Ironbark Capital Limited
Annual Report 2013

Plain-text annual report

Ironbark Capital Limited ABN 89 008 108 227 Annual Report For the year ended 30 June 2013 Ironbark Capital Limited Annual Report 30 June 2013 ABN 89 008 108 227 Contents Corporate Directory Review of Operations and Activities Corporate Governance Statement Portfolio Shareholdings at 30 June 2013 Directors' Report Auditor's Independence Declaration Financial Statements Directors' Declaration Independent Auditor's Report to the Members Shareholder Information Page 1 2 3 9 11 16 17 43 44 46 Directors Company secretary Principal registered office in Australia Share registrar Investment manager Accounting & administration Auditors Website Ironbark Capital Limited ABN 89 008 108 227 Corporate directory B.Ec, M.Ec Sydney, F Fin Michael J Cole Ross J Finley Ian J Hunter B.Comm NSW B.A, LLB Sydney, MBA MGSM Peter A Roberts CA Level 3 99 Bathurst Street Sydney 2000 (02) 8262 2800 NSW Boardroom Pty Limited GPO Box 3993 Sydney (02) 9290 9600 NSW 2001 Kaplan Funds Management Pty Limited Level 22 44 Market Street Sydney NSW 2000 White Outsourcing Pty Limited Level 3 99 Bathurst Street Sydney 2000 (02) 8262 2800 NSW MNSA Pty Ltd Level 2 333 George Street Sydney 2000 NSW www.ironbarkcapital.com Company secretarial and all other enquiries Telephone: Email: ironbarkcapital@whiteoutsourcing.com.au (02) 8262 2800 Stock exchange Australian Securities Exchange ASX code: IBC 1 Ironbark Capital Limited Review of Operations and Activities 30 June 2013 Review of Operations and Activities The Directors consider the investment management performance of IBC to be satisfactory for the latest financial year. The value of the IBC portfolio lifted 10.4% over the period. This level significantly underperformed the ASX 300 benchmark by 11.5% as the broad market index recorded a very strong performance of 21.9%. Notwithstanding the favourable equity environment IBC fell just shy of its internal investment return target of 1% per month. It was a year when preservation of shareholder capital priorities based on options written strategies would always struggle in an equity market which recorded the strongest growth in a financial year since the GFC. The markedly lower volatility of the IBC investment portfolio means the risk embedded in the portfolio is much less than the market. Accordingly the investment returns are generally expected to be below long only fund managers. Last year’s investment performance maintains the solid returns achieved over the last five years which was generally a difficult period that emphasised capital preservation as the overarching objective. The table in the Investment Managers Report, reproduced below, highlights that IBC has generated outperformance above the ASX 300 Index over the most recent 3 and 5 year periods. In addition, the share portfolio volatility is approximately half that of the Index volatility over all of periods. Inception (10.5 yrs) % pa $1.00 Ironbark Capital Ltd ASX 300 Accum Index Relative Performance $1.00 Volatility IBC Volatility ASX 8.67 9.10 -0.44 7.0 13.6 5 Yr % pa 6.46 2.70 3.76 8.0 16.0 3 Yr % pa 9.31 8.25 1.06 5.3 11.9 2 Yr % pa 6.40 6.47 -0.07 5.3 13.2 1 Yr % 6 mnths % 3 mnths % 1.41 4.99 -3.58 -0.31 2.83 2.52 10.44 21.90 -11.46 3.5 11.2 Over the longer term over a decade since inception, the IBC portfolio has underperformed the ASX 300 index performance by a small margin. However IBC also recorded around half the volatility of the index. This performance is consistent with the solid growth, high yield and low risk of the IBC portfolio. Last year the Directors highlighted the frustration all IBC shareholders shared with the large discount of the ASX share price of IBC shares to the Net Tangible Asset (NTA) backing of the shares. The Directors hold the view that if there was certainty that the full NTA backing could be realised at a specific future date, the discount of the ASX share price to the NTA would narrow. Following the Constitutional amendment potentially providing certainty for shareholders to access the full NTA value of the shares in mid-2015, it was anticipated the share price discount to NTA would reduce. It is pleasing to report that measuring the NTA discount at the close of the latest financial year and comparing it to the previous corresponding period, the NTA discount has reduced from 9.7% to 5.3% and we anticipate a further narrowing as mid 2015 approaches. It is pleasing to report that IBC was able to distribute fully franked dividends totalling 4.0 cents per share from adjusted earnings per share of 4.1 cents in FY2013. At year end the franking account balance had been fully distributed and there were no retained earnings. IBC's capacity to pay fully franked dividends depends on both the accumulation of franking credits and IBC's trading income generation (net of our low and easily predictable operating expenses). In the current year, subject to markets and the IBC investment portfolio value being at least maintained, we expect to pay a fully franked dividend of about 2.5 cents per share. This is lower than the previous year, largely as a result of a forecast decline in income receipts from 7.5% pre-tax last year to 6.9% pre-tax this year stemming from the reduction in floating rate yields on hybrid securities as the official interest rate has fallen. 2 Corporate Governance Statement Ironbark Capital Limited Corporate Governance Statement 30 June 2013 This statement outlines the main corporate governance practices adopted by the the ASX Corporate Governance Council Principles and Recommendations (2nd Edition, August 2007) unless otherwise stated. which comply with Company, Principle 1: Lay solid foundations for management and oversight The Board’s primary role is the protection and enhancement of long-term shareholder value. To fulfill this role the Board seeks to address: (a) the prudential control of the (b) the resourcing, review and monitoring of executive management; (c) the timeliness and accuracy of reporting to shareholders; and (d) the determination of the broad objectives. Company’s Company’s operations; The Company’s operations are conducted through and investment and administration personnel who undertake the White Outsourcing Pty Limited Manager) (Administration Manager). These entities incorporate the specialist wholesale Kaplan Funds Management Pty Limited (Investment Company’s executive operations. Company’s The efficient investment vehicle and access to a significant depth of professional resources. Individual directors are subject to continuous review by the Chairman. executive management arrangements have been structured to provide investors with a cost The Board has established a number of Board Committees including a Nomination Committee, a Remuneration Committee and an Audit Committee. These committees have written mandates and operating procedures which are reviewed on a regular basis. The Board has also established a range of policies which govern its operation. The Nomination Committee is responsible for the review of the Board’s performance as a whole. A performance evaluation of the Board and all Board members is conducted annually. This review took place in May for the calendar year. Individual directors are subject to continuous review by the Chairman. 2013 Recommendation 1.2 requires the disclosure of the process for evaluating the performance of senior executives. The Company. does not comply with this recommendation as there are no senior executive officers of the Company Principle 2: Structure the board to add value The names of the directors of the Report Company on page 11. in office at the date of this statement are set out in the Directors' is included in the The skills, experience and expertise relevant to the position of each director in office at the date of the Report independent when they are independent of management and free from any business or other relationship that could materially interfere with - or could reasonably be perceived to materially interfere with - the exercise of their unfettered and independent judgment. Ironbark Capital Limited are considered to be Directors' Report Directors of on page Annual 12. The composition of the Board is determined using the following principles: • A minimum of three directors; • An independent, non-executive director as Chairman; and • A majority of independent non-executive directors. The term in office held by each director in office at the date of this report is as follows: Name M J Cole R J Finley I J Hunter Term in office 11 years 27 years 11 years Directors have a usual term of two years, and a maximum term of 3 years before standing for re-election. 3 Ironbark Capital Limited Corporate Governance Statement 30 June 2013 (continued) (continued) Principle 2: Structure the board to add value An independent director is considered to be a director: (a) who is not a member of management; (b) who has not within the last three years been employed in an executive capacity by the principal of a professional adviser or consultant to the (c) is not a significant supplier to the (d) has no material contractual relationship with the (e) is free from any interest or business or other relationship which could materially interfere with the director’s ability to act in the best interests of the other than as a director; and Company; Company. Company; Company Company or been a In the context of director independence, “materiality” is considered from both the company and individual director’s perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors which point to the actual ability of the directors in question to shape the direction of the company’s loyalty. In accordance with the definition of independence above, and the materiality thresholds set, the following directors, being the entire Board, are considered to be independent: Name M J Cole R J Finley I J Hunter Position Chairman, Non-Executive Director Non-Executive Director Non-Executive Director The Board considers that although Michael Cole is a substantial shareholder, this does not affect his independence as he satisfies all other suggested criteria for assessing independence set out in Recommendation 2.1. Recommendation 2.3 requires that “the roles of the Chair and Chief Executive Officer of the be exercised by the same