2021 Annual Report
Clime Investment
Management Limited
INTEGRITY | TRANSPARENCY | CONVICTION | PROGRESS
Clime Investment Management Limited
Level 12, 20 Hunter Street Sydney NSW 2000 Australia | PO Box H90 Australia Square NSW 1215
ABN 37 067 185 899 P 1300 788 568
clime.com.au
1
Photography by Harry Cordaiy
Associate Analyst
Harry’s
throughout the Annual Report.
images have been used
2
2021 Annual Report
Clime Investment
Management Limited
Contents
Chairman’s Report
CEO Report
Review of Financial Results
Investment Report
Madison
We exist to create value for our clients
Clime in the community
Report from the Board
Remuneration Report - Audited
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members
Shareholder Information
04
06
08
10
12
14
17
18
29
38
39
82
83
88
3
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
John Abernethy
Chairman’s Report
Despite the significant health, social and therefore
economic consequences of the continuing COVID19
outbreaks, Clime Investment Management Limited
(Clime, Company or Clime Group) produced an
excellent result for shareholders in FY21.
The declared profit of $3.8 million (after depreciation
of right-of-use assets, and finance costs) before tax
and non-cash amortisation charges on intangible
assets was 280% higher than the result reported in
FY20 of $1.0 million. The result has allowed Directors
to declare an increased final dividend of 1.5 cents
fully franked, making a total dividend payment of 2.5
cents fully franked for FY21.
It is important for shareholders to note that the $3.8
million declared result was calculated after expensing
$784,877 for a range of one off or extraordinary
non operating costs. These included redundancy
costs, legal costs and fund closure costs. These costs
exceeded the grants received from Government
assistance for the COVID19 outbreak of $435,682.
Clearly, the Company’s results would have been even
more impressive without these costs and offsets.
Reflecting on the past it is true to say that it was an
“opportunistic” transaction whereby Clime acquired
and thereby merged with Madison in June 2020. The
opportunity arose because Madison Financial Group
Pty Ltd, AdviceNet Pty Ltd, ProActive Portfolios Pty
Ltd, and WealthPortal Pty Ltd (together, Madison
Entities) were sold during the heights of the COVID19
outbreak. Clime was able to move quickly to a position
of preferred buyer because we had extensively
researched the market landscape in which the
Madison Entities operated, we had a strong balance
sheet, and we had supportive capital providers.
A year after the merger the most significant synergy
has been created through the promotion of Annick
Donat from the CEO of Madison Financial Group Pty
Ltd (Madison) to the Group Chief Executive role.
With her extensive experience across financial advice,
licensing obligations, regulatory rules for financial
product creation and management, it is doubtful
that any leader of a company participating in our
particular markets has the operating qualifications of
Annick.
Also, I remind shareholders that the Company had
non-cash depreciation and amortisation charges in
FY21 of $700,877. The expensing of these charges
has the affect of understating the actual cash profit
reported to shareholders.
Consequently, the reported statutory profit before
tax of $3,109,254 is conservatively stated due to the
above accounting adjustments.
I want to reiterate my earlier comments regarding
our “highly talented” funds management team.
Adrian Ezquerro has had a 14-year career with Clime
and I congratulate him on your behalf in establishing
himself as our successful investment leader. Under
his leadership, Clime has now developed a very stable
team of Portfolio Managers and Analysts, whose
ages and experiences cover the required ambit of a
successful investment team.
To a great extent the substantially improved reported
profit flows from four key aspects of our business:
1. The successful merger of Clime entities with
Madison Financial Group;
2. The identification and then the implementation
of synergies between the two operations;
3. The tailwind of strong returns from risk markets;
and
4. The outperformance of a range of indices by our
highly talented investment team.
In 2018 when I was Managing Director of Clime Group,
I outlined in the Annual Report the opportunity that
presented for companies like the combined Clime
and Madison Group. I would like to update you on
the opportunity, as it has grown in the meantime.
4
CHAIRMAN’S REPORT
service
Our direct Clime business and Madison Authorised
Representatives
the wealth markets
of Australia. The wealth market of Australia is
estimated at $5 trillion made up of about $3 trillion
in superannuation and over $2 trillion in non super
investments (excluding residences).1
Based on the above statistics it is easy to discern that
the major focus of our service provision is directed to
the trustees of self-managed superannuation funds
(SMSFs) – both in accumulation and pension mode.
Nothing has changed from my observations in 2018,
but our potential to access and service this market is
greater following our merger.
Source: ABS, 2021
1
The declared
profit of $3.8
million... before
tax and non-cash
amortisation
charges on
intangible assets
was 280% higher
than the result
reported in FY20.
In 2018 I noted:
“Measured by assets, Australia now has the fourth
largest retirement system in the world. Further,
Australia’s per capita income sits comfortably inside
the top 10% of world economies. We are indeed a
wealthy nation.
Whilst these observations and statistics are impressive
it is sobering to reflect that for the foreseeable future
over 70% of people who enter retirement will be
dependent upon a full or part Commonwealth public
pension.
Those retirees in the community who are self-
sufficient, through super or non-super assets, will have
an increasing burden to bear. These people are and
will increasingly be required to look after themselves
through retirement. Whilst there is nothing wrong
with this, future governments will continue to make
changes across superannuation and taxation rules.
These changes, the frantic pace of change everywhere
and an enduring low yield investment environment,
will require the self-funded to constantly monitor
their affairs or seek the support of ethical retiree
consultants.”
With Clime and Madison now successfully coming
together, we as a group can help our clients “monitor
their affairs or seek the support of ethical retiree
consultants”.
Whilst we anticipate that FY22 will be a successful
year for the Clime Group, there is no doubt that
the continuing outbreaks of COVID19 will create
challenges in servicing our clients. However, we are
committed to doing our best for all of our clients,
our staff, our strategic service partners and our
shareholders.
Kindest regards to my fellow shareholders
John Abernethy”
5
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
Annick Donat
CEO Report
I am pleased to report on Clime’s strong FY21 financial
results. This was a year, dominated by COVID19
shutdowns and interruptions, where learning to pivot
quickly without all the information at hand became
the new way of working.
Despite the COVID19 challenges it is pleasing
to report that both of our businesses, Clime and
Madison, outperformed the operating budget set for
each at the beginning of the financial year.
Continuous business improvement
Since my commencement on 1 May, we have taken
several steps to leverage our significant core assets
and highly experienced team to grow the business by
continuing to provide expert advisory and investment
services to our diverse range of clients.
These results, when coupled with improved operating
earnings and a positive contribution from Clime’s
Balance Sheet investments, delivered a combined
FY21 group profit of $3.8 million before depreciation
and amortisation. By comparison, FY20 was $1.3
million.
It was a productive year for clients with all Clime
funds, outperforming their respective benchmarks.
For our direct portfolio managed clients, it is pleasing
to report that the IMA Growth portfolio has now
outperformed its benchmark over all time frames out
to 3 years, after all fees. Our Smaller Companies Fund
continues to perform strongly, and has now delivered
+21.4% p.a. since inception, after all fees. Adrian
Ezquerro, Head of Investments, shares additional
insights and performance highlights on page 10.
Key programs commenced in FY21 and due for
completion mid FY22 include:
Happy anniversary -
Clime and Madison come together
•
simplifying our
improve the client experience,
technology architecture
to
• better utilise the data and insights we curate,
• use the diversity of skills and experience across
•
our people to accelerate projects, and
strengthen our position as an integrated wealth
business.
June 26, 2021 marked the first anniversary of the
merger of Clime with Madison. The successful
integration of Madison has provided synergy and
cost benefits in the form of operational efficiency,
people expertise and introductions to new market
segments. In May of this year, I was honored to be
appointed as the Group CEO.
These programs have allowed the Group to
streamline processes, find efficiency gains and
increase productivity.
Financial Performance
and
disciplined
The
unwavering
approach
commitment to quality and value which underpins
our investment philosophy has delivered exceptional
results for our clients and shareholders. This resulted
in our Funds Under Management and Advice
(FUM&A) growing strongly to a total of $5.1 billion.
Our Portfolio Managers delivered strong investment
fund and mandate results. Their exceptional work
generated $2.3 million in gross performance fees for
the year.
It is pleasing to report that Madison outperformed
its operating budget for the financial year. Our team
is well-respected throughout the advice community,
and we continue to attract quality advice firms and
highly experienced employees.
We are starting to see steady growth in the number
of new referrals, attracting Advisers who are seeking
a collaborative community which provides access
to professional
investment expertise, ongoing
education, underpinned by a culture of ‘client first’.
More recently, we have conducted a review of our
Clime Private Wealth service to ensure we continue
to meet the needs and objectives of our clients. I have
valued the open discussions with many of our Private
Wealth clients and we have identified ways we can
improve or enhance our service to better assist you.
6
CEO REPORT
Jaime Johns has been appointed GM Madison & Head
of Clime Private Wealth. She has been with Madison
for five years. Her knowledge and experience span
two decades in advice, investments, mergers and
acquisitions and practice management. You can read
more about our advice business on page 12.
The way forward
Clime exists to create value
for our clients,
undertaking our business and services as a team. We
often refer to the African proverb, ‘if you want to go
fast, go alone. If you want to go far, go together’.
We head into FY22 optimistic about the future and
passionate about providing a fresh, progressive and
principled financial services offering, to elevate the
financial wellbeing of our clients, shareholders and
employees.
In closing, I would like to acknowledge the support
and guidance of John Abernethy, our Chairman. John
is well known to many, and highly respected for his
ability to communicate complex market information
simply, educating clients to help make informed
decisions about their investments. It is this ethos
which continues to set the foundation for our Group,
and from which we derive our commitment and
passion to create value for our clients, Advisers and
shareholders.
To our clients and shareholders, thank you for
investing alongside us, and entrusting us with your
investments. On behalf of Clime, I hope you and your
families are in good health and remain safe.
Sincerely,
My thanks to our Directors, Leadership team and
people for staying the course, working collaboratively
despite the continual changing dynamics brought
about by a global pandemic.
Annick Donat
Our leadership team
Jaime Johns
General Manager
Madison & Head of
Private Wealth
Biju Vikraman
Chief Financial
Officer
Troy Poposki
Head of
Operations
Annick Donat
Chief Executive
Officer
Kerry Thomas
General Manager
Risk & Compliance
Adrian Ezquerro
Head of
Investments
7
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
Below is a summary of the Group’s performance from the operating business and investment income:
Funds management and related activities revenue
Performance fees income
Revenues from the Madison Entities
Investment software revenue
Government subsidy
Gross income
Staff costs
Short-term incentives to staff
Total staff costs before redundancies
Depreciation of right to use assets
Finance costs on leases
Short term leases
Total occupancy costs
Other administrative expenses
Third party custody, management & funds administration services
Selling and marketing expenses
Total other operating expenses
2021
($)
9,253,262
2,285,283
3,591,472
301,957
435,682
15,867,656
(7,432,379)
(1,290,045)
(8,722,424)
(429,444)
(117,759)
(157,565)
(704,768)
(2,064,947)
(852,370)
(346,668)
(3,263,985)
2020
($)
8,914,357
2,347,871
-
353,324
355,500
11,971,053
(5,583,082)
(859,300)
(6,442,382)
(234,701)
(77,885)
(197,731)
(510,317)
(1,518,902)
(972,460)
(297,106)
(2,788,468)
Operating profit
3,176,479
2,229,886
Direct investment income – dividends and Interest
Realised and unrealised gains/(losses)
Income/(loss) generated by financial assets held at fair value
Redundancy costs
One-off - legal expenses defending employment matter
One-off - fund closure expenses
Other non-recurring expenses
Total non-recurring expenses
317,558
1,100,971
1,418,529
(249,915)
(283,027)
(206,209)
(45,726)
(784,877)
336,670
(1,156,990)
(820,320)
(65,731)
-
-
(318,732)
(384,463)
Profit before depreciation and amortisation
3,810,131
1,025,104
Depreciation of property plant and equipment
Amortisation of intangibles
Total depreciation and amortisation and finance costs
Statutory profit before income tax
Income tax expense attributable to operating profit
Statutory profit after income tax
(53,120)
(647,757)
(700,877)
3,109,254
(831,679)
2,277,575
(41,481)
(448,967)
(490,448)
534,654
(137,226)
397,428
8
Statutory profit before tax was $3.1 million compared
to $0.5 million for the previous corresponding period
(pcp). Strong contributions from the operating
businesses, generation of performance fees and
positive contribution from Group’s direct investments
lead to a solid performance during the year current
year.
Operating business:
Operating profit for the year was $3.1 million
compared to $2.2 million in pcp. Madison Entities
contributed $3.6 million to the revenue during the
current year.
from Clime’s
Strong performance
investment
portfolios contributed to $2.3 million (2020: $2.3
million) of performance fees for the year. During the
current year, the outperformance of the investments
within Clime Capital Limited’s portfolio contributed
significantly to the performance fees received by
Clime.
Key projects rolled out during the year have delivered
operational efficiencies in readiness for scaling the
growth opportunities for FY22.
During the year $0.8 million (2020: $0.4 million) of
one-off costs were incurred in redundancies, legal
costs for winding up sub-scale funds, and costs
related to employment.
REVIEW OF FINANCIAL RESULTS
Investment income
Investment income contributed positive $1.4 million
compared to a loss of $0.8 million in pcp. Record
profits for the year generated by Clime Asset
Management Pty Ltd (a subsidiary of the Company) in
its capacity as Investment Manager for Clime Capital
Limited significantly contributed to Group results.
Strong performance from the operating businesses,
performance fees and investment incomes resulted
in generating a profit before depreciation and
amortisation of $3.8 million compared to $1.0 million
during the pcp.
Total depreciation and amortisation were $0.7
million compared to $0.5 million during the pcp.
Amortisation of intangibles increased in FY21 mainly
due to amortisation of customer lists acquired
through Madison Entities.
