other non-recurring expenses
Depreciation of property, plant and equipment
Amortisation of intangibles
Statutory profit before income tax
(418,707)
(1,334,682)
567,959
1,279,992
2,727,511
1,081,205
(1,220,643)
(615,653)
1,130,193
460,308
13,130
2,808
3,218,150
2,208,660
(283,537)
(237,946)
(348,880)
-
(42,826)
(33,636)
(446,760)
(569,782)
2,096,147
1,367,296
Income tax expense attributable to operating profit
(634,703)
(303,037)
Statutory profit after income tax
1,461,444
1,064,259
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For personal use only Summary of Total Equity
The Total Equity at balance date comprised the following:
Cash and cash equivalents
Trade and other receivables less payables
30 JUNE 2019
($)
30 JUNE 2018
($)
4,199,534
4,735,297
394,756
(96,884)
Listed investments – Clime Capital Limited and CBG Capital Limited
5,856,758
5,021,646
Unlisted investments – Managed funds
Equity accounted investment - Clime Super Pty Ltd
Other tangible assets less liabilities
Net tangible assets
Intangible assets
Deferred tax assets
Total Equity
No. of ordinary shares on issue
Equity per share
Net tangible assets per share
10,000
13,730
-
3,408
(833,196)
(751,292)
9,641,582
8,912,175
8,371,147
8,805,501
494,306
610,260
18,507,035
18,327,936
54,737,771
54,933,362
33.8 cents
33.4 cents
17.6 cents
16.2 cents
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Cashflow
Operating cash flow (pre impact of financial asset transactions) was positive $1.1 million
($0.4 million in FY18). This was primarily a function of the following:
• An increase in cash receipts from operating activities of $1.3 million;
• An increase in cash payments on operating activities of $0.2 million; and
• An increase in tax paid by $0.4 million.
The Group used net cash of $0.1 million to purchase short term financial assets in FY19
compared to $1.1 million net cash inflow generated from trading financial assets in FY18.
Thus, the net cash inflow from operating activities was $1.0 million, a decrease of $0.4
million in comparison with the prior corresponding period.
In FY19, net cash used in investing activities was $45k arising from payments for property,
plant and equipment and intangible assets. In FY18, the Group had a net cash inflow
from investing activities of $655k, mainly on account of the net cash inflow on acquisition
of subsidiary of $726k and offset by payments for property, plant and equipment of $71k.
Net cash outflow from financing activities in FY19 was $1.5 million, a decrease of $0.2
million in comparison with prior corresponding year. This was mainly due to lower
dividends paid by $0.4 million and offset by higher payments for shares bought back by
$0.2 million in FY19.
Cash reserves were applied as follows:
• Share buy-back program of $0.3 million; and
• Payment of half year and full year dividends to shareholders of $1.3 million.
Outlook for 2020 Financial Year
Directors and management expect 2020 to be a year of further growth as the business
transitions from funds management into a diversified product and financial solutions
services business. The Group now has a clear focus on growing assets under management,
expanding the Clime Private Wealth Division, maintaining solid investment returns across
all portfolios, and developing investment solutions that meet the needs of our clients.
On behalf of the Board
Donald McLay
Chairman
Allyn Chant
Independent Director
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Directors’ Report
Your Directors present their report on the consolidated entities (“the Group”
or “economic entity”), consisting of Clime Investment Management Limited
and its controlled entities for the financial year ended 30 June 2019. In order
to comply with the provisions of the Corporations Act 2001, the Directors’
Report is as follows:
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
Non-Executive Chairman
J Abernethy
Non-Independent Director from 1 January 2019 (Managing
Director up to 31 December 2018)
N Schafer
Independent Director
A Chant
Independent Director
Information on Directors
Mr. Donald McLay BCom, CA, FFin, ACIS, AGIA
Non-Executive Chairman
Experience and expertise
Mr. Donald McLay 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 Mr. McLay is Chairman of Credit Corp Group Limited (ASX: CCP),
appointed as a Non-Executive Director in March 2008 and Chairman on 30
June 2008 and Chairman of Registry Direct Limited (ASX:RD1) from 30 May
2016 (the company was listed on 1 November 2017).
Mr. McLay holds a Bachelor of Commerce degree, is a Chartered Accountant,
a Chartered Secretary and a Senior Fellow of the Financial Services Institute
of Australasia (FINSIA).
Former directorships in last 3 years
None
Special responsibilities
Member of Remuneration Committee
Member of Audit Committee
Interests in shares and options
7,470,576 ordinary shares.
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For personal use only Mr. John Abernethy BCom (Econ), LL.B
(Non-Independent Director from 1 January 2019)
(Managing Director up to 31 December 2018)
Experience and expertise
Mr. Abernethy was appointed Executive Director in 1994. Mr. Abernethy
has over 35 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 20 years.
Other current directorships
Mr. Abernethy is a Director of Clime Capital Limited, WAM Research Limited
and Australian Leaders Fund Limited.
Former directorships in last 3 years
WAM Active Limited, Watermark Market Neutral Fund Limited, Watermark
Global Limited and CBG Capital Limited
Special responsibilities
None
Interests in shares and options
4,032,850 ordinary shares
200,000 options under Employee Incentive Scheme (“EIS”) over ordinary shares
Mr. Neil Schafer BApp Econ
Independent Director
Experience and expertise
Mr. Schafer was appointed Non-Executive Director in 2011. Mr. Schafer
has extensive experience in business strategy and execution, investment
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 Imperial Pacific Limited and London City
Equities Limited.
Former directorships in last 3 years
None
Special responsibilities
Chairman of Remuneration Committee
Member of Audit Committee
Interests in shares and options
548,007 ordinary shares
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Mr. Allyn Chant BCom, CA, FFin
Independent Director
Experience and expertise
Mr. Chant was appointed as a director in 2014. Mr. Chant holds a Bachelor of
Commerce degree and is a qualified Chartered Accountant and a fellow of FINSIA.
Mr. Chant has over 40 years’ experience both in Australia and overseas in
auditing; financial planning and business management.
Other current directorships
None
Former directorships in last 3 years
None
Special responsibilities
Member of Remuneration Committee
Chairman of Audit Committee
Interests in shares and options
50,000 ordinary shares
Mr. Biju Vikraman Bcom, ACA, AGIA, ACIS
Company Secretary
Experience and expertise
Mr. Vikraman was appointed to the position of Company Secretary in 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 20 years experience across accounting, audit, finance and governance
and has held senior roles with big 4 Accounting Firms and listed entities
within Australia, India and Africa.
Mr. Vikraman is also an associate member of the Governance Institute
of Australia.
Interests in shares and options
57,000 ordinary shares
200,000 options (EIS) over ordinary shares
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For personal use only 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 2019, and the numbers of
meetings attended by each Director were:
DIRECTORS
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
Mr. Donald McLay
Mr. Neil Schafer
Mr. John Abernethy
Mr. Allyn Chant
A – Number of meetings eligible to attend
B – Number of meetings attended
A
7
7
7
7
B
7
7
7
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. John Abernethy retires by rotation and, being eligible, offers himself for
re-election at the next Annual General Meeting.
Principal activities
The Group’s principal activity is investing in listed and unlisted securities
for clients and operating under Australian Securities and Investments
Commission (ASIC) approved Australian Financial Services Licences (AFSL) in
the funds management industry.
There was no significant change in these activities during the current
financial year.
During the year the principal continuing activities of the Group consisted of:
a. Operating an Individually Managed Accounts Service for wholesale
clients and Separately Managed accounts through wholly owned
subsidiary Clime Asset Management Pty Limited;
b.
c.
Providing exclusive wealth advice to wholesale and sophisticated
clients through wholly owned subsidiary Clime Private Wealth Pty
Limited;
Acting as investment managers for Clime Capital Limited (ASX:CAM) and
CBG Capital Limited (ASX:CBC) through wholly owned subsidiaries Clime
Asset Management Pty Limited and CBG Asset Management Limited;
d. Acting as investment managers for the managed funds Clime Australian
Income Fund, Clime Smaller Companies Fund, Clime International
Fund, Clime Australian Value Fund, Clime Fixed Interest Fund, Clime
CBG Australian Equities Fund (Wholesale) and CBG Australian Equities
Fund through wholly owned subsidiaries Clime Asset Management Pty
Limited and CBG Asset Management Limited;
e.
Providing an online equity research and valuation tool for Australian
investors to research and value Australian and international listed
companies and investment markets through wholly owned subsidiary
Stocks in Value Pty Limited (trading as Clime Direct); and
f.
Providing administration services to Self Managed Super Funds through
joint venture company Clime Super Pty Limited.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Operating result
The consolidated net profit after providing for tax amounted to $1,461,444
(2018: $1,064,259).
Dividends paid or recommended
Dividends paid or recommended during the financial year are as follows:
1.5 cents per share (2018: 1.5 cents per share) franked to
100% at 27.5% (2018: franked to 100% at 27.5%) corporate
income tax rate, final ordinary dividend paid during the year
on 3 October 2018 in respect of the prior financial year
0.75 cents per share (2018: 1.5 cents per share) franked to
100% at 27.5% (2018: franked to 100% at 27.5%) corporate
income tax rate, interim ordinary dividend paid during the
year on 12 April 2019 in respect of the current financial year
2019
($)
2018
($)
852,726
849,739
421,713
849,374
Total dividends paid
1,274,439
1,699,113
Review of operations
In accordance with the relief provided by Legislative Instrument 2016/188
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 14.
Significant changes in state of affairs
Effective 31 December 2018, Mr. John Abernethy resigned as Managing
Director. Mr. Abernethy continued as a Director of the Company. The
material terms of Mr. Abernethy’s entitlements on resignation and Director’s
fees are disclosed under the Remuneration Report.
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 2019 of 1.5 cents per
share, totalling $841,089 has been declared by the Directors. This provision
has not been reflected in the financial statements.
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.
0 2 3
For personal use only Future developments
The Company will continue to pursue investment management activities
– primarily investing in equities listed on the Australian and international
securities exchanges.
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 rates, 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 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
DATE OPTIONS
GRANTED
VESTING /
EXPIRY DATE
EXERCISE
PRICE
NUMBER UNDER
OPTION
Employee Incentive Scheme
25 October 2013
30 September 2019
Employee Incentive Scheme
19 August 2014
30 September 2019
Employee Incentive Scheme
25 February 2015
30 September 2019
Employee Incentive Scheme
11 September 2015
30 September 2019
Employee Incentive Scheme
20 July 2016
30 September 2019
Employee Incentive Scheme
23 June 2017
23 June 2020
Employee Incentive Scheme
21 August 2018
21 August 2021
Employee Incentive Scheme
2 January 2019
2 January 2022
$0.829
$0.850
$0.750
$0.700
$0.630
$0.500
$0.485
$0.470
Total
150,000
50,000
25,000
150,000
200,000
200,000
400,000
200,000
1,375,000
No option holder has any right under the options to participate in any other share issue of the
Company or any other entity.
Shares issued on the exercise of options
Nil shares (2018: Nil shares) were issued to option holders after the end of
the 2019 financial year as a result of the exercise of options. Refer to Note 25
for movement of in-substance options during the year.
0 2 4
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 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.
Rounding off amounts
In accordance with Australian Securities and Investments Commission
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
the amounts in the Directors’ Report and in the financial report have been
rounded to the nearest dollar or in certain cases to the nearest one thousand
dollars where indicated, unless otherwise stated.
