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Federated Investors Inc.2015 ANNUAL REPORT
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INVESTMENT
REPORT
DIRECTORS’ S’
REPORT
FINANCIAL
STATEMENTS
CORPORATE
GOVERNANCE
ADDADDIITTIIONAL ASX
ININFFORMORMATION
ADDITIONAL ASX
REPORTING
Corporate Directory
Katana Capital Limited
ABN 56 116 054 301
Board of Directors
Mr Dalton Gooding
Chairman, Non-Executive Director
Mr Peter Wallace
Non-Executive Director
Mr Giuliano Sala Tenna
Non-Executive Director
Mr Gabriel Chiappini
Company Secretary
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6001
Auditors
Ernst & Young
11 Mounts Bay Road
Perth WA 6000
Share Registry
Computershare Investor
Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
Perth WA 6000
Registered Office
Level 9, The Quadrant Building
1 William Street
Perth WA 6000
Stock Exchange
ASX Limited
Exchange Plaza, 2 The Esplanade
Perth WA 6000
ASX Code: KAT
01
Katana Capital combines its listed investment company structure
with the proven ability of its Manager (“KATANA ASSET MANAGEMENT LTD”)
to provide investors with access to comprehensive investment
techniques aimed at providing capital and income returns.
The Company and the Manager share similar investment
philosophies. The role of the Company is to assess and monitor
the Manager and liaise with the Manager with respect to its
Mandate as detailed in the Management Agreement.
Our investment philosophy
As an ‘All Opportunities’ fund, the underlying goal of the Manager
is to assess the risk adjusted return of every potential opportunity
identified by the Manager. The Manager’s approach includes
selectively and modestly taking higher-risk positions, provided
that the potential return exceeds the additional risk –
preferably in terms of both value and time.
Whilst the Manager intends to combine the best principles
of value investing, fundamental and technical analysis,
it does not wish to be constrained by the constructs of
any one approach. The key to the long-term success of
the Company is seen as the capacity of the Manager to
integrate the best principles of each discipline with
the extensive and varied experiences of the Manager.
This is achieved by encouraging flexibility and
adaptability, but within the confines of an overall
framework that controls risk.
02
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
INVESTMENT REPORT
Katana Asset Management Ltd (‘The Manager’) has completed
a report on the performance of Katana Capital Limited’s portfolio
for the 12 months to 30 June 2015.
FY15
financial
year
review
The All Ordinaries Index was broadly flat over
the course of FY15, starting at 5,382 points as
at 1 July 2014 and ending at 5,451.2 points,
representing a gain of 1.29%. The index
‘range traded’ between approximately
5,200 points and 5,800 points over this period.
After significantly outperforming its
benchmark in FY14 with a 26.79% return verses
the All Ords Index of 12.7% and a track record
of outperformance in eight of the past nine
years, the Manager unfortunately under-
performed its benchmark in FY15, generating
a negative gross investment return (before fees
and taxes) of -2.28%. A summary of returns
delivered by the Manager compared to the
All Ords Index is shown in the table below.
The Manager continued to hold between
50-60 individual stock positions as well as
a reasonable level of cash over FY15.
The Manager remains committed to
maintaining a diversified portfolio, which
it believes, provides a better risk adjusted
outcome compared to achieving that same
level of return via a concentrated portfolio.
The bar chart below illustrates the Manager’s
track record of relative performance in each
of the past ten years together with its average
level of out-performance over this period.
Katana Gross Investment Return
YEAR ENDING 30 JUNE
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Investment Return
All Ords Index
Relative performance
%
%
%
Katana Outperformance
vs All Ords Index
9.20
49.03
-6.41
-23.57
24.54
19.10
-11.19
8.84
26.79
-2.28
6.90
25.36
-15.49
-25.97
9.55
7.75
-11.25
15.47
12.70
1.29
2.30
23.67
9.08
2.40
14.99
11.35
0.06
-6.63
14.09
-3.57
25.00%
20.00%
15.00%
10.00%
5.00%
-5.00%
-10.00%
Average
The Top 10 holdings of the Fund as at
30 June 2015 are shown below. There is a
strong emphasis on and bias towards quality
large and emerging industrial and diversified
financial services companies. Several of these
companies have international operations and
virtually all have strong balance sheets and
produce robust cash flows.