Biju Vikraman
Chief Financial Officer
9
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
Adrian Ezquerro
Investment Report
response
In many respects, FY21 was an extraordinary year.
The onset of the pandemic in late FY20 brought with
it an acute market reaction initially driven by elevated
from Governments
uncertainty. The
and Central Banks was both swift and decisive,
providing unprecedented support that in turn aided
the swift rebound in the global economy. Thus, as
we progressed through FY21, a renewed sense of
optimism pushed markets higher, largely reflecting
the strong recovery in both economies and corporate
earnings.
Such settings provide context for what was another
positive year of execution by the Clime Investment
Management team. I am fortunate to lead such a
talented, dedicated team whose efforts routinely go
beyond the nine to five. We are here to serve our
clients, all of whom place their trust in us to invest
their savings wisely. To achieve sound outcomes
for our clients is thus greatly satisfying and reflects
positively on the efforts of the team, who ultimately
form an intangible asset base of immense value for
the Clime business.
Shareholders are likely to find much of the information
in this annual report to be useful when assessing the
performance and prospects of Clime. I would also
suggest that shareholders consider factors relating to
people, process, and performance when undertaking
any such assessment. Those reviewing our funds will
often analyse these critical aspects of our business,
which in turn influences fund flows.
As introduced above, I am of the view that we have
great people. Moreover, the strength, stability and
consistency of our Investment Management team
now provide us with the requisite foundation from
which to execute well. Much of the team has now
worked together for many years, resulting in ever
improving communication and cohesion.
Great people
executing
a sensible
investment
process will
generate strong
performance over
time. ”
Specific to process, our focus remains on researching
and investing in high quality companies, while
maintaining strong valuation discipline. Put simply,
we seek to invest in great businesses at sensible
prices. Distilling our process sharply into focus leads
us to spend much of our time looking for companies
with niche leadership, strong balance sheets and
large opportunity sets. It is our commitment that
these endeavours continue in earnest in the years to
come.
Great people executing a sensible
investment
process will generate strong performance over
time. Thankfully, this has been the case for Clime
funds in recent years, with the majority of our funds
outperforming over 1 and 3 year periods. Two of our
funds, namely the Clime Australian Income Fund and
the Clime Smaller Companies Fund, are in the top
decile of their respective categories over 3 years.
10
Adrian Ezquerro
Investment Report
INVESTMENT REPORT
I am grateful for the support received from our
investors, the Clime Board, CEO Annick Donat,
the Leadership team, an exceptional Investment
Management team and the broader Clime Group. I
feel we are particularly well positioned to continue
building constructively on the growth path now firmly
established. Finally, thank you to all shareholders for
your ongoing support.
Adrian Ezquerro
It is pleasing to note that all of Clime’s various
income funds have outperformed their respective
benchmarks over all
is an
outstanding achievement and is a great credit to the
diligent efforts of Dr Vincent Chin, Clime’s Income
Portfolio Manager, and the income team.
timeframes. This
Clime’s growth focused funds have also added
significant value for investors in recent times, and
this has several positive impacts for Clime and
its shareholders. Firstly, and most
importantly,
this suggests we are meeting or exceeding the
investment objectives of our clients. Secondly, this
positions the Company well to earn performance
fees, with the Company generating in excess of $1m
of performance fee revenue in FY21 for the fourth
consecutive year. Finally, this affords the Clime
distribution team a better opportunity to continue
growing the Company’s funds under management
(FUM) base. Successfully compounding such a
scenario over many years should drive both revenue
and earnings growth.
Clime Australian Income Fund
Clime Smaller Companies Fund
Ratings current as at date of annual report.
11
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
Jaime Johns
Madison
Year in Review 2021
Madison provides licensee support services to self-
employed advice firms. The Madison community
is built with like-minded professionals who share a
passion for providing advice to more Australians.
Madison provides services to these small business
owners which consists of a strong governance
framework, business and advice coaching, ongoing
education development, and advice technology
solutions, which assist advisers to deliver great advice
and excellent client outcomes.
Underlying demand for financial advice remains
strong and Madison will support Advisers through
the regulatory requirements that will continue to
rollout over the coming year. Financial Advisers who
want to remain within retail advice are required to
pass the FASEA Adviser exam by December 2021.
Although a small extension has been granted to
allow an additional resit if you have failed, Madison
has seen over 90% of our Adviser community pass
the Financial Adviser Exam.
Madison has now spent 12 months within the Clime
Group. Madison advice practices have found the
integration into Clime valuable through leveraging
the deep
investment experience and scalable
efficiencies through a mature operating parent.
Madison currently has over $3.8b funds under advice
and $45m of in-force Insurance premiums. Despite
the challenging market conditions, and significant
legislative changes, Madison met its profit targets
for FY21, and retained team members, ensuring the
Adviser and client community remained stable and
safe.
Outlook 2022
Focussing on FY22, we will continue to assess
partnerships and other acquisition opportunities
that support the growth of our business and our
advice practices. This includes continued investment
into the advice and governance framework, building
upon data insights and identified efficiencies for
the delivery of high quality, personal advice to
Australians.
Although disrupted through COVID19, Madison has
seen a steady increase of average revenue per advice
firm.
Jaime Johns
Having made strong investment into the advice
framework has allowed our practices to embrace
technology to continue to engage clients and deliver
advice services.
Madison has seen over 90% of our
Adviser community pass the
Financial Adviser Exam.”
12
MADISON
Craig Muchamore
From our
Community
This can range from the completion of all of the
administration paperwork that is required, through
to managing tax, super and centrelink strategies,
managing portfolios, and aiming to deliver returns
that are specifically targeted to each individual
client’s needs.
Where do you see your business focussing
over the next three years?
Don Sampson (Principal and Co-founder) and I chose
to partner with a successful and growing accountancy
business here in Adelaide when we established our
business. We see our business continuing to grow
and provide support to many more people.
We know that there are a lot of clients needing support
following the exit of the banks from personalised
advice and the lack of quality alternatives here in
Adelaide, so we are focussed on maintaining our
high standards of value, quality and compliance to
meet these needs.
We will manage our growth in line with our core
philosophies of maintaining a work-life balance and
treating our clients with the upmost respect and
personalisation.
Craig is a Principal and Co-founder of i2
Wealth Financial Planning and has been part
of our Madison community since 2020. He
is also a member of the Madison Adviser
Council. Craig shares his experiences as an
Adviser below.
Why do you believe in financial advice?
It’s fair to say that the advice industry “chose me”
rather than I choosing the industry. My Dad &
Mum ran a small financial planning business in my
childhood town of Mount Gambier and through
this (and welcoming clients to our kitchen table for
meetings), I learnt of the profound impact and value
that Advisers could provide to their clients.
Following my move to Adelaide for University, I
have chosen to remain in this industry, which is
rapidly evolving to a profession with the de-linking
of product sales to advice, and the additional
protections provided to consumers through the
heavy load of compliance Advisers are now working
under.
I believe that professional and personalised financial
advice has the ability to drastically change a client’s
relationship with money and provide great comfort
that they can achieve their financial objectives.
In your opinion, what are the key areas of
advice and service your clients value?
Typically, the main value we provide our clients is
the peace of mind that they are being looked after
and there is someone “in their corner” helping them
manage their money and their finances.
13
“We exist to create value for our clients.”
Private Wealth
Investment management
in uncertain times
Active investing to manage
risk & volatility
A tax effective way to end
the financial year
Family Wealth Transfer
The Outlook for FY22
with John Abernethy
Sharing investing
insights with 560
Private Wealth
clients
Sourcing growth
solutions
Investing in a low interest
rate environment
Investing in the best emerging
market companies
Investing in a balanced
and ethical way
Behavioural finance
and asset allocation
Clime
Direct
Clime
Private
Wealth
Investment
Management
Clime
Capital
Limited
Madison
Financial
Group
Research
Adviser
Distribution
Education
Australia Small and
Medium Companies -
Fund Managers
Top 3 over 3 years
Citywire Selector
31 July 2018 – 31 July 2021
Madison Financial Group
Educating our Adviser community
Professional Development days
Melbourne, Sydney, Brisbane, Adelaide
Attendees – 102
Rating 4/5
Good Governance Summit 2020
Online
Attendees - 101
Rating - 4.1/5
Investment Specialist Forum 2021
Sydney
Attendees – 42
Rating – 4/5
Specialist training webinars
Attendees - 136
Advice Technology
Advice & Governance seminar
Investment Market updates
End of Financial Year review
14
In the media
Expert commentary from Adrian Ezquerro,
Vincent Cook and Jonathan Wilson
220
individual company valuations
Clime
Direct
Clime
Private
Wealth
Investment
Management
Clime
Capital
Limited
Adviser
Distribution
Education
Madison
Financial
Group
Welcome!
Anand Tanna | Senior Accountant
Chris Hansen | Client Solutions Manager
Harry Cordaiy | Business Development Associate
Jason Gapps | National Practice Manager
Jessica Clair | Practice Transition Manager
Madeleine Falkiner | Practice Transition Manager
Research
Megan Thomson | Advice Integration Manager
Nina Bailey | Advice Coach
Troy Poposki | Head of Operations
Viel Gabriel | Financial Accountant
““IInnvveesstt iinn ppeeooppllee,, wwhhoo iinnvveesstt iinn yyoouu””
Promoting from within
Jaime Johns
GM, Madison & Private Wealth
Harry Cordaiy
Associate Analyst
Kerry Thomas
GM, Risk & Compliance
April Kim
EA to CEO & Chairman
Madeleine Falkiner
Associate Analyst
Andrea Theouli
Research and APL Governance Manager
Marie Lee
Marketing & Brand Manager
15
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
16
16
Clime in the community
CLIME IN THE COMMUNITY
The Emerge
Foundation
During both World Wars, Timor-Leste
fought
alongside Australian troops and since then our
countries have a long history of kinship and support
for one another. The Emerge Foundation builds on
this relationship and creates incredible opportunities
for the people of Timor-Leste through their 3
programs - Teaching Scholarship, Barefoot Nursing
and Youth in Sport. This funding provides critical
education and training to the women and children of
Timor-Leste who continue to bring hope amidst the
nation’s devastated past.
At the beginning of the year Annick Donat joined the
committee which works closely with the founders Ian
and Marionne MacRitchie. Clime helped to prepare
for a day of fundraising at the Legends of Sports
Lunch in May. It was fantastic event that brought
together people across industries working towards
a greater cause. We partnered with designer Donna
Forbes, and Aesop, to prepare designer bags and
body care packages which were auctioned. All profits
went towards funding the 3 programs.
Future Generation
Australia
Education
Indigenous
Future Generation Australia supports 10 charities
across the country to help at-risk youth: Act for
Kids, Australian Children’s Music Foundation,
Foundation,
Australian
Debra Australia, Diabetes Kids Fund, Giant Steps,
Lighthouse Foundation, Mirabel Foundation, Raise
Foundation and Youth Off The Streets. The funds
raised for these charities help to the break the cycle
of disadvantage,
improve social wellbeing and
community engagement among the young people
across the country.
Clime became a fund manager with Future Generation
Australia in May 2016. We are part of the $4.8 million
invested by Future Generations Australia in 2020
in charities which focus on supporting vulnerable
young Australians.
17
Report from the Board
18
18
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 2021.
The comparison with
the prior year needs
consideration of the impact of the acquisition of all
of the issued share capital of each of the Madison
Entities.
Acquisition of Madison Entities was completed on
26 June 2020 with the Group acquiring 100% equity
interest. The results of Madison Entities have been
included in the Group consolidation from acquisition,
whereas the previous reporting period includes the
results of Madison Entities from 26 June 2020. To that
extent, the numbers are not strictly comparable.
Key highlights
For FY21, the Group recorded a net profit before
tax of $3,109,254 compared with $534,654 in FY20.
Net profit after tax attributable to members was
$2,277,575 for FY21 compared with $397,428 in FY20.
Basic earnings per share for the year was 3.5 cents
per share compared to 0.7 cents per share as at 30
June 2020.
Group revenue increased by 32% from $11,952,222
in FY20 to $15,749,533 in FY21.
Gross Funds under Management (FUM)
Clime Individually Managed Accounts
Listed Investment Company (Clime Capital Limited - ASX: CAM)
Managed Funds and Mandates
Separately Managed Accounts
Sub-Total Funds Under Management
Funds Under Management and Advice - WealthPortal
Funds Under Advice - other investment platforms
Insurance Premiums Under Advice
Sub-Total Funds and Insurance Premiums Under Advice
TOTAL FUM&A
The Group derived performance fees during the year
of $2,285,283 (FY20: $2,347,871).
Madison Entities contributed $3,591,472 revenue to
the Group for the 12 months ending 30 June 2021.
The Group’s Gross Funds Under Management and
Advice (FUM&A) was $5.1 billion as at 30 June 2021
compared to $4.6 billion as at 30 June 2020.
Direct investment income comprises of dividends,
trust distributions, interest income, realised gains
and unrealised gains for a mark to market of our
investments. For the year ended 30 June 2021 this
represented $317,558 (FY20: $336,670) of dividend
and distribution income and $1,100,971 (FY20: loss
of $1,156,990) mark to market gains of financial
assets, mainly on account of the Group’s holdings in
Clime Capital Limited.
Depreciation and amortisation expense increased
from $725,149 in FY20 to $1,130,321 in FY21. The
increase was mainly on account of higher amortisation
on right of use assets due to moving to a larger office
space in Sydney following the acquisition of Madison
Entities.
