Clime Investment
Management Limited
2020 Annual Report
Clime Investment Management Limited
Level 12, 20 Hunter Street Sydney NSW 2000 Australia | PO Box H90 Australia Square NSW 1215
ACN 067 185 899 ABN 37 067 185 899 P +61 2 8917 2100 F +61 2 8917 2155
www.clime.com.au
1
Clime Investment Management Limited and Controlled Entities 2
Clime Investment Management Limited and Controlled Entities Clime Investment
Management Limited
Contents
2020
Annual
Report
Chairman’s Report
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
4
6
16
20
34
36
92
94
99
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Chairman’s
Report
Donald McLay
Chairman
In quite an extraordinary year, management have
delivered a robust operating result and implemented
further strategic initiatives.
Some of these initiatives are related to expanding
our core capability; and some relate to diversifying
income streams as well as widening the revenue
base.
Last year I talked about disruption within the
financial advice industry as a result of the Hayne
Royal Commission. This year, disruption presented
in a different form, with the onset of the COVID-19
pandemic. Clime’s management team responded
quickly and decisively to the COVID-19 crisis,
maintaining a stable operating business while
identifying strategic opportunities to expand the
service offering and grow revenues.
Our CEO, Rod Bristow, discusses the year’s
performance in greater detail in his following report.
2019-20 (FY20) was the second year in our three-
year planning cycles initiated by the CEO following
his appointment in September 2018. This second
year has been about consolidating the changes made
in FY19, strengthening the investment process and
laying a solid foundation for continued business
expansion.
In June, Clime acquired Madison Financial Group, a
national wealth management business that provides
AFSL licensing and associated services, for $4.4
million plus a small working capital adjustment.
The acquisition fits neatly into our strategy to
become an integrated wealth management business.
Clime now offers investor education, advice and
investment solutions for self-directed, retail and
wholesale clients. We welcome the Madison Financial
Group financial advisers and staff to the Clime group
and look forward to a long and rewarding relationship.
We expect to see accelerated growth in revenue,
operating earnings and assets under management as
the integration benefits are realised.
This year the Board put in place an appropriate
long-term incentive scheme to align the interests
of shareholders and senior management. Following
shareholder approval at the FY19 Annual General
Meeting, the Board has implemented the scheme
which we expect to deliver enhanced shareholder
outcomes from this alignment.
4
Clime Investment Management Limited and Controlled Entities Chairman’s Report
Somewhat uniquely, Clime is an investment Group
that is prepared to invest time and resources seeking
redress for our investment clients who have lost
money in ASX listed companies as a result of alleged
corporate misbehaviour.
I’m pleased to advise that this year, Clime Capital
Limited, as applicant, resolved a class action with
UGL Limited.
Cash from the settlement has now been distributed
to investors who chose to become part of the class
action process. We continue to support the use
of class actions by shareholders in appropriate
circumstances.
In recognition of the continued improvement in our
operating business, Directors are proposing a fully
franked final dividend of 1.0 cent per share to be paid
on 2 October 2020. Together with the fully franked
interim dividend of 1.0 cent, makes a total of 2.0 cents
per share (FY19 2.25 cents).
I would like to thank Rod and his team for the very
strong foundations that they are laying for the future
growth of our business. Our staff have clarity and
direction in their roles and understand the outputs
they need to deliver to achieve the corporate
objectives. Thank you.
Finally, thank you to my fellow directors. Change
has been persistent, evolutionary and is now
demonstrating tangible results. This change would
not have been possible without the focus, guidance
and support of my fellow directors; John Abernethy,
Allyn Chant and Neil Schafer.
Donald McLay
Chairman
5
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
CEO
Report
Rod Bristow
Chief Executive Officer
2020 has been a year of two halves, with a record
first half following strong equity market performance
followed by the onset of the COVID-19 pandemic
negatively impacting markets with a sharp correction
in March. Despite the challenges, Clime has
maintained focus on our core business, delivering
comparable revenues to the prior corresponding
period (PCP) while lowering expenses as we introduce
efficiencies into the business during this strategic
plan period. Supplemented with consolidating the
group’s product range to enhance efficiency and a
strategic acquisition in June to diversify the group’s
revenue streams, Clime is well placed to deliver
future growth for shareholders.
Financial Highlights
Statutory profit before income tax for FY20 was
$534,654, down $1,561,493 on PCP. Statutory profit
after income tax was $397,428, down $1,064,016
on PCP.
To further explain the results, it is useful to
understand how Clime’s margins are derived. These
are a function of three sources: operating earnings,
performance fees and return on financial assets held
at fair value on Clime’s balance sheet.
After a strong first half,
COVID-19 has impacted the full
year result. Profit before tax
attributable to members was
$0.53M, down from $2.10M
in the prior corresponding
period. Importantly, positive
contributions from operating
earnings and performance fees
show the improving quality
of the underlying operating
business.
6
Clime Investment Management Limited and Controlled Entities CEO Report
these performance fees were generated in the first
half of the year.
Financial Assets Held at Fair Value
The market correction in March also had a significant
negative impact on Clime’s balance sheet holding of
shares in Clime Capital Limited (ASX: CAM). The total
contribution to group results from balance sheet
investments during the year was ($0.82M), down 172%
from $1.14M in the PCP.
With more robust returns from the operating
business now being achieved, management has put
in place a strategy to deploy balance sheet capital
to deliver more predictable returns for shareholders
over time.
In summary, excluding performance from financial
assets held at fair value, management is comfortable
with strategy execution and the results generated
during the year.
Operating Earnings
Total operating earnings for the year were $1.05M,
up $0.49M on the PCP. This result is pleasing in a
challenging year.
Funds Management and Investment Software
revenue was down 0.9% and direct operating
expenses down 2.4% on PCP. In addition, a total of
$0.32M of one-off costs were incurred during FY20
associated with strategic and growth initiatives that
are expected to deliver improved results in coming
years. This was offset by the receipt of $0.36M in
Government support as revenues deteriorated in the
second half.
Performance Fees
While performance fees were a material contributor
in the first half, there was no contribution in the
second half given the March market correction.
Domestic and international share markets have
recovered some of the March losses and a number
of Clime’s investment products are performing well,
although not at the point where performance fees
were accrued in the second half. Net performance
fees (after team incentives) for the year were $1.76M,
down 6% on the PCP. It is important to note that all of
7
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Review of Financial Results
Below is a summary of the Group’s profit and loss on a sector basis to enable shareholders to distinguish
between the operational investment management business and the direct investment components.
Funds management and related activities revenue
Investment software revenue
Government subsidy
Administrative and occupancy expenses
Third party custody, management & funds administration services
Selling and marketing expenses
Operating earnings
Performance fees
Short-term incentives – performance related
Net Performance Fees
Direct investment income
Realised and unrealised (losses)/gains
Income from joint venture
(Loss)/Income generated by Financial Assets Held at Fair Value
Redundancy costs
Other non-recurring expenses
Short term incentives
Total Other expenses
Depreciation of property plant and equipment
Depreciation of right-of-use assets
Finance costs on lease liabilities
Amortisation of intangibles
Total Depreciation, amortisation and finance costs
Statutory profit before income tax
Income tax expense attributable to operating profit
Statutory profit after income tax
2020
($)
8,914,357
353,324
355,500
(7,299,715)
(972,460)
(297,106)
1,053,900
2,347,871
(586,499)
1,761,372
336,670
(1,156,990)
-
(820,320)
(65,731)
(318,732)
(272,801)
(657,264)
(41,481)
(234,701)
(77,885)
(448,967)
(803,034)
534,654
(137,226)
397,428
2019
($)
8,900,938
448,269
-
(7,208,067)
(1,154,474)
(418,707)
567,959
2,727,511
(844,964)
1,882,547
370,921
759,272
13,130
1,143,323
(283,537)
(348,880)
(375,679)
(1,008,096)
(42,826)
-
-
(446,760)
(489,586)
2,096,147
(634,703)
1,461,444
Clime Investment Management Limited and Controlled Entities
8
9
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
CEO
Report
(continued)
Strategic Highlights
As outlined in the Chairman’s report, FY20 is the
second year in our current 3-year strategic planning
period. The ramifications of the Royal Commission
into Banking and Financial Services continue to be
felt, resulting in change to the competitive landscape
across the markets in which Clime operates as a
result a tightening regulatory cycle. We expect these
trends to continue in the coming years, creating both
challenges and opportunities for our business.
The first half results for the group were strong,
driven by performance fees from above benchmark
investment performance across most of Clime’s suite
of investment solutions and sound mark-to-market
performance of Clime’s balance sheet investments.
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.
The major feature of the second half was, of course,
the business disruption caused by the onset of
COVID-19. Clime adjusted quickly to the onset of the
virus, rapidly transitioning to remote working in March
and lowering both our fixed and variable cost base
in response. This included Clime staff and Directors
operating at reduced salaries for several months. It
is a credit to the team at Clime for the way in which
they embraced these changes as part of a shared
responsibility for the organisation’s success.
In the face of these challenges, management
remained focused on executing on our strategy of
building on our heritage and capability as an asset
manager and repositioning Clime to become an
integrated wealth management business.
Clime has a unique position
as a values-led organisation
and trusted provider of
investor education, advice and
investment solutions for self-
directed, retail and wholesale
clients. We look forward to the
coming year with a sense of
optimism and excitement about
what the future holds.
A key part of strategy execution was the acquisition
of Madison Financial Group (MFG) in June. MFG is
a national wealth management group who license
around 100 financial advisers to provide retail
financial advice for their clients. The acquisition,
funded via a placement of shares issued at a premium
to our then market price, means Clime now has over
$4.5Bn in funds under management and advice.
Clime also achieved sound performance in our
non-financial metrics this year, encompassing
compliance, client Net Promoter Score and
employee feedback. Based on our values of Integrity,
Transparency and Conviction, appropriately weighting
financial and non-financial outcomes is key to
shaping the culture necessary for developing and
sustaining the trust our clients have in the financial
services we provide.
Expanding Clime’s existing operations and investing
in new opportunities has been a notable feature of
FY20. Clime’s senior executive team have delivered a
sound uplift in underlying business performance for
the year. This is facilitating the strategic transition
of our business to an integrated wealth management
business offering investor education, advice and
investment solutions for self-directed, retail and
wholesale clients.
10
Clime Investment Management Limited and Controlled Entities CEO Report
With the acquisition of Madison
Financial Group, Clime has
over $4.5Bn in funds under
management and advice.
This provides a strong platform
for future growth across all of
Clime’s operating segments.
11
Looking Ahead
While much remains uncertain, the outlook for 2021
is positive. Clime is optimistic about the future and
how we access growth opportunities via executing
on our strategy. Our focus remains on generating
sustainable, self-funded growth and expanding
profitability while implementing mergers and
acquisitions that deliver operating leverage for the
business.
I would like to thank each of the Clime team who have
managed well through a difficult period this year,
particularly the senior management team; and the
Clime Board for their ongoing advice and support.
Rod Bristow
Chief Executive Officer
Clime Investment Management Limited
Clime Investment Management Limited and Controlled Entities Key Statistics
1500
300
1250
30
1100
111
15
150
88,000
70,000
108
15
50
Fund Ratings
Clime Smaller Companies Fund
Clime Australian Income Fund
SUPERIOR
SUPERIOR
Clime International Fund
SUPERIOR
12
Clime Investment Management Limited and Controlled EntitiesClime DirectEngagementsThird Party Adviser EngagementsInvestor Education EventsInvestor EducationParticipantsArticles in the PressTelevision AppearancesMarketing CampaignsWholesaleInvestorEngagementsEmail Click ThroughsWebsite VisitsFund ReportsClient & Adviser PublicationsInvestor Video Updates 13
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Clime & Madison
Financial Group:
Clime Investment Management acquired
Madison Financial Group (MFG) in June 2020.