Outlook
Seven years on from the Global Financial Crisis
(GFC) and we remain in a low global growth
environment despite having the lowest
interest rates in our lifetimes. We expect
improvements in future growth to continue
to be more gradual than in past recoveries.
This is due to a combination of factors
including debt deleveraging; ongoing
structural changes in economies; and a
general lack of demand growth in many
countries, partly attributable to ageing
populations. However, the global economy
is improving and will benefit from extremely
loose monetary policies as well as lower oil
prices, which will reduce corporate input
costs and increase net incomes. In addition,
growth, particularly in the US and UK, is
recovering and we expect both countries to
begin to normalise interest rates over the
next six months.
There is a continuing gradual recovery in the
euro area, supported by very accommodative
Top 10 Equity investments
ASX Code
MPL NAB CWN TLS STO HGG AMP BTT TRG GCS
Percentage of Portfolio
Valuation as at 30/6/15
%
4.1
4.0
3.9
3.8
3.6
3.0
2.6
2.4
2.3
2.2
Percentage
of portfolio
valuation
L E N TS
E Q U I V AVV
S H
A
C
&
H
S
A
C
TOP 10 EQUITY INVEST
M
E
N
T
S
S
UITTIIEE
EQ
AININ G
R E M
03
monetary policy and despite imposed
austerity measures. Unemployment is
gradually declining and as inflation remains
well below the European Central Bank’s
(ECB) target, monetary stimulus will continue
for some while yet. Growth in China has
moderated as it rebalances its economy away
from fixed asset investment and towards
consumer demand. The Chinese authorities
are seeking to engineer a ‘soft landing’ by
increasing a range of liquidity measures.
Australia continues to grow at a sub-trend
pace as it transitions away from the past
mining investment boom and towards
growth in other, non-mining sectors.
Interest rates are now at historically low
levels, supporting strong growth in housing
and to a lesser extent, consumption.
The lower Australian dollar is assisting
key export industries to become more
internationally competitive. This includes
tourism and education, which is now
Australia’s fourth largest export.
Financial, business and healthcare services
are also showing robust growth. In the
medium term, Australia remains well
positioned for growth as China and other
Asian economies continue to develop their
economies. This region contains some 40%
of the world’s population and will continue
to demand Australian products and services
ranging from LNG to insurance. Demand for
Australian agricultural products are being
driven by the emerging Asian middle class
and already, seven of the top 10 sources of
Australian inbound tourism are from Asia.
Strategy
The Manager believes that the stock market
will move higher and provide modest total
shareholder returns in FY16, boosted by the
lower Australian dollar, low interest rates and
a gradual improvement in global economic
growth. Despite this, there will be periods
of volatility, particularly as interest rates
normalise in the US and as expectations
regarding the local and global economic
outlook fluctuate.
The Manager has positioned the portfolio
to benefit from the low and depreciating
Australian dollar by selectively increasing its
exposure to companies with international
operations. It has also increased its holdings
in domestic companies that offer solid and
sustainable dividend yields as these should
perform well in the low Australian interest
rate environment. The Manager believes
that dividends will form a greater part of
total shareholder returns in this low growth
environment. The portfolio also contains some
high quality mid-cap companies that should
deliver high levels of profitable growth and
ultimately outperform the broader market.
04
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
INVESTMENT REPORT
The portfolio remains very underweight in
resource and associated stocks. The Manager
expects the share market to experience
periods of volatility and will use any weak
periods to add to holdings. This may result in
it holding higher cash balances from time to
time as it will only invest valuable shareholder
funds when it considers the risk/return
equation to be favourable.
Corporate
Katana Capital Ltd issued a total of 11.8m new
shares, raising $10.95m (before transaction costs
of $0.2m) in FY15. Of this amount, 8.4m shares
were issued in a placement to professional
and sophisticated investors at 93 cents per
share. The placement raised $7.8m and was
over-subscribed. The balance of $3.15m was
completed via a 1-for-8 non renounceable
pro-rata rights issue at the same price.