$12,928,852
Administration
(compared to $9,813,044 in FY20) mainly on account
of additional head count and operating expenses.
expenses
were
30 June 2021
($ millions)
30 June 2020
($ millions)
556
163
363
98
1,180
833
3,057
45
3,935
5,115
471
120
308
83
982
749
2,795
74
3,618
4,600
19
Summary of total equity
The total equity at 30 June comprised the following:
30 JUNE 2021
($)
30 JUNE 2020
($)
Cash and cash equivalents
6,078,777
6,276,531
Other financial asset at amortised cost
289,334
230,639
Trade and other receivables less payables
(826,024)
(2,799,759)
Listed investment company - Clime Capital Limited
5,649,076
4,770,017
Unlisted investments - managed funds
21,596
945,387
Other tangible assets less liabilities
(2,153,961)
(1,567,930)
Net tangible assets
9,058,798
7,854,885
Intangible and right-of-use assets
13,709,057
13,621,707
Deferred tax assets - net
308,545
590,139
Total equity
23,076,400
22,066,731
No. of ordinary shares on issue
64,708,505
64,657,505
Equity per share
35.7 cents
34.1 cents
Net tangible assets per share
14.0 cents
12.1 cents
20
20
Cashflow
Outlook for 2022 Financial Year
Operating cash flow (pre-impact of financial asset
transactions) was positive $0.4 million ($4.3 million in
FY20). This was primarily a function of the following:
• An increase in cash receipts from operating
activities of $0.7 million;
• An increase in cash payments on operating
activities of $4.7 million;
• Government grants received of $0.5 million; and
• An increase in tax payments by $0.3 million.
The Group generated net cash of $1.1 million from
disposal of short-term financial assets in FY21
compared to $1.0 million outflow from purchase of
short-term financial assets in FY20.
Directors and management expect FY22 to be a
year of further growth resulting from delivery of
Clime’s strategy. The Group’s integrated service
offering encompasses investor education, advice
and investment solutions for self-directed, retail and
wholesale clients.
We also anticipate continued expansion during FY22
via growing funds under management and advice;
expanding the retail and wholesale advice footprint
of the Group through appointing Financial Advisers
who share our values of Integrity, Transparency,
Conviction and Progress; growing
investment
services provided to third-party licensed Financial
Advisers; and seeking above benchmark investment
returns across all portfolios.
The net cash inflow from operating activities was
$1.5 million, a decrease of $1.8 million in comparison
with the previous financial year.
On behalf of the Board
In FY21, net cash inflow from investing activities
was $0.1 million mainly on account of receipt of
$0.3 million refund arising from working capital
adjustment following the completion of Madison
Entities acquisition.
Net cash outflow from financing activities in FY21
was $1.8 million mainly due to dividend payment of
$1.3 million.
John Abernethy
Chairman
Brett Spork
Independent Director
21
21
The
Directors
The Directors of Clime Investment
Management Limited submit
herewith the financial report of
Clime Investment Management
Limited for the financial year ended
30 June 2021. To comply with the
provisions of the Corporations
Act 2001, the Directors report as
follows:
Directors
The names and particulars of the
Directors of the Company during or
since the end of the financial year
are:
J Abernethy
Non-Executive Chairman
B Spork
(Appointed 23 October 2020)
Independent Director
P Beaumont
(Appointed 19 October 2020)
Independent Director
D McLay
(Resigned 1 October 2020)
Non-Executive Chairman
A Chant
(Resigned 19 October 2020)
Independent Director
N Schafer
(Ceased 6 August 2021)
Independent Director
Mr. John Abernethy BCom (Econ), LL.B
Chairman
Mr. Brett Spork BBA
Independent Director
Experience and expertise
Experience and expertise
Mr. Abernethy was appointed Executive
Director in 1994. Mr. Abernethy has over
35 years’ funds management experience
in Australia and was previously General
Manager Investments of the NRMA.
Mr. Abernethy 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 25 years.
Mr. Spork was appointed Non-
Executive Director of the Company in
October 2020. Mr. Spork has extensive
experience in the Funds Management,
Banking and Financial Services sectors.
Mr. Spork’s previous roles include CEO
of B.T.I.G., CEO of E*Trade Australia and
Executive Director with Macquarie Bank.
Mr. Spork holds a Bachelor of Business
from the Queensland University of
Technology.
Directorships of other listed companies
Directorships of other listed companies
Mr. Abernethy is a Director of Clime
Capital Limited and WAM Research
Limited.
Mr. Spork is a Director of PM Capital
Global Opportunities Fund Limited and
PM Asian Opportunities Limited.
Former Directorships in last 3 years
Former Directorships in last 3 years
Watermark Market Neutral Fund
Limited, Watermark Global Limited,
Australian Leaders Fund Limited and
CBG Capital Limited.
Special responsibilities
Member of Compliance & Risk
Committee
Interests in shares and options
4,430,404 ordinary shares
Clime Capital Limited
Special responsibilities
Chairman of Remuneration Committee
Member of Compliance & Risk
Committee
Member of Audit Committee
Interests in shares and options
35,000 ordinary shares
22
Mr. Peter Beaumont BSc(Chem), MBA
Independent Director
Mr. Biju Vikraman BCom, ACA, AGIA, ACIS
Company Secretary
Remuneration of key management
personnel
Information about the remuneration
of key management personnel is set
out in the Remuneration report section
of this Directors’ report. The term
‘key management personnel’ refers to
those persons having authority and
responsibility for planning, directing
and controlling the activities of the
consolidated entity (the Company),
directly or indirectly, including any
Director (whether executive or
otherwise) of the Group.
Experience and expertise
Experience and expertise
Mr. Vikraman was appointed 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.
Mr. Beaumont was appointed as a
Non-Executive Independent Director
of the Company in October 2020. Mr.
Beaumont has extensive experience
in financial markets, public-private
partnerships and consumer fintech
lending. Mr. Beaumont holds a Bachelor
of Science (Hons 1) from the University
of Sydney and an MBA from the
MIT-Sloan School of Management,
Cambridge MA.
Directorships of other listed companies
Mr. Beaumont is currently the Chief
Commercial Officer with Wisr Limited
and a Director of related companies.
Former Directorships in last 3 years
None
Special responsibilities
Chairman of Audit Committee
Chairman of Compliance & Risk
Committee
Member of Remuneration Committee
Interests in shares and options
None
23
Mr. Allyn Chant BCom, CA, FFin
Independent Director
(Resigned 19 October 2020)
Mr. Neil Schafer BAppEcon
Independent Director
(Ceased 6 August 2021)
Mr. Donald McLay BCom, CA, FFin, ACIS, AGIA
Non-Executive Chairman
(Resigned 1 October 2020)
Experience and expertise
Experience and expertise
Experience and expertise
Mr. Chant was appointed as a Director
in 2014. Mr. Chant holds a Bachelor of
Commerce 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.
Directorships of other listed companies
None
Former directorships in last 3 years
None
Special responsibilities
Chairman of Audit Committee
Member of Remuneration Committee
Interests in shares and options
Not applicable
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 Honours Degree in Applied
Economics from the University of New
England.
Directorships of other listed companies
Mr. Schafer is a Director of Imperial
Pacific Limited and London City Equities
Limited.
Former Directorships in last 3 years
None
Mr. 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.
Mr. McLay holds a Bachelor of
Commerce, 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).
Special responsibilities
Directorships of other listed companies
Chairman of Audit Committee
Member of Remuneration Committee
Member of Compliance & Risk
Committee
Interests in shares and options
Not applicable
Mr. McLay is a Director of Credit Corp
Group Limited (ASX: CCP).
Former Directorships in last 3 years
None
Special responsibilities
Member of Remuneration Committee
Member of Audit Committee
Interests in shares and options
Not applicable
24
Directors’ meetings
The following table sets out the number of Directors’ meeting (including meetings of committees of Directors)
held during the financial year and the number of meetings attended by each Director (while they were a Director
or committee member).
DIRECTORS
BOARD OF DIRECTORS
AUDIT COMMITTEE
REMUNERATION COMMITEE
Held
Attended
Held
Attended
Held
Attended
Mr. John Abernethy
Mr. Brett Spork
Mr. Peter Beaumont
Mr. Neil Schafer
Mr. Donald McLay
Mr. Allyn Chant
15
9
9
15
5
6
15
9
9
15
4
5
-
1
1
2
1
1
-
1
1
2
1
1
-
2
2
3
1
1
-
2
2
3
1
1
d. Acting as investment managers for the managed
funds Clime Australian Income Fund, Clime Smaller
Companies Fund, Clime International Fund, Clime
Fixed Interest Fund and Clime All Cap Australian
Equities Fund (Wholesale) through wholly owned
subsidiaries Clime Asset Management Pty Limited
and CBG Asset Management Limited.
e. Providing licensee services to Financial Advisers
licensed through Madison Financial Group Pty
Limited.
f. Dealing in various financial products to retail
and wholesale
investors through AdviceNet
Pty Limited, WealthPortal Pty Ltd and ProActive
Portfolios Pty Ltd.
g. Providing an online equity research and valuation
tool for Australian and International 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).
Rotation and election of
Directors
Mr. Spork and Mr. Beaumont were appointed in 2020
and being eligible, offer themselves for re-election at
the next Annual General Meeting in accordance with
the Company’s Constitution.
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) granted Australian Financial Services Licences
(AFSLs) in the funds management and financial
planning 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) through wholly
owned subsidiary Clime Asset Management Pty
Limited.
25
Review of operations
Operating result
In accordance with the relief provided by Legislative
issued by the ASIC, the
Instrument 2016/188
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 18.
The consolidated net profit after providing for tax
amounted to $2,277,575 (2020: $397,428).
Dividends paid or recommended
Dividends paid or recommended during the financial
year are as follows:
1 cent per share (2020: 1.5 cents per share) franked to 100% at 27.5% (2020: franked to
100% at 27.5%) corporate income tax rate, final ordinary dividend paid during the year
on 2 October 2020 in respect of the prior financial year
2021
2020
657,075
841,061
1 cent per share (2020: 1 cent per share) franked to 100% at 26% (2020: franked to 100%
at 27.5%) corporate income tax rate, interim ordinary dividend paid during the year on
12 March 2021 in respect of the current financial year
650,585
559,249
Total dividends paid
1,307,660
1,400,310
Changes in state of affairs
Subsequent events
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.
A final fully franked dividend for the year ended 30
June 2021 of 1.5 cent per share, totaling $997,628,
has been declared by the Directors subsequent to
year end. This provision has not been reflected in the
financial statements.
During the year, the Board resolved to replace the
Equity Incentive Plan (EIP) approved at the 2019
AGM held on 14 November 2019 with the Clime
Investment Management Limited Employee Incentive
Scheme (EIS) approved by the shareholders in 2007.
There were no grants under the EIP.
There were no other significant changes in the state
of affairs of the Group during the financial year.
Other than the above, there has not been any matter
or circumstance occurring subsequent to the end
of the financial year that has significantly affected
or may significantly affect, the operations of the
consolidated entity, the results of those operations,
or the state of affairs of the consolidated entity in
future financial years.
26
Future developments
The Company will continue to pursue activities of:
•
Primarily investing in equities listed on the
Australian and international securities exchanges;
• Growing the Madison Adviser Community; and
Providing advice to wholesale and retail 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
industry conditions.
Shares under option
In addition, a range of external factors including
economic growth rates, COVID19 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 the Company 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
CIW Employee Incentive Scheme
25 October 2013
3 January 2022
CIW Employee Incentive Scheme
11 September 2015
3 January 2022
CIW Employee Incentive Scheme
20 July 2016
3 January 2022
CIW Employee Incentive Scheme
30 April 2021
29 April 2024
CIW Employee Incentive Scheme
23 June 2021
22 June 2024
$0.829
$0.700
$0.630
$0.575
$0.573
Total
100,000
150,000
100,000
400,000
1,050,000
1,800,000
The holders of these options do not have the right, by virtue of the option, to participate in any other share issue
of the Company or of any other body corporate or registered scheme.
Rounding off amounts
Environmental issues
The Company is a company of the kind referred to in
ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, dated 24 March 2016,
and in accordance with that Corporations Instrument,
amounts in the Directors’ report and in the financial
statements are rounded to the nearest dollar or in
certain cases to the nearest one thousand dollars,
unless otherwise indicated.
The Group’s operations are minimally impacted by
any significant law of the Commonwealth or of a
State or Territory relating to the environment.
27
Risk and compliance control
statement
Insurance for Directors and
Officers
During the financial year, the Group paid a premium
in respect of a contract 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. The contract of insurance
prohibits disclosure of the nature of the liability and
the amount of premium.
No indemnity provided to auditors
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 auditor of the Company or of any of its controlled
entities against a liability incurred by an auditor.
Exchange
Under Australian Securities
(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 Group’s
objectives. These internal control processes cover
financial, operational and compliance risks. The
Group’s corporate governance practices are outlined
in further detail in the Corporate Governance
Statement section on the 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 ASX Principles and
Recommendations to the extent disclosed in the
Corporate Governance Statement.
28
Remuneration Report
Audited
29
29
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 (Company) and its other key
management personnel for the financial year ended
30 June 2021.
The term ‘key management personnel’ refers to
those persons having authority and responsibility
for planning, directing and controlling the activities
of the Group, directly or indirectly, including any
director (whether executive or otherwise) of the
Group. The prescribed details for each person
covered by this report are detailed below under the
following headings:
A. Key management personnel
B. Remuneration policy
C. Remuneration of key management personnel
D. Key terms of employment contract
E. Share-based compensation
F. Related party transactions
G. Additional information
A. Directors and other key
management personnel
The Directors and other key management personnel
of the Group during or since the end of the financial
year were:
Non-Executive Directors
Position
John Abernethy
Non-Executive Chairman
Donald McLay
(resigned 1 October 2020)
Neil Schafer
(ceased 6 August 2021)
Non-Executive Chairman
Independent Director
Brett Spork
(appointed 23 October 2020)
Independent Director
Peter Beaumont
(appointed 19 October 2020)
Independent Director
Allyn Chant
(resigned 19 October 2020)
Independent Director
Executive Directors &
Officers
Annick Donat
(appointed 1 May 2021)
Neil Schafer
(from 16 November 2020 to
16 April 2021)
Brett Spork
(from 16 November 2020 to
16 April 2021)
Rod Bristow
(resigned 10 November 2020)
Position
Chief Executive Officer
Joint Acting
Chief Executive Officer
Joint Acting
Chief Executive Officer
Chief Executive Officer
There were no additional persons who were
considered key management personnel under the
Corporations Act 2001.