The acquisition enables Clime to offer wealth
management solutions for self-directed, retail
and wholesale clients.
Madison was established in 1983 by financial
advisers who wanted to grow a community
where they could influence the outcome to
benefit the advice they provided their clients.
Over time, Madison has grown into a community
of entrepreneurial business owners who align
with the Madison values and ethos:
• Lead and foster a community of professional,
qualified business owners/advisers who
provide quality advice with great care to their
clients;
• Pre-eminent licensee of choice for high
quality adviser firms;
• The home for the next generation of
professional advisers to support succession;
and
• Licensee value proposition that embeds a
culture of ownership, self-governance and
business development and growth.
COMMUNITY
We believe in the power of the Madison adviser
community. That’s why it’s important to us that
we partner with the right business and advice
leaders.
REGULATORY COMPLIANCE
Our experienced team provide advisers
with prudent risk and compliance advice
underpinned by sound commercial reasoning.
STRATEGIC CONSULTING
We focus on increasing advisers’
entrepreneurial, technical and professional
capability through innovative and informative
education programs – supplemented with the
hands-on support of experienced industry
leaders.
FOREFRONT TECHNOLOGY
We provide operational and technology
solutions that enable advisers to run their
businesses efficiently and dynamically,
taking advantage of fast moving technology
developments.
How we engage
PRINCIPAL
BRIEFINGS
GOOD GOVERNANCE
SUMMITS
ADVICE
COACHING
SPECIALIST WORKING
GROUPS & FORUMS
CONTINUING
EDUCATION
Collaborating with the business
owner about strategic
objectives
Providing risk & compliance
guidance to Practices &
Advisers
Helping advisers provide quality
advice to their clients
Communities of practice in
niche areas of advice
Bespoke & tailored
14
Clime Investment Management Limited and Controlled Entities 15
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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 2020 (FY20).
The comparison with the prior year needs
consideration of the impact of the acquisition of all of
the issued share capital of each of Madison Financial
Group Pty Limited, AdviceNet Pty Ltd, WealthPortal
Pty Ltd and Proactive Portfolios Pty Ltd (together,
the MFG Entities).
MFG Entities provide licensing, compliance,
technology and support to approximatley 100
Authorised representatives licensed under its
Australian Financial Services License (AFSL). MFG
Entities have around $3.5Bn in funds under advice
and total in-force insurance premiums of $65m, with
total gross annual revenue around $34m.
Acquisition of MFG Entities were completed on 26
June 2020 with the Group acquiring 100% equity
interest. The results of MFG Entities have been
included in the Group consolidation from the date
of acquisition to 30 June 2020. As the acquisition
was completed close to the financial year end, their
contribution was insignificant to the overall Group
result.
Key Highlights
For FY20, the Group recorded a net profit before tax
of $534,654 compared with $2,096,147 in FY19. Net
profit after tax attributable to members was $397,428
for FY20 compared with $1,461,444 in FY19.
Group revenue decreased by 4%, from $12.4 million in
FY19 to $12.0 million in FY20. The Group’s Gross Funds
Under Management (FUM) was $982 million as at 30
June 2020, compared with $924 million as at 30 June
2019.
“Directors are
proposing a fully
franked final dividend
of 1.0 cent, making a
total of 2.0 cents per
share for the year.”
The Group received performance fees during the year
of $2,347,871 (FY19:$2,727,511) while revenue from
Investment Software was $0.4 million compared to
$0.4 million in FY19 in Stocks In Value Pty Ltd.
Interest and dividend income were $337,000 this
year (FY19: $371,000). The Group’s interest income
declined in line with lower average interest rates.
Depreciation and amortisation expense increased
from $490,000 in FY19 to $725,000 in FY20.
The increase was mainly on account of the adoption
of the new accounting standard AASB 16 Leases from
1 July 2019.
Administration expenses were $9.6 million (compared
to $10.2 million in FY19).
16
Clime Investment Management Limited and Controlled Entities Summary of Total Equity
The Total Equity at balance date comprised the following:
Cash and cash equivalents
Other financial asset at amortised cost
Trade and other receivables less payables
Listed investment - Clime Capital Limited
Unlisted investments - Managed funds
Equity accounted investment - Clime Super Pty Ltd
Other tangible assets less liabilities
Net tangible assets
Intangible and right-of-use assets
Deferred tax assets
Total Equity
No. of ordinary shares on issue
Equity per share
Net tangible assets per share
Amortisation of intangibles
Total Depreciation, amortization and finance costs
Statutory profit before income tax
Income tax expense attributable to operating profit
Statutory profit after income tax
Report from the Board
30 JUNE 2020
($)
30 JUNE 2019
($)
6,276,531
230,639
(2,799,759)
4,770,017
945,387
-
(1,567,930)
7,854,885
13,621,707
590,139
22,066,731
64,657,505
34.1 cents
12.1 cents
(820,319)
(65,731)
(318,732)
(272,801)
(657,265)
(41,481)
(234,701)
(77,885)
(448,967)
(803,035)
534,654
(137,226)
397,428
4,199,534
-
394,756
5,856,758
10,000
13,730
(833,196)
9,641,582
8,371,147
494,306
18,507,035
54,737,771
33.8 cents
17.6 cents
13,130
1,143,323
(283,537)
(348,880)
(375,679)
(1,008,096)
(42,826)
-
-
(446,760)
(489,586)
2,096,147
(634,703)
1,461,444
17
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Cashflow
Outlook for 2021 Financial Year
Directors and management expect 2021 to be a
year of further growth resulting from delivery of
Clime’s strategy. The Group integrated service
offering encompasses investor education, advice
and investment solutions for self-directed, retail
and wholesale clients. Consolidation of the Madison
Financial acquisition in June 2020 will be a high
priority to ensure effective integration and synergies
realization. We also anticipate continued expansion
during 2021 via growing funds under management
and advice; expanding the retail and wholesale
advice footprint of the Group through adding
financial advisers who share our values of Integrity,
Transparency and Conviction; growing investment
services provided to third-party licensed financial
advisers/planners; and seeking above benchmark
investment returns across all portfolios.
On behalf of the Board
Donald McLay
Chairman
Allyn Chant
Independent Director
Operating cash flow (pre-impact of financial asset
transactions) was positive $4.3 million ($1.1 million in
FY19). This was primarily a function of the following:
• An increase in cash receipts from operating
activities of $4.3 million;
• An increase in cash payments on operating
activities of $1.4 million;
• Government grants received of $0.2 million; and
• A decrease in tax paid by $0.1 million.
The Group used net cash of $1.0 million to purchase
short term financial assets in FY20 compared to $0.1
million net cash used to purchase short term financial
assets in FY19.
Thus, the net cash inflow from operating activities
was $3.3 million, an increase of $2.3 million in
comparison with the prior corresponding period.
In FY20, net cash used in investing activities was $3.9
million mainly arising from the MFG acquisition which
resulted in a net cash outflow of $3.3 million. In FY20,
$231k was paid for the security deposit on the office
lease and a further increase in payments for property,
plant and equipment of $44.4k and intangible assets
of $241.6k.
Net cash inflow from financing activities in FY20 was
$2.7 million, an increase of $4.2 million in comparison
with prior corresponding year. This was mainly due to
placement of shares to institutional investors of $4.5
million and a decline in the number of shares bought
back by $0.2 million. The increase was offset by lease
payments of $0.3 million and higher dividends paid by
$0.1 million in FY20.
Cash reserves were applied as follows:
• Share buy-back program of $0.1 million; and
• Payment of half year and full year dividends to
shareholders of $1.4 million.
18
Clime Investment Management Limited and Controlled Entities 19
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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
2020. 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
N Schafer
Independent Director
A Chant
Independent Director
Mr. Donald McLay BCom, CA, FFin, ACIS, AGIA
Non-Executive Chairman
Mr. John Abernethy BCom (Econ), LL.B
Non-Independent Director
Experience and expertise
Mr. Donald McLay has more than 40
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, Associate Member
of Governance Institute of Australia and
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
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
4,293,850 ordinary shares
20
Clime Investment Management Limited and Controlled Entities Directors’ Report
Mr. Neil Schafer BApp Econ
Independent Director
Mr. Allyn Chant BCom, CA, FFin
Independent Director
Mr. Biju Vikraman Bcom, ACA, AGIA, ACIS
Company Secretary
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.
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
Former directorships in last 3 years
None
Special responsibilities
Chairman of Remuneration Committee
Member of Audit Committee
Special responsibilities
Member of Remuneration Committee
Chairman of Audit Committee
Interests in shares and options
548,007 ordinary shares
Interests in shares and options
50,000 ordinary shares
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.
21
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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 2020, and the numbers of meetings attended by each Director were:
DIRECTORS
BOARD OF DIRECTORS
AUDIT COMMITTEE
RENUMERATION COMMITEE
Mr. Donald McLay
Mr. Neil Schafer
Mr. John Abernethy
Mr. Allyn Chant
A
20
20
20
20
B
20
18
20
20
A
2
2
-
2
B
2
2
-
2
A
6
6
-
B
5
6
-
6
6
A – Number of meetings eligible to attend
B – Number of meetings attended
Rotation and election
of Directors
In accordance with the Company’s Constitution:
• Mr. Neil Schafer and Mr. Allyn Chant retire by
rotation and, being eligible, offer themselves 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.
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. Providing exclusive wealth advice to wholesale
and sophisticated clients through wholly owned
subsidiary Clime Private Wealth Pty Limited;
c. Acting as investment managers for listed
company Clime Capital Limited (ASX: CAM) and
unlisted public company CBG Capital Limited
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 All Cap Australian Equities Fund (Wholesale)
(formerly 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);
f. Providing administration services to Self-Managed
Super Funds through joint venture company Clime
Super Pty Limited;
g. Providing Dealer Group services to licensed
financial advisers/planners through Madison
Financial Group Pty Limited; and
h. Providing financial product advice and dealing in
various financial products to retail and wholesale
clients through Advicenet Pty Limited.
22
Clime Investment Management Limited and Controlled Entities Directors’ Report
Operating result
The consolidated net profit after providing for tax amounted to $397,428 (2019: $1,461,444).
Dividends paid or recommended
Dividends paid or recommended during the financial year are as follows:
1.5 cents per share (2019: 1.5 cents per share) franked to
100% at 27.5% (2019: franked to 100% at 27.5%) corporate
income tax rate, final ordinary dividend paid during the year
on 3 October 2019 in respect of the prior financial year
1.0 cent per share (2019: 0.75 cents per share) franked to
100% at 27.5% (2019: franked to 100% at 27.5%) corporate
income tax rate, interim ordinary dividend paid during the
year on 15 April 2020 in respect of the current financial year
2020
($)
2019
($)
841,061
852,726
559,249
421,713
Total dividends paid
1,400,310
1,274,439
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 16.
Significant changes in
state of affairs
The Group acquired all the issued share capital in
the MFG Entities on 26 June 2020. The aggregate
consideration of $4.76 million was funded by raising
$4.5 million by way of institutional placement of
9,782,609 new fully paid ordinary shares at an issue
price of $0.46 per share.
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 2020 of 1.0 cent per share, totaling $657,075
has been declared by the Directors subsequent to
year end. This provision has not been reflected in the
financial statements.
The Group entered into a five-year office lease
agreement commencing on 15 July 2020 and up to
14 July 2025. This resulted in lease commitments
of $2,175,038 discounted at the current incremental
borrowing rate.