Risk and compliance control statement
Under Australian Securities Exchange (ASX) Listing Rules and 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’.
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 section on Company’s website at www.clime.com.au.
The Directors have received and considered the annual control certification
from the Chief Executive Officer and the Chief Financial Officer in accordance
with the Principles relating to financial, operational and compliance risks.
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 Directors or officers
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.
0 2 5
For personal use only Remuneration Report - Audited
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 2019. The remuneration
report is set out under the following main headings:
A Directors and other key management personnel
B Principles used to determine the nature and amount of remuneration
C Details of remuneration
D Service agreements
E Share-based compensation
F Related party transactions
G 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
Non-Executive Chairman
John Abernethy Non-Independent Director from 1 January 2019
(Managing Director up to 31 December 2018)
Neil Schafer
Independent Director
Allyn Chant
Independent Director
Other key management personnel
Rod Bristow
Chief Executive Officer (commenced 17 September 2018)
There were no additional persons other than the Directors who were
considered key management personnel under the Corporations Act 2001.
B. Principles used to determine the nature and amount
of remuneration
Directors and other 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). 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.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
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 January
2016. 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 $260,000 per annum.
Executive Directors’ remuneration
The executive remuneration framework has five components:
• base pay and benefits;
• 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.
Short-term incentives (STI)
Executive Directors and key management personnel have target short-term
incentive opportunities depending on the accountabilities of respective roles
and their impact on the organisation’s performance.
The intention of the STI plan is to recognise and reward the contributions
and achievements of individuals for the achievement of their relevant key
performance indicators (“KPI’s”). Such KPI’s will generally include measures
relating to both the Group and the relevant individual, and may include financial,
human resources, client service, strategy and risk measures where appropriate.
The measures are chosen such that they directly align the individual’s reward to
the KPI’s of the Group and to its strategy and performance.
0 2 7
For personal use only 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 in Note
25 on pages 78 to 80.
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 2019 and 30 June 2018 are set out in
the following tables. 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.
Directors and other key management personnel of Clime
Investment Management Limited
2019
NAME
Donald McLay
John Abernethy*
Neil Schafer
Allyn Chant
Rod Bristow**
Total
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
CASH SALARY
AND FEES
($)
SHORT-TERM
INCENTIVES
($)
SUPERANNUATION
($)
OPTIONS
($)
TOTAL
($)
70,000
286,199
54,000
47,489
286,918
744,606
-
18,721
-
-
193,177
211,898
-
-
70,000
12,435
7,380
324,735
-
4,511
16,683
33,629
-
-
54,000
52,000
14,498
511,276
21,878
1,012,011
* Includes $190,062 paid to Mr. John Abernethy in his capacity as Managing Director from 1 July 2018 to 31 December 2018,
$25,000 in his capacity as Director and $102,293 paid as consultancy fees from 1 January 2019 to 30 June 2019.
** Remuneration paid from the date of commencement being 17 September 2018.
0 2 8
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 2018
NAME
Donald McLay
John Abernethy
Neil Schafer
Allyn Chant
Total
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
CASH SALARY
AND FEES
($)
SHORT-TERM
INCENTIVES
($)
SUPERANNUATION
($)
OPTIONS
($)
TOTAL
($)
70,000
282,120
54,000
47,489
453,609
-
22,831
-
-
22,831
-
20,049
-
4,511
24,560
-
7,380
-
-
70,000
332,380
54,000
52,000
7,380
508,380
The relative performance of those elements of remuneration of Directors and
other key management personnel that are linked to performances are as follows:
NAME
Donald McLay
John Abernethy
Neil Schafer
Allyn Chant
Rod Bristow
FIXED REMUNERATION
REMUNERATION LINKED TO PERFORMANCE
2019
100%
94.2%
100%
100%
62.2%
2018
100%
93.1%
100%
100%
-
2019
-
5.8%
-
-
37.8%
2018
-
6.9%
-
-
-
Short-term incentives
$211,898 (2018: $22,831) short-term incentives were paid to Directors and
other key management personnel in respect of the year ended 30 June 2019.
The short-term incentives were paid at the discretion of the Remuneration
Committee based on the company exceeding its targets for the financial year.
The short-term incentives therefore vested 100% during the financial year ended
30 June 2019.
0 2 9
For personal use only
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.
Mr. John Abernethy
Non-Independent Director from 1 January 2019
(Managing Director up to 31 December 2018)
Up to 31 December 2018:
• Term of employment agreement – no fixed term
• Notice period for termination by employee – 3 months
• Notice period for termination by Company – 9 months
• Payment of a termination benefit on early termination by the Company
From 1 January 2019:
• Term of consultancy agreement – 3 years commencing 1 January 2019
• Estimated rate of effort – 4 days per week
• $50,000 per annum plus GST as director’s fee
• $204,585 per annuum plus GST as consultancy fee for a three-year
mutually agreeable renewable contract for delivering agreed outcomes
• Continued directorship of the Company
Mr. Rod Bristow
Chief Executive Officer (Commenced 17 September 2018)
• Base Salary - $385,000 per annum (inclusive of superannuation)
• Immediate issue of 400,000 ordinary shares under employee
incentive scheme
• Short and long-term incentive – to be negotiated subject to satisfactory
achievement of key performance indicators set by the Board
• 3-month probation period
• Notice period for termination by employee – 3 months
• Notice period for termination by Company – 3 months
E. Share-Based Compensation
(i)
Shares provided on exercise of remuneration options
No ordinary shares in the Company were provided as a result of the exercise
of options via the EIS during the year (2018: Nil).
(ii) Shareholdings of Directors and other key management personnel
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 related
parties, are set out below.
0 3 0
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only NAME
Mr. Donald McLay
Mr. John Abernethy
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Rod Bristow
BALANCE AT
1 JULY 2018
No.
7,320,680
4,083,850
548,007
50,000
-
GRANTED AS
COMPENSATION /
RECEIVED ON
EXERCISE OF OPTIONS
OTHER CHANGES
DURING THE YEAR
BALANCE AS
AT DATE
No.
-
-
-
-
-
No.
149,896
149,000
-
-
610,000
No.
7,470,576
4,232,850*
548,007
50,000
610,000*
* Includes 200,000 and 600,000 shares issued under Employee Incentive Scheme to
Mr. John Abernethy and Mr. Rod Bristow, respectively.
F. Related party transactions
1. Clime Capital Limited
i. Mr. John Abernethy is a director of Clime Capital Limited. The
Group received $84,000 (2018: $65,924) as management fees for
the services rendered by two Directors and Company Secretary to
Clime Capital Limited. The Group directly owns 6.28% (2018: 6.31%)
of the fully paid ordinary shares of Clime Capital Limited as at 30
June 2019. Clime Investment Management Limited through Clime
Asset Management Pty Limited (a wholly owned subsidiary) has
the indirect power to dispose 5.26% (2018: 6.14%) of Clime Capital
Limited’s shares held by the Investment Manager’s individually
managed accounts as at 30 June 2019.
ii.
Clime Asset Management Pty Limited (a wholly owned subsidiary),
during the year earned $795,006 (2018: $715,813) as remuneration
for managing Clime Capital Limited’s investment portfolio.
iii. All dividends paid and payable by Clime Capital Limited to its
directors and their related entities are on the same basis as to
other shareholders.
2. Clime Australian Income Fund
i.
Clime Asset Management Pty Limited, during the year received
$204,619 (2018: $114,817) as remuneration for managing the
investment portfolios and acting as trustee of Clime Australian
Income Fund. An external responsible entity was appointed on 3
May 2019.
3. Clime Smaller Companies Fund
i.
Clime Asset Management Pty Limited during the year received
$772,044 (2018: $277,548) as remuneration for managing the
investment portfolios and acting as trustee of Clime Smaller
Companies Fund. An external responsible entity was appointed on
3 May 2019.
4. Clime Fixed Interest Fund
i.
Clime Asset Management Pty Limited during the year received
$1,853 (2018: $nil) as remuneration for managing the investment
portfolios and acting as trustee of Clime Fixed Interest Fund.
0 3 1
For personal use only 5. CBG Capital Limited
i. Mr. John Abernethy was a director of CBG Capital Limited until
24 August 2018. The Group received $26,383 (2018: $26,708) as
management fees for the services rendered by two Directors and
Company Secretary to CBG Capital Limited. The Group directly
owns 1.03% (2018: 0.6%) of fully paid ordinary shares in CBG
Capital Limited as at 30 June 2019.
ii.
CBG Asset Management Limited (a wholly owned subsidiary) during
the year earned $405,099 (2018: $311,806) as remuneration for
managing CBG Capital Limited’s investment portfolio.
iii. All dividends paid and payable by CBG Capital Limited to its directors
and related entities are on the same basis as to other shareholders.
6. Clime CBG Australian Equities Fund (Wholesale)
i.
CBG Asset Management Limited, during the year received
$1,167,882 (2018: $934,325) as remuneration for managing the
investment portfolios and acting as trustee of Clime CBG Australian
Equities Fund (Wholesale).
7. Amigo Consulting Pty Limited
Mr. Allyn Chant, a Director of the Company, is also a director and a minority
shareholder of Amigo Consulting Pty Limited (“Amigo”). No consultancy fees
were paid by the Group to Amigo during the year (2018: $50,000).
On 27th October 2016, shareholders approved issuing 1,000,000 options to
Amigo to acquire ordinary shares in the Company. Amigo has been engaged
to provide strategic and outcome driven corporate advisory services.
These options will expire on 1 October 2019 and may be exercised at any
time upon vesting and prior to the expiry date. The amount payable on
exercise of each option is 50 cents, subject to adjustment in accordance with
certain conditions as follows:
i.
ii.
333,333 options vest on the date, if it occurs prior to 30 September
2017 that the Company’s securities trade on the Australian
Securities Exchange (“ASX”) at or above 75 cents. As this condition
was not met the vesting period has been extended to 30
September 2019 and vesting will occur if the Company’s securities
trade on the ASX at or above $1.00 by that extended date;
333,333 options vest on the date that the Company completes the
purchase or build of a retail platform (defined as a flexible service
that enables investors to buy and hold their investments online all
in one place, tracking transactions for tax purposes and allowing
advisor and/or client direction) for client’s monies if this occurs
before the expiry date;
iii.
333,334 options vest if the Company’s Funds under Management
attains or exceeds $1 billion prior to the expiry date.
Expenses arising from the share based payment transactions recognised
during the year was $36,333 (2018: $36,333).