individual”. The Chief Executive Officer of the Company. Company does not comply with this recommendation as there is no Company should not Each director has the right of access to all relevant subject to prior consultation with the Chairman, may seek independent professional advice at the entity’s expense. A copy of advice received by the director is made available to all other members of the Board. information and to the Company’s Company executives and The Board will hold four scheduled meetings each year plus any other strategic meetings as and when necessitated by the Company’s operations. The agenda for meetings is prepared through the input of the Chairman and the Company Secretary. Standing items include matters of compliance and reporting, financials, shareholder communications and investment strategy and outcomes. Submissions are circulated in advance. The Nomination Committee considers the appropriate size and composition of the Board, criteria for membership, identification of potential candidates and the terms and conditions of appointment to and retirement from the Board. Company and making recommendations as to composition and appointments; The Committee is responsible for: • Conducting an annual review of the Board membership with regard to the present and future requirements of the • Review of Board succession plans, including succession of the Chairman, to maintain an appropriate balance of skills, experience and expertise, taking into account the need for diversity in gender, age, ethnicity and cultural background; • Conducting an annual review of the time required from non-executive directors, and whether the directors are meeting this; • Requesting non-executive directors to inform the Chair and the Chair of the nomination committee before accepting any new appointments as directors; • Conducting an annual review of the independence of directors; and • Recommendations to the Board on necessary and desirable competencies of directors. 4 Ironbark Capital Limited Corporate Governance Statement 30 June 2013 (continued) Principle 2: Structure the board to add value (continued) The Committee’s target is to ensure that (as a minimum) directors collectively have investment accounting, general business experience and shareholder representation. The terms and conditions of the appointment and retirement of non-executive directors are set out in a letter of appointment. The Committee is responsible for the performance review of the Board and its Committees. Individual directors are subject to continuous review by the Chairman. The Chairman reports on the general outcome of the meetings to the Board annually. Directors whose performance is unsatisfactory are asked to retire. In addition, the performance of service providers Outsourcing Pty Limited the Chairman and the Board as a whole. and Kaplan Funds Management Pty Limited) is the subject of continuous oversight by (J.P. Morgan Chase Bank, N.A. (Sydney Branch), White The Nomination Committee comprised the following members during the year: • Michael Cole (Chairman) - Independent Non-Executive • Ian Hunter - Independent Non-Executive • Ross Finley - Independent Non-Executive The Nomination Committee meets annually unless otherwise required. For details on the number of meetings of the Nomination Committee held during the year and the attendees at those meetings, refer to page Directors' Report. of the 13 Principle 3: Promote ethical and responsible decision making The Board expects all non-executive directors to act professionally in their conduct and with the utmost integrity and objectivity. All non-executive directors must comply with the directors in acting professionally in their conduct means that they will act with high standards of honesty, integrity and fairness, avoiding conflicts of interest, acting lawfully and ensuring confidential information is dealt with in accordance with the Code of Conduct and Ethics. The Privacy Policy. Company’s Company’s Company encourages directors to have a significant personal financial interest in Ironbark Capital Limited The (“IBC"), by acquiring and holding shares on a long-term basis. Short term trading in IBC's shares by directors is not permitted. The Board has adopted the following policies concerning dealing in IBC's shares by directors. • Insider trading laws prohibit Directors and their associates from dealing in the possession of price sensitive information that is not generally available. Company’s shares whilst in • As a matter of practice, market disclosure will be made whenever the gross portfolio value moves by more than 2.5% since the previous NTA announcement. Directors’ trading will be allowed, provided such an announcement has been made and a reasonable amount of time allowed for the dissemination of the information into the market. The composition of the Board is monitored (both in respect of size, diversity and membership) to ensure that the Board has a balance of skill and experience appropriate to the needs of the When a vacancy arises, the Board will identify candidates with appropriate expertise and experience and appoint the most suitable person taking into account the need for diversity in gender, age, ethnicity and cultural background. Given the has no employees, consideration of diversity does not extend beyond the Board and further disclosures in relation to policies are not considered relevant. Company. Company 5 Ironbark Capital Limited Corporate Governance Statement 30 June 2013 (continued) Principle 4: Safeguard integrity in financial reporting It is a requirement of the Board that statements, position of the Company. White Outsourcing Pty Limited and that these statements represent a true and fair view of the sign-off on the content of the Company’s operations and financial financial provides a declaration to the Board twice annually, to certify that the White Outsourcing Pty Limited financial statements and notes present a true and fair view, in all material respects, of the condition and operational results and that they have been prepared and maintained in accordance with relevant Accounting Standards and the declarations have been submitted to the Board. In addition, Company Secretarial) confirms in writing to the Board that the declaration provided above is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. In respect of the current financial year all necessary (accounting and White Outsourcing Pty Limited Company’s financial Corporations Act Company’s 2001. Company has an Audit Committee with a documented Charter, approved by the Board. All members must be The non-executive directors and the majority be independent directors. The Chairman is not the Chairman of the Board. The Committee is responsible for considering the effectiveness of the systems and standards of internal control, financial reporting and any other matter at the request of the Board. The Audit Committee will meet at least two times per year. The Audit Committee may have in attendance at their meeting such members of management as may be deemed necessary to provide information and explanations. The external auditors attend meetings by invitation to report to the Committee. The members of the Audit Committee during the year were: • I J Hunter (Chairman) • R J Finley • M J Cole The responsibilities of the Audit Committee are to ensure that: 1. Relevant, reliable and timely information is available to the Board to monitor the performance of the 2. External reporting is consistent with committee members’ information and knowledge and is adequate for shareholder needs; 3. Management processes support external reporting in a format which facilitates ease of understanding by shareholders and institutions; 4. The external audit arrangements are adequate to ensure the maintenance of an effective and efficient external audit. This involves: (a) reviewing the terms of engagement, scope and auditor’s independence; (b) recommendations as to the appointment, removal and remuneration of an auditor; and (c) reviewing the provision of non-audit services provided by the external auditor ensuring they do not adversely impact on audit independence; 5. Review the risk profile and assess the operation of the internal control system. Company’s Company’s Company; The external auditor is required to attend the Annual General Meeting and is available to answer shareholder questions. For details on the number of meetings of the Audit Committee held during the year and the attendees at those meetings, refer to page Directors' Report. of the 13 The Board as a whole monitors the performance of the annual & half-yearly audit performed by the external auditor. If the Board considers that the external auditor of the should be changed a special resolution will be put to shareholder vote at the following Annual General Meeting. External audit engagement partners are required by legislation to rotate their appointment every five years. Company 6 Principle 5: Make timely and balanced disclosures The Board informs shareholders of all major developments affecting the Company’s state of affairs as follows: Ironbark Capital Limited Corporate Governance Statement 30 June 2013 (continued) • All information lodged with the ASX is available on the direct link to the ASX website; • An Annual Report will be mailed to shareholders at the close of the financial year, where requested; and • Net asset backing per share is released to the ASX by the 14th day following each month-end and is sent via email to shareholders who register their interest. website at www.ironbarkcapital.com via a Company’s The Company Secretary is responsible for ensuring disclosure obligations. All relevant staff of Limited Company Secretary immediately when they become aware of it. The Company Secretary in consultation with the Chairman will decide whether the information should be disclosed to the ASX. White Outsourcing Pty Limited are made aware of these obligations and are required to report any price sensitive information to the complies with its continuous Kaplan Funds Management Pty Ironbark Capital Limited and Where possible, all continuous disclosure releases to the ASX are approved by the Board, except the monthly net asset backing per share which is approved by Funds Management Pty directors must approve the release. Where time does