B. Principles used to determine
the nature and amount of
remuneration
Directors and other key management personnel
Remuneration packages are set at levels that are
intended to attract and retain 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. Executives may be given
an incentive via a performance based bonus (as
determined by the Remuneration Committee).
Equity based remuneration can be made via shares
issued under the CIW Employee Share Plan (ESP) or
via the options issued to the executives under the
CIW Employee Incentive Scheme (EIS).
The Remuneration Committee
responsible
for making recommendations to the Board on
remuneration policies and packages applicable to
the Board members and senior executives of the
Group.
is
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.
30
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 Board within the maximum
amount approved by shareholders periodically.
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 ESP and EIS.
Directors’ fees
The current base remuneration was last reviewed
with effect from 1 January 2016. The Independent
Directors’ fees are inclusive of committee fees.
Independent Directors’ fees are determined within
an Independent Directors’ base remuneration pool,
which is periodically recommended for approval
by shareholders. The Independent Directors’ base
remuneration pool currently stands at $260,000 per
annum.
Executive Officers’ remuneration
The Executive Officers’ remuneration framework has
four components:
• base pay and benefits;
•
•
short-term performance incentives;
long-term incentives through participation in the
Company’s EIS and ESP; and
• other remuneration such as superannuation.
Executives are offered a base pay that comprises the
fixed component of pay and rewards. Base pay for
senior executives is reviewed annually to ensure the
Executive’s pay is competitive with the market.
Short-Term Incentives (STI)
Executive Officers and senior management have the
ability to earn STIs depending on the accountabilities
of respective roles and their impact on the Company’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 (KPIs). Such KPIs will generally
include measures relating to both the Group and the
relevant individual, and may include financial, non-
financial, human resources, client service, strategy,
risk and compliance measures where appropriate.
The measures are chosen such that they directly
align the individual’s reward to the KPIs of the Group
and to its strategy and performance.
Long-Term Incentives (LTI)
CIW Employee Incentive Scheme (EIS)
Information on the Company’s Employee Incentive
Scheme is set out in Note 25.
Each year, the Remuneration Committee considers
the appropriate targets and KPIs indicators to link
the STI and LTI plans and the level of payout if targets
are met. This includes setting any maximum payout
under the STI and LTI 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.
CIW Employee Share Plan (ESP)
The combination of these comprises the Executive
Officers’ total remuneration.
Information on the Company’s Employee Share Plan
is set out in Note 21(f).
Base pay
Structured as a total remuneration package which
may be delivered as a combination of cash and
prescribed non-financial benefits at the Board’s
discretion.
Shares under the Employee Share Plan are issued
to all CIW employees (excluding Directors). The
participants under the ESP are entitled to dividends
and are subject to a 3 year lock in period in accordance
with the plan rules.
31
C. Remuneration of key management personnel
Details of the remuneration of key management personnel for the years ended 30 June 2021 and 30 June 2020
are set out in the following tables. STIs are dependent on the satisfaction of performance conditions as set
out in the section headed Short-Term Incentives (STI) on page 31. EIS and ESP do not vest unless the relevant
vesting hurdles are achieved. All other elements of remuneration are not directly related to performance.
2021
SHORT-TERM EMPLOYEE BENEFITS
POST-
EMPLOYMENT
BENEFITS
NAME
CASH SALARY
AND FEES
($)
SHORT-
TERM
INCENTIVES
($)
TERMINATION
BENEFITS
($)
SUPERANNUATION
($)
SHARE-
BASED
PAYMENTS
OPTIONS (1)
& EMPLOYEE
SHARE PLAN
($)
Non-Executive Directors
John Abernethy*
227,711
Brett Spork
Peter Beaumont
Neil Schafer
Donald McLay
Allyn Chant
Executive Officers
Annick Donat***
Brett Spork**
Neil Schafer**
Rod Bristow
Total
32,147
32,877
60,112
17,769
14,794
51,747
55,748
57,018
185,610
735,533
-
-
-
-
-
-
75,000
-
-
146,740
221,740
-
-
-
-
-
-
-
-
-
152,453
152,453
4,338
3,053
3,123
2,680
-
1,405
3,253
5,547
5,547
17,855
46,801
-
-
-
-
-
-
2,407
-
-
6,422
8,829
*Includes $50,000 in his capacity as Director and $182,049 paid as consultancy fees.
**Joint CEO from 16 November 2020 to 16 April 2021.
***Annick Donat commenced her position as CEO on 1 May 2021.
TOTAL (2)
($)
232,049
35,200
36,000
62,792
17,769
16,199
132,407
61,295
62,565
509,080
1,165,356
2020
SHORT-TERM EMPLOYEE BENEFITS
POST-
EMPLOYMENT
BENEFITS
SHARE-
BASED
PAYMENTS
NAME
CASH SALARY
AND FEES
($)
SHORT-
TERM
INCENTIVES
($)
TERMINATION
BENEFITS
($)
SUPERANNUATION
($)
OPTIONS
(1) ($)
TOTAL
($)
Donald McLay
67,667
John Abernethy*
242,292
Neil Schafer
Allyn Chant
Executive Officers
Rod Bristow
Total
51,300
46,072
382,040
789,371
-
685
-
-
150,685
151,370
-
-
-
-
-
-
-
4,259
-
4,362
21,003
29,624
-
67,667
7,238
254,474
-
-
19, 267
26,505
51,300
50,434
572,995
996,870
* Includes $49,476 in his capacity as Director and $197,760 paid as consultancy fees.
(1) The value of the options granted to key management personnel as part of their remuneration is calculated at the grant date using a binomial pricing
model. The amounts disclosed as part of remuneration for the financial year have been determined by allocating the grant date value on a straight-line basis
over the period from grant date to vesting date.
(2) The STI has been included in the above tables on an accrual basis and have been recorded at 100 per cent of the maximum potential payment. Individual
performance reviews to be conducted after the finalisation of the 2021 audited consolidated financial statements will determine the final entitlement.
32
The relative percentage of those elements of remuneration of key management personnel that are linked to
performances are as follows:
FIXED REMUNERATION
REMUNERATION LINKED TO PERFORMANCE
NAME
Non-Executive Directors
John Abernethy
Brett Spork
Peter Beaumont
Neil Schafer
Donald McLay
Allyn Chant
Executive Officers
Annick Donat
Rod Bristow
2021
100%
100%
100%
100%
100%
100%
43.7%
71.2%
Short-Term Incentives
2020
99.7%
-
-
100%
100%
100%
-
73.7%
2021
-
-
-
-
-
-
56.3%
28.8%
2020
0.3%
-
-
-
-
-
-
26.3%
$221,740 (2020: $151,370) STIs were paid/payable to key management personnel in respect of the year ended
30 June 2021. The STIs were paid at the discretion of the Remuneration Committee based on the Company
exceeding its targets for the financial year.
The STIs therefore vested 100% during the financial year ended 30 June 2021.
D. Service Agreements
Remuneration and other terms of employment for
Non-Independent Directors and certain Executive
Officers are
in service agreements
with annual adjustments (once agreed by the
Remuneration Committee) notified in writing.
formalised
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
• 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
• $180,000 per annum plus GST as consultancy fee
for a three-year mutually agreeable renewable
contract for delivering agreed outcomes
• Continued Directorship of the Company
Mr. Brett Spork
Non-Independent Director
Joint Acting CEO 16 November 2020 – 16 April 2021
• Term of fixed term employment contract – 5
months, commencing 16 November 2020
• Estimated rate of effort – 3 days per week
• $35,200 per annum as Director’s fees
• $11,000 per month plus superannuation
• Termination on appointment of new CEO or the
expiration of fixed term contract
Mr. Neil Schafer
Non-Independent Director
Joint Acting CEO 16 November 2020 – 16 April 2021
• Term of fixed term employment contract – 5
months, commencing 16 November 2020
• Estimated rate of effort – 3 days per week
• $62,792 per annum as Director’s fees
• $11,000 per month plus superannuation
• Termination on appointment of new CEO or the
expiration of fixed term contract
33
Ms. Annick Donat
Chief Executive Officer
Mr. Rod Bristow
Chief Executive Officer
(Resigned 10 November 2020)
• Base salary - $357,500 per annum (inclusive of
superannuation) subject to yearly review
• Immediate issue of 400,000 Shares under
Employee Incentive Scheme (EIS)
• STI – entitled to receive short term incentives
in the form of annual cash bonus based on
achieving yearly targets including annual EBTIDA,
operating cash profit, and operational targets as
approved by the Board
• Maximum STI upon commencement is $200,000
per annum
• Notice period for termination by employee or
by Company – two months’ written notice in
the initial 12 months of employment and three
months’ written notice thereafter
E. Share-based compensation
• Base salary - $403,043 per annum (inclusive of
superannuation) subject to yearly review
• STI and LTI – to be negotiated subject to
satisfactory achievement of key performance
indicators set by the Board
• Notice period for termination by employee –
three months
• Notice period for termination by Company –
three months
Shares provided on exercise of remuneration
options
Loans to Directors and other key management
personnel
No ordinary shares in the Company were provided as
a result of the exercise of options via the EIS during
the year (2020: 200,000).
$230,000 (2020: $262,500) loan to executive officers
in relation to the EIS share issued under the Employee
Incentive Scheme (refer Note 25(a)).
Shareholdings of Directors and other key
management personnel
The numbers of shares (including shares issued under
EIS) in the Company held during the year by each key
management personnel of the consolidated entity,
including their related parties, are set out below.
There were no other loans made to Directors of the
Company or other key management personnel of
the consolidated entity, including their personally
related entities, at any stage during the financial year.
As described in Note 25(a), notional non-recourse
loans exist in relation to “in substance” options issued
under the Employee Incentive Scheme.
NAME
BALANCE AT 1 JULY 2020
GRANTED AS
COMPENSATION
OTHER CHANGES DURING
THE YEAR
AT BALANCE DATE
Non-Executive Directors
John Abernethy
4,293,850
Brett Spork
Peter Beaumont
Neil Schafer
Donald McLay
Allyn Chant
Executive Officers
-
-
548,007
7,470,576
50,000
-
-
-
-
-
-
136,554
35,000
-
76,051
(7,470,576)
(50,000)
Annick Donat**
-
400,000*
1,500
Rod Bristow
610,000
-
(610,000)
4,430,404
35,000
-
624,058
-
-
401,500
-
*400,000 shares issued during the year under the Employee Incentive Scheme (EIS). Fair value of options at the grant date was $0.108, exercise
price is $0.575 per share. The vesting date is 29 April 2024. Shares issued under EIS are subject to certain restrictions including continued
employment with the company and share transfer locks. Upon the expiry of the loan terms and the repayment of the outstanding loan balance
the shares become unconditional.
**Annick Donat commenced her position as CEO on 1 May 2021.
34
F. Related party transactions
1. Clime Capital Limited
2. Clime Fixed Interest Fund
Clime Asset Management Pty Limited during
the year received $102,339 (2020: $66,239) as
remuneration for managing the investment portfolios
and acting as trustee of Clime Fixed Interest Fund.
3. Clime All Cap Australian Equities Fund
(Wholesale)
CBG Asset Management Limited, during the year
received $931,485 (2020: $932,736) as remuneration
for managing the investment portfolios and acting
as trustee of Clime All Cap Australian Equities Fund
(Wholesale).
i. Mr. John Abernethy is a Director of Clime Capital
Limited. The Group received $162,867 (2020:
$90,233) 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 4.38%
(2020: 5.29%) of the fully paid ordinary shares of
Clime Capital Limited as at 30 June 2021. Clime
Investment Management Limited through Clime
Asset Management Pty Limited (a wholly owned
subsidiary) has the indirect power to dispose 2.94%
(2020: 3.55%) of Clime Capital Limited’s shares
held by the Investment Manager’s Individually
Managed Accounts as at 30 June 2021. Clime
Capital Limited received $533,520 (ex-GST) from
Clime Asset Management Pty Limited to obtain
the investment management agreement of CBG
Capital Limited’s portfolio that was previously
managed by CBG Asset Management Limited.
ii. Clime Asset Management Pty Limited, received
$2,213,502 (2020: $777,887) as remuneration for
managing Clime Capital Limited’s investment
portfolio in full.
iii. All dividends paid and payable by Clime Capital
Limited to its Directors and their related entities
are on the same basis as to other shareholders.
The following balances prior to group elimination were outstanding at the end of the reporting period:
30 JUNE 2021
($)
30 JUNE 2020
($)
AMOUNT OWED BY RELATED PARTIES
Clime Capital Limited
Clime All Cap Australian Equities Fund (Wholesale)
Subsidiaries of Clime Investment Management Limited
1,232,601
305,208
6,818,749
84,039
-
4,377,001
AMOUNT OWED TO RELATED PARTIES
Clime Capital Limited
Clime All Cap Australian Equities Fund (Wholesale)
-
-
-
-
Subsidiaries of Clime Investment Management Limited
20,477,782
19,671,718
35
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 2021:
30 JUNE
2021
$
30 JUNE
2020
$
30 JUNE
2019
$
30 JUNE
2018
$
30 JUNE
2017
$
TOTAL
Revenue
15,749,533
11,952,222
12,447,639
10,864,250
8,672,692
Net profit before tax and
amortisation
3,757,012
983,622
2,542,907
1,937,078
1,239,961
Net profit before tax
3,109,254
534,654
2,096,147
1,367,296
766,739
Net profit after tax
2,277,575
397,428
1,461,444
1,064,259
2,561,130
-
-
-
-
Cash dividends paid
1,307,660
1,400,310
1,274,439
1,699,113
2,263,053
$7,944,575
1.5cps
7.0cps
15cps
-
-
-
-
Interim dividend -
Fully franked 1
Interim dividend -
Partially franked 2
Final dividend 1,3
Capital return 4
1.0cps
1.0cps
0.75cps
1.5cps
-
4.25cps
-
-
-
1.5cps
1.0cps
1.5cps
1.5cps
1.5cps
1.5cps
Share price at start of year
Share price at end of year
Basic EPS
Diluted EPS
0.50
0.61
3.5cps
3.4cps
-
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
0.65*
0.50
5.2cps
5.1cps
1 100% franked dividends (franked to 100% at 26% for FY2021 and 27.5% up to FY2020 (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 CIW ordinary share held worth 15cps
* Price pre-Jasco demerger
Furthermore, during the five years to 30 June 2021, Clime Investment Management Limited bought back
1,346,198 (2020: 1,519,939) fully paid ordinary shares for total consideration of $655,922 (2020: $768,023).