The company bought back 780,780 shares in
FY15 at an average price of 88 cents per share.
In addition to providing liquidity to existing
shareholders, the buyback increased the
underlying net asset backing for all existing
and remaining shareholders.
In November, shareholders received one free
bonus option for every ordinary share held.
The options are exercisable at $1.00 each and
have an expiry date of 1 March 2016.
Katana paid four quarterly dividends
totalling six cents ($0.06) during FY15 of
which three cents ($0.03) were fully franked.
This represented an increase of 20% over FY14.
In order to reduce the overall cost of running
Katana Capital Ltd and provide a better
conversion from gross investment returns
to net shareholder returns, the Manager
voluntarily reduced the management and
performance fees by approximately 20%.
(This was reported to the ASX on 26
September 2014). This will directly benefit all
shareholders. In addition the Manager has
further reduced some transaction costs and
is working with the Board to review all costs
in order to maximise the conversion of gross
returns to net returns.
On behalf of all of the staff at Katana Asset
Management, we take this opportunity to
once again thank Katana Capital’s valued
shareholders for your support and belief
throughout FY15 and beyond.
Brad Shallard
Romano Sala Tenna
INVESTMENT MANAGERS
KATANA ASSET MANAGEMENT LIMITED
05
DIRECTORS’ REPORT
Your directors present their report with respect to results of
Katana Capital Limited (the “Company” or “Katana Capital”) and its
controlled entities (the “Group”) for the year ended 30 June 2015
and the state of affairs for the Company at that date.
Directors
The following persons were directors of Katana Capital Limited during the whole of the financial year and up to the date of this report:
Information on Directors
Dalton Gooding
BBus, FCA.
Peter Wallace
SF Fin, FAICD, AFAIM.
(Non-Executive Chairman)
(Non-Executive Director)
Mr Gooding was appointed to the Board on
11 November 2005. Mr Gooding, formerly
a long-standing partner at Ernst & Young,
is a Fellow of the Institute of Chartered
Accountants in Australia. He is currently
the senior partner of Gooding Partners and
advises to a wide range of businesses with
particular emphasis relating to taxation and
accounting issues, due diligence, feasibilities
and general business advice. Mr Gooding
also has a number of other directorships of
companies in many different segments of
business. During the past four years
Mr Gooding has also served as a director
of the following other listed companies:
(cid:114)(cid:1) (cid:52)(cid:42)(cid:49)(cid:34)(cid:1)(cid:51)(cid:70)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:70)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 1 May 2003
(cid:114)(cid:1) (cid:34)(cid:87)(cid:74)(cid:85)(cid:66)(cid:1)(cid:46)(cid:70)(cid:69)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 14 November 2002,
resigned 30 June 2014
(cid:114)(cid:1) (cid:35)(cid:83)(cid:74)(cid:70)(cid:83)(cid:85)(cid:90)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 26 October 2007
(cid:114)(cid:1) (cid:53)(cid:39)(cid:52)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 16 October 2014
Mr Wallace was appointed to the Board on
19 September 2005. Mr Wallace has had 45
years in the Banking and Finance industry
with experience gained in all aspects of debt
and equity raising. Past Executive positions
held include COO of a major Regional Bank as
well as Chief Credit Officer and other General
Management roles. Most recently as Head of
Corporate Advisory for Bell Potter Securities
Ltd, Mr Wallace directed the capital raisings
for several large Public companies as well
as providing a variety of Corporate Advisory
services to a wide range of companies,
both private and publicly owned.