not permit approval by the Board, the Chairman of the White Outsourcing Pty Limited in consultation with Limited. Kaplan Any information of a material nature affecting the as soon as the Disclosure requirement. Company becomes aware of such information, in accordance with the ASX Continuous Company is disclosed to the market through release to the ASX Principle 6: Respect the rights of shareholders Shareholders are entitled to vote on significant matters impacting on the business, which include the election and remuneration of directors, changes to the constitution and are able to receive the annual and interim statements Meetings of proxies. if requested. Shareholders are strongly encouraged to attend and participate in the Annual General Ironbark Capital to lodge questions to be responded by the Board, and are able to appoint financial Limited, Principle 7: Recognise and manage risk The Board acknowledges that it is responsible for the overall system of internal control but recognises that no cost effective internal control system will preclude all errors and irregularities. The Board has delegated responsibility for reviewing the risk profile and reporting on the operation of the internal control system to the Audit Committee. The Audit Committee (a) requires executive management to report annually on the operation of internal controls, (b) reviews the external audit of internal controls and liaises with the external auditor and (c) conducts any other investigations and obtains any other information it requires in order to report to the Board on the effectiveness of the internal control system. In respect of the current financial year all necessary declarations have been submitted to the Board. The Board identifies the following business risks as having the potential to significantly or materially impact the Company’s market related risks. performance (a) administrative risks including operational, compliance and financial reporting (b) has outsourced its administrative functions to service providers, Administrative Risks Company The (Sydney Branch) Funds Management Pty Limited handled in accordance with the service providers' policies and procedures. responsible for recognising and managing administrative risks including (a) operational, (b) compliance and (c) financial reporting. Certificates of insurance currency are obtained annually from all key service providers. (investment management). Risk issues associated with these activities are is J.P. Morgan Chase Bank, N.A. Kaplan (accounting and Company Secretarial) and White Outsourcing Pty Limited White Outsourcing Pty Limited (custody), 7 Ironbark Capital Limited Corporate Governance Statement 30 June 2013 (continued) Company (continued) will always carry investment risk because it must invest its capital in Principle 7: Recognise and manage risk Market Risks The Board is primarily responsible for recognising and managing market related risks. By its nature as a Listed Investment Company, the securities which are not risk free. However, the Company diversification of investments across industries and companies operating in various sectors of the market. Funds Management Pty Limited investment management agreement and reports to the Board quarterly on the portfolio’s performance, material actions of the investment manager during that quarter and an explanation of the investment manager’s material proposed actions for the upcoming quarter. In addition, the investment manager is required to report half-yearly that approved investment mandate and complied with the Investment Management Agreement requirements during the reporting period. In respect of the current financial year all necessary declarations have been submitted to the Board. In assessing the risk tolerance level the Board considers any instance which materially affects the Kaplan (investment manager), is required to act in accordance with the Board approved monthly Net Tangible Asset backing announcement released to the ASX. seeks to reduce this investment risk by a policy of Kaplan Funds Management Pty Limited assets in accordance with the have invested the Company’s Company’s Company’s The Audit Committee and the Board perform a risk review on an annual basis to ensure that adequate controls are in place to mitigate risk associated with investment manager performance, market risk, fraud, transaction reporting errors, material reporting risks and compliance risk. Company Principle 8: Remunerate fairly and responsibly The has a Remuneration Committee which reviews and makes recommendations to the Board on remuneration of the directors themselves. The Remuneration Committee meets once a year. Full details on Directors’ remuneration are provided in the Directors’ Report. The members of the Remuneration Committee during the year were: • MJ Cole (Chairman) • R J Finley • I J Hunter (accounting and administration) and As previously noted, the executive function of the Limited therefore, there are no executive directors of the Company. appropriate remuneration of the non-executive directors’ packages for the Board lies with the Remuneration Committee. Non-executive directors are remunerated by way of cash payments. has been outsourced to Kaplan Funds Management Pty Limited White Outsourcing Pty (funds management), The responsibility for considering and recommending Company Recommendation 8.3 states that the remuneration from that of executive directors and senior executives”. The recommendation as there are no executive directors or senior executives. Company should “clearly distinguish the structure of non-executive directors’ Company does not comply with this For details on the number of meetings of the Remuneration Committee held during the year and the attendees at those meetings, refer to page Directors' Report. of the 13 Board policies and charters covering the following are available on the www.ironbarkcapital.com: Company’s website at • Board charter • Nomination Committee charter • Audit Committee charter • Remuneration Committee • Disclosure policy • Communication policy • Risk management policy • Trading policy • Code of Conduct and Ethics 8 Ironbark Capital Limited Portfolio Shareholdings at 30 June 2013 Market Value* $'000 % of portfolio Portfolio Shareholdings at 30 June 2013 ASX Code ANZ CBA NAB WBC Security c Banks ANZ Banking Group Limited Commonwealth Bank of Australia Limited National Australia Bank Limited Westpac Banking Corporation Limited c Hybrids AGL Energy Limited - Subordinated Notes ALE Property Group - Unsecured Notes ANZ Banking Group Ltd - Convertible Preference Securities APA Group - Subordinated Notes Bank of Queensland - Convertible Preference Securities Bendigo Bank - Convertible Preference Securities Caltex Australia Limited - Subordinated Notes AGKHA LEPHC ANZPA/PB AQHHA BOQPD BENPB/PC/PD CTXHA PCAPA/CBAPA/PC Commonwealth Bank Perls III & Perls V & Perls VI Crown Limited - Subordinated Notes CWNHA Insurance Australia Group - Convertible Preference Securities IAGPC Insurance Australia Group - Perpetual Reset Exchangeable Notes IANG Macquarie Group Limited - Capital Notes MQGPA National Australia Bank Limited - Convertible Preference Securities NABPA National Australia Bank Limited Income Securities NABHA Origin Energy Limited - Subordinated Notes ORGHA Ramsay Health Care Ltd - Convertible Equity Securities RHCPA Seven Group Holdings Limited - Convertible Preference Securities SVWPA Suncorp Group Limited - Convertible Preference Securities SUNPC SUNPD Suncorp Group Limited - Subordinated Notes WCTPA/WBCPA Westpac - Convertible Preference Securities TLS BHP BTU NCM RIO WPL CPA CMW DXS IOF SCP c Large Industrial (Top 50) Telstra Corporation Limited c Materials & Energy BHP Billiton Limited Bathurst Resources Limited Newcrest Mining Limited Rio Tinto Limited Woodside Petroleum Limited Property Trusts Commonwealth Property Office Fund Cromwell Property Group Dexus Property Group Investa Office Fund Shopping Centres Australasia Property Group c * Includes market value of options written against holdings. 9 2,739 4,403 1,653 3,293 12,088 1,017 2,017 4,141 1,041 1,234 1,518 2,084 8,318 1,035 3,047 2,573 499 2,161 2,671 4,034 2,170 2,800 3,404 887 1,797 48,448 8,186 8,186 8,137 45 109 84 778 9,153 791 533 387 255 1,794 3,760 3.2 5.2 1.9 3.9 14.2 1.2 2.4 4.9 1.2 1.5 1.8 2.5 9.8 1.2 3.6 3.0 0.6 2.5 3.1 4.8 2.6 3.3 4.0 1.0 2.1 57.1 9.6 9.6 9.6 0.1 0.1 0.1 0.9 10.8 0.9 0.6 0.5 0.3 2.1 4.4 Ironbark Capital Limited Portfolio Shareholdings at 30 June 2013 (continued) Portfolio Shareholdings at 30 June 2013 ASX Code DUE SPN SKI TPI VRT Security c Utilities & Infrastructure DUET Group SP AusNet Spark Infrastructure Group c Small Industrial (ex Top 50) Transpacific Industries Group Ltd Virtus Health Ltd c Cash c Total c * Includes market value of options written against holdings. Market Value* $'000 % of portfolio 1,754 169 856 2,779 200 123 323 123 2.1 0.2 1.0 3.3 0.3 0.2 0.5 0.1 84,860 100.0 10 ABN Ironbark Capital Limited 89 008 108 227 Directors' Report 30 June 2013 Directors' Report Your Directors present their report on the Company for the year ended 30 June 2013. Directors of Ironbark Capital Limited during the financial year and up to the date of Directors The following persons were this report: Michael J Cole Ross J Finley Ian J Hunter Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Principal activities During the year, Stock Exchange. the principal activities of the Company included investments in securities listed on the Australian Dividends Dividends paid to members since the end of the previous financial year were as follows: Record Date Dividend Rate Total Amount $'000 Date of Payment % Franked 2013 Ordinary shares - final Ordinary shares - interim 2012 Ordinary shares - final Ordinary shares - interim 20/06/2013 2.0 cps $3,114 28/06/2013 17/12/2012 2.0 cps $3,114 28/12/2012 21/06/2012 1.0 cps $1,416 29/06/2012 30/01/2012 0.8 cps $1,132 09/02/2012 100 100 100 100 Review of operations Information on the operations and financial position of the Company set out in the review of operations and activities on page 2 of this Annual Report. and its business strategies and prospects is The profit from ordinary activities after income tax amounted to $6,186,000 (2012: $1,791,000). The net tangible asset backing for each ordinary share as at $0.548 per share). 