0 3 2
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only The following balances prior to group elimination were outstanding at the end of the reporting period:
Clime Capital Limited
76,233
73,406
-
-
AMOUNT OWED BY RELATED PARTIES
AMOUNT OWED TO RELATED PARTIES
30 JUNE 2019
($)
30 JUNE 2018
($)
30 JUNE 2019
($)
30 JUNE 2018
($)
Subsidiaries of Clime Investment
Management Limited
Joint venture of Clime Investment
Management Limited
CBG Capital Limited
Amigo Consulting Pty Limited
G. Additional Information
2,511,604
902,562
18,697,101
16,102,083
-
-
-
22,330
6,600
-
-
-
-
-
-
11,000
P E R F O R M A N C E O F C L I M E I N V E S T M E N T M A N A G E M E N T L I M I T E D
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 2019:
30 JUNE
2019
$
30 JUNE
2018
$
30 JUNE
2017
$
30 JUNE
2016
$
30 JUNE
2015
$
TOTAL
Revenue
12,447,639
10,864,250
8,672,692
9,114,230
9,653,739
Net profit before tax and amortisation
2,542,907
1,937,078
1,239,961
1,808,353
4,532,188
Net profit before tax
2,096,147
1,367,296
766,739
1,335,130
4,226,840
Net profit after tax
1,461,444
1,064,259
2,561,130
1,065,330
3,288,651
-
-
-
-
Cash dividends paid
1,274,439
1,699,113
2,263,053
3,013,290
3,002,690
$11,252,585
Interim dividend - Fully franked 1
0.75cps
1.5cps
-
3.0cps
3.0cps
8.25cps
Interim dividend - Partially franked 2
-
-
1.5cps
1.5cps
1.5cps
1.5cps
-
1 CPL for 1
CIW
-
-
1.5cps
3.0cps
3.0cps
10.5cps
-
-
15cps
$0.50
$0.48
1.9cps
1.9cps
$0.65
$0.50
5.2cps
5.1cps
$0.75
$0.80
$0.65*
$0.75*
2.2cps
2.1cps
6.9cps
6.6cps
-
-
-
-
-
$0.48
$0.50
2.6cps
2.6cps
Final dividend 1,3
Capital return 4
Share price at start of year
Share price at end of year
Basic EPS
Diluted EPS
1 100% franked dividends (franked to 100% at 27.5% (prior to FY2018: 30%) corporate tax rate)
2 50% franked dividends (franked to 50% at 30% corporate tax rate)
3 Declared after each respective balance date and not reflected in the financial statements
4 In-specie distribution of 1 ordinary Clime Private Limited (CPL) share for each Clime Investment Management Limited (“CIW”)
ordinary share held worth 15cps
* Price pre-Jasco demerger
0 3 3
For personal use only Furthermore, during the five years to 30 June 2019, Clime Investment
Management Limited bought back 1,322,064 (2018: 1,411,279) fully paid
ordinary shares for total consideration of $673,983 (2018: $882,343). 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 imposed by s257B of the
Corporations Act 2001).
R E L A T I O N S H I P O F G R O U P P E R F O R M A N C E T O
R E M U N E R A T I O N P O L I C I E S
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”);
• Investment returns and performance generated by the Funds
Management team in respect of its managed investment products;
• Active compliance and risk management based on regulatory requirements;
• Employee satisfaction above a threshold approved by the
Remuneration Commitee; and
• Client satisfaction (Net Promoter Score).
END OF AUDITED REMUNERATION REPORT
0 3 4
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Proceedings on behalf of the 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 Pitcher Partners 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 36.
Signed in accordance with a resolution of the Directors.
Donald McLay
Chairman
Allyn Chant
Independent Director
Sydney, 26 August 2019
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For personal use only
Auditor’s
Independence
Declaration
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF CLIME INVESTMENT MANAGEMENT LIMITED
ABN 37 067 185 899
In relation to the independent audit for the year ended 30 June 2019, I declare that to the best
of my knowledge and belief there have been:
(i) no contraventions of the auditor’s independence requirements of the Corporations Act
2001; and
(ii) No contraventions of APES 110 Code of Ethics for Professional Accountants.
This declaration is in respect of Clime Investment Management Limited and the entities it
controlled during the year.
Mark Godlewski
Partner
Pitcher Partners
Sydney
26 August 2019
Adelaide Brisbane Melbourne Newcastle Perth Sydney
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
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pitcher.com.au
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
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For personal use only 0 3 8
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Financial
Statements
Contents
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
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, domiciled in Australia and listed on the Australian Securities
Exchange. Its registered office and principal place of business is:
Clime Investment Management Limited
Level 13, 20 Hunter Street
Sydney NSW 2000
A description of the nature of the consolidated entity’s operations and its principal
activities is included in Note 26 on pages 81 and 82 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.
40
41
42
43
44
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For personal use only Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
Revenue
Net realised and unrealised gains on financial assets at fair value
through profit or loss
NOTES
2019
$
2018
$
5
12,447,639
10,864,250
759,272
89,225
Occupancy expenses
(415,457)
(302,839)
Depreciation and amortisation expense
6
(489,586)
(603,418)
Administrative expenses
Share of profit from joint venture
Profit before income tax
Income tax expense attributable to operating profit
Profit for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Profit attributable to members of Clime Investment Management
Limited
Total comprehensive income attributable to members of Clime
Investment Management Limited
Earnings per share
Basic - cents per share
Diluted - cents per share
13(c)
6
8(a)
(10,218,851)
(8,682,730)
13,130
2,808
2,096,147
1,367,296
(634,703)
(303,037)
1,461,444
1,064,259
-
-
1,461,444
1,064,259
1,461,444
1,064,259
1,461,444
1,064,259
24(a)
24(b)
2.6
2.6
1.9
1.9
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
Consolidated Statement of Financial Position
As at 30 June 2019
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 equity method
Property, plant and equipment
Deferred tax assets
Intangible assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Current tax liabilities
Contract 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
NOTES
2019
$
2018
$
7(a)
4,199,534
4,735,297
10
11
12
13
15
16
17
3,124,338
2,030,348
141,894
175,907
5,866,758
5,021,646
13,332,524
11,963,198
13,730
79,128
3,408
89,777
494,306
610,260
8,371,147
8,805,501
8,958,311
9,508,946
22,290,835
21,472,144
18
2,691,380
2,084,165
38,202
472,024
349,658
43,067
645,961
306,314
3,551,264
3,079,507
232,536
232,536
64,701
64,701
3,783,800
3,144,208
18,507,035
18,327,936
16,933,128
17,006,379
298,901
233,556
1,275,006
1,088,001
18,507,035
18,327,936
19
20
21
22(a)
22(b)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
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For personal use only
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
CONSOLIDATED
NOTES
ISSUED
CAPITAL
$
SHARE-BASED
PAYMENTS
RESERVE
$
RETAINED
EARNINGS
$
TOTAL
$
Balance as at 1 July 2017
13,822,370
155,798
1,722,855
15,701,023
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:
- Issue of ordinary shares for acquisition
of CBG Asset Management Limited
- On-market buy-back including
transaction costs
- Recognition of share-based payments
- Dividends paid or provided for
-
-
-
21(b)
3,250,000
21(d)
(65,991)
22(a)
9(a)
-
-
-
-
-
-
-
77,758
1,064,259
1,064,259
-
-
1,064,259
1,064,259
-
-
-
3,250,000
(65,991)
77,758
-
(1,699,113)
(1,699,113)
Balance as at 30 June 2018
17,006,379
233,556
1,088,001
18,327,936
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:
- Issue of ordinary shares for acquisition
of CBG Asset Management Limited
- On-market buy-back including
transaction costs
- Recognition of share-based payments
- Dividends paid or provided for
-
-
-
21(b)
187,500
21(d)
(260,751)
22(a)
9(a)
-
-
-
-
-
-
-
65,345
1,461,444
1,461,444
-
-
1,461,444
1,461,444
-
-
-
187,500
(260,751)
65,345
-
(1,274,439)
(1,274,439)
Balance as at 30 June 2019
16,933,128
298,901
1,275,006
18,507,035
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Consolidated Statement of Cashflows
For the year ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Fees received in the course of operations
Expense payments in the course of operations
Dividends and distributions received
Interest received
Income taxes (paid)/refunded
NOTES
2019
$
2018
$
11,702,920
10,368,106
(10,590,070)
(10,366,732)
302,428
285,395
71,301
(355,780)
76,704
18,052
1,130,799
381,525
Proceeds from disposal of financial assets at fair value through
profit or loss
1,421,152
2,552,622
Payments for financial assets at fair value through profit or loss
(1,507,043)
(1,458,842)
(85,891)
1,093,780
Net cash provided by operating activities
7(b)
1,044,908
1,475,305
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash inflow on acquisition of subsidiary
Payments for property, plant and equipment
Payments for intangible assets
Payment for investment in joint venture – Clime Super Pty Ltd
32
15
-
(33,075)
(12,406)
-
725,944
(70,526)
-
(600)
Net cash (used in)/provided by investing activities
(45,481)
654,818
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for shares bought back (including transaction costs)
21(d)
(260,751)
(65,991)
Dividends paid to Company’s shareholders
9(a)
(1,274,439)
(1,699,113)
Net cash used in financing activities
(1,535,190)
(1,765,104)
Net (decrease)/increase in cash and cash equivalents
(535,763)
365,019
Cash and cash equivalents at beginning of the year
4,735,297
4,370,278
Cash and cash equivalents at end of the year
7(a)
4,199,534
4,735,297
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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For personal use only Notes to the Financial Statements
For the year ended 30 June 2019
1. Corporate information
Clime Investment Management Limited (the Company) is a publicly listed company incorporated and domiciled
in Australia. The address of its registered office and principal place of business is Level 13, 20 Hunter Street,
Sydney NSW 2000 Australia. The principal activities of the Company and its subsidiaries (“the Group”) are
described in Note 26(a).
The financial statements of Clime Investment Management Limited for the year ended 30 June 2019 were
authorised for issue in accordance with a resolution of the Directors on 26 August 2019 and covers the
consolidated entity consisting of Clime Investment Management Limited and its subsidiaries as required by the
Corporations Act 2001.
2. Summary of significant accounting policies
The financial statements include the consolidated entity consisting of Clime Investment Management Limited
and its subsidiaries.
These financial statements are general purpose financial statements which have been prepared in accordance
with the Corporations Act 2001, Accounting Standards and other authoritative pronouncements, and comply
with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group. For the purpose of
preparing the consolidated financial statements, the Group is a for-profit entity.
Accounting Standards include Australian Accounting Standards (AASs) and other authoritative pronouncements
issued by the Australian Accounting Standards Board (‘AASB’). Compliance with Australian Accounting Standards
ensures that the financial statements and notes of the Group comply with International Financial Reporting
Standards (‘IFRS’).
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board that are mandatory and relevant to the operations and
effective for the current reporting period.
New and revised accounting standards effective during the reporting period
Certain accounting standards and interpretations were effective for the first time during the current reporting
period. The relevant policies are:
(i) AASB 9: Financial Instruments and its consequential amendments
AASB 9 contains requirements in relation to the classification, measurement and de-recognition of financial
assets and liabilities, replacing the recognition and measurement requirements in AASB 139 Financial
instruments: Recognition and Measurement. Under the new requirements the four previous categories of
financial assets under AASB 139 have been replaced with three measurement categories: fair value through
profit or loss, fair value through other comprehensive income, and amortised cost. Financial assets can only be
measured at amortised cost where very specific conditions are met.
AASB 9 introduced new hedge accounting requirements including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be hedged, and disclosures.
There was no impact on the Group upon adoption of AASB 9 as the Group had already measured financial
assets and financial liabilities at fair value through profit or loss or amortised cost, and the Group does not
apply hedge accounting.
AASB 9 also introduced a new impairment model for trade receivables, the Expected Credit Loss (ECL) model.