The Parent Entity has provided share-based
compensation benefits to its executive team and
management since 2007, under the Clime Investment
Management Employee Incentive Scheme (EIS).
From 1 July 2020, a new Equity Incentive Plan (EIP),
has replaced the EIS. The EIP was approved at the
2019 AGM held on 14 November 2019.
Under the EIP, rights to shares are granted for $nil
consideration. Rights are granted in accordance with
the plan at the sole discretion of the Parent Entity’s
Board. Rights vest and convert to shares in the Parent
Entity (or cash equivalent) following the satisfaction
of the relevant performance and service conditions.
Performance and service conditions applicable to
each issue of rights are determined by the Board at
the time of granting. Rights granted under the plan
carry no dividend or voting rights until that have
vested and have been converted into shares of the
Parent Entity.
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.
23
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Future Developments
The Company will continue to pursue investment
management activities of:
• primarily investing in equities listed on the
Australian and international securities exchanges
• providing wholesale and retail advice to clients.
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
Shares under option
industry conditions. In addition, a range of external
factors including economic growth rates, COVID-19
pandemic impact, 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.
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
3 January 2022
Employee Incentive Scheme
11 September 2015
3 January 2022
Employee Incentive Scheme
20 July 2016
3 January 2022
Employee Incentive Scheme
21 August 2018
21 August 2021
Employee Incentive Scheme
2 January 2019
2 January 2022
Employee Incentive Scheme
4 October 2019
3 January 2022
$0.829
$0.700
$0.630
$0.485
$0.470
$0.494
Total
100,000
150,000
150,000
400,000
200,000
50,000
1,050,000
No option holder has any right under the options to participate in any other share issue of the Company or any
other entity.
Environmental issues
The Group’s operations are minimally impacted by any
significant law of the Commonwealth or of a State or
Territory relating to the environment.
Rounding off amounts
In accordance with ASIC 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.
24
Clime Investment Management Limited and Controlled Entities 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.
Directors’ Report
25
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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 2020. 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.
Non-Executive Chairman
Donald McLay
John Abernethy Non-Independent Director
Neil Schafer
Allyn Chant
Independent Director
Independent Director
Other key management personnel
Rod Bristow
Chief Executive Officer
B. Principles used to determine
the nature and amount
of renumeration
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”) and Equity Incentive Plan
(EIP).
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.
There were no additional persons other than the
Directors who were considered key management
personnel under the Corporations Act 2001.
Directors
Fees and payments to Directors reflect the demands
which are made on, and the responsibilities of, the
Directors. Remuneration of Independent Directors
is 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 and EIP.
26
Clime Investment Management Limited and Controlled Entities Renumeration Report Directors’ Report
Directors’ fees
Long-term incentives
The current base remuneration was last reviewed
with effect from 1 January 2016. The Independent
Directors’ fees are inclusive of committee fees.
From 1 July 2020, a new Equity Incentive Plan (EIP),
has replaced the EIS. The EIP was approved at the
2019 AGM held on 14 November 2019.
Under the EIP, rights to shares are granted for $nil
consideration. Rights are granted in accordance with
the plan at the sole discretion of the Parent Entity’s
Board. Rights vest and convert to shares in the Parent
Entity (or cash equivalent) following the satisfaction
of the relevant performance and service conditions.
Performance and service conditions applicable to
each issue of rights are determined by the Board at
the time of granting. Rights granted under the plan
carry no dividend or voting rights until that have
vested and have been converted into shares of the
Parent Entity.
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 26 on pages 79 to 82.
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.
Chief Executive Officers’ 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 EIP; and
• other remuneration such as superannuation.
The combination of these comprises the Chief
Executive Officers’ 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)
Key management personnel and senior management
have the ability to earn short-term incentives
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.
27
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
C. Details of remuneration
Amounts of renumeration
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 2020 and 30 June 2019 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
2020
NAME
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
CASH SALARY
AND FEES
($)
SHORT-TERM
INCENTIVES
($)
SUPERANNUATION
($)
OPTIONS
($)
Donald McLay
67,667
John Abernethy*
242,292
Neil Schafer
Allyn Chant
Rod Bristow
Total
51,300
46,072
382,040
789,371
-
685
-
-
150,685
151,370
-
4,259
-
4,362
21,003
29,624
* Includes $49,476 in his capacity as Director and $197,760 paid as consultancy fees.
-
7,238
-
-
19, 267
26,505
2019
NAME
Donald McLay
John Abernethy*
Neil Schafer
Allyn Chant
Rod Bristow**
Total
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
CASH SALARY
AND FEES
($)
SHORT-TERM
INCENTIVES
($)
SUPERANNUATION
($)
OPTIONS
($)
70,000
286,199
54,000
47,489
286,918
744,606
-
18,721
-
-
193,177
211,898
-
12,435
-
4,511
16,683
33,629
-
7,380
-
-
14,498
21,878
TOTAL
($)
67,667
254,474
51,300
50,434
572,995
996,870
TOTAL
($)
70,000
324,735
54,000
52,000
511,276
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.
28
Clime Investment Management Limited and Controlled Entities Renumeration Report Directors’ Report
The relative performance of those elements of
remuneration of Directors and other key management
personnel that are linked to performances are as
follows:
FIXED REMUNERATION
REMUNERATION LINKED TO PERFORMANCE
NAME
Donald McLay
John Abernethy
Neil Schafer
Allyn Chant
Rod Bristow
2020
100%
99.7%
100%
100%
73.7%
2019
100%
94.2%
100%
100%
62.2%
2020
-
0.3%
-
-
26.3%
2019
-
5.8%
-
-
37.8%
Short-term incentives
$151,370 (2019: $211,898) short-term incentives
were paid to Directors and other key management
personnel in respect of the year ended 30 June 2020.
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 2020.
29
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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
Mr. Rod Bristow
Chief Executive Officer
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 annum plus GST as consultancy fee
for a three-year mutually agreeable renewable
contract for delivering agreed outcomes. $180,000
per annum plus GST with effect from 1 August 2020
• Continued directorship of the Company
• Base salary - $403,043 per annum (inclusive of
superannuation)
• Short and long-term incentive – to be negotiated
subject to satisfactory achievement of key
performance indicators set by the Board
• 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
200,000 ordinary shares in the Company were provided as a result of the exercise of options via the EIS during
the year (2019: 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.
NAME
BALANCE AT 1 JULY
2019
GRANTED AS
COMPENSATION
/ RECEIVED ON
EXERCISE OF OPTIONS
OTHER CHANGES
DURING THE YEAR
BALANCE AS
AT DATE
Donald McLay
John Abernethy
Neil Schafer
Allyn Chant
Rod Bristow
7,470,576
4,232,850*
548,007
50,000
610,000*
-
-
-
-
-
-
61,000
-
-
-
7,470,576
4,293,850
548,007
50,000
610,000
* Includes 200,000 and 600,000 shares issued in prior periods under Employee Incentive Scheme to Mr. John Abernethy and Mr. Rod Bristow,
respectively.
For prior year information, refer to Note 30.
30
Clime Investment Management Limited and Controlled Entities Renumeration Report Directors’ Report
F. Related party transactions
1. Clime Capital Limited
i. Mr. John Abernethy is a director of Clime Capital
Limited. The Group received $90,233 (2019:
$84,000) as management fees for the services
rendered by two Directors and Company Secretary
to Clime Capital Limited and reimbursement of
marketing fees. The Group directly owns 5.29%
(2019: 6.28%) of the fully paid ordinary shares
of Clime Capital Limited as at 30 June 2020.
Clime Investment Management Limited through
Clime Asset Management Pty Limited (a wholly
owned subsidiary) has the indirect power to
dispose 3.55% (2019: 5.26%) of Clime Capital
Limited’s shares held by the Investment Manager’s
individually managed accounts as at 30 June
2020.
ii. Clime Asset Management Pty Limited (a wholly
owned subsidiary), during the year earned
$777,887 (2019: $795,006) 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 $320,995 (2019: $204,619)
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 $1,000,036 (2019: $772,044)
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 $60,011 (2019: $1,853) as
remuneration for managing the investment
portfolios and acting as trustee of Clime Fixed
Interest Fund.
5. CBG Capital Limited
i. Mr. John Abernethy was a director of CBG Capital
Limited until 24 August 2018. The Group received
$16,167 (2019: $26,383) as management fees for
the services rendered by a Director and Company
Secretary to CBG Capital Limited. As a result of
Clime Capital Limited’s acquisition of CBG Capital
Limited during the year, the Group does not own
any fully paid ordinary shares in CBG Capital
Limited (2019: 1.03%).
ii. CBG Asset Management Limited (a wholly owned
subsidiary) during the year earned $374,640 (2019:
$405,099) 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 All Cap Australian Equities Fund
(Wholesale) (formerly Clime CBG Australian
Equities Fund (Wholesale))
i. CBG Asset Management Limited, during the
year received $932,736 (2019: $1,167,882) as
remuneration for managing the investment
portfolios and acting as trustee of Clime All Cap
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 (2019: $nil). On 27th October 2016, shareholders
approved issuing 1,000,000 options to Amigo to
acquire ordinary shares in the Company. Amigo was
engaged to provide strategic and outcome driven
corporate advisory services.
These options expired on 1 October 2019 without
being vested due to option vesting conditions not
met.
No expense arising from the share-based payment
transactions was recognised during the year (2019:
$36,333).
The following balances prior to group elimination
were outstanding at the end of the reporting period:
AMOUNT OWED BY RELATED PARTIES
AMOUNT OWED TO RELATED PARTIES
30 JUNE 2020
($)
30 JUNE 2019
($)
30 JUNE 2020
($)
30 JUNE 2019
($)
Clime Capital Limited
84,039
76,233
-
-
Subsidiaries of Clime Investment
Management Limited
4,377,001
2,511,604
19,671,718
18,697,101
31
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
G. Additional Information
PERFORMANCE OF CLIME INVESTMENT MANAGEMENT LIMITED
The tables below set out the summary information regarding the economic entity’s earnings and movements in
shareholder wealth for the five years to 30 June 2020:
30 JUNE
2020
$
30 JUNE
2019
$
30 JUNE
2018
$
30 JUNE
2017
$
30 JUNE
2016
$
TOTAL
Revenue
11,952,222
12,447,639
10,864,250
8,672,692
9,114,230
Net profit before tax and
amortisation
983,621
2,542,907
1,937,078
1,239,961
1,808,353
Net profit before tax
534,654
2,096,147
1,367,296
766,739
1,335,130
Net profit after tax
397,428
1,461,444
1,064,259
2,561,130
1,065,330
-
-
-
-
Cash dividends paid
1,400,310
1,274,439
1,699,113
2,263,053
3,013,290
$9,650,205
Interim dividend -
Fully franked 1
Interim dividend -
Partially franked 2
Final dividend 1,3
Capital return 4
Share price at start of year
Share price at end of year
Basic EPS
Diluted EPS
1.0cps
0.75cps
1.5cps
-
3.0cps
6.0cps
-
-
-
1.5cps
-
1.0cps
1.5cps
1.5cps
1.5cps
3.0cps
-
0.48
0.50
0.7cps
0.7cps
-
$0.48
$0.50
2.6cps
2.6cps
-
1 CPL for 1
$0.50
$0.48
1.9cps
1.9cps
CIW
$0.65
$0.50
5.2cps
-
$0.75
$0.65*
2.2cps
2.1cps
1.5cps
8.5cps
15cps
-
-
-
-
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
Furthermore, during the five years to 30 June 2020, Clime Investment Management Limited bought back
1,519,939 (2019: 1,322,064) fully paid ordinary shares for total consideration of $768,023 (2019: $673,983).