30 June 2013 amounted to $0.549 per share (2012: Earnings per share space Basic and diluted earnings per share (cents per share) 2013 4.09 2012 1.26 Significant changes in the state of affairs Significant changes in the state of affairs of the Company during the financial year were as follows: On 14 September 2012, the Company invited its shareholders to subscribe to a non-renounceable rights issue of 14,155,953 ordinary shares at an issue price of $0.48 per share on the basis of 1 share for every 10 fully paid ordinary shares held, with such shares issued on 24 October 2012 and participated in the dividends paid on 28 December 2012. The issue was fully subscribed. 11 ABN Ironbark Capital Limited 89 008 108 227 Directors' Report 30 June 2013 (continued) Matters subsequent to the end of the financial year No other matter or circumstance has occurred subsequent to significantly affect, the operations of the Company years. in subsequent Company, financial end that has significantly affected, or may the results of those operations or the state of affairs of the year Likely developments and expected results of operations The Company will continue to pursue its investment objectives for the long term benefit of the members. This will require continual review of the investment strategies that are currently in place and may require changes to these strategies to maximise returns. Environmental regulation The Company is not affected by any significant environmental regulation in respect of its operations. To the extent that any environmental regulations may have an incidental impact on the Company's operations, the Directors of the Company are not aware of any breach by the Company of those regulations. Information on directors Michael J Cole B.Ec, M.Ec Sydney, F Fin. Chairman Experience and expertise Investment manager and investment banker Other current directorships Chairman of Platinum Asset Management Limited; Chairman, IMB Ltd; Director, NSW Treasury Corp; Chairman, Challenger Listed Investments Ltd. Interests in shares 9,000,000 shares Ross J Finley B.Comm NSW Experience and expertise Investment banker and stockbroker Other current directorships Director of Century Australia Investments Ltd. Interests in shares 1,640,000 shares Ian J Hunter B.A, LLB Sydney, MBA MGSM Audit Committee Chairman Experience and expertise Banking and finance Other current directorships Director of Rubik Financial Limited. Interests in shares 2,435,596 shares The particulars of directors' interests in shares of the Company are as at the date of this report. 12 ABN Ironbark Capital Limited 89 008 108 227 Directors' Report 30 June 2013 (continued) Secretary is Company secretary The Company member of the Institute of Chartered Accountants and is the Company Secretary of Steadfast Group Limited and Macquarie Premium Funding Pty Limited and also for a number of other Listed Investment Companies. Roberts Secretary in was appointed to the position of Company Roberts. Peter A He is a 2003. Mr Mr Meetings of directors The numbers of meetings of the ended 30 June 2013, Company's board of Directors and of each board committee held during the year and the numbers of meetings attended by each Director were: Michael J Cole Ross J Finley Ian J Hunter Board Meetings Audit A 4 4 4 B 4 4 4 A 2 2 2 Remuneration Meetings of Committees Nomination B A 1 1 1 1 1 1 A 1 1 1 B 2 2 2 B 1 1 1 A = Number of meetings attended B = Number of meetings held during the time the the year Director held office or was a member of the committee during Audit committee The Audit Committee consists of Mr Ian Hunter, Mr Michael Cole and Mr Ross Finley. The Chairman is Mr Ian Hunter, who is not the Chairman of the Board. Remuneration report This report details the nature and amount of remuneration for each Director and Key Management Person of Ironbark Capital Limited Corporations Act 2001. in accordance with the Remuneration policy The Board determines the remuneration structure of Non-Executive Directors (based on the recommendation of the Remuneration Committee), having regard to the scope of the Company’s operations and other relevant factors including the frequency of Board meetings as well as directors’ length of service, particular experience and qualifications. The Board makes a recommendation to shareholders as to the level of Non-Executive Directors remuneration which is then put to shareholders at the Annual General Meeting for approval. As the Company does not provide share or option schemes to Directors and Executives, remuneration of Executives and Non-executives is not explicitly linked to the Company’s performance. Notwithstanding this, Board members and Company executives are subject to ongoing performance monitoring and regular performance reviews. Directors' benefits No Director of the Company has, since the end of the previous financial year, received or become entitled to receive a benefit, other than a remuneration benefit as disclosed in the Director's Report, by reason of a contract made by the Company or a related entity with the director or with a firm of which he is a member, or with a Company in which he has a substantial interest. 13 (continued) Remuneration report Details of remuneration The following tables show details of the remuneration received by the and previous financial year. ABN Ironbark Capital Limited 89 008 108 227 Directors' Report 30 June 2013 (continued) Directors of the Company for the current 2013 Name Other Company Michael J Cole R J Finley I J Hunter 2012 Name Michael J Cole R J Finley I J Hunter and Company executives Cash salary and fees $ Superannuation $ Total $ 20,000 20,000 20,000 60,000 Cash salary and fees $ Superannuation $ 20,000 20,000 20,000 60,000 - - - - - - - - 20,000 20,000 20,000 60,000 Total $ 20,000 20,000 20,000 60,000 Directors are paid a maximum remuneration of $20,000 each per annum. Accounting and company secretarial duties are outsourced to White Outsourcing Pty Limited. Peter Roberts is a director and shareholder of White Outsourcing Pty Limited which received fees net of reduced input tax credits of $82,830 during the year Agreement entered into by the Company. Mr Roberts received no fees as an individual. White Outsourcing Pty Limited is remunerated in accordance with the Fee Revision Letter dated 8 January 2010. The agreement has no fixed term. $64,721) for the services rendered pursuant to an Administrative Services (2012: Shares issued on the exercise of options No options were granted over issued shares or interests during the financial year or since the financial year end by the Company to Directors or any officers. Insurance and indemnification of officers and auditors During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary and any related body corporate against liability incurred as such by a Director Corporations Act or Secretary to the extent permitted by the The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. 2001. No indemnities have been given or insurance premiums paid during or since the end of the financial year, for any person who is or has been an auditor of the Company. Proceedings on behalf of the company No person has applied to the Court under section 237 of the proceedings on behalf of the the purpose of taking responsibility on behalf of the Company, Company or to intervene in any proceedings to which the is a party, for Corporations Act 2001 for leave to bring Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the section 237 of the Corporations Act 2001. Company with leave of the Court under Non-audit services Non-audit services were performed by the auditors and consultation fees of $4,451 were incurred by the Company during the year ended 30 June 2013 (2012: nil). 14 ABN Ironbark Capital Limited 89 008 108 227 Directors' Report 30 June 2013 (continued) Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the set out on page 16. Corporations Act 2001 is Company Rounding of amounts The Commission, relating to the 'rounding off' of amounts in the Directors' Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Directors' Amounts in the Report. This report is made in accordance with a resolution of the Directors. Michael J Cole Director Sydney 23 August 2013 15 Ironbark Capital Limited Annual Report 30 June 2013 - ABN 89 008 108 227 Contents Financial Statements Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Auditor's Report to the Members Page 18 19 20 21 22 43 44 17 Investment income from trading portfolio Revenue Net gains/(losses) on trading portfolio Expenses Management fees Brokerage expense Accounting fees Share registry fees Custody fees Tax fees Directors' liability insurance fees Legal fees Directors' fees ASX fees Audit fees Options expense Other expenses Profit before income tax Income tax (expense)/benefit Net profit for the year Other comprehensive income/(loss) for the year, net of tax Ironbark Capital Limited Statement of Comprehensive Income For the year ended 30 June 2013 Notes 2013 $'000 2012 $'000 6 6 21(b) 18(a) 19 7(a) 4,702 3,807 8,509 (577) (79) (83) (42) (34) (11) (23) (4) (60) (40) (40) (27) (22) (1,042) 7,467 (1,281) 6,186 - 4,681 (2,758) 1,923 (526) (21) (65) (50) (28) (13) (23) (2) (60) (38) (34) (21) (9) (890) 1,033 758 1,791 - Total comprehensive income for the year 6,186 1,791 Cents Cents Earnings per share for profit attributable to the ordinary equity holders of the Basic earnings per share Diluted earnings per share Company: 24 24 4.09 4.09 1.26 1.26 The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 18 ASSETS Current assets Cash and cash equivalents Trade and other receivables Trading portfolio Current tax assets Other assets Total current assets Non-current assets Deferred tax assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Current tax liabilities Total current liabilities Non-current liabilities Deferred tax liabilities Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Accumulated losses Total equity Ironbark Capital Limited Statement of Financial Position As at 30 June 2013 Notes 2013 $'000 2012 $'000 8 9 10 12 13 14 123 615 84,737 332 4 85,811 2,147 714 75,070 - 4 77,935 606 606 1,823 1,823 86,417 79,758 118 - 118 11 11 129 102 57 159 14 14 173 86,288 79,585 15 16(a) 86,901 (613) 80,156 (571) 86,288 79,585 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 