The Group’s receivables include trade and other receivables. As the settlement period is short and credit risk
of counter party is low, the change in impairment calculation did not have a material impact on the Group or
require any adjustment on adoption.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only (ii) AASB 15 Revenue from Contracts with Customers
The standard provides a single standard for revenue recognition. The core principle of the standard is that an
entity recognises 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 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 Group’s main sources of income are management and performance fees which arise through the provision
of services to clients and mandates. In accordance with the revenue recognition policies of the Group, revenue
is typically recognised as these services are delivered. The application of AASB 15 has not had a material impact
on the recognition of management and performance fees except for the reclassification of subscription fees
received in advance to be a contract liability in the statement of financial position.
Other sources of income are interest, dividends and distributions, and gains on financial instruments at fair
value. All of these are outside the scope of the new revenue standard. The adoption of AASB 15 in relation to
these revenue sources did not have a significant impact on the Company’s accounting policies or the amounts
recognised in the financial statements.
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 consolidated financial statements are general purpose financial statements prepared in accordance with
applicable Accounting Standards, the Corporations Act 2001 and other authoritative pronouncements issued by
the Australian Accounting Standards Board.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has
concluded would result in financial statements containing relevant and reliable information about transactions,
events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements
and notes also comply with International Financial Reporting Standards as issued by the IASB. Material
accounting policies adopted in the preparation of these consolidated financial statements are presented below
and have been consistently applied unless stated otherwise.
Except for cash flow information, the consolidated financial statements have been prepared on an accruals
basis and are based on historical costs, modified, where applicable, by the measurement at fair value of
financial assets and liabilities at fair value through profit and loss at the end of each reporting period.
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For personal use only 0 4 6
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability,
the Group takes in to account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at measurement date.
Critical accounting estimates
The preparation of financial statements in conformity with Australian Equivalent of International Financial
Reporting Standards 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 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of Clime Investment Management
Limited (“the Company”) and entities (including structured entities) controlled by the Company and its
subsidiaries. Clime Investment Management Limited and its subsidiaries together are referred to in these
financial statements as the “Group” or the “Consolidated Entity”. Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
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 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)).
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group companies are eliminated on consolidation. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.
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.
(ii) Associates
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 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.
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For personal use only 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.
(c) Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled to in exchange for transferring goods and services to a customer. 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) Dividend income (excluding dividends received from associates)
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.
(ii) Services income
Fees and commissions that relate to specific transactions or events are recognised as revenue in the period
that the services are provided and performance obligations are satisfied. When they are charged for services
provided over a period, they are recognised as revenue on an accrual basis as the services are provided.
(iii) Investment education and software
The Group operates and distributes the online, web-based equity valuation tool, Clime Direct (formerly known
as 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 as this
reflects the period over which performance obligations under the subscription are satisfied.
(iv) Interest income
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 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.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 0 4 9
For personal use only 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.
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 non-financial 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
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 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.
(i) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses and have a repayment terms between
30 and 90 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on
due dates.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
( j)
Investments
(i) Classification
The Group’s managed investments are categorised at fair value through profit or loss. They comprise
investments in publicly listed companies and unlisted managed funds.
The Group classifies its assets based on its business model for managing those financial assets and the
contractual cash flow characteristics of the financial assets.
The Group’s portfolio of financial assets is managed and performance is evaluated on a fair value basis in
accordance with the Group’s documented investment strategy. The Group’s policy is to evaluate the information
about these financial assets on a fair value basis together with other related financial information.
(ii) Recognition/derecognition
The Group recognises financial assets on the date it becomes party to the contractual agreement (trade date)
and recognises changes in the fair value of the financial assets from this date.
Investments are derecognised when the right to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all of the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in the statement of profit or loss.
Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair
value. Gains and losses arising from changes in the fair value of ‘financial assets at fair value through profit
or loss’ category are presented in the statement of profit or loss within ‘net realised and unrealised gains on
financial assets at fair value through profit or loss’ in the period in which they arise.
(iv) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when
the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a
net basis or realise the asset and settle the liability simultaneously. As at the end of the reporting period, there were
no financial assets or liabilities offset or with the right to offset in the statement of financial position.
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For personal use only 0 5 2
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only (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 financial assets at fair value through
profit or loss) 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, if any. 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 considered to
approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group
for similar financial instruments.
(l) Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss
during the financial period in which they are incurred.
Depreciation of assets is calculated using the straight line method to allocate their cost or revalued amounts,
net of their residual values, over their estimated useful lives, as follows:
• Plant and equipment
3-20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 2(g)).
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.
(m) Intangible assets
(i) Goodwill
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 recognised 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.
0 5 3
For personal use only (ii) Intangible assets acquired separately
Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated
useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted for on a prospective basis.
(iii) Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially
recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are
acquired separately.
(iv) Investment Management contracts and relationships
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.
(v) Software licence, customer relationship and customer list
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) Contract liabilities
Contract liabilities represent the consolidated entity’s obligation to transfer goods or services to a customer and
are recognised when the customer pays consideration, or when the consolidated entity recognises a receivable
to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has
transferred the goods or services to the customer.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 0 5 5
For personal use only (p) Employee benefits
(i) Wages and salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled
wholly within 12 months of the reporting date are recognised 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.
(ii) Bonus plans
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) Superannuation
Contributions are made by the Group to employee superannuation funds and are charged as expenses
when incurred.
(iv) Employee benefit on-costs
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.
(v) Share-based payments
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.
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.
0 5 6
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 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.
(q) 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).
(r) 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 the 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.
(s) 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.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only (t) Earnings per share
(i) Basic earnings per share
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.
(ii) Diluted earnings per share
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.
(u) Goods and service tax
Revenues, expenses, assets and liabilities 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
ii.
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising
from investing and financing activities which is recoverable from, or payable to, the taxation authority is
classified within operating cash flows.
(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 2019 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:
(i) AASB 16 Leases
AASB 16 provides a comprehensive model for the identification of leases arrangements and their treatment in
the financial statements of both lessees and lessors.
The accounting model for lessees will require lessees to recognise all leases on balance sheet, except for short-
term leases and leases of low value assets.
AASB 16 applies to annual periods beginning on or after 1 January 2019. As at 30 June 2019, the Group has non-
cancellable operating lease commitment of $1,658,137 (Note 28). A preliminary assessment indicates that these
arrangements will meet the definition of a lease under AASB16, and hence the Group will recognise a right-of-
use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-
term leases upon the application of AASB 16. The Group will adopt this standard from 1 July 2019 and its impact
on adoption is expected to result in total assets and total liabilities increasing by $1,191,728.
0 5 9
For personal use only 3. Critical accounting estimates and assumptions
In the application of the Group’s accounting policies, which are described in Note 2, 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.
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.
4. Financial risk management
The Group’s activities expose it to various direct and indirect financial risks, including market risk, interest rate
risk, credit risk, liquidity risk and fair value risk.
Risk management is carried out by senior management under policies and strategies approved by the Board
and Audit Committee. The Group does not enter into or trade financial instruments, including derivative
financial instruments, for speculative purposes.
(a) Market risk
The Group’s activities expose it primarily to other price risks (see (i) below) and interest rate risks (see (ii)
below). Unfavourable economic conditions both domestically and globally can have a significant impact on the
investment returns of the investments and investment portfolios.
(i) Other price risk
The Group’s activities expose it primarily to equity securities price risk. This arises from the following:
• Investments held by the Group as direct investments; 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 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.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 0 6 1
For personal use only P R I C E R I S K S E N S I T I V I T Y A N A L Y S I S
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.
30 JUNE 2019
30 JUNE 2018
5% INCREASE IN
MARKET PRICES
5% DECREASE IN
MARKET PRICES
5% INCREASE IN
MARKET PRICES
5% DECREASE IN
MARKET PRICES
Impact on profit (pre-tax)
$805,730
($805,730)
$682,217
($682,217)
(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. The majority of the
Group’s interest-bearing assets are held with reputable banks to ensure the Group obtains competitive rates
of return while providing sufficient liquidity to meet cash flow requirements. 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 (1.66% weighted average interest rate in 2019 and 1.69% weighted average interest
rate in 2018).
30 JUNE 2019
30 JUNE 2018
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)
$43,031
($43,031)
$45,518
($45,518)
(b) Credit risk
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 maximum 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. All financial assets that are not impaired or past due are of good credit quality.
(ii) Trade and other receivables
The maximum 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.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
ability to close-out market positions. The Group manages liquidity risk by maintaining adequate reserves and
by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial
assets and liabilities. 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 liabilities
The following table details the Group’s remaining contractual maturity for its non-derivative financial 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 2019
CARRYING
AMOUNT
$
CONTRACTUAL
CASH FLOWS
$
LESS THAN 6
MONTHS
$
6 – 12
MONTHS
$
1-3
YEARS
$
Financial liabilities
Trade and other payables
2,311,940
2,311,940
2,311,940
Total financial liabilities
2,311,940
2,311,940
2,311,940
-
-
-
-
MATURITY ANALYSIS – GROUP 2018
CARRYING
AMOUNT
$
CONTRACTUAL
CASH FLOWS
$
LESS THAN 6
MONTHS
$
6 – 12
MONTHS
$
1-3
YEARS
$
Financial liabilities
Trade and other payables
1,629,211
1,629,211
1,629,211
Total financial liabilities
1,629,211
1,629,211
1,629,211
-
-
-
-
Trade and other payables 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.
0 6 3
For personal use only (d) Fair value risk
(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.
AT 30 JUNE 2019
Financial assets at fair value
through profit or loss
- Listed equities
- Unlisted unit trusts
AT 30 JUNE 2018
Financial assets at fair value
through profit or loss
- Listed equities
(ii) Valuation technique
L I S T E D I N V E S T M E N T S
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
5,856,758
-
5,856,758
-
-
-
-
5,856,758
10,000
10,000
10,000
5,866,758
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
5,021,646
5,021,646
-
-
-
-
5,021,646
5,021,646
When fair values of publicly traded equities 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.
U N L I S T E D U N I T T R U S T S
The investment is included within Level 3 of the hierarchy. As observable prices are not available for these securities,
the Group has relied on valuations provided by managers of the underlying funds, based on the net asset value per
unit reported by those trusts, in order to derive the fair value of the units.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 5. Revenue
Revenue from contracts with customers
2019
$
2018
$
Funds management
Management fees 1,2
Performance fees 1
Director and Company Secretary Fees 2
Other 2
Investment software
Subscription fees 1
Other revenue
Direct investments
Dividends and distributions
Interest income
8,751,428
2,727,511
115,486
34,024
8,580,935
1,081,205
74,924
209,273
11,628,449
9,946,337
448,269
546,830
299,620
71,301
370,921
294,379
76,704
371,083
Total revenue
12,447,639
10,864,250
1 Revenue from contracts with customers recognised over time
2 Revenue from contracts with customers recognised at a point in time
Refer to Note 26(b) for an analysis of revenue by segment.
6. Expenses
Profit before income tax includes the
following specific expenses:
2019
$
2018
$
Employee benefits expense (excluding superannuation)
6,455,738
5,133,646
Defined contribution superannuation expense
Share-based payment expense recognised
Rental expense relating to operating leases
- Minimum lease payments
Depreciation of property, plant and equipment
Amortisation of investment management contracts
Amortisation of software licences, customer relationships
and customer lists
354,224
65,345
276,957
42,826
356,908
89,852
371,008
77,758
263,935
33,636
356,908
212,874
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For personal use only
7. Statement of Cashflows
(a) Reconciliation of cash
For the purposes of the statement of financial position and
statement of cash flows, cash and cash equivalents comprise:
2019
$
2018
$
Cash and bank balances
4,199,534
4,735,297
Cash at bank is interest bearing. Cash at bank and deposits at call bear floating interest rates between 1.0% and 1.5%
(2018: 1.0% and 1.8%).