During the past four years Mr Wallace has
also served as a director of the following
other listed companies:
(cid:114)(cid:1) (cid:47)(cid:70)(cid:81)(cid:85)(cid:86)(cid:79)(cid:70)(cid:1)(cid:46)(cid:66)(cid:83)(cid:74)(cid:79)(cid:70)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 8 July 2011
(cid:114)(cid:1) (cid:40)(cid:80)(cid:77)(cid:69)(cid:241)(cid:70)(cid:77)(cid:69)(cid:84)(cid:1)(cid:46)(cid:80)(cid:79)(cid:70)(cid:90)(cid:1)(cid:45)(cid:85)(cid:69)(cid:1)(cid:14)(cid:1)
appointed 7 August 2014
Giuliano Sala Tenna
BCom, FFIN, GAICD.
(Non-Executive Director)
Mr Sala Tenna was appointed to the Board on
19 September 2005.
Mr Sala Tenna currently works with one of
Australia’s leading full service stockbroking firms
in Corporate Advisory and Institutional Sales.
Prior to this Mr Sala Tenna was the Head
of Institutional Sales with one of Australia’s
leading hedge fund managers with over
$5.5 billion in funds under management.
Mr Sala Tenna has worked in the Finance
Industry for over 17 years in various fields
including credit, financial advising, business
development, corporate advisory and equity
sell side / buy side.
Mr Sala Tenna has completed a Bachelor
of Commerce degree at Curtin University
of Technology with a double major in
Economics and Finance graduating with
Distinction, the Graduate Diploma in Financial
Planning at the Financial Services Institute of
Australasia, the Company Directors Course at
the Australian Institute of Company Directors
and is an ASX Derivatives Accredited Adviser.
Mr Sala Tenna is a Member of the Golden Key
National Honour Society, a Graduate Member
of the Australian Institute of Company
Directors and a Fellow of the Financial
Services Institute of Australasia.
Company Secretary
Gabriel Chiappini
B.Bus, GAICD, CA
Mr Chiappini is a member of the Australian
Institute of Company Directors and Institute
of Chartered Accountants and has been the
Company Secretary since 14 November 2005.
Mr Chiappini has worked in Chief Financial
Officer and Company Secretarial roles in
both local and international environments
and also holds the position of Company
Secretary with several ASX listed and unlisted
companies. Mr Chiappini has experience
in diverse and varied industry sectors
including Investment Banking (UK), Property
Development & Investment (UK), Oil & Gas
(Australia), Telecommunications (Australia)
and Biotechnology (Australia).
06
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ REPORT
Directors’ Meetings
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2015, and the
numbers of meetings attended by each director were:
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
A = Number of meetings attended
DIRECTORS’
MEETINGS
B
4
4
4
A
4
3
4
AUDIT & COMPLIANCE
COMMITTEE MEETINGS
B
A
2
2
2
2
2
2
B = Number of meetings held during the time the director held office or was a member of the committee during the year
Committee membership
As at the date of this report the Company had an Audit and Compliance Committee.
Members acting on the Audit and Compliance Committee of the Board at the date of this report are:
(cid:114)(cid:1)
(cid:49)(cid:70)(cid:85)(cid:70)(cid:83)(cid:1)(cid:56)(cid:66)(cid:77)(cid:77)(cid:66)(cid:68)(cid:70)(cid:1)(cid:9)(cid:36)(cid:73)(cid:66)(cid:74)(cid:83)(cid:78)(cid:66)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:85)(cid:70)(cid:70)(cid:10)
(cid:114)(cid:1) (cid:37)(cid:66)(cid:77)(cid:85)(cid:80)(cid:79)(cid:1)(cid:40)(cid:80)(cid:80)(cid:69)(cid:74)(cid:79)(cid:72)
(cid:114)(cid:1) (cid:40)(cid:74)(cid:86)(cid:77)(cid:74)(cid:66)(cid:79)(cid:80)(cid:1)(cid:52)(cid:66)(cid:77)(cid:66)(cid:1)(cid:53)(cid:70)(cid:79)(cid:79)(cid:66)
Directors’ interest in Shares and Options
As at the date of this report, the interest of the directors in the shares and options of the Company are:
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
Earnings Per Share
No. of shares
30 June 2015
No. of options
30 June 2015
157,219
300,000
112,500
149,744
300,000
112,500
30 June 2015
Cents
30 June 2014
Cents
Basic and diluted earnings per share
Basic earnings from continuing operations attributable to the ordinary equity holders of the company
(2.7)
17.07
The weighted average number of ordinary shares on issue used in the calculation of basic earnings per share was 43,623,418 (2014: 34,592,393).