19 Ironbark Capital Limited Statement of Changes in Equity For the year ended 30 June 2013 Issued capital $'000 Accumulated losses $'000 Total equity $'000 Notes 80,156 186 80,342 - - 1,791 1,791 1,791 1,791 Balance at 1 July 2011 Profit for the year Total comprehensive income for the year Transactions with owners in their capacity as owners: Dividends provided for or paid Balance at 30 June 2012 17 - 80,156 (2,548) (571) (2,548) 79,585 Balance at 1 July 2012 Profit for the year Total comprehensive income for the year Transactions with owners in their capacity as owners: Dividends provided for or paid Contributions of equity from rights issue, net of transaction costs and tax 17 15(e) 80,156 (571) 79,585 - - - 6,745 6,745 6,186 6,186 (6,228) - (6,228) 6,186 6,186 (6,228) 6,745 517 Balance at 30 June 2013 86,901 (613) 86,288 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 20 Cash flows from operating activities Interest received Proceeds from sale of trading portfolio Payments for purchase of trading portfolio Dividends and trust distributions received Other income received Management fees paid Other expenses paid Net income taxes paid Net cash (outflow) from operating activities Cash flows from financing activities Dividends paid to company shareholders Proceeds from rights issue Transaction costs paid for rights issue Net cash inflow/(outflow) from financing activities (decrease) in cash and cash equivalents Net Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year Ironbark Capital Limited Statement of Cash Flows For the year ended 30 June 2013 Notes 2013 $'000 2012 $'000 945 59,457 (65,380) 3,711 130 (573) (375) (435) (2,520) (6,228) 6,795 (71) 496 (2,024) 2,147 123 77 38,036 (43,235) 4,466 31 (527) (378) (24) (1,554) (2,548) - - (2,548) (4,102) 6,249 2,147 23 17 8 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 21 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 1 General information Ironbark Capital Limited Ironbark Capital statements of in making investments, and deriving revenue and investment income from listed securities and unit trusts in Australia. (the "Company") is a listed public company domiciled in Australia. The address of registered office is Level 3, 99 Bathurst Street, Sydney NSW 2000. The financial 30 June Ironbark Capital Limited are for the year ended The Company is primarily involved Limited's 2013. 2 Summary of significant accounting policies The principal accounting policies adopted in the preparation of These policies have been consistently applied to all the years statements Ironbark Capital are for the Limited. entity financial statements these presented, unless otherwise stated. The are set out below. financial (a) Basis of preparation general purpose These have Standards and interpretations issued by the Australian Accounting Standards Board and the 2001. is a for-profit entity for the purpose of preparing the Ironbark Capital Limited financial statements financial been prepared in accordance with Australian Accounting statements. Corporations Act The Financial Statements were authorised for issue by the directors on 23 August 2013. (i) Compliance with IFRS The Ironbark Capital Limited Standards (IFRS) as issued by the International Accounting Standards Board (IASB). financial statements comply of the also with International Financial Reporting beginning 1 July 2012 New and amended standards adopted by the (ii) None of the new standards and amendments to standards that are mandatory for the first time for the year are not likely to affect future periods. However, amendments made to AASB 101: Statements comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met. Presentation of Financial effective 1 July 2012 now require the statement of comprehensive income to show the items of affected any of the amounts recognised in the current period or any prior period and Company financial Financial Statements (iii) Historical cost convention These convention, as modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. been prepared under the accruals basis and are based on historical cost have (iv) Critical accounting estimates The preparation of requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the are disclosed in Note financial statements accounting policies. statements, financial 4. (b) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of rebates and amounts collected on behalf of third parties. (i) Trading income Profits and losses realised from the sale of investments and unrealised gains and losses on securities held at fair value are included in the Statement of Comprehensive Income in the year they are earned/incurred. (ii) Dividends and trust distributions Dividends and trust distributions are recognised as revenue when the right to receive payment is established. 22 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2 Summary of significant accounting policies (continued) (b) Revenue recognition (continued) (iii) Interest income Interest income is recognised using the effective interest method. recognises other income when the amount of revenue can be reliably measured, it is probable that (iv) Other income The Company future economic benefits will flow to the entity and specific criteria have been met for each of the activities as described below. The Company type of customer, the type of transaction and the specifics of each arrangement. bases its estimates on historical results, taking into consideration the Company's (c) Income tax The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax is Statements. Financial Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss in the except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Statement of Comprehensive Income, (d) Cash and cash equivalents For the purpose of presentation in the hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the cash and cash equivalents includes cash on Statement of Financial Statement of Cash Position. Flows, (e) Trade and other receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade and other receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. 23 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2 Summary of significant accounting policies (continued) (f) Trading portfolio Classification The trading portfolio comprises securities held for short term trading purposes, including exchange traded option contracts that are entered into, as described below. The purchase and the sale of securities are accounted for at the date of trade. Trade date accounting is adopted for financial assets that are delivered within timeframes established by market place convention. Options are initially brought to account at the amount received upfront for entering the contract (the premium) and subsequently revalued to current market value. Increments and decrements are taken through the Comprehensive Statement of Income. Securities in the trading portfolio are classified as "assets measured at fair value through profit or loss". Recognition and derecognition Purchases and sales of financial assets are recognised on trade date - the date on which the to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the risks and rewards of ownership. has transferred substantially all the Company Company commits Measurement At initial recognition, the transaction costs which are expensed in profit or loss. Company measures a financial asset or financial liability at its fair value, net of Subsequent to initial recognition, the financial instruments are measured at fair value with changes in their fair value recognised in the Statement of Comprehensive Income. When an investment is disposed, the cumulative gain or loss is recognised as realised gains and losses on trading portfolio in the Statement of Comprehensive Income. AIFRS defines fair value for the purpose of valuing holdings of securities that are listed or traded on an exchange to be based on quoted "bid" prices for securities prevailing at the close of business on the balance date. AASB 139 and AG72 state that the current bid price is usually the appropriate price to be used in measuring the fair value of actively traded financial assets. Financial assets should be valued at their fair value without any deduction for transaction costs that may be incurred on sale or other disposal. Certain costs in acquiring investments, such as brokerage and stamp duty are expensed in the Statement of Comprehensive Income. (g) Derivatives The Company may invest in financial derivatives. Derivative financial instruments are accounted for on the same basis as the underlying investment exposure. Gains and losses relating to derivatives are included in investment income as part of realised or unrealised gains and losses on investments. (h) Trade and other payables These amounts represent liabilities for goods and services provided to the which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and year other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. prior to the end of Company financial 24 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2 Summary of significant accounting policies (continued) (i) Issued capital 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. (j) Dividends In accordance with the exceed its liabilities, the payment of the dividend is fair and reasonable to the Company's shareholders as a whole and the payment of the dividend does not materially prejudice the Company's ability to pay its creditors. the Company may pay a dividend where the Company's assets Corporations Act 2001, It is the Directors’ policy to only pay fully franked dividends and to distribute the majority of franking credits received each year. Franking credits are generated by receiving fully franked dividends from shares held in the Company's investment portfolio, and from the payment of corporate tax on its other investment income, namely share option premiums, unfranked income and net realised gains. A provision for dividends payable is recognised in the reporting period in which dividends are declared, for the entire undistributed amount, regardless of the extent to which they will be paid in cash. (k) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing: • • the profit attributable to owners of the ordinary shares by the weighted average number of ordinary shares outstanding during the bonus elements