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).
RELATIONSHIP OF GROUP PERFORMANCE TO REMUNERATION POLICIES
The profitability of the Group is one of the key measures taken into consideration by the Remuneration
Committee when determining the quantum of bonuses payable under the STI plan in any given year.
Other performance measures assessed by the Remuneration Committee when determining remuneration
packages for key management personnel include:
• Growth in the Group’s level of Funds Under Management (“FUM”);
• 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;
• Adviser satisfaction and retention;
• Employee satisfaction above a threshold approved by the Remuneration Committee; and
• Client satisfaction (Net Promoter Score).
END OF AUDITED REMUNERATION REPORT
32
Clime Investment Management Limited and Controlled Entities Proceedings on behalf
of the Group
Auditor’s independence
declaration
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.
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act
2001 is set out on page 34.
Signed in accordance with a resolution of the
Directors.
Donald McLay
Chairman
Allyn Chant
Independent Director
Sydney, 26 August 2020
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 24 of the
attached Financial Statements.
The Board of Directors have considered the position
and, in accordance with the advice received from the
Audit Committee is satisfied that the provision of the
non-audit services is compatible with the general
standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied
that the provision of non-audit services, as set out in
Note 24 of the attached Financial Statements, did not
compromise the auditor independence requirements
of the Corporations Act 2001 for the following
reasons:
• all non-audit services have been reviewed by the
Audit Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
• none of the services undermine the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants (including Independence Standards).
33
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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 2020, 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
(including Independence Standards).
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 2020
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
34
Clime Investment Management Limited and Controlled Entities
35
Clime Investment Management Limited and Controlled Entities Interim Financial Statements | For the half-year ended 31 December 2019
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.
A description of the nature of the consolidated entity’s operations
and its principal activities is included in Note 27 on pages 82 and 83
of these financial statements.
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:
Through the use of the internet, we have ensured that our
corporate reporting is timely, complete and accessible at minimum
cost to the Company.
Clime Investment Management Limited
Level 12, 20 Hunter Street
Sydney NSW 2000
37
38
39
40
41
36
Clime Investment Management Limited and Controlled Entities Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Net realised and unrealised gains on financial assets at fair value through
profit or loss
Government subsidy
Occupancy expenses
Depreciation and amortisation expense
Administrative expenses
Finance costs
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
Notes
2020
$
2019
$
5
11,952,222
12,447,639
(1,156,990)
759,272
355,500
(197,731)
(725,149)
-
(415,457)
(489,586)
(9,615,313)
(10,218,851)
(77,885)
-
534,654
(137,226)
397,428
-
-
13,130
2,096,147
(634,703)
1,461,444
-
6
16
13(c)
6
8(a)
Total comprehensive income for the year
397,428
1,461,444
Profit attributable to members of Clime Investment Management Limited
397,428
1,461,444
Total comprehensive income attributable to members of Clime
Investment Management Limited
397,428
1,461,444
Earnings per share
Basic - cents per share
Diluted - cents per share
25(a)
25(b)
0.7
0.7
2.6
2.6
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
37
Clime Investment Management Limited and Controlled Entities
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Consolidated Statement of Financial Position
As at 30 June 2020
ASSETS
Current Assets
Cash and cash equivalents
Other financial asset at amortised cost
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
Right-of-use assets
Deferred tax assets
Intangible assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Contract liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained earnings
Total Equity
Notes
7(a)
32(c)
10
11
12
13
15
16
17
18
19
16
20
16
21
20
22
23(a)
23(b)
2020
$
2019
$
6,276,531
230,639
1,351,134
405,176
5,715,404
13,978,884
-
112,191
1,045,485
590,139
12,576,222
14,324,037
28,302,921
4,199,534
-
3,124,338
141,894
5,866,758
13,332,524
13,730
79,128
-
494,306
8,371,147
8,958,311
22,290,835
3,934,503
2,691,380
218,973
216,390
381,844
474,191
-
38,202
472,024
252,410
5,225,901
3,454,016
885,251
-
125,038
1,010,289
6,236,190
22,066,731
21,508,300
286,307
272,124
22,066,731
-
232,536
97,248
329,784
3,783,800
18,507,035
16,933,128
298,901
1,275,006
18,507,035
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
38
Clime Investment Management Limited and Controlled Entities
Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Consolidated
Notes
Issued
capital
$
Share-based
payments
reserve
$
Retained
earnings
$
Total
$
Balance as at 1 July 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
22(b)
187,500
• On-market buy-back including transaction
costs
• Recognition of share-based payments
• Dividends paid or provided for
22(d)
23(a)
9(a)
(260,751)
-
-
-
-
-
-
-
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
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 by way of placements
33
4,500,000
• Cost of issuing capital - net of tax
• On-market buy-back including transaction costs
• Transfer from share-based payments reserve to
issued capital on completion of EIS loan term
• Transfer of loan repayments to issued capital on
completion of EIS loan term
• Recognition of share-based payments
• Dividends paid or provided for
22(d)
23(a)
23(a)
9(a)
(72,979)
(94,039)
39,490
(39,490)
202,700
-
26,896
-
-
-
-
-
-
-
-
397,428
397,428
-
-
397,428
397,428
-
-
-
-
-
-
4,500,000
(72,979)
(94,039)
-
202,700
26,896
-
(1,400,310)
(1,400,310)
Balance as at 30 June 2020
21,508,300
286,307
272,124
22,066,731
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
39
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Consolidated Statement of Cashflows
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Fees received in the course of operations
Expense payments in the course of operations
Dividends and distributions received
Government grants received
Interest received
Income taxes paid
Notes
2020
$
2019
$
16,019,377
11,702,920
(12,019,712)
(10,590,070)
307,682
242,000
38,247
(259,725)
4,327,869
302,428
-
71,301
(355,780)
1,130,799
Proceeds from disposal of financial assets at fair value through profit or loss
758,716
1,421,152
Payments for financial assets at fair value through profit or loss
(1,759,880)
(1,507,043)
(1,001,164)
(85,891)
Net cash provided by operating activities
7(b)
3,326,705
1,044,908
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for other financial asset at amortised cost
Net cash outflow on acquisition of Madison Entities
Payments for property, plant and equipment
Payments for intangible assets
(230,639)
(3,338,738)
(77,431)
(254,042)
33
15
18
-
-
(33,075)
(12,406)
Net cash used in investing activities
(3,900,850)
(45,481)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for shares bought back (including transaction costs)
22(d)
Principal elements of lease payments
Finance costs paid for lease liabilities
Proceeds from issue of shares to institutional investors
Costs of issue of shares to institutional investors
(94,039)
(175,963)
(77,885)
4,500,000
(100,661)
(260,751)
-
-
-
-
Dividends paid to Company’s shareholders
9(a)
(1,400,310)
(1,274,439)
Net cash provided by/(used) in) financing activities
2,651,142
(1,535,190)
Net increase /(decrease) in cash and cash equivalents
2,076,997
(535,763)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Non-cash financing activities
4,199,534
6,276,531
4,735,297
4,199,534
250,041
187,500
7(a)
7(c)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
40
Clime Investment Management Limited and Controlled Entities Notes 1 - 2 Notes to the Financial Statements
Notes to the Financial Statements
For the year ended 30 June 2020
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 12, 20 Hunter Street, Sydney NSW 2000
Australia. The principal activities of the Company and
its subsidiaries (“the Group”) are described in Note
27(a).
The financial statements of Clime Investment
Management Limited for the year ended 30 June
2020 were authorised for issue in accordance with
a resolution of the Directors on 26 August 2020 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 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 affected policies are:
(i) AASB 16: Leases
The Group adopted AASB 16 Leases from 1 July
2019, but has not restated comparatives for the 30
June 2019 reporting period, as permitted under the
specific transitional provisions in the standard. The
reclassifications and the adjustments arising from
AASB 16 are therefore recognised as an opening
balance adjustment on 1 July 2019.
i. Adjustments recognised on adoption to
AASB 16 Leases
On adoption of AASB 16 Leases, the Group recognised
lease liabilities in relation to leases which had
previously been classified as ‘operating leases’ under
the principles of AASB 117 Leases. These liabilities
were measured at the present value of the remaining
lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 July 2019. The
lessee’s incremental borrowing rate applied to the
lease liabilities on 1 July 2019 was 7.07%.
The Group has also elected to apply the following
practical expedients to the measurement of right-
of-use assets and lease liabilities in relation to those
leases previously classified as operating leases under
the predecessor standard:
• to recognise each right-of-use asset at the date of
initial application at an amount equal to the lease
liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease
recognised in the statement of financial position
immediately before the date of initial application;
• to not recognise a right-of-use asset and a lease
liability for leases for which the underlying asset is
of low value;
• to not recognise a right-of-use asset and a lease
liability for leases for which the lease term ends
within 12 months of the date of initial application;
and
• to use hindsight, such as in determining the lease
term if the contract contains options to extend or
terminate the lease.
41
Clime Investment Management Limited and Controlled Entities
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
The remeasurements to the lease liabilities were
recognised as adjustments to the related right-
of-use assets immediately after the date of initial
application.
30 June
2020
$
1,658,137
1,403,959
(123,773)
Operating lease commitments
disclosed as at 30 June 2019
Discounted using the lessee’s
incremental borrowing rate at the
date of initial application
Less: Amounts relating to short-term
leases recognised on a straight-line
basis as expense
Operating lease amounts subject to
AASB 16
1,280,186
Rental expense relating to operating
leases
- Minimum lease payments
Lease liability recognised as at 1 July
2019 of which are:
- Current lease liabilities
- Non-current lease liabilities
175,963
1,104,223
1,280,186
These right-of use assets were measured at the
amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments
relating to that lease recognised in the Statement of
Financial Position as at 30 June 2019. There were no
onerous lease contracts that would have required an
adjustment to the right-of-use assets at the date of
initial application.
The change in accounting policy affected the
following items in the Statement of Financial Position
on 1 July 2019:
(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 International
Accounting Standards Board. 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.
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.
• Right-of-use assets – increase by $1,280,186
• Lease liabilities – increase by $1,280,186
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.
42
Clime Investment Management Limited and Controlled Entities 43
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
(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.
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.
(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.
44
Clime Investment Management Limited and Controlled Entities (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) Management fees and 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) Performance fees
Performance fees are recognised at a point in time
as income at the end of the relevant period to which
the performance fee relates and when the Group’s
entitlement to the fee becomes established.
As performance fees are contingent upon
performance determined at a future date, they are
not recognised over time as they are not able to be
measured reliably, and it is probable that there could
be a reversal of revenue.
(iv) 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.
(v) 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.
(vi) Government subsidies
Note 2 (continued) Notes to the Financial Statements
Grants from the government are recognised at their
fair value where there is a reasonable assurance that
the grant will be received, and the Group will comply
with all attached conditions.
(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.
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.
45
Clime Investment Management Limited and Controlled Entities 46
Clime Investment Management Limited and Controlled Entities (e) Leases
The Group leases its offices in Sydney, Melbourne,
Brisbane and Perth. Rental contracts are typically
made for fixed periods of 1 to 5 years. Lease terms are
negotiated on an individual basis and contain a wide
range of different terms and conditions. The lease
agreements do not impose any covenants, but leased
assets may not be used as security for borrowing
purposes.
Until 30 June 2019 financial year, leases of the offices
were classified as operating leases. Payments made
under operating leases (net of any incentives received
from the lessor) were charged to profit or loss on a
straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-
of-use asset and a corresponding liability at the date
at which the leased asset is available for use by the
Group. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged
to 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 right-
of-use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line
basis.
Liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the
net present value of the following lease payments:
• fixed payments (including in-substance fixed
payments), less any lease incentives receivable;
• variable lease payment that are based on an index
or a rate;
• amounts expected to be payable by the lessee
under residual value guarantees;
• the exercise price of a purchase option if the
lessee is reasonably certain to exercise that
option; and
• payments of penalties for terminating the lease, if
the lease term reflects the lessee exercising that
option.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be
determined, the lessee’s incremental borrowing rate
is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset
of similar value in a similar economic environment
with similar terms and conditions.
Subsequent to initial recognition, lease liabilities
are measured at the present value of the remaining
lease payments (i.e., the lease payments that are
unpaid at the reporting date). Interest expense
Note 2 (continued) Notes to the Financial Statements
on lease liabilities is recognised in profit or loss
(presented as a component of finance costs). Lease
liabilities are remeasured to reflect changes to lease
terms, changes to lease payments and any lease
modifications not accounted for as separate leases.
Variable lease payments not included in the
measurement of lease liabilities are recognised as an
expense when incurred.
Right-of-use assets are measured at cost comprising
the following
• the amount of the initial measurement of lease
liability;
• any lease payments made at or before the
commencement date less any lease incentives
received;
• any initial direct costs; and
• restoration costs.
Subsequent to initial recognition, lease assets are
measured at cost (adjusted for any remeasurement
of the associated lease liability), less accumulated
depreciation and any accumulated impairment loss.
Payments associated with short-term leases and
leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12
months or less.
47
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
(f) Business combinations
(h) Cash and cash equivalents
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 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).
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 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.
48
Clime Investment Management Limited and Controlled Entities Note 2 (continued) Notes to the Financial Statements
(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.
(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
49
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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.
(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 separately
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.
(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.
50
Clime Investment Management Limited and Controlled Entities 51
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
(p) Employee benefits (continued)
(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.
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).
52
Clime Investment Management Limited and Controlled Entities Note 2 (continued) Notes to the Financial Statements
(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.
(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 services 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 2020 reporting period
and hence have not been early adopted by the Group.
These standards are not expected to have a material
impact on the Group in the current or future reporting
periods and on foreseeable future transactions.
(w) Rounding of amounts
The Group is a of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, relating to ‘rounding
off’. Amounts in this report have been rounded off in
accordance with that Corporations Instruments to
the nearest dollar.
53
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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.
The fair value of assets acquired, liabilities and
contingent liabilities assumed are initially estimated
by the consolidated entity taking into consideration
all available information at the reporting date. Fair
value adjustments on the finalisation of the business
combination accounting is retrospective, where
applicable, to the period the combination occurred
and may have an impact on the assets and liabilities,
depreciation and amortisation reported.
Determining the lease term of contracts with renewal
and termination options – Group as lessee
The Group has lease contracts that include extension
and termination options. The Group applies
judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to
renew or terminate the lease. That is, it considers all
relevant factors that create an economic incentive
for it to exercise either the renewal or termination.
After the commencement date, the Group reassesses
the lease term if there is a significant event or
change in circumstances that is within its control and
affects its ability to exercise or not to exercise the
option to renew or to terminate (e.g., construction
of significant leasehold improvements or significant
customisation to the leased asset).
Carrying value assessment of goodwill, investment
management contracts and customer relationships
4. Financial risk management
The Group tests annually whether goodwill,
investment management contracts 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.
Business combinations
As discussed in Note 33, business combinations
are initially accounted for on a provisional basis.
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.
54
Clime Investment Management Limited and Controlled Entities Notes 3 & 4 Notes to the Financial Statements
(a) Market risk (continued)
The Group seeks to reduce market risk by adhering to the prudent investment guidelines of its Investment
Committee.
PRICE RISK SENSITIVITY ANALYSIS
The table below summarises the pre-tax impact of both a general fall and general increase in market prices by
5% at the end of the reporting period. The analysis is based on the assumption that the movements are spread
equally over all assets in the investment and trading portfolios.
30 JUNE 2020
30 JUNE 2019
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)
$811,232
($811,232)
$805,730
($805,730)
(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 (0.78% weighted average interest rate in 2020 and 1.66% weighted average interest
rate in 2019).
30 JUNE 2020
30 JUNE 2019
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)
$49,117
($49,117)
$43,031
($43,031)
55
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
(b) Credit risk
(c) Liquidity 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.
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 2020
Financial liabilities
CARRYING
AMOUNT
$
CONTRACTUAL
CASH FLOWS
$
LESS THAN 6
MONTHS
$
6 – 12
MONTHS
$
1-3
YEARS
$
Trade and other payables
3,500,204
3,500,204
3,500,204
-
-
Lease liabilities
1,104,224
1,280,516
144,457
145,656
990,403
Total financial liabilities
4,604,428
4,780,720
3,644,661
145,656
990,403
MATURITY ANALYSIS –
GROUP 2019
Financial liabilities
CARRYING
AMOUNT
$
CONTRACTUAL
CASH FLOWS
$
LESS THAN 6
MONTHS
$
6 – 12
MONTHS
$
1-3
YEARS
$
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
-
-
-
-
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.
56
Clime Investment Management Limited and Controlled Entities 57
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
(d) Fair value risk
The Group seeks to reduce market risk by adhering to the prudent investment guidelines of its Investment
Committee.
(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 2020
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
Financial assets at fair value through profit or loss
- Listed equities
- Unlisted unit trusts
4,770,017
-
4,770,017
-
945,387
945,387
-
-
-
4,770,017
945,387
5,715,404
AT 30 JUNE 2019
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
Financial assets at fair value through profit or loss
- Listed equities
- Unlisted unit trusts
(i) Valuation technique
LISTED INVESTMENTS
5,856,758
-
5,856,758
-
10,000
10,000
-
-
-
5,856,758
10,000
5,866,758
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.
UNLISTED UNIT TRUSTS
Investments in unlisted unit trusts are recorded at the redemption value per unit as reported by the investment
managers of such funds and are included within level 2 of the hierarchy.
The carrying amounts of other financial asset and trade and other payables, are assumed to approximate their
fair values due to their short-term nature.
58
Clime Investment Management Limited and Controlled Entities 5. Revenue
Revenue from contract with customers
Funds management
Management fees 1,2
Performance fees 2
Other 2
Private wealth
Advice and other fees 1,2
Investment software
Subscription fees 1
Direct investments income
Dividends and distributions
Interest income
Note 5 Notes to the Financial Statements
2020
$
2019
$
8,161,363
8,148,375
2,347,871
2,727,511
257,198
738,540
10,766,432
11,614,426
495,796
14,023
353,324
448,269
11,615,552
12,076,718
298,423
38,247
336,670
299,620
71,301
370,921
TOTAL REVENUE
11,952,222
12,447,639
1 Revenue from contracts with customers recognised over time
2 Revenue from contracts with customers recognised at a point in time
Refer to Note 27(b) for an analysis of revenue by segment.
59
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
6. Expenses
2020
$
2019
$
Profit before income tax includes the following specific expenses:
Employee benefits expense (excluding superannuation)
6,164,281
6,455,738
Defined contribution superannuation expense
378,890
354,224
Share-based payment expense recognised
Finance costs paid on lease liabilities
Rental expense relating to operating leases
- Minimum lease payments
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of investment management contracts
Amortisation of software licences, customer relationships and customer lists
26,896
77,885
124,030
41,481
234,701
356,908
92,059
65,345
-
276,957
42,826
-
356,908
89,852
60
Clime Investment Management Limited and Controlled Entities Note 7 Notes to the Financial Statements
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:
Cash and bank balances
6,276,531
4,199,534
2020
$
2019
$
Cash at bank is interest bearing. Cash at bank and deposits at call bear floating interest rates between 0.25%
and 0.9% (2019: 1.0% and 1.5%).
Cash and bank balances above in 2019 include deposits of $487,589 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
Write off of investment in joint venture
Share of profit of joint venture
Dividends received from joint venture
Finance costs paid on lease liabilities
Change in operating assets and liabilities
Trade and other receivables and other assets
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
2020
$
2019
$
397,428
1,461,444
728,036
26,896
600
-
13,130
77,885
490,486
65,345
-
(13,130)
2,808
-
2,093,441
(1,059,977)
151,354
(845,112)
(142,978)
178,188
(300,688)
103,413
620,776
(4,865)
283,789
43,344
Net cash provided by operating activities
3,326,705
1,044,908
(c) Non-cash investing activities
Issue of ordinary shares for acquisition of CBG Asset Management Limited
Exchange of investments via scrip for scrip consideration
2020
$
-
250,041
2019
$
187,500
-
61
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
8. Income tax expense
(a) Income tax expense
Current tax expense
Deferred tax expense
Deferred income tax expense included in income tax expense comprises:
(Increase)/decrease in deferred tax assets (Note 17)
(Decrease)/increase in deferred tax liabilities (Note 21)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
2020
$
437,914
(300,688)
137,226
(68,152)
(232,536)
2019
$
350,914
283,789
634,703
115,954
167,835
(300,688)
283,789
2020
$
2019
$
534,654
2,096,147
Tax at the Australian tax rate of 27.5% (2019: 27.5%)
147,030
576,440
Tax effect of amounts which are not deductible / (taxable) in calculating
taxable income:
Amortisation of intangibles
Share-based payment expense
Franking credits on dividends
Government subsidy
(Over)/under provision of prior year tax
Sundry items
Income tax expense
110,166
7,396
(90,270)
(20,625)
(18,105)
1,634
137,226
110,166
17,970
(91,292)
-
20,829
590
634,703
62
Clime Investment Management Limited and Controlled Entities 63
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
9. Dividends
(a) Dividends provided for and paid during the year
Final dividend in respect of the previous financial year –
1.5 cents per share fully franked (2019: 1.5 cents per share fully franked)
Interim dividend in respect of the current financial year – 1.0 cent per share fully
franked (2019: 0.75 cents per share fully franked)
Fully franked portion
(b) Dividends not recognised at year end
2020
$
2019
$
841,061
852,726
559,249
421,713
1,400,310
1,274,439
1,400,310
1,274,439
Proposed fully franked dividend – 1.0 cent per share (2019: 1.5 cents per share)
657,075
841,089
(c) Franking account balance
Amount of franking credits available for subsequent financial years are:
Franking account balance brought forward
Franking credits arising from income tax paid
Franking credits from dividends received
Franking debits from payment of dividends
Balance of franking account at year end
226,493
259,725
124,511
228,238
355,780
125,883
(531,152)
(483,408)
79,577
226,493
Impact on franking account of proposed dividend not recognised at year end
at 27.5% corporate tax rate (2019: 27.5%)
(249,235)
(319,034)
64
Clime Investment Management Limited and Controlled Entities 10. Trade and other receivables - Current
Trade receivables
Other receivables
Note 10 Notes to the Financial Statements
2020
$
2019
$
1,140,492
2,808,348
210,642
315,990
1,351,134
3,124,338
a. Trade receivables are non-interest bearing and are generally subject to 30-day terms.
b. The Group did not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics.
c. 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.
d. The carrying amounts of trade and other receivables are considered to represent a reasonable approximation
of their fair values.
11. Other current assets
Prepayments and deposits
12. Financial assets at fair value through profit or loss - Current
Listed equities
Unlisted unit trusts
2020
$
405,176
2019
$
141,894
2020
$
2019
$
4,770,017
5,856,758
945,387
10,000
5,715,404
5,866,758
65
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
13. Investments accounted for using the equity method
Investment in joint venture
(a) Carrying amounts
Information relating to joint venture is set out below.