At 30 June 2015, the Company had 45,706,657 options on issue exercisable at $1.00 each expiring 1 March 2016. These options are not considered
to be dilutive as the weighted average price of the Company’s shares did not exceed the $1.00 exercise price.
07
Dividends
The following dividends have been paid by the Company or declared by the directors since the commencement of the financial year ended 30 June 2015:
Total Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
30 June 2015
$
30 June 2014
$
509,216
1.5 cent
685,492
1.5 cents
685,005
1.5 cents
689,167
1.5 cents
2,568,880
352,672
1 cent
435,278
1.25 cents
427,917
1.25 cents
512,662
1.5 cents
1,728,529
Principal activity
Employees
The principal activity of the Group is that
of an Investment Company with an ‘all
opportunities’ investment strategy.
As at 30 June 2015, the Group did not have
any full time employees (2014: Nil).
Dividend paid during 1st Quarter of the year
Dividend paid during 2nd Quarter of the year
Dividend paid during 3rd Quarter of the year
Dividend paid during 4th Quarter of the year
Corporate Information
The Company was incorporated on
19 September 2005. During the 30 June 2007
financial year it incorporated a wholly owned
subsidiary Kapital Investments (WA) Pty Ltd.
Katana Capital Limited is incorporated and
domiciled in Australia. The registered office
is located at Level 9, The Quadrant Building,
Perth, WA 6000, Australia.
Operating and Financial Review
Company overview
Investments for future performance
Liquidity and funding
Katana Capital was incorporated in September
2005 as a listed investment company providing
shareholders with access to the investment
services of Katana Asset Management Ltd
(“Fund Manager”). The Fund Manager employs
a benchmark unaware long only Australian
Equities investment philosophy with active use
of cash holdings as a defensive mechanism
within the portfolio to deploy into market
weakness. The portfolio does not incorporate
gearing or short selling of securities.
The All Ordinaries Index was broadly flat over
the course of FY15, starting at 5,382 points as
at 1 July 2014 and ending at 5,451.2 points,
representing a gain of 1.29%. The index
‘range traded’ between approximately 5,200
points and 5,800 points over this period. After
significantly outperforming its benchmark
in FY14 with a 26.79% return versus the All
Ords Index of 12.7% and a track record of
outperformance in eight of the past nine years,
the Manager unfortunately under-performed
its benchmark in FY15, generating a negative
gross investment return (before fees and taxes)
of -2.28%. The loss after tax for the year was
$1,157,799 (2014: $5,904,101 profit after tax).
Katana Capital’s Fund Manager notes that
the Australian equity market has now
seen valuations return to more normalised
historical levels and therefore we are entering
a more challenging time for equity investing.
In saying that, the Fund Manager continues
to find some pockets of value including in
a number of mid and small-cap companies.
In addition to this, the Fund Manager has
reviewed and invested in a number of
successful IPOs more recently with several
more on the radar for immediate further work.
Cash from operations
Net cash outflows from operations were
($10,184,260) (2014: inflows $3,824,823)
during the year which reflects the
Group’s investment from the Australian
equities market.
Net cash flows for the financial year ending
30 June 2016 are expected to remain neutral
and will be subject to the Group taking
advantage of opportunities within the
Australian equities market and the general
performance of the market.
Following the completion of the issue of
8,400,000 shares at $0.93 together with 1-for-8
rights issue, the Company foresees no need
to raise additional equity and will use its
remaining cash reserves to invest
into the Australian equities market along
with continuing dividend payments and
share buybacks.
Risk management
The Board is responsible for overseeing
the establishment and implementation
of an effective risk management system
and reviewing and monitoring the Group’s
application of that system.
Implementation of the risk management
system and day to day management of risk
is the responsibility of the Fund Manager.