These shares were repurchased at the prevailing market prices on the dates of the respective transactions in
accordance with the 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;
• 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
36
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 38.
Signed in accordance with a resolution of the
Directors.
John Abernethy
Chairman
Brett Spork
Independent Director
Sydney, 24 August 2021
Non-audit services
Details of amounts paid or payable to the auditor
for non-audit services provided during the year by
the auditor are outlined in Note 23 to the financial
statements.
The Directors are satisfied that the provision of
non-audit services, during the year, by the auditor
(or by another person or firm on the auditor’s
behalf) is compatible with the general standard
of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services as
disclosed in Note 23 to the financial statements do
not compromise the external auditor’s independence,
based on the advice received from the Audit
Committee, for the following reasons:
• All non-audit services have been reviewed and
approved to ensure they do not impact the
integrity 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)
issued by the Accounting Professional & Ethical
Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management
or decision-making capacity for the company,
acting as advocate for the company or jointly
sharing economic risks and rewards.
37
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 2021, 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
24 August 2021
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
38
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
40
41
42
43
44
39
39
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue
Net realised and unrealised gains on financial assets at fair value through
profit or loss
Government subsidy
Depreciation and amortisation expense
Administrative expenses
Finance costs
Profit before income tax
Income tax expense attributable to operating profit
Profit for the year
Other comprehensive income, net of income tax
Notes
2021
$
2020
$
5
15,749,533
11,952,222
6
15
8(a)
1,100,971
(1,156,990)
435,682
355,500
(1,130,321)
(725,149)
(12,928,852)
(9,813,044)
(117,759)
3,109,254
(831,679)
2,277,575
-
(77,885)
534,654
(137,226)
397,428
-
Total comprehensive income for the year
2,277,575
397,428
Profit attributable to members of Clime Investment Management Limited
2,277,575
397,428
Total comprehensive income attributable to members of Clime
Investment Management Limited
2,277,575
397,428
Earnings per share
Basic - cents per share
Diluted - cents per share
24(a)
24(b)
3.5
3.4
0.7
0.7
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying Notes.
40
Consolidated statement of financial position
As at 30 June 2021
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
Notes
7(a)
31(c)
10
11
12
Other financial asset at amortised cost
31(c)
Property, plant and equipment
Right-of-use assets
Deferred tax assets – net
Contract costs
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
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained earnings
Total Equity
14
15
16
17
18
19
15
20
15
20
21
22(a)
22(b)
2021
$
2020
$
6,078,777
-
3,937,543
475,466
5,670,672
16,162,458
289,334
163,990
1,717,778
308,545
477,360
11,513,919
14,470,926
30,633,384
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
4,564,298
3,934,503
377,884
199,273
244,233
526,792
218,973
216,390
381,844
474,191
5,912,480
5,225,901
1,436,017
208,487
1,644,504
7,556,984
23,076,400
21,539,410
294,951
1,242,039
885,251
125,038
1,010,289
6,236,190
22,066,731
21,508,300
286,307
272,124
23,076,400
22,066,731
The above consolidated statement of financial position should be read in conjunction with the accompanying Notes.
41
Consolidated statement of changes in equity
For the year ended 30 June 2021
Consolidated
Notes
Issued
capital
$
Share-based
payments
reserve
$
Retained
earnings
$
Total
$
Balance as at 1 July 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
32
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
Balance as at 30 June 2020
21(d)
22(a)
22(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)
21,508,300
286,307
272,124
22,066,731
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 under CIW Employee Share Plan
21(b)
31,110
• Recognition of share-based payments
• Dividends paid or provided for
Balance as at 30 June 2021
22(a)
9(a)
-
-
-
-
-
-
8,644
2,277,575
2,277,575
-
-
2,277,575
2,277,575
-
-
31,110
8,644
-
(1,307,660)
(1,307,660)
21,539,410
294,951
1,242,039
23,076,400
The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.
42
Consolidated statement of cash flows
For the year ended 30 June 2021
Notes
2021
$
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
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for financial assets at fair value through profit or loss
16,799,058
16,019,377
(16,737,127)
(12,019,712)
299,207
549,183
14,550
(567,203)
357,668
1,775,507
(626,000)
1,149,507
307,682
242,000
38,247
(259,725)
4,327,869
758,716
(1,759,880)
(1,001,164)
Net cash provided by operating activities
7(b)
1,507,175
3,326,705
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for other financial asset at amortised cost
Net cash inflow/(outflow) on acquisition of Madison Entities
Payments for property, plant and equipment
Payments for intangible assets
Payment for contract costs
Proceeds on termination of investment management agreement
Net cash used in investing activities
32
14
18(a)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for shares bought back (including transaction costs)
21(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
(58,696)
338,977
(104,919)
(62,815)
(533,520)
533,520
112,547
-
(392,059)
15
(117,759)
-
-
(230,639)
(3,338,738)
(77,431)
(254,042)
-
-
(3,900,850)
(94,039)
(175,963)
(77,885)
4,500,000
(100,661)
Dividends paid to Company’s shareholders
9(a)
(1,307,660)
(1,400,310)
Net cash (used in)/provided by financing activities
(1,817,478)
2,651,142
Net (decrease)/increase in cash and cash equivalents
(197,756)
2,076,997
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Non-cash financing activities
6,276,531
6,078,777
4,199,534
6,276,531
-
250,041
7(a)
7(c)
The above consolidated statement of cash flows should be read in conjunction with the accompanying Notes.
43
Notes to the Financial Statements
For the year ended 30 June 2021
New and revised accounting standards effective
during the reporting period
The Group has considered the implications of new or
amended Accounting Standards which have become
applicable for the current financial reporting period
as set out below:
The Group adopted AASB 16 Leases from 1 July 2019
to Australian
• AASB 2019-1 Amendments
Accounting Standards – References to the
Conceptual Framework
• AASB 2018-6 Amendments
to Australian
Accounting Standards – Definition of a Business
• AASB 2018-7 Amendments
to Australian
Accounting Standards – Definition of Material
• AASB 2019-5 Amendments
to Australian
Accounting Standards – Disclosure of the Effect
of New IFRS Standards Not yet Issued in Australia
to Australian
Accounting Standards – Interest Rate Benchmark
Reform
• AASB 2019-3 Amendments
• AASB 2020-4 Amendments
to Australian
Accounting Standards – Covid – 19 – Rent
Related Concessions
The adoption of these Accounting Standards did not
have any significant impact on the profit or loss or
financial position of the Group.
1. Corporate information
Clime
(the
Investment Management Limited
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
26(a).
The financial statements of Clime
Investment
Management Limited for the year ended 30 June
2021 were authorised for issue in accordance with
a resolution of the Directors on 24 August 2021 and
covers the consolidated entity consisting of Clime
Investment Management Limited 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,
other
requirements of the law.
comply with
and
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.
other
(AASs)
Accounting Standards include Australian Accounting
Standards
authoritative
and
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.
44
(a) Basis of preparation
the
Material accounting policies adopted
preparation of
consolidated financial
statements are presented below and have been
consistently applied unless stated otherwise.
these
in
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.
Critical accounting estimates
The preparation of financial statements in conformity
with Australian Equivalent of International Financial
Reporting Standards requires the use of certain critical
accounting estimates. It also requires management
to exercise its judgment in the process of applying
the Group’s accounting policies. The areas involving
a higher degree of judgment or complexity, or areas
where assumptions and estimates are significant to
the financial statements are disclosed in Note 3.
(b) Principles of consolidation
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.
(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
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.
(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
contingent upon
fees are
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.
45
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.
(iv) Authorised Representative fees
On a bi-monthly basis, Madison Financial Advisers
are billed for AFSL licensing fees in line with the
contract between Madison and the Advisers. The
Group’s obligations under these contracts is to
provide support to Advisers and licensing under the
Madison AFSL to enable them to provide financial
advice. The fees charged to the Adviser are based
on a fee structure outlined in the contract with the
Advisers.
(v) Contract costs
Contract costs represent payments made by the Group
to obtain an Investment Management Agreement.
These costs are amortised on a straight-line basis
over the period of the Investment Management
Agreement as this reflects the period over which the
Investment Management Services will be provided.
(vi) 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
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.
in respect of client subscriptions
(vii) 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.
(viii) Government subsidies
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.
46
(e) Leases
The Group leases its offices in Sydney, Melbourne and
Brisbane. 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.
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 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.
lease payments not
Variable
in the
measurement of lease liabilities are recognised as an
expense when incurred.
included
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.
(f) Business combinations
The purchase method of accounting is used to
account for all acquisitions of assets (including
business combinations) regardless of whether equity
instruments or other assets are acquired. Cost is
measured as the fair value of the assets given, shares
issued, or liabilities incurred or assumed at the date
of exchange. Where equity instruments are issued in
an acquisition, the value of the instruments is their
published market price as at the date of exchange
unless, in rare circumstances, it can be demonstrated
that the published price at the date of exchange is
an unreliable indicator of fair value and that other
evidence and valuation methods provide a more
reliable measure of fair value. Transaction costs
arising on the issue of equity instruments are
recognised directly in equity. Acquisition-related
costs are recognised in profit or loss as incurred.
liabilities assumed
liabilities and
Identifiable assets acquired and
contingent
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.
47
Where settlement of any part of cash consideration
is deferred, the amounts payable in the future is
discounted to its 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).
(h) Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
(i) Trade and other receivables
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance for
expected credit losses and have a repayment terms
between 30 and 90 days.
The Group has applied the simplified approach
to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the
expected credit losses, trade receivables have been
grouped based on due dates and reviewed for
expected credit losses.
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. Since the investments do not have contractual
cash flows attached the appropriate classification is
fair value through profit or loss.
(ii) Recognition/derecognition
The Group recognises financial assets on the date it
becomes party to the contractual agreement (trade
date) and recognises changes in the fair value of the
financial assets from this date.
Investments are derecognised when the right
to receive cash flows from the investments have
expired or have been transferred and the Group has
transferred substantially all of the risks and rewards
of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial
asset at its fair value. Transaction costs of financial
assets carried at fair value through profit or loss are
expensed in the statement of profit or loss.
Subsequent to initial recognition, all financial assets
at fair value through profit or loss are measured at
fair value. Gains and losses arising from changes in
the fair value of ‘financial assets at fair value through
profit or loss’ category are presented in the statement
of profit or loss within ‘net realised and unrealised
gains on financial assets at fair value through profit
or loss’ in the period in which they arise.
(iv) Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount is reported in the statement of financial
position when the Group has a legally enforceable
right to offset the recognised amounts, and there is
an intention to settle on a net basis or realise the
asset and settle the liability simultaneously. As at the
end of the reporting period, there were no financial
assets or liabilities offset or with the right to offset in
the statement of financial position.
48
(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 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.
included
Subsequent costs are
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 of 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.
(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.
For the purpose of impairment testing, goodwill is
allocated to each of the Group’s cash-generating units
(or group of cash-generating units) that is expected
to benefit from the synergies of the combination.
Goodwill acquired in business combinations is not
amortised. Instead, goodwill is tested for impairment
annually, or more frequently if events or changes in
circumstances indicate that it might be impaired and
is carried at cost less accumulated impairment losses.
If the recoverable amount of the cash-generating
unit is less than its carrying amount, the impairment
loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to
the other assets of the unit pro rata based on the
carrying amount of each asset in the unit.
Any impairment loss for the goodwill is recognised
directly in profit or loss in the consolidated statement
of profit or loss and other comprehensive income.
An impairment loss recognised for goodwill is not
reversed in subsequent periods. Gains and losses on
the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
(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.
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).
49
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.
they are
(iii) Investment Management contracts & relationships
Investment Management contracts have a finite
useful life and are carried at cost less accumulated
amortisation and impairment losses. When acquired
in a business combination,
initially
recognised at their fair value at the acquisition date
(which is regarded as their cost). Subsequent to initial
recognition they 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
reviewed for indicators of impairment annually.
licence, customer
(iv) Software licence, customer relationship and
customer list
Software
relationships and
customer lists have a finite useful life and are
carried at cost less accumulated amortisation and
impairment losses. When acquired in a business
combination, they are initially recognized at their fair
value at the acquisition date (which is regarded as
their cost). Subsequent to initial recognition they are
carried at cost less accumulated amortization and
impairment losses. Amortisation is calculated using
the straight-line method to allocate the software
license, customer relationship and customer list over
their useful life of 3 to 15 years. Software license,
customer relationship and customer list are reviewed
for indicators of 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
liabilities
Contract
the consolidated
represent
entity’s obligation to transfer goods or services to a
customer and are recognised when the customerpays
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.
(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 Company 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.
50
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 considers 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 considers 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 ASX.
(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,
considering the risks and uncertainties surrounding
the obligation. When a provision is measured using
the cash flows estimated to settle the present
obligation, its carrying amount is the present value of
those cash flows (where the effect of the time value
of money is material).