NAME OF COMPANIES
PRINCIPAL ACTIVITY
Unlisted
2020
$
-
2019
$
13,730
CARRYING AMOUNTS
2020
%
2019
%
2020
$
2019
$
Clime Super Pty Ltd (i)
Provision of administration
services to self-manage super funds
-
50%
-
13,730
The above joint venture is incorporated in Australia.
(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
Write-off
Carrying amount at the end of the financial year
Net profit of joint venture before income tax
Income tax expense
Profit after income tax
2020
$
13,730
-
-
(13,130)
(600)
-
-
-
-
(c) Reconciliation to share of net profits of investments accounted for using the equity method
Share in net profit of joint venture
2020
$
-
2019
$
3,408
-
13,130
(2,808)
-
13,730
18,110
(4,980)
13,130
2019
$
13,130
(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.
2020 Clime Super Pty Ltd
2019 Clime Super Pty Ltd
ASSETS
$
-
28,574
LIABILITIES
$
-
14,844
REVENUES
$
PROFIT AFTER TAX
$
-
124,659
-
13,130
66
Clime Investment Management Limited and Controlled Entities Notes 14 & 15 Notes to the Financial Statements
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
2020
%
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
Madison Financial Group Pty Limited**
Australia
Fully Paid Ordinary
Advicenet Pty Limited**
Australia
Fully Paid Ordinary
Proactive Portfolios Pty Limited**
Australia
Fully Paid Ordinary
WealthPortal Pty Limited**
Australia
Fully Paid Ordinary
100
100
100
100
100
100
100
100
100
* The proportion of ownership interest is equal to the proportion of voting power held.
** Acquired on 26 June 2020 (refer Note 33).
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
Written off during the year
Depreciation charge for the year
Carrying amount at end of the year
2020
%
563,525
(451,334)
112,191
79,128
77,431
(2,887)
(41,481)
112,191
2019
%
100
100
100
100
100
-
-
-
-
2019
%
494,227
(415,099)
79,128
89,777
33,075
(898)
(42,826)
79,128
67
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
16. Leases
The Group has a lease contract on its main office in Sydney which has a term of five years. The Group also has
leases on its Brisbane and Melbourne offices with lease terms of 12 months or less which the Group applies the
“short term lease” recognition exemptions for these leases.
Amounts recognised in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets
Building under lease arrangement
At cost
Accumulated depreciation
Reconciliation of the carrying amount of lease assets at the beginning and end of the financial year:
Carrying amount at 1 July 2019
Restated opening balance upon adoption of AASB 16 at 1 July 2019
Depreciation
Carrying amount at 30 June 2020
Lease liabilities
Current
Non-current
An analysis of the remaining contractual maturities of lease liabilities is disclosed in Note 4(c).
Lease expenses and cashflows
Finance costs on lease liabilities
Principal elements of lease payments
Expenses relating to leases of 12-months or less
(for which a lease asset and lease liability have not been recognised)
Total cash outflow in relation to leases
Depreciation expense on lease assets
2020
$
1,280,186
(234,701)
1,045,485
Building
-
1,280,186
(234,701)
1,045,485
2020
$
218,973
885,251
1,104,224
77,885
175,963
124,030
377,878
234,701
68
Clime Investment Management Limited and Controlled Entities
69
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
17. Deferred tax assets
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).
The balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
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
Credited/(charged) to profit or loss (Note 8(a))
Credited to equity
Closing balance at 30 June
2020
%
92,325
105,007
124,595
72,433
-
195,779
590,139
494,306
68,152
27,681
590,139
2019
%
-
129,806
96,156
37,114
35,451
195,779
494,306
610,260
(115,954)
-
494,306
70
Clime Investment Management Limited and Controlled Entities 18. 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
Closing balance at 30 June
Note 18 Notes to the Financial Statements
2020
%
8,613,884
5,694,000
(3,511,899)
2,182,101
842,748
(312,054)
530,694
1,758,023
(508,480)
1,249,543
12,576,222
2019
%
5,321,884
5,694,000
(3,154,991)
2,539,009
588,706
(247,691)
341,015
650,023
(480,784)
169,239
8,371,147
71
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
18. Intangible assets (continued)
(a) Reconciliations
2020
GOODWILL
INVESTMENT
MANAGEMENT
CONTRACTS &
RELATIONSHIPS
SOFTWARE
LICENCES
CUSTOMER
RELATIONSHIPS &
CUSTOMER LISTS
TOTAL
$
$
$
$
$
5,321,884
2,539,009
341,015
169,239
8,371,147
Carrying amount at
beginning of year
Additions
Business combination (Note 33)
3,292,000
Amortisation expense1
-
Carrying amount at end of year
8,613,884
-
-
-
254,042
-
254,042
-
1,108,000
4,400,000
(356,908)
2,182,101
(64,363)
530,694
(27,696)
(448,967)
1,249,543
12,576,222
2019
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
Carrying amount at
beginning of year
Additions
Amortisation expense1
Carrying amount at end of year
5,321,884
2,539,009
-
-
-
(356,908)
12,406
(62,156)
341,015
-
(27,696)
169,239
12,406
(446,760)
8,371,147
1 Amortisation of $448,967 (2019: $446,760) is included in the consolidated statement of profit or loss and other comprehensive income.
(b) Impairment testing of goodwill
Goodwill acquired through business combinations has been allocated to the applicable cash-generating unit for
impairment testing. Each cash-generating unit represents a business operation of the Group.
CASH-GENERATING UNIT
2020 - Consolidated
FUNDS
MANAGEMENT
INVESTMENT
SOFTWARE AND
EDUCATION
DEALERSHIP
BUSINESS
TOTAL
$
$
$
$
Balance at the beginning of the year
4,996,884
325,000
-
5,321,884
Acquisition of MFG Entities (Note 33)
-
-
3,292,000
3,292,000
Balance at end of year
2019 - Consolidated
4,996,884
325,000
3,292,000
8,613,884
Balance at the beginning of the year
4,996,884
325,000
Movements during the year
-
-
Balance at end of year
4,996,884
325,000
-
-
-
5,321,884
-
5,321,884
72
Clime Investment Management Limited and Controlled Entities
Notes 18 & 19 Notes to the Financial Statements
(b) Impairment testing of goodwill (continued)
FUNDS MANAGEMENT
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.
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.
The Company’s acquisitions of the components of
its Funds Management business were conducted at
prices within the historical range of 2.5% to 6.0% of
their underlying FUM.
INVESTMENT SOFTWARE AND EDUCATION
The recoverable amount of the cash generating unit
has been determined by a value-in-use calculation.
DEALERSHIP BUSINESS
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. Due to the proximity of the
acquisition to the balance date, the purchase price is
considered to be the fair value of the investment.
19. Trade and other payables
2020 CONSOLIDATED
Unsecured:
Trade payables
Dividends on shares issued under the Employee Incentive Scheme
Accruals
Advisor fees (MFG)
Other payables
2020
$
560,530
94,375
1,888,878
919,165
471,555
3,934,503
2019
$
370,217
121,687
1,767,740
-
431,736
2,691,380
The carrying amount of trade and other payables are considered to represent a reasonable approximation of
their values.
73
Clime Investment Management Limited and Controlled Entities
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
20. Provisions
Employee benefits – current
Annual leave
Long service leave
Employee benefits - non-current
Long service leave
21. Deferred tax liabilities
The balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
Equity accounted investments
Deferred tax liabilities
Movements:
Opening balance at 1 July
Charged to the profit or loss (Note 8(a))
- Other
Closing balance at 30 June
2020
$
347,401
126,790
474,191
2019
$
189,091
63,320
252,411
125,038
97,248
2020
$
-
-
-
2019
$
228,925
3,611
232,536
232,536
64,701
(232,536)
-
167,835
232,536
74
Clime Investment Management Limited and Controlled Entities 75
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
22. Issued capital
(a) Share capital
Ordinary shares
Fully paid
PARENT EQUITY
PARENT EQUITY
2020
Shares
2019
Shares
2020
$
2019
$
64,657,505
54,737,771
21,508,300
16,933,128
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.
(b) Movements in ordinary share capital
DATES
1 July 2018
16 July 2018
July 2018 to June 2019
July 2018 to June 2019
DETAILS
Balance
Shares issued for acquisition of
CBG Asset Management Limited
Shares bought back on-market
and cancelled
Transaction costs arising from
on-market buy- back
NOTES
NUMBER OF
SHARES
54,933,362
$
17,006,379
375,001
187,500
(d)
(570,592)
(260,241)
-
(510)
30 June 2019
Balance
54,737,771
16,933,128
10 June 2020
June 2020
July 2019 to March 2020
July 2019 to March 2020
Oct 2019 and June 2020
Oct 2019 and June 2020
Shares issued to institutional
investors
Cost of issuing capital – net of
tax
Shares bought back on-market
and cancelled
Transaction costs arising from
on-market buy- back
Transfer from share-based
payments reserve to issued
capital on completion of EIS loan
term
Transfer of loan repayments to
issued capital on completion of
EIS loan term
33
9,782,609
4,500,000
-
(72,979)
(d)
(187,875)
(93,889)
-
-
(150)
39,490
325,000
202,700
30 June 2020
Balance
64,657,505
21,508,300
(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.
76
Clime Investment Management Limited and Controlled Entities Notes 22 & 23 Notes to the Financial Statements
incentive scheme carry no rights to dividends and no
voting rights. Refer to Note 26(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 2019.
2020
$
286,307
298,901
26,896
(39,490)
286,307
2020
$
1,275,006
397,428
(1,400,310)
272,124
2019
$
298,901
233,556
65,345
-
298,901
2019
$
1,088,001
1,461,444
(1,274,439)
1,275,006
22. Issued capital (continued)
(d) On-market share buy-back
During the financial year ended 30 June 2020, Clime
Investment Management Limited, in accordance with
its on-market share buy-back scheme, bought back
187,875 (2019: 570,592) 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 49.97
cents per share (2019: 45.70 cents per share). The
total cost of $94,039 (2019: $260,751), including $150
(2019: $510) 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 2020, there are 1,050,000 (2019:
1,375,000) EIS ‘in-substance’ options on issue. Share
options granted under the Company’s employee
23. Reserves and retained earnings
(a) Reserves
Share-based payments reserve
Movements
Share-based payments reserve
Balance 1 July
Share-based payment expense recognised
Transfer from share-based payments reserve to issued capital on
completion of EIS loan term
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
The share-based payments reserve is used to recognise the fair value of options issued to employees but not exercised.
77
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
24. 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
25. Earnings per share
(a) Basic earnings per share
Profit attributable to the ordinary equity holders of the Group
(b) Diluted earnings per share
Profit attributable to the ordinary equity holders of the Group
(c) Reconciliations of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit for the year attributable to owners of the Group
Profit attributable to the ordinary equity holders of the Group used in
calculating basic and diluted earnings per share
(d) Weighted average number of shares used as the denominator
2020
$
91,724
35,055
5,568
132,347
2020
CENTS
0.7
0.7
2020
$
397,428
397,428
2020
NUMBER
2019
$
86,784
10,255
1,570
98,609
2019
CENTS
2.6
2.6
2019
$
1,461,444
1,461,444
2019
NUMBER
Weighted average number of ordinary shares used in calculation of
basic earnings per share
55,309,449
55,222,139
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
56,359,449
56,597,139
(e) Reconciliations of weighted average numbers of shares
2020
NUMBER
2019
NUMBER
Weighted average number of ordinary shares used in the calculation of
basic earnings per share
55,309,449
55,222,139
Shares deemed to be issued for no consideration in respect of
- Employee Incentive Scheme
1,050,000
1,375,000
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
56,359,449
56,597,139
(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.