Cash and bank balances above include deposits of $487,589 (2018: $256,615) that have been pledged as security for
the occupied office space in Sydney.
(b) Reconciliation of profit for the year to
net cash flows from operating activities:
Profit for the year
Adjustment for non-cash items:
Depreciation and amortisation expense and loss
on asset write off
Non-cash share-based payment expense
Share of profit of joint venture
Dividends received from joint venture
Deferred consideration written back
Change in operating assets and liabilities
2019
$
2018
$
1,461,444
1,064,259
490,486
603,418
65,345
(13,130)
2,808
-
77,758
(2,808)
-
(187,500)
Trade and other receivables and other assets
(1,059,977)
(1,388,176)
Financial assets at fair value through profit or loss
Trade and other payables and contract liabilities
Current tax liability
Deferred tax assets and liabilities
Provisions
(845,112)
620,776
(4,865)
283,789
43,344
995,571
(57,634)
387,186
(66,097)
49,328
Net cash provided by operating activities
1,044,908
1,475,305
(c) Non-cash financing activities
Issue of ordinary shares for acquisition
of CBG Asset Management Limited
2019
$
2018
$
187,500
3,250,000
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 8.
Income tax expense
(a) Income tax expense
Current tax expense
Deferred tax expense/(benefit)
Deferred income tax expense/(benefit)
included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (Note 16)
Increase in deferred tax liabilities (Note 20)
2019
$
350,914
283,789
634,703
115,954
167,835
283,789
2018
$
369,134
(66,097)
303,037
(87,004)
20,907
(66,097)
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit before income tax expense
2019
$
2018
$
2,096,147
1,367,296
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
576,440
376,006
Tax effect of amounts which are not deductible / (taxable) in
calculating taxable income:
Amortisation of intangibles
Share-based payment expense
Tax rate changes
Franking credits on dividends
Utilisation of losses not previously recognised
Under/(over) provision of prior year tax
Non-taxable income
Sundry items
Income tax expense
110,166
17,970
-
(91,292)
-
20,829
-
590
634,703
144,083
21,383
22,049
(88,949)
(63,722)
(47,233)
(51,563)
(9,017)
303,037
0 6 7
For personal use only 9. Dividends
(a) Dividends provided for and paid during the year
2019
$
2018
$
Final dividend in respect of the previous financial year –
1.5 cents per share fully franked (2018: 1.5 cents per share fully franked)
852,726
849,739
Interim dividend in respect of the current financial year – 0.75 cents per
share fully franked (2018: 1.5 cents per share fully franked)
421,713
849,374
Fully franked portion
(b) Dividends not recognised at year end
Proposed fully franked dividend – 1.5 cents per share
(2018: 1.5 cents per share)
(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 arising from acquisition of CBG Asset Management Limited
Franking credits from dividends received
Franking debits from payment of dividends
Franking debits from income tax refund
Balance of franking account at year end
Impact on franking account of proposed dividend not recognised at year
end at 27.5% corporate tax rate (2018: 27.5%)
10. Trade and other receivables - Current
Trade receivables
Other receivables
1,274,439
1,274,439
1,699,113
1,699,113
841,089
852,725
228,238
355,780
-
125,883
(483,408)
-
226,493
319,034
2,046
271,139
766,046
122,690
(644,491)
(289,192)
228,238
323,447
2019
$
2018
$
2,808,348
1,808,528
315,990
221,820
3,124,338
2,030,348
a.
b.
c.
d.
Trade receivables are non-interest bearing and are generally subject to 30 day terms.
The Group did not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics.
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 and performance fees receivable which are considered low risk.
The carrying amounts of trade and other receivables are considered to represent a reasonable approximation
of their fair values.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only 11. Other current assets
Prepayments and deposits
2019
$
2018
$
141,894
175,907
12. Financial assets at fair value through profit or loss - Current
Listed equities
Unlisted unit trust
13. Investments accounted for using the equity method
Investment in joint venture
(a) Carrying amounts
Information relating to joint venture is set out below.
2019
$
2018
$
5,856,758
5,021,646
10,000
-
5,866,758
5,021,646
2019
$
13,730
2018
$
3,408
NAME OF COMPANIES
PRINCIPAL ACTIVITY
CARRYING AMOUNTS
2019
%
2018
%
2019
$
2018
$
Unlisted
Clime Super Pty Ltd (i)
Provision of administration
services to self-managed
super funds
50%
50%
13,730
3,408
The above joint venture is incorporated in Australia.
(i) Clime Super Pty Ltd
On 1 July 2017, the Group entered into a 50:50 joint venture with HLB Mann Judd (Wollongong) an experienced firm
of accountants and business advisors to provide self-managed super fund administration services.
(b) Movements of carrying amounts
Carrying amount at the beginning of the financial year
Payment for investment in joint venture
Share of profit after income tax
Dividends received
Carrying amount at the end of the financial year
Net profit of joint venture before income tax
Income tax expense
Profit after income tax
2019
$
3,408
-
13,130
(2,808)
13,730
18,110
(4,980)
13,130
2018
$
-
600
2,808
-
3,408
3,873
(1,065)
2,808
0 6 9
For personal use only
(c) Reconciliation to share of net profits of investments accounted for using the equity
method
Share in net profit of joint venture
2019
$
13,130
2018
$
2,808
(d) Summarised financial information of investments accounted for using the
equity method
Summarised financial information in respect of the Group’s joint venture is set out below. The summarised financial
information below represents amounts shown in the joint venture’s financial statements prepared in accordance
with AASBs adjusted by the Group for equity accounting purposes.
ASSETS
$
LIABILITIES
$
REVENUES
$
PROFIT AFTER TAX
$
2019
Clime Super Pty Ltd
28,574
14,844
124,659
13,130
2018
Clime Super Pty Ltd
25,831
22,423
89,630
2,808
14. Investments in 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).
EQUITY HOLDING *
NAME OF ENTITY
COUNTRY OF
INCORPORATION
CLASS OF SHARES
Clime Asset Management Pty Ltd
Australia
Fully Paid Ordinary
Stocks In Value Pty Ltd
Australia
Fully Paid Ordinary
Clime Private Wealth Pty Ltd
Australia
Fully Paid Ordinary
Clime Investors Education Pty Ltd
Australia
Fully Paid Ordinary
CBG Asset Management Limited **
Australia
Fully Paid Ordinary
2019
%
100
100
100
100
100
2018
%
100
100
100
100
100
* The proportion of ownership interest is equal to the proportion of voting power held.
** Acquired on 14 July 2017.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
15. Property, plant and equipment
Plant and equipment - at cost
Accumulated depreciation and impairment
Written down value of property, plant and equipment
Reconciliation
Carrying value at beginning of the year
Additions during the year
Acquisition through business combination (Note 32)
Written off during the year
Depreciation charge for the year
Carrying amount at end of the year
16. Deferred tax assets
The balance comprises temporary differences
attributable to:
Contract liabilities
Employee benefits
Accrued expenses
Tax losses carried forward on revenue account
Tax losses carried forward on capital account
Deferred tax assets
Movements
Opening balance at 1 July
Acquisition through business combination (Note 32)
Credited/(charged) to profit or loss (Note 8(a))
Closing balance at 30 June
2019
$
494,227
(415,099)
79,128
89,777
33,075
-
(898)
(42,826)
79,128
2018
$
516,940
(427,163)
89,777
51,206
70,526
1,681
-
(33,636)
89,777
2019
$
2018
$
129,806
177,639
96,156
37,114
35,451
195,779
494,306
610,260
-
(115,954)
494,306
84,236
18,580
86,106
243,699
610,260
341,134
182,122
87,004
610,260
0 7 1
For personal use only
17. Intangible assets
Goodwill:
Goodwill at cost
Investment management contracts and relationships:
At cost
Accumulated amortisation
Software licences:
At cost
Accumulated amortisation
Customer relationship and customer list:
At cost
Accumulated amortisation
2019
$
2018
$
5,321,884
5,321,884
5,694,000
5,694,000
(3,154,991)
(2,798,083)
2,539,009
2,895,917
588,706
(247,691)
341,015
650,023
(480,784)
169,239
576,300
(185,535)
390,765
650,023
(453,088)
196,935
Closing balance at 30 June
8,371,147
8,805,501
(a) Reconciliations
2019 CONSOLIDATED
Carrying amount at
beginning of year
Additions
Amortisation expense1
GOODWILL
$
INVESTMENT
MANAGEMENT
CONTRACTS &
RELATIONSHIPS
$
SOFTWARE
LICENCES
CUSTOMER
RELATIONSHIPS &
CUSTOMER LISTS
TOTAL
$
$
$
5,321,884
2,895,917
390,765
196,935
8,805,501
-
-
-
12,406
-
12,406
(356,908)
(62,156)
(27,696)
(446,760)
Carrying amount at end of year
5,321,884
2,539,009
341,015
169,239
8,371,147
2018 CONSOLIDATED
GOODWILL
$
INVESTMENT
MANAGEMENT
CONTRACTS &
RELATIONSHIPS
$
SOFTWARE
LICENCES
CUSTOMER
RELATIONSHIPS &
CUSTOMER LISTS
TOTAL
$
$
$
Carrying amount at beginning of year
3,351,564
2,348,825
452,610
347,964
6,500,963
Acquisition (Note 32)
1,970,320
904,000
-
-
2,874,320
Amortisation expense1
-
(356,908)
(61,845)
(151,029)
(569,782)
Carrying amount at end of year
5,321,884
2,895,917
390,765
196,935
8,805,501
1 Amortisation of $446,760 (2018: $569,782) is included in the consolidated statement of profit or loss and other comprehensive income.
0 7 2
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
(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
2019 - Consolidated
FUNDS
MANAGEMENT
$
INVESTMENT
SOFTWARE AND
EDUCATION
$
TOTAL
$
Balance at the beginning of the year
4,996,884
325,000
5,321,884
Movements during the year
Balance at end of year
2018 - Consolidated
-
-
-
4,996,884
325,000
5,321,884
Balance at the beginning of the year
3,026,564
325,000
3,351,564
Acquisition of CBG Asset Management Limited (Note 32)
1,970,320
-
1,970,320
Balance at end of year
4,996,884
325,000
5,321,884
F U N D S M A N A G E M E N T
The recoverable amount of the cash generating unit has been determined based on fair value less costs to sell,
using Directors’ assessments of its values on the basis of arms’ length transactions between knowledgeable and
willing parties with the best information available. In determining these amounts, the Directors have considered
the outcomes of recent transactions for similar assets and businesses.
I N V E S T M E N T S O F T W A R E A N D E D U C A T I O N
The recoverable amount of the cash generating unit has been determined by a value-in-use calculation.
The key assumptions utilised in Directors’ assessments relate primarily to current year results, management
forecasts based on next year’s budgeted result and the Group’s 3-year strategy. These key assumptions have
been derived under a consistent approach to the prior year impairment assessment, utilising past experience
and internal analysis. The Directors also anticipate growth based on continued evolution of products and services.
18. Trade and other payables
Unsecured:
Trade payables
Dividends on shares issued under the Employee Incentive Scheme
Accruals
Deferred consideration payable
Other payables
2019
$
2018
$
370,217
121,687
397,653
131,250
1,767,740
1,055,423
-
431,736
2,691,380
187,500
312,339
2,084,165
The carrying amount of trade and other payables are considered to represent a reasonable approximation of
their values.