(r) Financial liabilities and equity instruments
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with the
substance of the contractual agreement.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Incremental
costs directly attributable to the issue of new shares
or options for the acquisition of a business are not
included in the cost of the acquisition as part of the
purchase consideration.
Repurchase of the Company’s own equity instruments
is recognised and deducted directly in equity. No gain
or loss is recognised in profit or loss on the purchase,
sale, issue or cancellation of the Company’s own
equity instruments.
liabilities,
Financial liabilities are classified as ‘other financial
liabilities’. Other financial
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.
51
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) Presentation currency and rounding of amounts
These financial statements are presented in Australian
Dollars. Australian Dollars are also the functional
currency of all entities in the Group.
(Rounding
The Group is a of a kind referred to in ASIC
Corporations
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.
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
to
reviewed on an ongoing basis. Revisions
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.
(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 consider 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
for receivables and payables which are recognised
inclusive of GST.
ii.
The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of
receivables or payables.
Cash flows are included in the cash flow statement
on a gross basis. The GST component of cash flows
arising from investing and financing activities which
is recoverable from, or payable to, the taxation
authority is classified within operating cash flows.
(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 2021 reporting period and
hence have not been early adopted by the Group.
52
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 and in Note 18.
Carrying value assessment of goodwill, investment
management contracts and client relationships
impairment,
tests annually whether goodwill,
The Group
investment management contracts and client
relationships have suffered any
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.
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).
Revenue from Madison – Principal versus agent
considerations
Revenue from Madison includes revenues collected
for services performed by Authorised Representatives
(as defined in the Corporations Act 2001 (Cth)) of
Madison. Madison is considered to be acting as
agent under the requirements of AASB 15 Revenue
from Contracts with Clients. Accordingly, payments
made to Authorised Representatives are deducted
from the gross revenue to arrive at the reported net
revenue figure as disclosed in Note 5 of the financial
statements.
4. Financial risk management
The Group’s activities expose it to various direct and
indirect financial risks, including market risk, interest
rate risk, credit risk, liquidity risk and fair value risk. Risk
management is carried out by senior management
under policies and strategies approved by the Board,
and Audit Committee. The Group does not enter into
or trade financial instruments, including derivative
financial instruments, for speculative purposes.
Business combinations
(a) Market risk
As discussed in Note 32, business combinations
are initially accounted for on a provisional basis.
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.
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.
53
(a) Market risk (continued)
The Group seeks to reduce market risk by adhering to the prudent investment guidelines as documented in
the respective product disclosure statements, information memorandum and portfolio construction guidelines.
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 2021
30 JUNE 2020
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)
$868,286
($868,286)
$811,232
($811,232)
(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 (0.23% weighted average interest rate in 2021 and 0.78% weighted average
interest rate in 2020).
30 JUNE 2021
30 JUNE 2020
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)
$62,329
($62,329)
$49,117
($49,117)
54
(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 as
the counterparties are banks with high credit ratings
assigned by credit-rating agencies.
(ii) Trade and other receivables
The maximum credit risk of the Group in relation
to trade and sundry receivables is their carrying
amounts. Receivable balances are monitored on
an ongoing basis with the result that the Group’s
exposure to bad debts is not significant.
liquidity
risk management
Prudent
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 2021
Financial liabilities
CARRYING
AMOUNT
$
CONTRACTUAL
CASH FLOWS
$
LESS THAN 6
MONTHS
$
6 – 12
MONTHS
$
1-3
YEARS
$
Trade and other payables
4,487,145
4,487,145
4,242,912
-
244,233
Lease liabilities
1,813,901
2,013,344
230,204
230,204
1,552,936
Total financial liabilities
6,301,046
6,500,489
4,473,116
230,204
1,797,169
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
3,882,048
3,882,048
3,500,204
-
381,844
Lease liabilities
1,104,224
1,280,516
144,457
145,656
990,403
Total financial liabilities
4,986,272
5,162,564
3,644,661
145,656
1,372,247
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.
55
(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 2021
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
TOTAL
$
Financial assets at fair value through profit or loss
- Listed equities
- Unlisted unit trusts
5,649,076
-
5,649,076
-
21,596
21,596
AT 30 JUNE 2020
LEVEL 1
$
LEVEL 2
$
LEVEL 3
$
Financial assets at fair value through profit or loss
- Listed equities
- Unlisted unit trusts
(i) Valuation technique
LISTED INVESTMENTS
4,770,017
-
4,770,017
-
945,387
945,387
-
-
-
-
-
-
5,649,076
21,596
5,670,672
TOTAL
$
4,770,017
945,387
5,715,404
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.
56
5. Revenue
Revenue from contract with customers
Funds management
Management fees 1
Performance fees 2
Other 2
Advice fees1
Other fees 2
2021
$
2020
$
8,469,485
8,161,363
2,285,283
2,347,871
427,531
257,198
11,182,299
10,766,432
202,250
133,416
153,997
362,380
356,247
495,796
Dealership, portfolio management and other fees 1
3,591,472
-
Subscription fees 1
Direct investments income
Dividends and distributions
Interest income
301,957
353,324
15,431,975
11,615,552
303,008
14,550
317,558
298,423
38,247
336,670
TOTAL REVENUE
15,749,533
11,952,222
1 Revenue from contracts with customers recognised over time
2 Revenue from contracts with customers recognised at a point in time
Refer to Note 26(b) for an analysis of revenue by segment.
57
6. Expenses
2021
$
2020
$
Profit before income tax includes the following specific expenses:
Employee benefits expense (excluding superannuation)
8,355,156
6,164,281
Defined contribution superannuation expense
577,428
378,890
Share-based payment expense recognised
Finance costs paid on lease liabilities
Rental expenses relating to short-term leases
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of contract costs
Amortisation of investment management contracts
Amortisation of software licences, customer relationships and customer lists
39,754
117,759
92,500
53,120
429,444
56,160
300,747
290,850
26,896
77,885
124,030
41,481
234,701
-
356,908
92,059
58
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
6,078,777
6,276,531
2021
$
2020
$
Cash at bank is interest bearing. Cash at bank and deposits at call bear floating interest rates between 0.01%
and 0.43% (2020: 0.25% and 0.9%).
The cash and cash equivalents as at end of 30 June 2021 includes $1.30 million (2020: $1.50 million) of cash held
on behalf of Authorised Representatives of Madison.
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Adjustment for non-cash items:
2021
$
2020
$
2,277,575
397,428
Depreciation and amortisation expense and loss on asset write off
1,130,321
728,036
Non-cash share-based payment expense
Write off of investment in joint venture
Dividends received from joint venture
Finance costs paid on lease liabilities
Change in operating assets and liabilities
39,754
-
-
117,759
26,896
600
13,130
77,885
Trade and other receivables and other assets
(2,654,516)
2,093,441
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
44,732
151,022
(17,117)
281,595
136,050
151,354
(142,978)
178,188
(300,688)
103,413
Net cash provided by operating activities
1,507,175
3,326,705
(c) Non-cash investing activities
Exchange of investments via scrip for scrip consideration
2021
$
-
2020
$
250,041
59
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 16)
(Decrease)/increase in deferred tax liabilities (Note 16)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
2021
$
2020
$
550,084
437,914
281,595
831,679
82,266
199,329
281,595
(300,688)
137,226
(68,152)
(232,536)
(300,688)
2021
$
2020
$
3,109,254
534,654
Tax at the Australian tax rate of 26% (2020: 27.5%)
808,406
147,030
Tax effect of amounts which are not deductible / (taxable) in calculating
taxable income:
Amortisation of intangibles
Share-based payment expense
Tax rate changes
Franking credits on dividends
Government subsidy
(Over)/under provision of prior year tax
Sundry items
Income tax expense
135,985
2,247
(32,310)
(88,655)
(13,000)
-
19,006
831,679
110,166
7,396
-
(90,270)
(20,625)
(18,105)
1,634
137,226
60
9. Dividends
(a) Dividends provided for and paid during the year
Final dividend in respect of the previous financial year –
1.0 cent per share fully franked (2020: 1.5 cents per share fully franked)
Interim dividend in respect of the current financial year – 1.0 cent per share fully
franked (2020: 1.0 cent per share fully franked)
Fully franked portion
(b) Dividends not recognised at year end
2021
$
2020
$
657,075
841,061
650,585
559,249
1,307,660
1,400,310
1,307,660
1,400,310
Proposed fully franked dividend – 1.5 cents per share (2020: 1.0 cent per share)
997,628
657,075
(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
Franking credits arising from income tax payable
Impact on franking account of proposed dividend not recognised at year end
at 26% corporate tax rate (2020: 27.5%)
79,577
567,200
119,804
226,493
259,725
124,511
(477,819)
(531,152)
288,762
199,273
79,577
216,390
(350,518)
(249,235)
Amount of franking credits available for subsequent financial years
137,517
46,732
61
10. Trade and other receivables - Current
Trade receivables
Other receivables
2021
$
2020
$
3,487,177
1,140,492
450,366
210,642
3,937,543
1,351,134
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, historic recovery rates, and actual collection subsequent to the year end, it
is expected that these amounts will be received when due. The receivables primarily relate to management,
performance fees and licensee fees receivable which are considered low risk as they are usually collected
within 30 days.
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
2021
$
2020
$
475,466
405,176
2021
$
2020
$
5,649,076
4,770,017
21,596
945,387
5,670,672
5,715,404
62
13. 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).
NAME OF ENTITY
COUNTRY OF
INCORPORATION
CLASS OF SHARES
Clime Asset Management Pty Ltd
Australia
Fully Paid Ordinary
Stocks In Value Pty Ltd
Australia
Fully Paid Ordinary
Clime Private Wealth Pty Ltd
Australia
Fully Paid Ordinary
Clime Investors Education Pty Ltd
Australia
Fully Paid Ordinary
CBG Asset Management Limited
Australia
Fully Paid Ordinary
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
* The proportion of ownership interest is equal to the proportion of voting power held.
14. 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
2021
$
668,444
(504,454)
163,990
112,191
104,919
-
(53,120)
163,990
EQUITY HOLDING *
2021
%
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2020
$
563,525
(451,334)
112,191
79,128
77,431
(2,887)
(41,481)
112,191
63
15. 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
2021
$
2020
$
2,147,222
(429,444)
1,717,778
1,280,186
(234,701)
1,045,485
Reconciliation of the carrying amount of lease assets at the beginning and end of
the financial year:
Office Space
Office Space
Carrying amount at 1 July
1,045,485
-
Restated opening balance upon adoption of AASB 16 at 1 July 2019
-
1,280,186
Termination of right of use assets
Additions
Depreciation
Carrying amount at 30 June
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
117,759
392,059
92,500
602,318
429,444
(1,045,485)
-
2,147,222
-
(429,444)
(234,701)
1,717,778
1,045,485
377,884
1,436,017
1,813,901
218,973
885,251
1,104,224
77,885
175,963
124,030
377,878
234,701
64
16. Deferred tax assets and deferred tax liabilities
(a) Deferred tax assets
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 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
(b) Deferred tax liabilities
2021
$
289
43,087
191,173
80,657
192,668
507,874
590,139
(82,265)
-
507,874
2021
$
The balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
199,329
Deferred tax liabilities
Movements:
Opening balance at 1 July
Charged to the profit or loss (Note 8(a))
- Other
Closing balance at 30 June
Net deferred tax assets (a – b)
-
-
-
199,329
308,545
2020
$
92,325
105,007
124,595
72,433
195,779
590,139
494,306
68,152
27,681
590,139
2020
$
-
-
232,536
(232,536)
-
590,139
65
17. Contract Costs
Contract Costs
2021
$
477,360
2020
$
-
During the current year, Clime Asset Management Pty Limited paid an amount of $533,520 (ex-GST) to Clime
Capital Limited to obtain the investment management agreement of CBG Capital Limited’s portfolio that was
previously managed by CBG Asset Management Limited.
In FY2021, amortisation amounting to $56,160 (2020: $nil) was recognised in the consolidated statement of
profit or loss. There was no impairment loss during the period (2020: $nil).
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
2021
$
8,613,884
5,160,480
(3,812,646)
1,347,834
905,563
(501,341)
404,222
1,758,023
(610,044)
1,147,979
11,513,919
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
66
18. Intangible assets (continued)
(a) Reconciliations
2021
GOODWILL
INVESTMENT
MANAGEMENT
CONTRACTS &
RELATIONSHIPS
SOFTWARE
LICENCES
CUSTOMER
RELATIONSHIPS &
CUSTOMER LISTS
TOTAL
Carrying amount at
beginning of year
Additions
Deletions
Business combination (Note 33)
Amortisation expense1
Carrying amount at end of year
8,613,884
$
$
$
$
$
8,613,884
2,182,101
530,694
1,249,543
12,576,222
-
62,815
-
62,815
(533,520)
-
(300,747)
1,347,834
-
-
(189,287)
404,222
-
(533,520)
-
(101,564)
1,147,979
-
(591,598)
11,513,919
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 32)
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
-
-
-
-
-
1 Amortisation of $591,598 (2020: $448,967) 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
2021 - Consolidated
FUNDS
MANAGEMENT
INVESTMENT
SOFTWARE AND
EDUCATION
DEALERSHIP
BUSINESS
$
$
$
TOTAL
$
Balance at the beginning of the year
4,996,884
325,000
3,292,000
8,613,884
Movements during the year
-
-
-
-
Balance at end of year
2020 - Consolidated
4,996,884
325,000
3,292,000
8,613,884
Balance at the beginning of the year
4,996,884
325,000
Acquisition of Madison Entities (Note 33)
-
-
Balance at end of year
4,996,884
325,000
-
3,292,000
3,292,000
5,321,884
3,292,000
8,613,884
67
(b) Impairment testing of goodwill (continued)
Funds management
Licensee 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. In determining these amounts,
the Directors have considered the outcomes of
recent transactions for similar assets and businesses.