in ordinary shares issued during the Company, year and excluding treasury financial year, shares. excluding any costs of servicing equity other than adjusted for (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: • the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. • (l) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (m) Rounding of amounts Company The Commission, relating to the 'rounding off' of amounts in the statements certain cases, the nearest dollar. is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments financial Amounts in the statements. financial have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in 25 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2 Summary of significant accounting policies (continued) (n) Functional and presentation currency The functional and presentation currency of the Company is Australian dollars. (o) Comparatives Where necessary, comparative information has been reclassified to be consistent with current reporting period. (p) Operating Segments The Company operated in Australia only and the principal activity is investment. (q) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 2013 of the impact of these new standards and interpretations is set out below. reporting periods and have not yet been applied in the Financial Statements. The Company's 30 June assessment (i) AASB 9 AASB 9 (December 2010) Financial and AASB 2010-7 (effective from 1 January 2015) Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from Amendments to Australian Accounting Standards arising from AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets AASB 9 and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not traded. The Directors do not expect this will have a significant impact on the Company's financial statements. (ii) AASB 13 arising from AASB 13 Amendments to Australian Accounting Standards (applicable for annual reporting periods commencing on or after 1 January 2013) and AASB 2011-8 Fair Value Measurement Company AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the However, application of the new standard will impact the type of information disclosed in the statements. does not intend to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 30 June 2014. Statements. notes to the financial Company Financial The (iii) AASB 2011-4 Personnel Disclosure Requirements (effective 1 July 2013) Amendments to Australian Accounting Standards to Remove Individual Key Management Related Party In July 2011 the AASB decided to remove the individual key management personnel (KMP) disclosure requirements from AASB 124 Disclosures, to achieve consistency with the international equivalent standard and remove a duplication of the requirements with the 2001. While this will reduce the disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be adopted early. The requirements are currently subject to review and may also be revised in the near future. The intend to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 30 June 2014. requirements in relation to remuneration reports will remain unchanged for now, but these does not Corporations Act Corporations Act Company There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 26 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 3 Financial risk management Company's The risk), credit risk and liquidity risk. The Board of the mitigate these risks. activities expose it to a variety of financial risks: market risk (including interest rate risk and price has implemented a risk management framework to Company (a) Market risk The standard defines this as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. (i) Price risk The Company classified in the is exposed to equity securities price risk. This arises from investments held by the Company and Statement of Financial Position as trading portfolio. Company seeks to manage and constrain market risk by diversification of the investment portfolio across The multiple stocks and industry sectors. The Investment Manager of the trading portfolio has been granted specific risk tolerance boundaries as set out in the Investment Management Agreement. The Company's investment sector as at 30 June is as below: Sector Financials Energy Healthcare and biotechnology Industrials Consumer discretionary Utilities Materials Telecommunications services Corporate floating rate notes Property trust Total 30 June 2013 2013 (%) 30 June 2012 2012 (%) 53.39 0.92 2.71 3.54 - 3.28 9.88 9.66 14.30 2.32 100.00 51.57 2.15 2.64 2.61 0.08 5.27 13.60 8.33 11.34 2.41 100.00 Securities representing over 5 percent of the trading portfolio at 30 June 2013 were: Commonwealth Bank Perls III & Perls V & Perls VI BHP Billiton Limited Telstra Corporation Limited Commonwealth Bank of Australia 2013 (%) 9.8 9.6 9.6 5.2 34.2 No other security represents over 5 percent of the trading portfolio at 30 June 2013. The Company is also not directly exposed to currency risk as all its investments are quoted in Australian dollars. 27 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 3 Financial risk management (continued) (a) Market risk (continued) Price risk (continued) (i) The following table illustrates the effect on the Company's profit or loss risk that were reasonably possible based on the risk the Company was exposed to at reporting date, assuming a flat tax rate of 30 percent: from possible changes in other market Index Change in variable by +5%/-5% (2012: +5%/-5%) Change in variable by +10%/-10% (2012: +10%/-10%) Impact on post-tax profit 2013 $'000 2012 $'000 2,966 5,932 2,627 5,255 (ii) Cash flow and fair value interest rate risk The Company's interest bearing financial assets expose it to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The risk is measured using sensitivity analysis. The table below summarises the exposure to interest rate risks. It includes the liabilities at fair values, categorised by the earlier of contractual repricing or maturity dates. Company's Company's assets and 30 June 2013 Financial Assets Cash and cash equivalents (i) Trade and other receivables Trading portfolio Current tax assets Financial liabilities Trade and other payables Floating interest rate $'000 Non- interesting bearing $'000 Total $'000 123 - 12,115 - 12,238 - 615 72,622 332 73,569 123 615 84,737 332 85,807 - - (118) (118) (118) (118) Net exposure 12,238 73,451 85,689 28 3 Financial risk management (continued) (a) Market risk (continued) Cash flow and fair value interest rate risk (continued) (ii) 30 June 2012 Financial assets Cash and cash equivalents (i) Trade and other receivables Trading portfolio Financial liabilities Trade and other payables Current tax liabilities Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) Floating interest rate $'000 Non- interesting bearing $'000 Total $'000 2,147 - 8,516 10,663 - - - - 714 66,554 67,268 (102) (57) (159) 2,147 714 75,070 77,931 (102) (57) (159) Net exposure 10,663 67,109 77,772 (i) The weighted average interest rate of the (2012: 4.56% pa). Company's cash and cash equivalents at 30 June 2013 is 3.90% pa 2013, Sensitivity At 30 June other variables held constant, post-tax profit for the changes of 75 bps/75 bps: $11,272 lower/$11,272 cash and cash equivalents. if interest rates had increased or decreased by 75 basis points from the year higher), would have been $644 higher/$644 lower (2012: mainly as a result of higher/lower interest income from year end rates with all (b) Credit risk The standard defines this as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position Notes to the Financial Statements. and There are no material amounts of collateral held as security at 30 June 2013. Credit risk is managed as noted in Note receivables and Note to be impaired. 10 for trade and other for floating rate note trading portfolio. None of these assets are over-due or considered with respect to cash and cash equivalents, Note 9 8 (c) Liquidity risk The standard defines this as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Investment Manager monitors its cash-flow requirements daily in relation to the investing account taking into account upcoming dividends, tax payments and investing activity. 29 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 3 Financial risk management (continued) (c) Liquidity risk (continued) The Company's inward cash flows depend upon the level of dividend and distribution revenue received. Should these decrease by a material amount, the Company would amend its outward cash flows accordingly. As the Company's major cash outflows are the purchase of securities and dividends paid to shareholders, the level of both of these is managed by the Board and Investment Manager. The assets of the Company are largely in the form of readily tradeable securities which can be sold on-market if necessary. The table below analyses the Company's non-derivative financial liabilities in relevant maturity groupings based on the remaining period to the earliest possible contractual maturity date at the year end date. The amounts in the table are contractual undiscounted cash flows. Contractual maturities of financial liabilities At 30 June 2013 Non-derivatives Trade and other payables Total non-derivatives 30 June 2012 At Non-derivatives Trade and other payables Current tax liabilities Total non-derivatives Less than 1 month $'000 More than 1 month $'000 118 118 102 - 102 - - - 57 57 (d) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 7 Financial Instruments: Disclosures following fair value measurement hierarchy: requires disclosure of fair value measurements by level of the (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). (c) The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. 30 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 3 Financial risk management (continued) (d) Fair value measurements (continued) The determination of what constitutes ‘observable’ requires significant judgement by the Directors. The Directors consider observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The following table presents the fair value according to the fair value hierarchy at Company's financial assets and liabilities (by class) measured and recognised at 2012: 30 June 2013 30 June and 30 June 2013 Financial assets Trading portfolio Total 30 June 2012 Financial assets Trading portfolio Total Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 84,737 84,737 Level 1 $'000 Level 2 $'000 75,070 75,070 - - - - - - - - 84,737 84,737 Total $'000 75,070 75,070 Level 3 $'000 The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the included in level 1. is the current bid price. These instruments are Company The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities and loans. 