0 7 3
For personal use only
19. Provisions
Employee benefits
2019
$
2018
$
349,658
306,314
The provision for employee benefits represents annual leave and long service leave entitlements.
20. Deferred tax liabilities
The balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
Equity accounted investments
Prepayments
Deferred tax liabilities
Movements:
Opening balance at 1 July
Charged/(credited) to the profit or loss (Note 8)
- Other
Closing balance at 30 June
2019
$
2018
$
228,925
3,611
-
232,536
22,241
771
41,689
64,701
64,701
43,794
167,835
232,536
20,907
64,701
21. Issued capital
(a) Share Capital
Ordinary shares
Fully paid
PARENT EQUITY
PARENT EQUITY
2019
Shares
2018
Shares
2019
$
2018
$
54,737,771
54,933,362
16,933,128
17,006,379
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(p)(v) for further information.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
(b) Movements in ordinary share capital
DATES
DETAILS
1 July 2017
14 July 2017
Balance
Shares issued for acquisition of
CBG Asset Management Limited (Note 32)
NOTES
NUMBER OF
SHARES
$
48,574,243
13,822,370
6,500,000
3,250,000
July 2017 to June 2018
Shares bought back on-market and cancelled
(d)
(140,881)
(65,841)
July 2017 to June 2018
Transaction costs arising from on-market buy- back
-
(150)
30 June 2018
Balance
16 July 2018
Shares issued for acquisition of
CBG Asset Management Limited (Note 32)
54,933,362
17,006,379
375,001
187,500
July 2018 to June 2019
Shares bought back on-market and cancelled
(d)
(570,592)
(260,241)
July 2018 to June 2019
Transaction costs arising from on-market buy- back
-
(510)
30 June 2019
Balance
54,737,771
16,933,128
(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 creditors and are fully entitled to any proceeds of liquidation.
(d) On-market share buy-back
During the financial year ended 30 June 2019, Clime Investment Management Limited, in accordance with
its on-market share buy-back scheme, bought back 570,592 (2018: 140,881) 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 45.70 cents
per share (2018: 46.84 cents per share). The total cost of $260,751 (2018: $65,991), including $510 (2018: $150)
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 2019, there are 1,375,000 (2018: 1,575,000) 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 25(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 2018.
0 7 5
For personal use only
22. Reserves and retained earnings
(a) Reserves
Share-based payments reserve
Movements
Share-based payments reserve
Balance 1 July
Share-based payment expense recognised
Balance 30 June
(b) Retained earnings
Movements in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends (Note 9)
Balance 30 June
(c) Nature and purpose of reserves
Share-based payments reserve
2019
$
2018
$
298,901
233,556
233,556
65,345
298,901
155,798
77,758
233,556
2019
$
2018
$
1,088,001
1,461,444
1,722,855
1,064,259
(1,274,439)
(1,699,113)
1,275,006
1,088,001
The share-based payments reserve is used to recognise the fair value of options issued to employees
but not exercised.
23. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity
(Pitcher Partners) and its related practices:
Audit and review of financial statements - Pitcher Partners
Taxation matters - Pitcher Partners
Other matters - Pitcher Partners
Audit of a subsidiary – unrelated firm
2019
$
86,784
10,255
1,570
-
98,609
2018
$
76,947
18,105
19,300
14,244
128,596
0 7 6
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
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
2019
CENTS
2018
CENTS
2.6
2.6
2019
$
1.9
1.9
2018
$
1,461,444
1,461,444
1,064,259
1,064,259
2019
NUMBER
2018
NUMBER
(d) Weighted average number of
shares used as the denominator
Weighted average number of ordinary shares used in calculation of basic
earnings per share
55,222,139
54,942,217
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
56,597,139
56,517,217
2019
NUMBER
2018
NUMBER
(e) Reconciliations of weighted
average number of shares
Weighted average number of ordinary shares used in the calculation of
basic earnings per share
55,222,139
54,942,217
Shares deemed to be issued for no consideration in respect of
- Employee Incentive Scheme
1,375,000
1,575,000
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
56,597,139
56,517,217
0 7 7
For personal use only
(f) Options issued under Employee Incentive Scheme
Options granted under the Employee Incentive Scheme are considered to be dilutive and have been included in
the determination of diluted earnings per share. These options have not been included in the determination of
basic earnings per share.
25. Share-based payments
(a) 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 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:
GRANT DATE
VESTING /
EXPIRY DATE
EXERCISE
PRICE
BALANCE AT
START OF
THE YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING THE
YEAR
TRANSFERRED/
FORFEITED
DURING
THE YEAR
BALANCE AT
THE END OF
THE YEAR
VESTED AND
EXERCISABLE
AT END OF
THE YEAR
2019
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
22/08/2013
04/11/2018
$0.800
100,000
25/10/2013
30/09/2019
$0.829
250,000
19/08/2014
30/09/2019
$0.850
200,000
25/02/2015
30/09/2019
$0.750
50,000
11/09/2015
30/09/2019
$0.700
275,000
20/07/2016
30/09/2019
$0.630
350,000
23/06/2017
23/06/2020
$0.500
350,000*
-
-
-
-
-
-
-
21/08/2018
21/08/2021
$0.485
02/01/2019
02/01/2022
$0.470
-
-
400,000
200,000
Total
1,575,000
600,000
Weighted average exercise price
$0.585
-
-
-
-
-
-
-
-
-
-
(100,000)
-
-
(100,000)
150,000
150,000
(150,000)
50,000
50,000
(25,000)
25,000
25,000
(125,000)
150,000
150,000
(150,000)
200,000
(150,000)
200,000*
400,000**
200,000**
-
-
-
-
(800,000)
1,375,000
375,000
* Includes 200,000 in-substance options granted to one of the Directors approved by shareholders on 27th October 2016.
** In-substance options granted to the Chief Executive Officer during the year.
0 7 8
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only GRANT DATE
VESTING /
EXPIRY DATE
EXERCISE
PRICE
BALANCE AT
START OF
THE YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
TRANSFERRED/
FORFEITED
DURING
THE YEAR
BALANCE AT
THE END OF
THE YEAR
VESTED AND
EXERCISABLE
AT END OF
THE YEAR
2018
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
22/08/2013
04/11/2018
$0.800
100,000
25/10/2013
04/11/2018
$0.829
250,000
19/08/2014
19/08/2019
$0.850
200,000
25/02/2015
25/02/2019
$0.750
50,000
11/09/2015
11/09/2018
$0.700
275,000
20/07/2016
20/07/2019
$0.630
350,000
23/06/2017
23/06/2020
$0.500
350,000
Total
1,575,000
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.649
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
250,000
250,000
200,000
200,000
50,000
50,000
275,000
350,000
350,000*
-
-
-
1,575,000
600,000
* Includes 200,000 in-substance options granted to the Managing Director approved by shareholders on 27th October 2016.
The weighted average contractual life of in-substance options outstanding at the end of the period was 1.06 years
(2018 – 1.05 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 2019 included:
• in-substance options are granted via an interest-free, non-recourse loan and vest based on the terms
25/10/2013
30/09/2019
$0.829
250,000
(100,000)
150,000
150,000
discussed above;
19/08/2014
30/09/2019
$0.850
200,000
(150,000)
50,000
50,000
• 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 $0.59 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: 1.80%; and
• discount rate: 14%.
0 7 9
GRANT DATE
VESTING /
EXERCISE
BALANCE AT
GRANTED
EXERCISED
TRANSFERRED/
BALANCE AT
VESTED AND
EXPIRY DATE
PRICE
DURING
DURING THE
FORFEITED
THE END OF
EXERCISABLE
START OF
THE YEAR
THE YEAR
YEAR
THE YEAR
DURING
THE YEAR
AT END OF
THE YEAR
2019
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
22/08/2013
04/11/2018
$0.800
100,000
(100,000)
-
25/02/2015
30/09/2019
$0.750
50,000
(25,000)
25,000
25,000
11/09/2015
30/09/2019
$0.700
275,000
(125,000)
150,000
150,000
20/07/2016
30/09/2019
$0.630
350,000
23/06/2017
23/06/2020
$0.500
350,000*
21/08/2018
21/08/2021
$0.485
02/01/2019
02/01/2022
$0.470
-
-
400,000
200,000
(150,000)
200,000
(150,000)
200,000*
400,000**
200,000**
Total
1,575,000
600,000
(800,000)
1,375,000
375,000
Weighted average exercise price
$0.585
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
For personal use only The fair values per in-substance option at the grant date were:
NUMBER OF OPTIONS
GRANT DATE
EXERCISE PRICE
VALUE PER OPTION
AT GRANT DATE
150,000
25/10/2013
50,000
25,000
150,000
200,000
200,000
400,000
200,000
19/08/2014
25/02/2015
11/09/2015
20/07/2016
23/06/2017
21/08/2018
02/01/2019
$0.829
$0.850
$0.750
$0.700
$0.630
$0.500
$0.485
$0.470
$0.140
$0.140
$0.134
$0.121
$0.107
$0.111
$0.099
$0.091
VESTING /
EXPIRY DATE
30/09/2019
30/09/2019
30/09/2019
30/09/2019
30/09/2019
23/06/2020
21/08/2021
02/01/2022
Refer to the Remuneration Report on pages 26 to 34, for additional information in relation to the EIS.
(b) Options issued to Amigo Consulting Pty Limited
On 27th October 2016 shareholders approved issuing 1,000,000 options to acquire ordinary shares to Amigo
Consulting Pty Limited. Amigo Consulting Pty Limited has been engaged to provide strategic and outcome
driven corporate advisory services. Mr. Allyn Chant, a director of Clime, is also a director and a minority
shareholder of Amigo.
These options will expire on 1 October 2019 and may be exercised at any time upon vesting and prior to the
expiry date. The amount payable on exercise of each option is 50 cents, subject to adjustment in accordance
with certain conditions.
Vesting conditions:
i.
ii.
333,333 options vest on the date, if it occurs prior to 30 September 2017, that the Company’s
securities trade on the Australian Securities Exchange (“ASX”) at or above 75 cents. As this condition
was not met the vesting period has been extended to 30 September 2019 and vesting will occur if
the Company’s securities trade on the ASX at or above $1.00 by that extended date;
333,333 options vest on the date that the Company completes the purchase or build of a
retail platform (defined as a flexible service that enables investors to buy and hold their
investments online all in one place, tracking transactions for tax purposes and allowing advisor
and/or client direction) for client’s monies if this occurs before the expiry date;
iii.
333,334 options vest if the Company’s funds under management attains or exceeds $1 billion prior
to the expiry date.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year as part of the
employee benefit expense were as follows:
Option expense
Employee Incentive Scheme
Amigo Consulting Pty Limited
2019
$
29,012
36,333
65,345
2018
$
41,425
36,333
77,758
Refer to the Remuneration Report on pages 26 to 34, for additional information in relation to the Employee
Incentive Scheme.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
26. Segment information
(a) Description of segments
Our internal reporting system produces reports in which business activities are presented in a variety of
ways. Based on these reports, the Directors, who are responsible for assessing the performance of various
components of the business and making resource allocation decisions as Chief Operating Decision Makers
(CODM), evaluate 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 businesses, Clime Asset Management Pty Ltd and CBG Asset Management Limited,
are based in Sydney. These businesses generate operating revenue (investment management and performance
fees) as remuneration for managing the investment portfolios of individuals, corporations and mandates.