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.
The recoverable amount of this cash-generating unit
is determined based on a value in use calculation
which uses cash flow projections based on financial
budgets, normalised EBITDA for a period of five
years, a pre-tax discount rate of 13% per annum and
a growth rate of 5% per annum.
The management believe that any reasonably
possible change in the key assumptions on which
the recoverable amount of the cash generating unit
is based would not cause the aggregate carrying
amount to exceed the aggregate recoverable amount
of the related cash generating unit.
Investment software and education
The recoverable amount of the cash generating unit
has been determined by a value-in-use calculation.
The key assumptions utilised in Directors’ assessments
relate primarily to current year results, management
forecasts based on next year’s budgeted result and
the Group’s 3-year strategy. These key assumptions
have been derived under a consistent approach to
the prior year impairment assessment, utilising past
experience and internal analysis. The Directors also
anticipate growth based on continued evolution of
products and services.
19. Trade and other payables
2021 CONSOLIDATED
Unsecured:
Trade payables
Dividends on shares issued under the Employee Incentive Scheme
Accruals
Licensee fees (Madison)
Other payables
2021
$
1,162,010
81,375
1,837,531
1,087,745
395,637
4,564,298
2020
$
560,530
94,375
1,888,878
919,165
471,555
3,934,503
The carrying amount of trade and other payables are considered to represent a reasonable approximation of
their values.
68
20. Provisions
Employee benefits – current
Annual leave
Long service leave
Employee benefits - non-current
Long service leave
21. Issued capital
(a) Share capital
2021
$
462,074
64,718
526,792
2020
$
347,401
126,790
474,191
208,487
125,038
PARENT EQUITY
PARENT EQUITY
2021
Shares
2020
Shares
2021
$
2020
$
Ordinary shares
Fully paid
64,708,505
64,657,505
21,539,410
21,508,300
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
DETAILS
NOTES
NUMBER OF
SHARES
$
30 June 2019
Balance
54,737,771
16,933 ,128
10 June 2020
Shares issued to institutional investors
9,782,609
4,500,000
June 2020
Cost of issuing capital – net of tax
(d)
-
(72,979)
July 2019 to March 2020
July 2019 to March 2020
Shares bought back on-market and
cancelled
Transaction costs arising from on-
market buy- back
Oct 2019 and June 2020
Transfer from share-based payments
reserve to issued capital on completion
of EIS loan term
33
(187,875)
(93,889)
-
-
(150)
39,490
Oct 2019 and June 2020
Transfer of loan repayments to issued
capital on completion of EIS loan term
325,000
202,700
30 June 2020
Balance
(d)
64,657,505
21,508,300
16 December 2020
Issue of ordinary shares under CIW
Employee Share Plan (ESP)
51,000
31,110
30 June 2021
Balance
64,708,505
21,539,410
(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.
69
21. Issued capital (continued)
(d) On-market share buy-back
(g) Capital Risk Management
The Group’s objectives when managing capital are
to safeguard their ability to continue as a going
concern, so that they can continue to provide returns
for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure and to
reduce the cost of capital.
The Group’s capital structure currently consists
of total equity, as recognized in the statement of
financial position.
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 2020.
During the financial year ended 30 June 2021, Clime
Investment Management Limited, in accordance
with its on-market share buy-back scheme, bought
back Nil (2020: 187,875) 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.
(e) Employee Incentive Scheme (“EIS”)
As at 30 June 2021, there are 1,800,000 (2020:
1,050,000) EIS ‘in-substance’ options on issue. Share
options granted under the Company’s employee
incentive scheme carry rights to dividends and
voting rights. Refer to Note 25(a) for a schedule of
the movements in EIS options on issue during the
year.
(f) Employee Share plan
On 16 December 2020, the Company issued 51,000
shares under the Clime Employee Share Plan for
nil consideration. These shares were issued to all
Clime Group employees (excluding directors). The
participants under the ESP are entitled to dividends
and are subject to a 3-year lock-in-period in
accordance with the plan rules. The value of these
shares are immediately expensed to profit or loss
account.
22. 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
2021
$
294,951
286,307
8,644
-
294,951
2020
$
286,307
298,901
26,896
(39,490)
286,307
70
(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
2021
$
272,124
2,277,575
(1,307,660)
1,242,039
2020
$
1,275,006
397,428
(1,400,310)
272,124
The share-based payments reserve is used to recognise the fair value of options issued to employees but not exercised.
23. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Parent
Entity (Pitcher Partners) and its related practices:
Audit and review of financial statements - Pitcher Partners
Audit and review of financial statements - KPMG
Taxation matters - Pitcher Partners
Other matters - Pitcher Partners
24. Earnings per share
(a) Basic earnings per share
Profit attributable to the ordinary equity holders of the Group
(b) Diluted earnings per share
Profit attributable to the ordinary equity holders of the Group
(c) Reconciliations of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit for the year attributable to owners of the Group
Profit attributable to the ordinary equity holders of the Group used in
calculating basic and diluted earnings per share
(d) Weighted average number of shares used as the denominator
2021
$
136,026
12,368
24,963
3,550
176,907
2021
CENTS
3.5
3.4
2021
$
2,277,575
2,277,575
2021
NUMBER
2020
$
91,724
-
35,055
5,568
132,347
2020
CENTS
0.7
0.7
2020
$
397,428
397,428
2020
NUMBER
Weighted average number of ordinary shares used in calculation of
basic earnings per share
64,684,891
55,309,449
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
64,484,891
56,359,449
71
(e) Reconciliations of weighted average numbers of shares
2021
NUMBER
2020
NUMBER
Weighted average number of ordinary shares used in the calculation of
basic earnings per share
64,684,891
55,309,449
Shares deemed to be issued for no consideration in respect of
- Employee Incentive Scheme
1,800,000
1,050,000
Weighted average number of ordinary shares used in the calculation of
diluted earnings per share
66,484,891
56,359,449
(f) Options issued under Employee Incentive Scheme
Options granted under the Employee Incentive Scheme are considered to be dilutive and have been included
in the determination of diluted earnings per share. These options have not been included in the determination
of basic earnings per share.
25. Share-based payments
(a) Employee Incentive Scheme (EIS)
Investment Management
The Clime
Limited
Employee Incentive Scheme (“EIS”) was approved
by shareholders at the Company’s Annual General
Meeting held on 25 October 2007.
for eligible
The EIS provides an opportunity
employees, as determined by the Board from time
to time, to purchase shares in the Company via the
provision of an interest-free, non-recourse loan.
Shares issued in accordance with the EIS are subject
to certain restrictions for the duration of the loan,
including continued employment with the Company
and share transfer locks. Upon the expiration of the
loan term, and the repayment of the outstanding
loan balance by relevant employees, the shares
become unconditional. Shares issued under the EIS
rank equally with other fully paid ordinary shares.
Due to certain aspects of the EIS - specifically the
share transfer locks and non-recourse nature of the
loans - the Company is required to classify shares
issued under the EIS as ‘in-substance options’ in
accordance with AASB 2 Share-based Payment.
It should be noted that the application of this
accounting policy will therefore result in differences
between the number of shares on issue as disclosed
in the Company’s statutory reports, and the number
of shares on issue as advised to the Australian
Securities Exchange.
Set out below is a summary of in-substance options
granted under the plan:
GRANT
DATE
VESTING
/ EXPIRY
DATE
EXERCISE
PRICE
BALANCE
AT START
OF THE
YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
TRANSFERRED/
FORFEITED
DURING THE
YEAR
BALANCE
AT THE
END OF
THE YEAR
VESTED AND
EXERCISABLE
AT END OF
THE YEAR
2021
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
25/10/2013
03/01/2022
$0.829
100,000
11/09/2015
03/01/2022
$0.700
150,000
20/07/2016
03/01/2022
$0.630
150,000
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
50,000
-
-
-
-
-
-
30/04/2021
29/04/2024
$0.575
23/06/2021
22/06/2024
$0.573
-
-
400,000*
1,050,000
Total
1,050,000
1,450,000
Weighted average exercise price
$0.601
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
150,000
150,000
(50,000)
100,000
100,000
(400,000)
(200,000)
(50,000)
-
-
-
-
-
400,000
1,050,000
-
-
-
-
-
(700,000)
1,800,000
350,000
* In-substance options granted to the Chief Executive Officer during the 2021 financial year.
72
(a) Employee Incentive Scheme (EIS) (continued)
GRANT
DATE
VESTING
/ EXPIRY
DATE
EXERCISE
PRICE
BALANCE
AT START
OF THE
YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
TRANSFERRED/
FORFEITED
DURING THE
YEAR
BALANCE
AT THE
END OF
THE YEAR
VESTED AND
EXERCISABLE
AT END OF
THE YEAR
2020
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.
The weighted average contractual life of in-substance options outstanding at the end of the period was 2.38
years (2020 – 1.39 years).
The assessed fair value at grant date of in-substance options granted to the individuals is allocated equally
over the period from grant date to vesting date. Fair values at grant date are determined by using a binomial
distribution model to statistically estimate the future probability of the in-substance options vesting and the
amounts that these in-substance options would be worth. The valuation was performed as at the grant date
of each in-substance option issued.
•
•
The model inputs for in-substance options granted during the year ended 30 June 2021 included:
•
in-substance options are granted via an interest free, non-recourse loan and vest based on the terms
discussed above;
in-substance options become unconditional on the date of their vesting following the repayment of the
outstanding loan balance;
exercise price: The forecast outstanding loan principal at the expiration of the loan term is equivalent to
the exercise price variable in a standard option valuation. The forecast outstanding loan principal is $0.56
(2020:$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 30.2% and 34.3% (2020 – 30% and 35%);
risk-free interest rate: 1.0% (2020 – 1.0%); and
•
•
•
• discount rate: 12% (2020 – 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
100,000
400,000
25/10/2013
11/09/2015
20/07/2016
30/04/2021
1,050,000
23/06/2021
$0.829
$0.700
$0.630
$0.575
$0.573
$0.140
$0.121
$0.107
$0.108
$0.108
03/01/2022
03/01/2022
03/01/2022
29/04/2024
22/06/2024
Refer to the Remuneration Report on pages 29 to 37, for additional information in relation to the EIS.
73
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year as part of the
employee benefit expense were as follows:
Option expense
Employee Incentive Scheme
Employee Share Plan Scheme
2021
$
8,644
31,110
39,754
2020
$
26,896
-
26,896
Refer to the Remuneration Report on pages 29 to 37, for additional information in relation to the Employee
Incentive Scheme and Employee Share Plan Scheme.
26. Segment information
(a) Description of segments
Our internal reporting system produces reports in
which business activities are presented in a variety of
ways. Based on these reports, the Directors, who are
responsible for assessing the performance of various
components of the business and making resource
allocation decisions as Chief Operating Decision
Makers (CODM), evaluate business activities in a
number of different ways. The Group’s reportable
segments under AASB 8 are as follows:
Funds management
•
• Madison Entities
Private wealth
•
•
Investment software
• Direct investments
Funds Management
The Group’s Funds Management businesses,
Clime Asset Management Pty Ltd and CBG Asset
Management Limited, are based in Sydney. These
businesses generate operating revenue (investment
management and performance fees) as remuneration
for managing the investment portfolios of individuals,
corporations and mandates.
Madison Entities
Towards end of June 2020, the Group acquired
all of the issued share capital of each of Madison
Financial Group Pty Limited, AdviceNet Pty Limited,
WealthPortal Pty Limited and ProActive Portfolios
Pty Limited. These entities generate operating
revenue in the form of Licensee fees from Authorised
Representatives (Madison) and portfolio management
fees (AdviceNet, ProActive and WealthPortal).
Private Wealth
The Group, through 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.
During the current period, the segment reporting
structure has been modified to apportion on a
reasonable basis, the fees earned from Individually
Managed Accounts (IMA) from Funds Management
to Private Wealth. These represent the value-added
services provided by Private Wealth Advisers to IMA
clients. The comparative disclosures have also been
restated.
Other than creation of a new Madison Entities
segment and the Private Wealth recharge for value
added summary stated above, there have been no
other changes in the basis of segmentation or the
basis of segment profit or loss since the previous
financial report.
74
(b) Reportable Segments
2021
FUNDS
MANAGEMENT
MADISON
ENTITIES
PRIVATE
WEALTH
INVESTMENT
SOFTWARE
DIRECT
INVESTMENTS
INTER
SEGMENT/
UNALLOCATED
CONSOLIDATED
$
$
$
$
$
$
$
Segment revenue
Sales to external
clients
Investment income
Government grants
Total segment
revenue
Net realised and
unrealised gains on
financial assets at
fair value through
profit or loss
Net group result
Net group result
before tax
9,960,809
3,591,472
1,449,982
301,957
-
127,754
15,431,974
-
-
-
-
-
-
-
-
317,558
-
317,558
-
435,682
435,682
9,960,809
3,591,472
1,449,982
301,957
317,558
563,436
16,185,214
-
-
-
-
1,100,971
-
-
4,222,798
717,399
(100,107)
(64,668)
1,418,529
(3,084,697)
3,109,254
Income tax expense
-
Profit for the year
Depreciation
and amortisation
expense
865,374
-
-
-
-
-
140,738
-
-
-
(831,679)
2,277,575
124,209
1,130,321
2020
FUNDS
MANAGEMENT
MADISON
ENTITIES
PRIVATE
WEALTH
INVESTMENT
SOFTWARE
DIRECT
INVESTMENTS
INTER
SEGMENT/
UNALLOCATED
CONSOLIDATED
$
$
$
$
$
$
$
Segment revenue
(Restated)
Sales to external
clients
Investment income
Government grants
Total segment
revenue
Net realised and
unrealised gains on
financial assets at
fair value through
profit or loss
Net group result
Net group result
before tax
Income tax expense
Profit for the year
Depreciation
and amortisation
expense
9.443,321
-
-
9.443,321
-
3,873,775
577,853
(c) Segment assets and liabilities
-
-
-
-
-
-
-
1,561,709
353,324
-
257,198
11,615,552
-
-
-
-
336,670
-
336,670
-
355,500
355,500
1,561,709
353,324
336,670
612,698
12,307,722
-
-
(1,156,990)
-
-
(5,594)
136,040
(820,319)
(2,649,248)
534,654
(137,226)
397,428
-
64,364
-
82,932
725,149
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. The Group operates in the geographical segments of Australia.