4 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. 5 Segment information The Company has only one reportable segment. The Company operates predominantly in Australia and in one industry being the securities industry, deriving revenue from dividend income, interest income and from the sale of its trading portfolio. 31 6 Investment income Revenue Dividends Interest Distributions Other income Net gains/(losses) on trading portfolio Net realised gains/(losses) on trading portfolio Net unrealised gains/(losses) on trading portfolio Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2013 $'000 2012 $'000 3,229 936 406 131 4,702 3,477 777 395 32 4,681 (1,255) 5,062 3,807 1,866 (4,624) (2,758) 8,509 1,923 7 Income tax expense/(benefit) (a) Income tax expense/(benefit) recognised in the Statement of Comprehensive Income Current tax Deferred tax Income tax expense/(benefit) is attributable to: Profit from continuing operations 2013 $'000 2012 $'000 61 1,220 1,281 644 (1,402) (758) 1,281 (758) (b) Numerical reconciliation of income tax expense/(benefit) to prima facie tax payable Profit from continuing operations before income tax expense/(benefit) Tax at the Australian tax rate of 30.0% (2012 - 30.0%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Franking credits on dividends received Imputation gross up on dividends income Timing differences Permanent differences from adjustments to prior year income tax expense Realised taxable investment (gain)/loss Realised accounting investment (gain)/loss Income tax expense/(benefit) The applicable weighted average effective tax rates are as follows: 32 2013 $'000 2012 $'000 7,467 2,240 (1,340) 402 (255) (53) (89) 376 1,281 1,033 310 (1,500) 450 (41) (40) 623 (560) (758) (8,748) 17.16% (275) -73.39% 8 Cash and cash equivalents Cash at bank and in hand (a) Reconciliation to cash at the end of the year Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2013 $'000 2012 $'000 123 2,147 The above figures are reconciled to cash at the end of the Flows as follows: financial year as shown in the Statement of Cash Balances as above (b) Risk exposure 2013 $'000 2012 $'000 123 2,147 Company's The The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. exposure to interest rate risk is discussed in Note 3. Cash investments are made with JP Morgan which is rated A+/A- by Standards & Poor's. 9 Trade and other receivables Dividends and distributions receivable Interest receivable GST receivable Unsettled sales 2013 $'000 2012 $'000 481 38 19 77 615 555 48 17 94 714 Outstanding settlements are on the terms operating in the securities industry, which usually require settlement within three days of the date of a transaction. None of the receivables is past due or impaired at the end of the reporting period. (a) Fair value and credit risk Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. Risk exposure The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. 33 10 Trading portfolio Listed equities Units in listed property trusts Floating rate notes - listed (a) Risk exposure and fair value measurements Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2013 $'000 2012 $'000 67,877 4,745 12,115 84,737 64,749 1,805 8,516 75,070 Information about the determining fair value is provided in note Company's 3. exposure to price risk and about the methods and assumptions used in 11 Derivative financial instruments In the normal course of business, the certain risks. A derivative is a financial instrument or other contract whose value depends on, or is derived from, underlying assets, liabilities or indices. Derivative transactions include a wide assortment of instruments, such as forwards, futures, options and swaps. enters into transactions in derivative financial instruments with Company Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of the Company's portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives is multi-faceted and includes: (i) hedging to protect an asset of the Company against a fluctuation in market values or to reduce volatility; (ii) as a substitute for physical securities; and (iii) adjustment of asset exposures within the parameters set out in the investment strategy. Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. The Company holds the following derivative instruments: Options An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a predetermined price. The seller receives a premium from the purchaser in consideration for the assumption of future securities price. Options held are exchange-traded. At year end, the notional principal amounts of derivatives held by the Company were as follows: c Australian traded exchange options Notional principal amounts 2012 $'000 (1,137) Notional principal amounts 2013 $'000 (799) 34 12 Deferred tax assets The balance comprises temporary differences attributable to: Net unrealised losses of investments Other temporary differences Movements: Opening balance Charged/credited: - to profit or loss 13 Trade and other payables Management fees payable Other payables 14 Deferred tax liabilities The balance comprises temporary differences attributable to: Accrued income Movements: Opening balance Charged/credited: - profit or loss Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2013 $'000 2012 $'000 574 32 606 1,823 (1,217) 606 1,816 7 1,823 972 851 1,823 Notes 21(c) 2013 $'000 2012 $'000 50 68 118 46 56 102 2013 $'000 2012 $'000 11 14 (3) 11 14 1 13 14 35 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 15 Issued capital (a) Issued capital 30 June 2013 Shares 30 June 2012 Shares 2013 $'000 2012 $'000 Ordinary shares - fully paid 155,715,478 141,559,525 86,901 80,156 (b) Movements in ordinary share capital Date Details Notes Number of shares Issue price $'000 1 July 2011 Opening balance 30 June 2012 Balance 141,559,525 141,559,525 24 October 2012 Rights issue 24 October 2012 Transaction costs arising from rights (e) 14,155,953 $0.48 issue 30 June 2013 Balance (c) Ordinary shares - 155,715,478 80,156 80,156 6,795 (50) 86,901 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the proportion to the number of and amounts paid on the shares held. Company in On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (d) Dividend reinvestment plan Under the Company's dividend reinvestment plan (DRP), additional shares are allotted at a price calculated at 97.5% of the weighted average share price. The DRP is currently suspended and as such, there were no shares issued under the dividend reinvestment plan during the year. (e) Rights issue On 14 September 2012 the to subscribe to a rights issue of 14,155,953 ordinary shares at an issue price of $0.48 per share on the basis of 1 share for every 10 fully paid ordinary shares held, with such shares to be issued on 24 October 2012 and participated in the dividends paid on 28 December 2012. The issue was fully subscribed. Shareholders Company invited its (f) Capital risk management To achieve this the Board of Directors monitor the monthly NTA results, investment performance, the Company's Indirect Cost Ratio (formerly known as 'Management Expense Ratio') and share price movements. The Company is not subject to any externally imposed capital requirements. 36 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) Notes 2013 $'000 2012 $'000 17 (571) 6,186 (6,228) (613) 186 1,791 (2,548) (571) 2013 $'000 2012 $'000 3,114 3,114 6,228 1,416 1,132 2,548 2013 $'000 2012 $'000 - 779 Parent entity 2013 $'000 2012 $'000 907 1,340 435 (2,669) - 13 477 1,498 24 (1,092) - 907 16 Accumulated losses (a) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net profit/(loss) for the Dividends paid Balance 30 June year 17 Dividends a) Ordinary shares Final dividend Interim dividend (b) Dividends not recognised at the end of the reporting period year end the Directors have not declared any interim dividend. When the Since prior year financial report was signed off, the payment of interim dividend of 5 cents per fully paid ordinary share, fully franked based on tax paid at December 2012 out of retained earnings at a liability at The aggregate amount of the dividend paid on 28 but not recognised as recommended the Directors 30 June end, is 2013, 30%. year (c) Dividend franking account Opening balance of franking account Franking credits on dividends received Net tax paid during the year Franking credits paid on ordinary dividends paid Loss of franking credits under 45 day rule Closing balance of franking account 37 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 17 Dividends (continued) (c) Dividend franking account (continued) Adjustments for tax payable/refundable in respect of the current year's profits Impact on the franking account of dividends proposed or declared before the financial report authorised for issue but not recognised as a distribution to equity holders during the year Franking credits on dividends received after year end Parent entity 2013 $'000 2012 $'000 (332) 228 - 127 (205) (192) (303) 171 96 1,003 (d) Dividend rate Dividends paid fully franked at 30% tax rate 2013 Ordinary shares - final Ordinary shares - interim 2012 Ordinary shares - final Ordinary shares - interim Record Date Dividend Rate Total Amount $'000 Date of Payment % Franked 20/06/2013 2.0 cps $3,114 28/06/2013 17/12/2012 2.0 cps $3,114 28/12/2012 21/06/2012 1.0 cps $1,416 29/06/2012 30/01/2012 0.8 cps $1,132 09/02/2012 100 100 100 100 18 Key management personnel disclosures (a) Key management personnel compensation Short-term employee benefits 2013 $ 2012 $ 60,000 60,000 Detailed remuneration disclosures are provided in the remuneration report on pages to13 14. (b) Equity instrument disclosures relating to key management personnel (i) Share holdings The numbers of shares in the and other key management personnel of the below. There were no shares granted during the reporting period as compensation. held during the Company, Company by each financial year Director including their personally related