Investment Software
Revenue generated from external subscriptions to the Group’s proprietary web-based investment software,
Stocks In Value Pty Limited (trading as Clime Direct), is included within this segment.
Direct Investments
Includes revenue generated by the Group’s direct investments in listed, 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 the basis of segmentation or the basis of segmental profit or loss since the
previous financial report.
(b) Reportable Segments
2019
Segment revenue
FUNDS
MANAGEMENT
$
INVESTMENT
SOFTWARE
$
DIRECT
INVESTMENTS
$
INTER SEGMENT/
UNALLOCATED
$
CONSOLIDATED
$
Sales to external customers
11,512,940
448,269
-
115,509
12,076,718
Investment income
-
-
1,130,193
-
1,130,193
Total segment revenue
11,512,940
448,269
1,130,193
115,509
13,206,911
Share of profits from investments
in joint venture
Net group result
-
-
13,130
-
13,130
Net group result before tax
3,213,287
229,080
1,143,323
(2,489,543)
2,096,147
Income tax expense
Profit for the year
Depreciation and
amortisation expense
390,801
62,615
-
36,168
489,584
(634,703)
1,461,444
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For personal use only 2018
Segment revenue
FUNDS
MANAGEMENT
$
INVESTMENT
SOFTWARE
$
DIRECT
INVESTMENTS
$
INTER SEGMENT/
UNALLOCATED
$
CONSOLIDATED
$
Sales to external customers
9,683,474
546,830
-
82,569
10,312,873
Investment income
-
-
640,602
-
640,602
Total segment revenue
9,683,474
546,830
640,602
82,569
10,953,475
Share of profits from
investments in associate
Net group result
-
-
2,808
-
2,808
Net group result before tax
2,451,607
204,381
643,410
(1,932,102)
1,367,296
Income tax expense
Profit for the year
Depreciation and
amortisation expense
382,928
104,622
-
115,868
603,418
(303,037)
1,064,259
(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 $11.5 million (2018: $9.7 million) (see
Note 26 (b) above) are revenues of approximately $1.7 million (2018: $1.5 million) which arose from services
provided to the Group’s largest customer.
27. Subsequent Events
A final fully franked dividend for the year ended 30 June 2019 of 1.5 cents per share, totalling $841,089 has been
declared by the Directors. This provision has not been reflected in the financial statements.
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.
28. Contingent liabilities, contingent assets and commitments
The Group has no material contingent liabilities or contingent assets as at 30 June 2019 (2018: Nil).
Capital expenditure commitments
The Group has no material capital expenditure commitments to acquire property, plant and equipment as at 30
June 2019 (2018: Nil).
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only Operating lease commitments
On 8 April 2019, the Company entered into an operating lease agreement for the new office premises for a
period of 5 years, terminating on 30 July 2024.
The expenditure commitments with respect to rent payable under various lease agreements are as follows.
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2019
$
377,621
1,252,348
28,168
1,658,137
2018
$
296,082
34,225
-
330,307
29. Key management personnel disclosures
(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:
SHORT-TERM
EMPLOYEE
BENEFITS
$
POST-
EMPLOYMENT
BENEFITS
$
SHARE- BASED
PAYMENTS
$
TERMINATION
BENEFITS
$
TOTAL
$
2019
Remuneration of Directors and other
key management personnel
956,504
33,629
21,878
2018
Remuneration of Directors and other
key management personnel
476,440
24,560
7,380
-
-
1,012,011
508,380
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 26 to 34 of this Annual Report.
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For personal use only (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 the Remuneration Report on pages 26 to 34.
(ii) Share holdings
The numbers of shares in the Company held during the year by each Director of Clime Investment Management
Limited and other key management personnel of the consolidated entity, including their personally-related
entities, are set out below.
2019
Mr. Donald McLay
Mr. John Abernethy
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Rod Bristow
BALANCE AT THE
START OF THE
YEAR
RECEIVED DURING
THE YEAR ON
THE EXERCISE
OF OPTIONS
No.
No.
7,320,680
4,083,850
548,007
50,000
-
-
-
-
-
-
OTHER CHANGES
DURING
THE YEAR
BALANCE AT THE
END OF
THE YEAR
No.
149,896
149,000
-
-
No.
7,470,576
4,232,850*
548,007
50,000
610,000
610,000*
* Includes 200,000 and 600,000 shares issued under Employee Incentive Scheme to Mr. John Abernethy and Mr. Rod Bristow, respectively.
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
2018
No.
No.
Mr. Donald McLay
7,320,680
Mr. John Abernethy (Note a)
3,961,350*
Mr. Neil Schafer
Mr. Allyn Chant
548,007
-
* Includes 200,000 shares issued under EIS to Mr. John Abernethy.
-
-
-
-
No.
-
No.
7,320,680
122,500
4,083,850*
-
50,000
548,007
50,000
(c) Loans to Directors and other key management personnel
$367,000 (2018: $94,000) loan to a Director and other key management personnel in relation to the EIS share
issued under the Employee Incentive Scheme (refer Note 25(a)).
There were no other loans made to Directors of Clime Investment Management Limited or other key
management personnel of the consolidated entity, including their personally related entities, at any stage
during the financial year.
As described in Note 25(a), notional non-recourse loans exist in relation to “in substance” options issued under
the Employee Incentive Scheme.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
30. Related party transactions
All transactions with related entities were made on normal commercial terms and conditions no more
favourable than transactions with other parties unless otherwise stated. Details of transactions between the
Group and other related parties are disclosed below.
(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 Ventures
Interest in joint ventures is set out in Note 13.
(d) Key Management Personnel
Disclosures relating to key management personnel are set out in Note 29.
(e) Other related party transactions
1.
Clime Capital Limited
i. Mr. John Abernethy is a director of Clime Capital Limited. The Group received $84,000 (2018: $65,924)
as management fees for the services rendered by two Directors and Company Secretary to Clime
Capital Limited. The Group directly owns 6.28% (2018: 6.31%) of the fully paid ordinary shares of
Clime Capital Limited as at 30 June 2019. Clime Investment Management Limited through Clime Asset
Management Pty Limited (a wholly owned subsidiary) has the indirect power to dispose 5.26% (2018:
6.14%) of Clime Capital Limited’s shares held by the Investment Manager’s individually managed
accounts as at 30 June 2019.
ii.
Clime Asset Management Pty Limited during the year received $795,006 (2018: $715,813) as
remuneration for managing Clime Capital Limited’s investment portfolio.
iii. All dividends paid and payable by Clime Capital Limited to its directors and their related entities are
on the same basis as to other shareholders.
2. Clime Australian Income Fund
i.
Clime Asset Management Pty Limited, during the year received $204,619 (2018: $114,817) as
remuneration for managing the investment portfolios and acting as trustee of Clime Australian
Income Fund. An external responsible entity was appointed on 3 May 2019.
3. Clime Smaller Companies Fund
i.
Clime Asset Management Pty Limited during the year received $772,044 (2018: $277,548) as
remuneration for managing the investment portfolios and acting as trustee of Clime Smaller
Companies Fund. An external responsible entity was appointed on 3 May 2019.
4. Clime Fixed Interest Fund
i.
Clime Asset Management Pty Limited during the year received $1,853 (2018: $nil) as remuneration
for managing the investment portfolios and acting as trustee of Clime Fixed Interest Fund.
0 8 5
For personal use only 5. CBG Capital Limited
i. Mr. John Abernethy was a Director of CBG Capital Limited until 24 August 2018. The Group received
$26,383 (2018: $26,708) as management fees for the services rendered by two Directors and
Company Secretary to CBG Capital Limited. The Group directly owns 1.03% (2018: 0.6%) of the fully
paid ordinary shares in CBG Capital Limited as at 30 June 2019.
ii.
CBG Asset Management Limited (a wholly owned subsidiary) during the year earned $405,099 (2018:
$311,806) as remuneration for managing CBG Capital Limited’s investment portfolio.
iii. All dividends paid and payable by CBG Capital Limited to its Directors and Directors’ related entities
are on the same basis as to other shareholders.
6. Clime CBG Australian Equities Fund (Wholesale)
i.
CBG Asset Management Limited, during the year received $1,167,882 (2018: $934,325) as
remuneration for managing the investment portfolios and acting as trustee of Clime CBG
Australian Equities Fund (Wholesale).
7. Amigo Consulting Pty Limited
Mr. Allyn Chant, a director of Clime, is also a director and a minority shareholder of Amigo Consulting Pty
Limited (“Amigo”). No consultancy fees were paid by the Group to Amigo during the year (2018: $50,000).
On 27th October 2016, shareholders approved issuing 1,000,000 options to Amigo to acquire ordinary shares in
the Company. Amigo has been engaged to provide strategic and outcome driven corporate advisory services
These options will expire on 1 October 2019 and may be exercised at any time upon vesting and prior to the
expiry date. The amount payable on exercise of each option is 50 cents, subject to adjustment in accordance
with certain conditions as follows:
i.
ii.
333,333 options vest on the date, if it occurs prior to 30 September 2017 that the Company’s
securities trade on the ASX at or above 75 cents. As this condition was not met the vesting period
has been extended to 30 September 2019 and vesting will occur if the Company’s securities trade on
the ASX at or above $1.00 by that extended date;
333,333 options vest on the date that the Company completes the purchase or build of a retail
platform (defined as a flexible service that enables investors to buy and hold their investments
online all in one place, tracking transactions for tax purposes and allowing advisor and/or client
direction) for client’s monies if this occurs before the expiry date;
iii.
333,334 options vest if the Company’s Funds Under Management attains or exceeds $1 billion prior
to the expiry date.
Expenses arising from the share based payment transactions recognised during the period was $36,333
(2018: $36,333).
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
(f) Outstanding balances as at year end
The following balances, prior to group elimination, were outstanding at the end of the reporting period:
AMOUNT OWED BY RELATED PARTIES
AMOUNT OWED TO RELATED PARTIES
30 JUNE 2019
($)
30 JUNE 2018
($)
30 JUNE 2019
($)
30 JUNE 2018
($)
Clime Capital Limited
76,233
73,406
-
-
Subsidiaries of Clime Investment
Management Limited
Joint venture of Clime Investment
Management Limited
CBG Capital Limited
Amigo Consulting Pty Limited
2,511,604
902,562
18,697,101
16,102,083
-
-
-
22,330
6,600
-
-
-
-
-
-
11,000
31. Parent entity disclosures
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
2019
$
2018
$
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Profit reserve
Accumulated losses
Share-based payments reserve
Total Equity
(b) Financial Performance
Profit for the year
Other comprehensive income / (loss)
Total comprehensive income
8,674,519
16,505,961
25,180,480
14,162,780
14,162,780
11,017,700
16,933,128
17,790,107
6,443,162
16,604,124
23,047,286
13,503,067
13,503,067
9,544,219
17,006,379
16,308,719
(24,004,435)
(24,004,435)
298,900
11,017,700
233,556
9,544,219
2,755,826
-
2,755,826
61,232
-
61,232
0 8 7
For personal use only (c) Guarantees entered into by the Parent Company
The parent company provides cash backed guarantees for the operating lease agreement of office premises.