78
Clime Investment Management Limited and Controlled Entities
Note 26 Notes to the Financial Statements
26. 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
2020
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
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
25/10/2013
03/01/2022
$0.829
150,000
19/08/2014
03/01/2022
$0.850
50,000
25/02/2015
03/01/2022
$0.750
25,000
11/09/2015
03/01/2022
$0.700
150,000
20/07/2016
03/01/2022
$0.630
200,000
23/06/2017
23/06/2020
$0.500
200,000*
21/08/2018
21/08/2021
$0.485
400,000
02/01/2019
02/01/2022
$0.470
200,000
04/10/2019
03/01/2022
$0.490
-
Total
1,375,000
-
-
-
-
-
-
-
-
-
-
(50,000)
(50,000)
(25,000)
-
-
(200,000)
-
-
-
-
-
-
-
100,000
100,000
-
-
-
-
150,000
150,000
(50,000)
150,000
150,000
-
-
-
50,000
-
400,000
200,000
50,000
-
-
-
-
(325,000)
-
1,050,000
400,000
Weighted average exercise price
$0.567
* 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 2019 financial year.
79
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
GRANT
DATE
2019
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
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)
(25,000)
-
-
150,000
150,000
50,000
25,000
50,000
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 the Managing Director approved by shareholders on 27th October 2016.
** In-substance options granted to the Chief Executive Officer during the 2019 financial year.
The weighted average contractual life of in-
substance options outstanding at the end of the
period was 1.39 years (2019 – 1.06 years).
•
In-substance options become unconditional on the
date of their vesting following the repayment of
the outstanding loan balance;
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 2020 included:
in-substance options are granted via an interest-
free, non-recourse loan and vest based on the
terms discussed above;
•
• 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 $0.49 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: 1.0%; and
• discount rate: 12%.
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
VESTING / EXPIRY
DATE
100,000
150,000
150,000
400,000
200,000
50,000
25/10/2013
11/09/2015
20/07/2016
21/08/2018
02/01/2019
04/10/2019
$0.829
$0.700
$0.630
$0.485
$0.470
$0.494
$0.140
$0.121
$0.107
$0.099
$0.091
$0.090
03/01/2022
03/01/2022
03/01/2022
21/08/2021
02/01/2022
03/01/2022
Refer to the Remuneration Report on pages 26 to 32, for additional information in relation to the EIS.
80
Clime Investment Management Limited and Controlled Entities 81
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
26. Share-based payments (continued)
27. Segment information
(b) Options issued to Amigo Consulting Pty Limited
(a) Description of segments
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 expired on 1 October 2019 and were not
exercised at any time upon vesting and prior to the
expiry date.
(c) Expenses arising from share-based
payment transactions
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
• Private wealth
•
• Direct investments
Investment software
Total expenses arising from share-based payment
transactions recognised during the year as part of the
employee benefit expense were as follows:
2020
$
2019
$
Option expense
Employee Incentive Scheme
26,896
Amigo Consulting Pty Limited
-
26,896
29,012
36,333
65,345
Refer to the Remuneration Report on pages 26 to 32,
for additional information in relation to the Employee
Incentive Scheme.
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.
Private Wealth
The Group recently launched Private Wealth as one of
its strategic initiatives to enhance client engagement
and growth of assets
under management. Private Wealth delivers tailored
private wealth advisory services for wholesale and
sophisticated investors.
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.
Other than the creation of a new Private Wealth
segment and consequently reclassification of
previous corresponding period numbers, there have
been no changes in the basis of segmentation or the
basis of segmental profit or loss since the previous
financial report.
82
Clime Investment Management Limited and Controlled Entities Note 27 Notes to the Financial Statements
(b) Reportable Segments
2020
FUNDS
MANAGEMENT
PRIVATE
WEALTH
INVESTMENT
SOFTWARE
DIRECT
INVESTMENTS
$
$
$
Segment revenue
Sales to external customers
10,509,234
495,796
353,324
$
-
Investment income
Government grants
-
-
-
-
-
-
336,670
-
Total segment revenue
10,509,234
495,796
353,324
336,670
INTER
SEGMENT/
UNALLOCATED
CONSOLIDATED
$
$
257,198
11,615,552
-
355,500
612,698
336,670
355,500
12,307,722
Net realised and unrealized
gains on financial assets
at fair value through profit
or loss
Share of profits from
investments in joint venture
Net group result
-
-
-
-
-
-
(1,156,990)
-
-
-
Net group result before tax
4,939,689
(1,071,508)
136,040
(820,319)
(2,649,248)
-
-
534,654
(137,226)
397,428
577,853
-
64,364
-
82,932
725,149
Income tax expense
Profit for the year
Depreciation and
amortisation expense
2019
FUNDS
MANAGEMENT
PRIVATE
WEALTH
INVESTMENT
SOFTWARE
DIRECT
INVESTMENTS
$
$
$
Segment revenue
Sales to external customers
11,498,939
14,000
448,269
Investment income
-
-
-
Total segment revenue
11,498,939
14,000
448,269
Net realised and unrealized
gains on financial assets
at fair value through profit
or loss
Share of profits from
investments in associate
Net group result
-
-
-
-
-
-
$
-
370,921
370,921
759,272
13,130
INTER
SEGMENT/
UNALLOCATED
CONSOLIDATED
$
$
115,509
12,076,718
-
370,921
115,509
12,447,639
-
-
759,272
13,130
2,096,147
(634,703)
1,461,444
Net group result before tax
5,058,567
(1,857,574)
229,080
1,143,323
(2,477,249)
Income tax expense
Profit for the year
Depreciation and
amortisation expense
390,801
-
62,615
-
36,168
489,584
(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 $10.5 million (2019: $11.5 million) (see Note
26 (d) above) are revenues of approximately $1.6 million (2019: $1.7 million) which arose from services provided
to the Group’s largest customer.
83
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
28. Subsequent Events
A final fully franked dividend for the year ended 30
June 2020 of 1.0 cents per share, totaling $657,075
has been declared by the Directors. This provision has
not been reflected in the financial statements.
The Group entered into a five-year office lease
agreement commencing on 15 July 2020 and up to
to 14 July 2025. This resulted in lease commitments
of $2,175,038 discounted at the current incremental
borrowing rate.
The Parent Entity has provided share-based
compensation benefits to its executive team and
management since 2007, under the Clime Investment
Management Employee Incentive Scheme (EIS).
From 1 July 2020, a new Equity Incentive Plan (EIP),
has replaced the EIS. The EIP was approved at the
2019 AGM held on 14 November 2019.
Under the EIP, rights to shares are granted for $nil
consideration. Rights are granted in accordance with
the plan at the sole discretion of the Parent Entity’s
Board. Rights vest and covert to shares in the Parent
Entity (or cash equivalent) following the satisfaction
of the relevant performance and service conditions.
Performance and service conditions applicable to
each issue of rights are determined by the Board at
the time of granting. Rights granted under the plan
carry no dividend or voting rights until that have
vested and have been converted into shares of the
Parent Entity.
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.
29. Contingent liabilities, contingent assets
and commitments
The Group has no material contingent liabilities or
contingent assets as at 30 June 2020 (2019: Nil).
Capital expenditure commitments
The Group has contracted material capital
expenditure commitments of $34,004 on fit-out
works of the new office location as at 30 June 2020
(2019: Nil).
Operating lease commitments
The Group has a number of non-cancellable operating
leases expiring within twelve months to five years.
The leases have varying terms, escalation clauses
and renewal rights. On renewal, the terms of the
leases are renegotiated.
From 1 July 2019, the group has recognised right-of-
use assets for the leases, except for short term and
low-value leases, see Note 2 for further information.
The comparative information relates to non-
cancellable operating lease agreements presented
in accordance with the predecessor accounting
standard AASB 17 Leases. The current year
information relates to short term leases which have
not been capitalised under the current standard
AASB 16 Leases.
The expenditure commitments with respect to rent
payable under various lease agreements are as
follows:
2020
$
2019
$
Not later than 1 year
93,000
377,621
Later than 1 year and not later
than 5 years
Later than 5 years
-
-
1,252,348
28,168
93,000
1,658,137
84
Clime Investment Management Limited and Controlled Entities Note 30 Notes to the Financial Statements
30. 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
2020
Remuneration of Directors and
other key management personnel
2019
Remuneration of Directors and
other key management personnel
$
$
$
940,741
29,624
26,505
956,504
33,629
21,878
$
-
-
TOTAL
$
996,870
1,012,011
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 32 of this Annual Report.
85
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
30. Key management personnel disclosures (continued)
(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 32.
(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.
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
2020
Mr. Donald McLay
Mr. John Abernethy
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Rod Bristow
No.
7,470,576
4,232,850*
548,007
50,000
610,000*
No.
-
-
-
-
-
No.
-
61,000
-
-
-
No.
7,470,576
4,293,850
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.
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
2020
Mr. Donald McLay
Mr. John Abernethy
Mr. Neil Schafer
Mr. Allyn Chant
Mr. Rod Bristow
No.
7,320,680
4,083,850
548,007
50,000
-
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.
(c) Loans to Directors and other key management personnel
$262,500 (2019: $367,000) loan to Director and other key management personnel in relation to the EIS share
issued under the Employee Incentive Scheme (refer Note 26(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 26(a), notional non-recourse loans exist in relation to “in substance” options issued under
the Employee Incentive Scheme.
86
Clime Investment Management Limited and Controlled Entities 87
Clime Investment Management Limited and Controlled Entities Note 31 Notes to the Financial Statements
31. 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 30.
(e) Other related party transactions
1. Clime Capital Limited
i. Mr. John Abernethy is a director of Clime Capital
Limited. The Group received $90,233 (2019:
$84,000) as management fees for the services
rendered by two Directors and Company Secretary
to Clime Capital Limited and reimbursement of
marketing fees. The Group directly owns 5.29%
(2019: 6.28%) of the fully paid ordinary shares
of Clime Capital Limited as at 30 June 2020.
Clime Investment Management Limited through
Clime Asset Management Pty Limited (a wholly
owned subsidiary) has the indirect power to
dispose 3.55% (2019: 5.26%) of Clime Capital
Limited’s shares held by the Investment Manager’s
individually managed accounts as at 30 June
2020.
ii. Clime Asset Management Pty Limited during
the year received $777,887 (2019: $795,006) 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 $320,995 (2019: $204,619)
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 $1,000,036 (2019: $772,044)
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 $60,011 (2019: $1,853) as
remuneration for managing the investment
portfolios and acting as trustee of Clime Fixed
Interest Fund.
5. CBG Capital Limited
i. Mr. John Abernethy was a Director of CBG Capital
Limited until 24 August 2018. The Group received
$16,167 (2019: $26,383) as management fees
for the services rendered by two Directors and
Company Secretary to CBG Capital Limited. As
a result of Clime Capital Limited’s acquisition of
CBG Capital Limited during the year, the Group
does not own any fully paid ordinary shares in CBG
Capital Limited (2019: 1.03%).
ii. CBG Asset Management Limited (a wholly owned
subsidiary) during the year earned $374,640 (2019:
$405,099) 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 All Cap Australian Equities Fund (Wholesale)
(formerly Clime CBG Australian Equities Fund
(Wholesale))
i. CBG Asset Management Limited during the
year received $932,736 (2019: $1,167,882) as
remuneration for managing the investment
portfolios and acting as trustee of Clime All Cap
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 (2019: $nil).