The Fund Manager is primarily responsible
for all matters associated with risk
management associated with the Equity
Markets and Investment of the Group’s funds
and has formalised an Investment Committee
that meets on a regular basis to review the
Group’s investments.
08
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ REPORT
Significant Changes in State of Affairs
In the opinion of the directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the year.
Significant Changes After Balance Date
Other than the events below, the directors are
not aware of any matter or circumstance that
has significantly or may significantly affect the
operations of the company or the results of
those operations, or the state of affairs of the
company in subsequent financial years.
On 3 August 2015 the Company declared a
fully franked 1.5 cent per share dividend.
At the time of writing this report, the Directors
note that following 30 June 2015, there has
been a correction in the All Ordinaries with
the index down from 5,451 points at
30 June 2015 to 5,076 points at 25 September
2015, representing a decrease of 6.9%%.
As this is the only Securities Exchange the
Company invests in, changes in the value of
the Company’s investments are reflected in
the Company’s Net Tangible Asset Backing
per share which is reported to the Australian
Securities Exchange (ASX) monthly and is
available via the ASX website. From 30 June
2015 to 31 August 2015, the Company’s
Net Tangible Asset Backing per share has
decreased by 3.21%. The further impact for
the month of September will be determined
and reflected in the Company’s Net Tangible
Asset Backing per share in 30 September 2015
monthly report to ASX.
Likely Developments and Expected Results
Seven years on from the Global Financial
Crisis (GFC) and we remain in a low global
growth environment despite having the
lowest interest rates in our lifetimes. We expect
improvements in future growth to continue to
be more gradual than in past recoveries. This is
due to a combination of factors including debt
deleveraging; ongoing structural changes
in economies; and a general lack of demand
growth in many countries, partly attributable
to ageing populations. However, the global
economy is improving and will benefit from
extremely loose monetary policies as well as
lower oil prices, which will reduce corporate
input costs and increase net incomes. In
addition, growth, particularly in the US and UK,
is recovering and we expect both countries to
begin to normalise interest rates over the next
six months.
There is a continuing gradual recovery in the
euro area, supported by very accommodative
monetary policy and despite imposed
austerity measures. Unemployment is
gradually declining and as inflation remains
well below the European Central Bank’s
(ECB) target, monetary stimulus will continue
for some while yet. Growth in China has
moderated as it rebalances its economy away
from fixed asset investment and towards
consumer demand. The Chinese authorities
are seeking to engineer a ‘soft landing’ by
increasing a range of liquidity measures.
Australia continues to grow at a sub-trend
pace as it transitions away from the past
mining investment boom and towards
growth in other, non-mining sectors. Interest
rates are now at historically low levels,
supporting strong growth in housing and
to a lesser extent, consumption. The lower
Australian dollar is assisting key export
industries to become more internationally
competitive. This includes tourism and
education, which is now Australia’s fourth
largest export. Financial, business and
healthcare services are also showing robust
growth. In the medium term, Australia remains
well positioned for growth as China and other
Asian economies continue to develop their
economies. This region contains some 40%
of the world’s population and will continue
to demand Australian products and services
ranging from LNG to insurance. Demand for
Australian agricultural products are being
driven by the emerging Asian middle class
and already, seven of the top 10 sources of
Australian inbound tourism are from Asia.
Environmental Regulation and Performance
The principal activities of the Group are not subject to any significant environmental regulations.
Share Options
Unissued shares
Shares issued on the exercise of Options
Options granted as remuneration
There were 45,706,657 options outstanding
as at 30 June 2015.
There were no options exercised during the
financial year to acquire fully paid ordinary
shares in the Group.
There were no options granted
as remuneration.
09
Remuneration Report (Audited)
This remuneration report outlines the director and executive remuneration arrangements of the Company and Group in accordance with the
requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or
indirectly, including any director of the Company (whether executive or otherwise).
This report outlines the remuneration arrangements in place for directors of Katana Capital. Katana Capital, at this stage of its development
does not employ executive directors and does not have a Managing Director or a Chief Executive Officer. The Company has outsourced the
management of the investment portfolio to the Fund Manager, Katana Asset Management Ltd. Katana Asset Management Ltd reports directly
to the Board and is invited to attend all Board meetings to present its investment strategy and to discuss and review the financial performance
of the Group.