parties, are set out Ironbark Capital Limited of 38 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 18 Key management personnel disclosures (continued) (b) Equity instrument disclosures relating to key management personnel (continued) (i) Share holdings (continued) 2013 Name Ironbark Capital Limited of Directors Ordinary shares Michael J Cole Ross J Finley Ian J Hunter 2012 Name Ironbark Capital Limited of Directors Ordinary shares Michael J Cole Ross J Finley Ian J Hunter Balance at the start of the year 8,000,000 1,400,000 2,032,364 11,432,364 Balance at the start of the year 8,000,000 1,400,000 1,662,448 11,062,448 Other changes during the year Balance at end of the year Net movement 1,000,000 240,000 403,232 1,643,232 - - - - 9,000,000 1,640,000 2,435,596 13,075,596 Other changes during the year Balance at end of the year Net movement - - 369,916 369,916 - - - - 8,000,000 1,400,000 2,032,364 11,432,364 19 Remuneration of auditors During the the Company, its related practices and non-related audit firms: year the following fees were paid or payable (exclusive of RITC) for services provided by the auditor of (a) Auditors Audit and other assurance services MNSA Pty Ltd - Audit and review of financial statements Other assurance services PWC - Audit of custodian statements Total remuneration for audit and other assurance services Other services PWC - Consultation fees Total remuneration for other services Total auditor remuneration for assurance and other services 39 30 June 2013 $'000 30 June 2012 $'000 29 7 36 4 4 40 26 8 34 - - 34 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 20 Contingencies The Investment Management Agreement entered into by the Company with Kaplan Funds Management Pty Ltd may be terminated by either party giving to the other no less than one-year written notice of its intention to do so. The Company had no other contingent liabilities at 30 June 2013 (2012: nil). 21 Related party transactions (a) Key management personnel Disclosures relating to key management personnel are set out in Note 18. (b) Transactions with other related parties The following transactions occurred with related parties (exclusive of RITC): 30 June 2013 $ 30 June 2012 $ Management fees paid or payable 577 526 The Company has entered into a Management Agreement with Kaplan Funds Management Pty Ltd such that it will manage investments of the Company, ensure regulatory compliance with all the relevant laws and regulations, and provide administrative and other services for a fee. No performance fees were paid or payable to Kaplan Funds Management Pty Ltd for the year ended 2013 (2012: nil). 30 June (c) Outstanding balances The following balances (GST inclusive) are outstanding at the end of the reporting period in relation to transactions with related parties: Management fees payable (d) Terms and conditions 2013 $'000 2012 $'000 50 46 Transaction between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. 22 Events occurring after the reporting period No matter or circumstance has occurred subsequent to significantly affect, the operations of the Company or economic entity in subsequent Company, financial years. year end that has significantly affected, or may the results of those operations or the state of affairs of the 40 Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 23 Reconciliation of profit after income tax to net cash outflow from operating activities Profit for the year Unrealised (gains)/losses on trading portfolio Realised losses/(gains) on trading portfolio Change in operating assets and liabilities: (Increase)/decrease in trade and other receivables (Increase)/decrease in other current assets (Decrease)/increase in trade and other payables (Decrease)/increase in tax liabilities (Increase)/decrease in trading portfolio Net cash outflow from operating activities 24 Earnings per share (a) Basic earnings per share 2013 $'000 2012 $'000 6,186 (5,062) 1,255 80 - 17 847 (5,843) (2,520) 1,791 4,624 (1,866) (107) 1 (17) (781) (5,199) (1,554) 2013 Cents 2012 Cents* From continuing operations attributable to the ordinary equity holders of the company Total basic earnings per share attributable to the ordinary equity holders of the Company 4.09 4.09 1.26 1.26 (b) Diluted earnings per share 2013 Cents 2012 Cents* From continuing operations attributable to the ordinary equity holders of the company Total diluted earnings per share attributable to the ordinary equity holders of the Company 4.09 4.09 1.26 1.26 Diluted earnings per share is the same as basic earnings per share. The Company has no securities outstanding which have the potential to convert to ordinary shares and dilute the basic earnings per share. 41 24 Earnings per share (continued) (c) Weighted average number of shares used as denominator Ironbark Capital Limited Notes to the Financial Statements 30 June 2013 (continued) 2013 Number 2012 Number* Weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share 151,419,985 141,559,525 * The prior year basic and diluted earnings per share were recalculated due to the change in the number of shares from the rights issue in the current year. 42 In the Directors' opinion: Ironbark Capital Limited Directors' Declaration 30 June 2013 and notes set out on pages to17 42 are in accordance with the Corporations Act (a) (b) (c) financial statements including: the 2001, (i) (ii) complying with Australian Accounting Standards, the mandatory professional reporting requirements, and giving a true and fair view of the performance for the year ended entity's financial position as at on that date, and Corporations Regulations 2001 and other 30 June 2013 and of its there are reasonable grounds to believe that the become due and payable. Company will be able to pay its debts as and when they 2(a) Note Standards as issued by the International Accounting Standards Board. financial statements confirms that the comply also with International Financial Reporting Directors have been given a declaration by Peter Roberts on behalf of White Outsourcing Pty Ltd, as a The person who performs the Chief Executive functions of the Company, required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. Michael J Cole Director Sydney 23 August 2013 43 Ironbark Capital Limited Shareholder information 11 September 2013 The Shareholder information set out below was applicable as at 11 September 2013. A. Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Holding 1 - 1000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Shareholders Shares 289 470 340 1,211 169 2,479 106,528 1,368,119 2,596,717 38,338,003 113,306,111 155,715,478 There were 257 holders of less than a marketable parcel of ordinary shares. B. Equity security holders The percentage of total holding of the 20 largest holders of ordinary shares currently comes to 51.66%. Twenty largest quoted equity security holders The names of the twenty largest holders of quoted equity securities are listed below: Name Ordinary shares Number held Percentage of issued shares KAPLAN PARTNERS PTY LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED ABTOURK (SYD NO 415) PTY LTD QUESTOR FINANCIAL SERVICES LIMITED EDSGEAR PTY LIMITED ABTOURK (SYD NO 415) PTY LTD SUPENTIAN PTY LIMITED LIANGROVE MEDIA PTY LIMITED DOWLING TAYLER PTY LTD BOND STREET CUSTODIANS LIMITED H H ANG PTY LTD BOND STREET CUSTODIANS LIMITED BOND STREET CUSTODIANS LIMITED LIANGROVE GROUP PTY LTD MR DAVID STRINGER HILTON BOND STREET CUSTODIANS LIMITED COOLAL PTY LTD TOLMIN PTY LIMITED DELTA ASSET MANAGEMENT PTY LTD BOND STREET CUSTODIANS LIMITED 36,115,029 10,587,061 5,500,000 4,957,553 4,655,922 3,500,000 2,435,596 1,518,672 1,278,953 1,275,563 999,933 951,284 932,587 911,210 880,000 849,434 820,000 820,000 760,000 661,668 80,410,465 23.19 6.80 3.53 3.18 2.99 2.25 1.56 0.98 0.82 0.82 0.64 0.61 0.60 0.59 0.57 0.55 0.53 0.53 0.49 0.43 51.66 46 C. Substantial holders Substantial holders in the Company are set out below: KAPLAN PARTNERS PTY LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED Ironbark Capital Limited Shareholder information 11 September 2013 (continued) Number held Percentage 36,115,029 23.19% 10,587,061 46,702,090 6.80% 29.99% D. Voting rights At a general meeting, on the show of hands, every ordinary member present in person shall have one vote for every share held. Proxies present at the meeting are not entitled to vote on a show of hands, but on a poll have one vote for every share held. E. Company Secretary The name of the Company Secretary is Mr Peter Roberts. The registered office and principal place of business of the Company is: Level 3 99 Bathurst Street Sydney, NSW 2000 Telephone: (02) 8262 2800 F. Registry Share registry functions are maintained by Boardroom Pty Limited and their details are as follows: GPO Box 3993 Boardroom Pty Limited Sydney, NSW 2001 Shareholder enquiries telephone: (02) 9290 9600 G. Stock Exchange Listing Quotation has been granted for all of the ordinary shares of the Australian Stock Exchange Limited. Company on all Member Exchanges of the The Company Council during the financial year. has followed all applicable best practice recommendations set by ASX Corporate Governance H. Transaction Summary Company The of RITC claimable was $128,468. conducted 732 security transactions during the financial year. Brokerage paid during the year net Company The consistent with its business objectives. has used cash and assets in a form readily convertible to cash that it had at the time of admission 47 I. Investment Management Agreement Ironbark Capital Limited Shareholder information 11 September 2013 (continued) Kaplan Funds Management Pty Limited The Investment Management Agreement with of an investment management fee of 0.65% per annum. In the event that the investment return on the IBC portfolio exceeds the ASX300 index benchmark by a margin of 1% or more an additional performance fee of 15% of the performance (adjusted for the value of franking credits received or accrued during the after the deduction of the Management Fee and any applicable GST) of the Portfolio above the aggregate of the Benchmark plus 1% will be payable. The agreement contains a highwater mark in relation to the performance fee to protect the interest of investors. provides for the payment financial year and 48 

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