75
28. Contingent liabilities, contingent assets and
commitments
The Group has no material contingent liabilities or
contingent assets as at 30 June 2021 (2020: Nil).
Capital expenditure commitments
The Group has nil contracted material capital
expenditure commitments on fit-out works of the 3
office locations as at 30 June 2021 (2020: $34,004).
(d) Information about major clients
from the
in revenues arising
Included
funds
management business of $9.9 million (2020: $9.4
million) (see Note 26 (b) above) are revenues of
approximately $2.2 million (2020: $1.6 million) which
arose from services provided to the Group’s largest
client.
27. Subsequent Events
A final fully franked dividend for the year ended 30
June 2021 of 1.5 cents per share, totaling $997,628
has been declared by the Directors. This provision
has not been reflected in the financial statements.
Other than the above, there has not been any matter
or circumstance occurring subsequent to the end
of the financial year that has significantly affected
or may significantly affect, the operations of the
consolidated entity, the results of those operations,
or the state of affairs of the consolidated entity in
future financial years.
29. Key management personnel disclosures
(a) Remuneration of Directors and other key management personnel
A summary of the remuneration of Directors and other key management personnel for the current and previous
financial year is set out below:
SHORT-TERM
EMPLOYEE
BENEFITS
POST-
EMPLOYMENT
BENEFITS
SHARE- BASED
PAYMENTS
TERMINATION
BENEFITS
$
$
$
$
TOTAL
$
957,273
46,801
8,829
152,453
1,165,356
940,741
29,624
26,505
-
996,870
2021
Remuneration of Directors and
other key management personnel
2020
Remuneration of Directors and
other key management personnel
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 29 to 37 of this Annual
Report.
76
(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 29 to 37.
(ii) Shareholdings
The numbers of shares (including shares issued under Employee Incentive Scheme (EIS)) 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
2021
Mr. John Abernethy
Mr. Brett Spork
Mr. Neil Schafer
Mr. Peter Beaumont
Mr. Donald McLay
Mr. Allyn Chant
Ms. Annick Donat
Mr. Rod Bristow
No.
4,293,850
-
548,007
-
7,470,576
50,000
-
610,000
No.
-
-
-
-
-
-
-
-
No.
136,554
35,000
76,051
-
(7,470,576)
(50,000)
401,500
(610,000)
No.
4,430,404
35,000
624,058
-
-
-
401,500*
-
* Includes 400,000 shares issued under Employee Incentive Scheme to Ms. Annick Donat
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
No.
No.
Mr. John Abernethy
4,232,850*
Mr. Neil Schafer
Mr. Donald McLay
Mr. Allyn Chant
Mr. Rod Bristow
548,007
7,470,576
50,000
610,000**
-
-
-
-
-
*Includes 200,000 shares issued to Mr. John Abernethy
**Includes 600,000 shares issued to Mr. Rod Bristow
(c) Loans to Directors and other key management personnel
No.
61,000
-
-
-
-
No.
4,293,850
548,007
7,470,576
50,000
610,000
$230,000 (2020: $262,500) loan to Executive Officers in relation to the EIS shares issued under the Employee
Incentive Scheme (refer Note 25(a)).
There were no other loans made to Directors of Clime Investment Management Limited or other key
management personnel of the consolidated entity, including their personally related entities, at any stage
during the financial year.
As described in Note 25(a), notional non-recourse loans exist in relation to “in substance” options issued under
the Employee Incentive Scheme.
77
30. Related party transactions
2. Clime Fixed Interest Fund
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.
i. Clime Asset Management Pty Limited during
the year received $102,339 (2020: $66,239) as
investment
remuneration
portfolios and acting as trustee of Clime Fixed
Interest Fund.
for managing the
(a) Parent Entity
The Parent Entity within the Group is CIW (Clime
Investment Management Limited).
3. Clime All Cap Australian Equities Fund (Wholesale)
(formerly Clime CBG Australian Equities Fund
(Wholesale))
i. CBG Asset Management Limited during the
year received $931,485 (2020: $932,736) as
remuneration
investment
portfolios and acting as trustee of Clime All Cap
Australian Equities Fund (Wholesale).
for managing the
(b) Subsidiaries
Interests in subsidiaries are set out in Note 13.
(c) Key Management Personnel
Disclosures relating to key management personnel
are set out in Note 29.
(d) Other related party transactions
1. Clime Capital Limited
i. Mr. John Abernethy is a Director of Clime Capital
Limited. The Group received $162,867 (2020:
$90,233) 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 4.38%
(2020: 5.29%) of the fully paid ordinary shares of
Clime Capital Limited as at 30 June 2021. Clime
Investment Management Limited through Clime
Asset Management Pty Limited (a wholly owned
subsidiary) has the indirect power to dispose 2.94%
(2020: 3.55%) of Clime Capital Limited’s shares
held by the Investment Manager’s individually
managed accounts as at 30 June 2021. Clime
Capital Limited received $533,520 (ex-GST) from
Clime Asset Management Pty Limited to obtain
the investment management agreement of CBG
Capital Limited’s portfolio that was previously
managed by CBG Asset Management Limited.
ii. Clime Asset Management Pty Limited during
the year received $2,213,502 (2020: $777,887)
as remuneration for managing Clime Capital
Limited’s investment portfolio.
iii. All dividends paid and payable by Clime Capital
Limited to its Directors and their related entities
are on the same basis as to other shareholders.
78
(e) Outstanding balances as at year end
The following balances, prior to group elimination, were outstanding at the end of the reporting period:
AMOUNT OWED BY RELATED PARTIES
AMOUNT OWED TO RELATED PARTIES
30 JUNE 2021
($)
30 JUNE 2020
($)
30 JUNE 2021
($)
30 JUNE 2020
($)
1,232,601
305,208
84,039
-
-
-
-
-
6,818,749
4,377,001
20,477,782
19,671,718
Clime Capital Limited
Clime All Cap Australian Equities Fund (Wholesale)
Subsidiaries of Clime Investment Management
Limited
31. Parent Entity disclosures
The following information relates to the Parent Entity Clime Investment Management Limited. The information
presented has been prepared using accounting policies that are consistent with those presented in Note 2.
(a) Financial position
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
2021
$
12,906,647
21,724,853
34,631,500
11,951,739
11,951,739
22,679,761
21,539,413
24,849,832
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
(24,004,435)
(24,004,435)
294,951
22,679,761
286,306
19,067,986
4,879,678
-
4,879,678
4,888,017
-
4,888,017
(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 $289,334 (2020: $230,639) and is secured by a charge over other financial
assets of $289,334.
(d) Commitments
The Entity has contracted capital expenditure commitments of Nil (2020: $34,004) on fit-out works of the 3
office locations as at 30 June 2021 and $92,500 (2020: $93,000) for the operating lease commitments of short-
term office leases.
79
32. Business Combination
In the previous year, 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 the Madison Entities
effective 26 June 2020.
As the initial accounting for the business combination was incomplete as at 30 June 2020, the assets and
liabilities acquired were reported at provisional amounts. During the current period, the provisional amounts
were adjusted to reflect new information obtained about facts and circumstances that existed as of the
acquisition date and if known, would have affected the measurement of the amounts recognised at the
acquisition date. A refund of $338,977 was received during the current period following the finalisation of the
completion accounts.
Consideration
The Company acquired all the issued share capital in the Madison Entities for an aggregate consideration of
$4.76 million under a Share Sale Deed, effective 26 June 2020 (Share Sale Deed). During the current period the
aggregate consideration was adjusted by the refund received of $338,977. The aggregate consideration was
funded by a $4.5 million institutional placement of 9,782,609 fully paid ordinary shares in the Company at the
issue price of $0.46 per share.
30 June 2021
Total ($)
30 June 2020
Total ($)
Cash paid (i)
Contingent consideration (paid and held in escrow) (ii)
Total purchase consideration
1,920,840
2,500,000
4,420,840
2,259,817
2,500,000
4,759,817
i.
Includes $20,840 (2020 - $359,817) paid towards Net Working Capital which is subject to post-completion
adjustment for working capital as at the date of completion.
ii. $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 by the Company for claims (under a limited indemnity) and adjustments
related to post-completion revenues of the Madison Entities, respectively. As at the date of this report, the
amounts to be released from escrow are being agreed with SC in accordance with the terms of the Share
Sale Deed.
80
Assets and liabilities acquired
$4,420,840 purchase consideration was fully paid in cash and has been provisionally allocated as follows:
2021
2020
RECOGNISED ON ACQUISITION
AT FAIR VALUE
RECOGNISED ON ACQUISITION
AT FAIR VALUE
ASSETS AND LIABILITIES ACQUIRED
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Provisions
Net identifiable tangible assets acquired
Add: Customer/Adviser list
Net identifiable assets acquired
Add: Goodwill arising on acquisition
Total purchase consideration
Net cash outflow on acquisition
($)
1,734,591
1,215,528
105,196
(2,831,621)
(202,854)
20,840
1,108,000
1,128,840
3,292,000
4,420,840
($)
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
$4,420,840 purchase consideration was fully paid in cash and has been provisionally allocated as follows:
Total purchase consideration
Cash and cash equivalents
($)
4,420,840
(1,734,591)
2,686,249
($)
4,759,817
(1,421,079)
3,338,738
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.
81
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 39 to
81, 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 S295A 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:
John Abernethy
Chairman
24 August 2021
Brett Spork
Independent Director
82
Independent Auditor’s Report
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 2021, 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 2021 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
83
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
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
$10,754,768 of the Group’s $15,749,533 reported
revenues in 2021.
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
individual
in accordance with each
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
for these
including the potential
transactions,
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
84
Impairment Assessment of Intangible Assets
Refer to Note 18: Intangible Assets
At 30 June 2021 the Group’s statement of financial
position has intangible assets, including goodwill,
totalling $11,513,919.
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.
Independent Auditor’s Report
Our procedures included, amongst others:
• Understanding and evaluating the design and
implementation of management’s processes
and controls 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;
• Reperforming calculations on a sample
basis to test 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.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership
85
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
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 2021 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
86
Independent Auditor’s Report
• 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 29 to 36 of the Directors’ Report for the year
ended 30 June 2021. In our opinion, the Remuneration Report of Clime Investment Management Limited, for
the year ended 30 June 2021, 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.
Mark Godlewski
Partner
24 August 2021
Pitcher Partners
Sydney
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership
87
CLIME INVESTMENT MANAGEMENT LIMITED ANNUAL REPORT 2021
Shareholder Information
The shareholder information set out below was applicable as at 2 August 2021:
A. Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
ORDINARY SHARES
NUMBER OF HOLDERS
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
48
177
72
186
66
B. Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
ORDINARY SHARES
NO OF SHARES
ORDINARY SHARES
PERCENTAGE OF
ISSUED SHARES
Citicorp Nominees Pty Limited
Mr. Donald McLay, Torres Industries Pty Limited & Nagarit Pty Limited
PHC Investments Limited
Double Pty Limited & Abernethy SMSF Pty Ltd
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
Lodge Road Pty Limited
Barrob Bondi Pty Ltd
Garrett Smythe Ltd
Arcelia Pty Ltd
Mr. Adrian Robert Ezquerro
Sanlam Private Wealth Pty Limited
Ms. Annick Clifford
10,387,500
7,470,576
7,341,500
5,434,783
4,546,826
4,430,404
3,661,735
1,130,446
871,419
813,522
745,709
692,951
657,744
624,058
561,066
531,141
485,334
475,000
410,000
401,500
51,673,214
15.618
11.233
11.038
8.172
6.836
6.661
5.506
1.700
1.310
1.223
1.121
1.042
0.989
0.938
0.844
0.799
0.730
0.714
0.616
0.604
77.694
88
Shareholder Information
C. Equity Security Holders
Substantial holders in the Company are set out below:
ORDINARY SHARES
NO OF SHARES
Citicorp Nominees Pty Limited
Mr. Donald McLay, Torres Industries Pty Limited & Nagarit Pty Limited
PHC Investments Limited
Double Pty Limited & Abernethy SMSF Pty Ltd
Mr. David Schwartz & related entities
10,387,500
7,470,576
7,341,500
5,434,783
4,546,826
4,430,404
3,661,735
ORDINARY SHARES
PERCENTAGE OF
ISSUED SHARES
15.618
11.233
11.038
8.172
6.836
6.661
5.506
D. Voting rights
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.
On-Market Buyback Scheme
As at 24 August 2021 an on-market buy-back scheme
existed and continues to be in operation as at the
date of this report.
Contact Details
Terms and conditions
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: 1300 788 568
Holders of ordinary shares are entitled to receive
dividends as declared from time to time and are
entitled to one vote per share at shareholders’
meetings. In the event of winding up of the
Company, ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to
any proceeds of liquidation.
E. Other Information
Annual General Meeting
The Annual General Meeting of Clime Investment
Management Limited is expected to be held on 18
November 2021.
Stock Exchange Listing
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.
89
90
Corporate Directory | For the half-year ended 31 December 2019
Clime Investment Management Limited
ABN 37 067 185 899
Level 12, 20 Hunter Street Sydney NSW 2000 Australia
PO Box H90, Australia Square NSW 1215 Australia
1300 788 568
www.clime.com.au
info@clime.com.au
91
clime.com.au
92