During the year these guarantees amounted to $485,709 (2018: $255,486).
(d) Commitments
The parent entity has no commitment for the acquisition of property, plant and equipment as at 30 June 2019
and 30 June 2018 and $1,658,137 (2018: $330,307) for the operating lease commitments.
32. Business Combination
On 14 July 2017, Clime Investment Management Limited acquired 100% of the share capital of CBG Asset
Management Limited (CBG). CBG is an Australian equities fund manager, founded in 2001.
Bringing CBG to Clime Group immediately increased FUM of the Group by $130 million and also enhanced
the Clime Private Wealth offering which was being developed by the Group. CBG product range extends the
investment solutions, by offering the clients with a choice between CBG’s equity performance funds and Clime’s
risk adjusted lower volatility approach. The combined funds management team is of both significant depth and
experience and offering broader research capability.
Consideration
Clime acquired 100% share capital of CBG by initial consideration of $3,250,000 and contingent consideration
of $375,000. On 14 July 2017, initial consideration of $3,250,000 was settled by issuance of 6,500,000 ordinary
shares in the Company at 50 cents per share, being the weighted average market price, over the past 30 trading
days. Contingent consideration of $375,000 was agreed to be settled in 12 months by issuance of 750,000
shares for fulfilment of certain warranties relating to FUM retention and delivery of agreed outcomes.
Details of the purchase consideration agreed:
Cash paid
Shares issued (i)
Contingent (deferred) consideration (ii)
Total purchase consideration
TOTAL
($)
-
3,250,000
375,000
3,625,000
i.
ii.
Shares were issued as part of the consideration at an issue price of $0.50, which was based on the weighted average market price,
over the past 30 trading days prior to acquisition date on 14 July 2017.
Contingent consideration was payable only if certain performance conditions were met as at 16 July 2018. Based on Directors’
assessment as at 16 July 2018, the contingent consideration was settled by issue of 375,001 CIW shares at a deemed issue price of 50
cents per share as final settlement and has now been completed.
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
Assets and liabilities acquired
Assets and liabilities acquired as a result of the business combination were:
RECOGNISED ON ACQUISITION AT FAIR VALUE
ASSETS AND LIABILITIES ACQUIRED
Cash and cash equivalents
Trade and other receivables
Deferred tax assets
Property plant and equipment
Current tax benefit
Investment management agreement
Trade and other payables
Net identifiable assets acquired
Add: Goodwill arising on acquisition
Total purchase consideration
The goodwill on acquisition comprises:
($)
725,944
143,133
182,122
1,681
40,387
904,000
(342,587)
1,654,680
1,970,320
3,625,000
• Broader product range offer including rated retail products, wholesale fund and listed investment company;
• Synergies from cost-saving on operating and overhead expenses; and
• More experienced Funds Management team.
Goodwill is not deductible for tax purposes.
Transition costs
Transaction costs of $14,379 were incurred in relation to the acquisition. These costs were included with
administration expenses in the 2018 statement of profit or loss and other comprehensive income.
0 8 9
For personal use only
Directors’
Declaration
The Directors declare that:
a.
b.
c.
d.
e.
in the Directors’ opinion, the attached financial statements and notes thereto, as set out on pages 39 to 89,
are 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;
in the Director’s opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
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 2001on behalf of the Directors by:
Donald McLay
Chairman
Allyn Chant
Independent Director
Date: 26 August 2019
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
Independent
Auditor’s Report
to the Members
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CLIME INVESTMENT MANAGEMENT LIMITED
ABN 37 067 185 899
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
We have audited the accompanying financial report of Clime Investment Management Limited
(“the Company”) and it Controlled Entities (“the Group”), which comprises the consolidated
statement of financial position as at 30 June 2019, the consolidated statement of profit and loss
and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies, and the Directors’
Declaration.
Opinion
In our opinion:
a)
the accompanying financial report of Clime Investment Management Limited is in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 30 June 2019 and
of its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Adelaide Brisbane Melbourne Newcastle Perth Sydney
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
pitcher.com.au
0 9 1
For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the matter
Accuracy of Management and Performance Fees
Refer to Note 5: Revenue and Note 30: Related party transactions
Management and performance fees account for
$11,478,939 of the Group’s $12,447,639
reported revenues in 2019.
Our procedures included amongst others:
• Obtaining an understanding of and
We focused our audit effort on the accuracy of
management and performance fees given their
significance to the revenues of the Group and
because their calculation may require
adjustments for significant events such as
payment of company dividends and income tax,
capital raisings and reductions in accordance
with each individual Investment Management
Agreement.
The calculation of management and
performance fees includes key inputs such as
portfolio movements, relevant index
benchmarking and set percentages in
accordance with the Investment Management
Agreements.
In addition to their quantum, as some of these
transactions are made with related parties, there
are additional inherent risks associated with
these transactions, including the potential for
these transactions to be made on terms and
conditions more favourable than if they had
been with an independent third-party (e.g. fees
charged in excess of those mandated under the
management agreement).
We therefore identified the accuracy of
management and performance fees as a key
audit matter.
evaluating the processes and controls for
calculating the management and
performance fees;
• Making enquiries with Management and
the Directors with respect to any
significant events during the year and
associated adjustments made as a result,
in addition to reviewing ASX
announcements and Board meeting
minutes;
• Reviewing the independent audit report on
•
•
•
internal controls (ASAE 3402 Assurance
Reports on Controls at a Service
Organisation) for the current financial year
for the Investment Administrator;
Testing of a sample of significant events
such as company dividends, income tax
payments, capital raisings, capital
reductions as well as any other relevant
expenses used in the calculation of
management and performance fees;
Testing of key inputs such as portfolio
movements, application of the relevant
index benchmarking, set percentage used
in the calculation of management and
performance fees, as well as performing a
recalculation in accordance with our
understanding of the Investment
Management Agreements; and
Assessing the appropriateness of the
current accounting policy in relation to
management and performance fees and
the adequacy of disclosures in the
financial statements.
Pitcher Partners is an association of independent firms.
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ABN 17 795 780 962.
An independent New South Wales Partnership.
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
Impairment Assessment of Intangible Assets
Refer to Note 17: Intangible Assets
At 30 June 2019 the Group’s statement of
financial position had intangible assets, including
goodwill, totalling $8,371,147.
The assessment of impairment of the Group’s
intangible assets incorporates significant
management judgement surrounding the
assumptions and estimates used in calculating
the fair value less cost to sell these assets when
evaluating their recoverable amount.
Key assumptions and estimates include financial
and cash flow forecasts based on budgeted
results and the Group’s 3 year strategy.
We therefore identified the valuation of
intangible assets as a key audit matter.
Our procedures included amongst others:
• Evaluating management’s process
regarding the valuation of intangible
assets to determine any asset
impairments;
• Challenging key assumptions and
estimates (e.g. future cash flows) used to
determine the fair value of intangible
assets;
• Checking the mathematical accuracy and
performing sensitivity analysis on fair
value calculations performed by
management; and
• Assessing the appropriateness of the
current accounting policy in relation to
impairment and the adequacy of
disclosures in the financial statements.
Other Information
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s Annual Report for the year ended 30 June 2019 but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Directors Responsibility for the Financial Report
The Directors of Clime Investment Management Limited are responsible for the preparation 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 controls as the Directors
determine are necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
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For personal use only
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with the Australian Auditing Standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
misrepresentations, or the override of internal control.
fraud may
forgery,
• Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Pitcher Partners is an association of independent firms.
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ABN 17 795 780 962.
An independent New South Wales Partnership.
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 29 of the Directors’ Report
for the year ended 30 June 2019. In our opinion, the Remuneration Report of Clime Investment
Management Limited, for the year ended 30 June 2019, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The Directors of the Group 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.
M Godlewski
Partner
26 August 2019
Pitcher Partners
Sydney
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
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For personal use only
Shareholder Information
The shareholder information set out below was applicable as at 6 August 2019.
A. Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
ORDINARY SHARES
NUMBER OF HOLDERS
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
34
152
85
208
52
531
B. Equity Security Holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
HSBC Custody Nominees (Australia) Limited
Torres Industries Pty Limited & Nagarit Pty Limited
Locope Pty Ltd & Savoir Superannuation Pty Ltd
Double Pty Limited & Abernethy SMSF Pty Ltd
Mr David Schwartz & related entities
Capital Property Corporation Pty Limited
Clodene Pty Ltd
Robansheil Pty Limited
Ruminator Pty Ltd
Di Iulio Homes Pty Limited
Mr Orlando Berardino Di Iulio & Ms Catharina Maria Koopman
Mr. Thomas Harrington Mann
Barrob Bondi Pty Ltd
Lodge Road Pty Limited
Arcelia Pty Ltd
Mr Robert Archer Black
Sanlam Private Wealth Pty Ltd
J P Morgan Nominees Australia Limited
John E Gill Trading Pty Ltd
Delta Asset Management Pty Ltd
ORDINARY SHARES
NO OF SHARES
PERCENTAGE OF
ISSUED SHARES
11,183,161
7,470,576
6,975,001
4,032,850
2,821,430
1,241,122
1,159,121
1,130,446
871,419
850,000
719,744
700,000
561,066
548,007
485,334
400,000
388,000
342,022
300,298
300,000
20.439
13.654
12.748
7.371
5.157
2.268
2.118
2.066
1.593
1.553
1.315
1.279
1.025
1.002
0.887
0.731
0.709
0.625
0.549
0.548
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42,479,597
77.637
CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only
QUOTED EQUITY SECURITIES ISSUED UNDER EMPLOYEE INCENTIVE
SCHEME NOT YET VESTED
ORDINARY SHARES
NO OF SHARES
NO OF
HOLDERS
Shares issued under the Employee Incentive Scheme to take up ordinary shares
1,375,000
8
C. Substantial Holders
Substantial holders in the company are set out below:
ORDINARY
SHARES
Wilson Management Group
Torres Industries Pty Limited & Nagarit Pty Limited
Locope Pty Ltd & Savoir Superannuation Pty Ltd
Mr. John Abernethy and related parties
D. Voting Rights
NO OF SHARES
PERCENTAGE OF
ISSUED SHARES
11,008,993
7,470,576
6,975,001
4,032,850
20.120
13.654
12.748
7.371
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 14 November 2019.
Stock Exchange Listing
The shares of the Company are listed on the Australian Securities Exchange Limited under the exchange code
CIW. Quotation has been granted for all the ordinary shares of the Company on all member exchanges of the
Australian Securities Exchange Limited. The home exchange is Sydney.
On-Market Buyback Scheme
As at 26 August 2019 an on-market buy-back scheme existed and continues to be in operation as at the date of
this report.
Contact Details
The name of the Company Secretary is Mr. Biju Vikraman.
The address of the registered office and principal place of business in Australia is:
Level 13
20 Hunter Street
Sydney NSW 2000
Telephone: (02) 8917 2100
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C L I M E I N V E S T M E N T M A N A G E M E N T L I M I T E D
Clime Investment Management Limited
ABN 37 067 185 899 | ACN 067 185 899
Level 13, 20 Hunter Street Sydney NSW 2000 Australia
PO Box H90, Australia Square NSW 1215 Australia
+61 2 8917 2100
+61 2 8917 2155
www.clime.com.au
info@clime.com.au
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CLIME INVESTMENT MANAGEMENT LIMITEDANNUAL REPORT 2019CLIME.COM.AUFor personal use only