On 27th October 2016, shareholders approved issuing
1,000,000 options to Amigo to acquire ordinary
shares in the Company. Amigo was engaged to
provide strategic and outcome driven corporate
advisory services.
These options expired on 1 October 2019 without
being vested due to conditions not met.
No expense arising from the share-based payment
transactions was recognised during the period (2019:
$36,333).
88
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
31. Related party transactions (continued)
(f) Outstanding balances as at year end
The following balances, prior to group elimination, were outstanding at the end of the reporting period:
AMOUNT OWED BY RELATED PARTIES
AMOUNT OWED TO RELATED PARTIES
30 JUNE 2020
($)
30 JUNE 2019
($)
30 JUNE 2020
($)
30 JUNE 2019
($)
Clime Capital Limited
84,039
76,233
-
-
Subsidiaries of Clime Investment Management
Limited
4,377,001
2,511,604
19,671,718
18,697,101
32. 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
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
2020
$
10,355,780
21,973,113
32,328,893
13,260,907
13,260,907
19,067,986
21,508,301
21,277,814
2019
$
8,674,519
16,505,961
25,180,480
14,162,780
14,162,780
11,017,700
16,933,128
17,790,107
(24,004,435)
(24,004,435)
286,306
19,067,986
4,888,017
-
4,888,017
298,900
11,017,700
2,755,826
-
2,755,826
(c) Guarantees entered into by the Parent Company
The parent company provides cash backed guarantees for the lease agreement of office premises. During the
year these guarantees amounted to $230,639 (2019: $485,709) and is secured by a charge over other financial
assets of $230,639.
(d) Commitments
The Entity has contracted capital expenditure commitments of $34,004 on fit-out works of the new office
location as at 30 June 2020 (2019: Nil) and $93,000 (2019: $1,658,137) for the operating lease commitments.
89
Clime Investment Management Limited and Controlled Entities Note 33 Notes to the Financial Statements
33. Business Combination
The Company entered into a share sale agreement
with SC Australian Holdings 1 Pty Ltd (SC) pursuant
to which the Company agreed to acquire all the
issued share capital of Madison Financial Group Pty
Limited, AdviceNet Pty Ltd, WealthPortal Pty Ltd
and Proactive Portfolios Pty Ltd (together, the MFG
Entities) effective from 26 June 2020.
MFG Entities provide licensing, compliance,
technology and support to approximatley 100
authorised representatives licensed under its
Australian Financial Services License (AFSL). MFG
Entities have around $3Bn in funds under advice and
total in-force insurance premiums of $65m, with total
gross annual revenue around $34m.
Clime’s strategy is to transition to an integrated
wealth management business by expanding
its financial services offering for clients. At its
most recent AGM, Clime advised it was seeking
acquisitions and mergers that would deliver scale
and optimise operational leverage. Acquisition
of MFG is consistent with this strategy, providing
the opportunity to support retail clients with
Clime’s investment products and services and
complementing existing self-directed and wholesale
investor offerings.
Consideration
Clime acquired all the issued share capital in the
MFG entities for an aggregate consideration of
$4.76 million (Share Sale Agreement). The aggregate
consideration was funded by a $4.5 million
institutional placement of 9,782,609 new fully paid
ordinary shares at the issue price of $0.46 per share.
The issue price of $0.46 per share represents an 8.2%
premium to the closing price of CIW shares as traded
on ASX on 22 May 2020, being the last trading day
prior to the announcement of the placement, being
$0.425.
Cash paid (i)
Contingent consideration (paid and held in escrow) (ii)
Total purchase consideration
i.
Includes $359,817 paid towards Net Working
Capital which is subject to post-completion
adjustment for working capital as at the date of
completion.
ii. The $2.5 million of the contingent consideration
has been paid and will be held in escrow with $1.25
million available for release after 12 months and
a further $1.25 million being available for release
after 24 months, subject in each case to payments
to the Company for claims (under a limited
indemnity) and adjustments related to post-
completion revenues of the MFG Entities.
All MFG staff has transitioned with the business to
Clime, including the MFG CEO. Advisors licensed with
MFG will significantly benefit from the transaction
by gaining access to clients from Clime’s existing
45,000 subscriber database; a greater pool of quality
investment opportunities for clients; and premium
equities research and investment capability.
Total ($)
2,259,817
2,500,000
4,759,817
90
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Assets and liabilities acquired
$4,759,817 purchase consideration was fully paid in cash and has been provisionally allocated as follows:
ASSETS AND LIABILITIES ACQUIRED
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Provisions
Net identifiable tangible assets acquired
Add: Customer /Advisor list
Net identifiable assets acquired
Add: Goodwill arising on acquisition
Total purchase consideration
Net cash outflow on acquisition
RECOGNISED ON ACQUISITION
AT FAIR VALUE
($)
1,421,079
306,190
277,328
(1,498,839)
(145,941)
359,817
1,108,000
1,467,817
3,292,000
4,759,817
$4,759,817 purchase consideration was fully paid in cash and has been provisionally allocated as follows:
Total purchase consideration
Cash held on MFG
The goodwill on acquisition comprises:
• Broader service range offered;
• Synergies from cost-saving on operating and overhead expenses; and
• Experienced Management team.
Goodwill is not deductible for tax purposes.
($)
4,759,817
(1,421,079)
3,338,738
Contribution since acquisition
Since acquisition was completed close to the financial year end, contribution of Madison entities to the
Group revenue and profit before tax was insignificant. Had the combination occurred from the beginning of
the reporting period, revenue and operating profit before tax for the consolidated entity would have been
$36,860,211 and $571,243 respectively.
Transaction costs
Transaction costs of $109,363 were incurred in relation to the acquisition. These costs were included with
administration expenses in the 2020 statement of profit or loss and other comprehensive income.
91
Clime Investment Management Limited and Controlled Entities Directors’ Declaration
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 37 to 91, 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 2001 on behalf of the Directors by:
Donald McLay
Chairman
Allyn Chant
Independent Director
Date: 26 August 2020
92
Clime Investment Management Limited and Controlled Entities
93
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
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 2020, 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. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
ii. 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 (including Independence Standards) (“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
94
Clime Investment Management Limited and Controlled Entities
Independent Auditor’s Report
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 31: Related party transactions
Management and performance fees account for
$10,509,234 of the Group’s $11,952,222 reported
revenues in 2020.
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.
Our procedures included, amongst others:
• Obtaining an understanding of and 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
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.
ABN 17 795 780 962.
An independent New South Wales Partnership
95
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Impairment Assessment of Intangible Assets
Refer to Note 18: Intangible Assets
At 30 June 2020 the Group’s statement of financial
position has intangible assets, including goodwill,
totalling $12,576,222.
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.
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
accounting policy in relation to impairment and
the adequacy of disclosures in the financial
statements.
Acquisition of Madison Financial Group
Refer to Note 33: Business Combination
During the year the Group acquired Madison Financial
Group (MFG) for an aggregate consideration of $4.8m.
This was considered a significant purchase for the
Group.
Accounting for this transaction is a complex and
judgemental exercise, requiring management to
determine the fair value of acquired assets and
liabilities, in particular determining the allocation of
purchase consideration to goodwill and separately
identifiable intangibles assets such as customer
contracts and relationships.
Judgment is also used in determining the fair value of
the consideration paid as $2.5m of the $4.8m aggregate
consideration paid is held in escrow and is subject to
adjustment based on post-completion revenues.
It is due to the relative size of the acquisition and the
estimation process involved in accounting for it that this
is a key audit matter.
Our procedures included, amongst others:
• Obtaining and reading the sale and purchase
agreement to understand the key terms and
conditions;
• We evaluated the assumptions and methodology
in management’s calculations, such as forecast
revenues, used to determine the value of MFG’s
identifiable intangible assets and consideration
paid;
• We used our Corporate Finance and valuation
specialists to compare management’s valuation
assumptions with external benchmarks and to
consider the valuation assumptions based on
our knowledge of the Group and its industry; and
• We assessed the adequacy of the Group’s
disclosures in respect of the business
combination.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership
96
Clime Investment Management Limited and Controlled Entities Independent Auditor’s Report
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 2020 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.
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 fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• 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.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership
97
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
• 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.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 32 of the Directors’ Report for the year ended 30
June 2020. In our opinion, the Remuneration Report of Clime Investment Management Limited, for the year ended
30 June 2020, 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 2020
Pitcher Partners
Sydney
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership
98
Clime Investment Management Limited and Controlled Entities
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
Shareholder
Information
The shareholder information set out below was applicable as at 12 August 2020.
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
35
154
81
210
60
540
99
Clime Investment Management Limited and Controlled Entities B. Equity Security Holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
ORDINARY SHARES
ORDINARY SHARES
NO OF SHARES
PERCENTAGE OF
ISSUED SHARES
HSBC Custody Nominees (Australia) Limited
Mr. Donald McLay, Torres Industries Pty Limited & Nagarit Pty Limited
Mr Ronni Chalmers, Locope Pty Ltd & Savoir Superannuation Pty Ltd
One Managed Investment Funds Ltd
PHC Investments Limited
10,616,632
7,470,576
7,050,000
5,434,783
4,546,826
Double Pty Limited & Abernethy SMSF Pty Ltd
4,293,850
Mr David Schwartz & related entities
Robansheil Pty Limited
Ruminator Pty Ltd
Clodene Pty Ltd
Capital Property Corporation Pty Limited
Di Iulio Homes Pty Limited
Mr Orlando Berardino Di Iulio & Ms Catharina Maria Koopman
Mr Rod Bristow
Barrob Bondi Pty Ltd
Lodge Road Pty Limited
Arcelia Pty Ltd
Jetstream Holdings Pty Ltd
Sanlam Private Wealth Pty Ltd
Mr Robert Archer Black
3,734,064
1,130,446
871,419
813,522
745,709
692,951
657,744
610,000
561,066
548,007
485,334
443,395
410,000
400,000
16.157
11.369
10.729
8.271
6.920
6.535
5.683
1.720
1.326
1.238
1.135
1.055
1.001
0.928
0.854
0.834
0.739
0.675
0.624
0.609
51,516,324
78.402
100
Clime Investment Management Limited and Controlled Entities CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2020
C. Equity Security Holders
Substantial holders in the Company are set out below:
ORDINARY SHARES
Wilson Management Group
Mr. Donald McLay and related parties
Mr. Ronni Chalmers and related parties
One Managed Investment Funds Ltd
PHC Investments Limited
Mr. John Abernethy and related parties
Mr David Schwartz and related entities
ORDINARY SHARES
NO OF SHARES
PERCENTAGE OF
ISSUED SHARES
10,616,632
7,470,576
7,050,000
5,434,783
4,546,826
4,293,850
3,734,064
16.157
11.369
10.729
8.271
6.920
6.535
5.683
D. Voting rights
E. Other Information
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.
Annual General Meeting
The Annual General Meeting of Clime Investment
Management Limited is expected to be held on 12
November 2020.
Terms and conditions
Stock Exchange Listing
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.
The shares of the Company are listed on the
Australian Securities Exchange 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.
The home exchange is Sydney.
On-Market Buyback Scheme
As at 26 August 2020 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 12
20 Hunter Street
Sydney NSW 2000
Telephone: (02) 8917 2100
101
Clime Investment Management Limited and Controlled Entities Corporate Directory | For the half-year ended 31 December 2019
Clime Investment Management Limited
ABN 37 067 185 899 | ACN 067 185 899
Level 12, 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
102
Clime Investment Management Limited and Controlled Entities 103
Clime Investment Management Limited and Controlled Entities www.clime.com.au