(a) Details of Key Management Personnel
The following persons were directors of Katana Capital Limited during the financial year:
(i) Chairman - non executive
Dalton Gooding
(ii) Non executive directors
Peter Wallace
Giuliano Sala Tenna
(b) Key management services – Katana Asset Management Ltd
In addition to the Directors noted above, Katana Asset Management Ltd, the Fund Manager for the Group provides the Group with key
management services. The directors of Katana Asset Management Ltd are Brad Shallard, Romano Sala Tenna and Michelle Butler.
Officer
The company secretary is an officer of the Company but is not considered to be a key management person as he does not have the authority and
responsibility for planning, directing or controlling the activities of the Group and is not involved in the decision making process, with his main
duties being aligned to his compliance function.
Remuneration philosophy
The performance of the Group depends upon the quality of its directors. To prosper, the Group must attract, motivate and retain skilled
non-executive directors.
As a result of the independence and separation of Non Executive Directors’ role of providing guidance and overview, the remuneration policy of
the directors is not directly linked to company performance. Katana Asset Management Ltd’s performance fees and management fees are linked
directly to the performance of the Company.
The Company does not have a remuneration committee. The Board of Directors act as the Remuneration Committee and is responsible for
determining and reviewing compensation arrangements for the Company. The Board will assess the appropriateness of the nature and amount
of emoluments of such officers on a periodic basis, by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality board.
10
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ REPORT
Remuneration Report (Audited) - CONTINUED
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and senior management remuneration is separate
and distinct.
(i) Non executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain Directors of the
highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The constitution and the ASX listing rules specify that the aggregate remuneration of non-executive directors shall be determined from time
to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. At present
the aggregate remuneration totals $200,000 per year in respect of fees payable to non-executive directors. This amount was approved by
shareholders at the annual general meeting held on the 10 November 2005.
The amount of aggregate remuneration, including the issue of options sought to be approved by shareholders and the manner in which it
is apportioned amongst directors, is reviewed annually. The Board considers advice from external consultants as well as the fees paid to
non-executive directors of comparable companies when undertaking the annual review process.
The Board considers that the majority of the Group’s performance lies with the Fund Manager.
Each director receives a fee for being a director of the Group and includes attendance at Board and Committee meetings. Any additional
services provided are charged at a daily rate agreed in advance by the Chairman.
The remuneration of non-executive directors for the year ended 30 June 2015 is detailed on page 12 of this report.
(ii) Senior manager and executive director remuneration
As previously noted the Company at present does not employ any executive directors or senior management. If the Company chooses in the
future to employ executive directors the Company will review the remuneration packages.
Employment contracts
As noted above the Group does not currently employ any executive directors or senior management, it does however have an agreement in
place with Katana Asset Management Ltd to provide the Group with investment management services.
(iii) Compensation of Katana Asset Management Ltd
No amount is paid by the Group directly to the directors of Katana Asset Management Ltd. Consequently, no compensation is paid by the
Group to the Directors of Katana Asset Management Ltd as Key Management Personnel.
Compensation is paid to the Fund Manager in the form of fees and the significant terms of the agreement and the amount of compensation is
disclosed below.
The Company has entered into the Management Agreement with the Fund Manager with respect to the management of the Portfolio.
The main provisions of the Management Agreement are summarised below.
The Management Agreement is for an initial period of 10 years from its commencement date (Initial Term) unless earlier terminated in
accordance with its terms. The commencement date (Commencement Date) is the date on which the company listed on the Australian Stock
Exchange - 23 December 2005.
11
Remuneration Report (Audited) - CONTINUED
(iii) Compensation of Katana Asset Management Ltd - CONTINUED
The Management Agreement will renew for a further period of 10 years on expiry of the Initial Term if the following conditions are satisfied:
1.
2.
3.
the Shareholders of the Company approve such renewal by ordinary resolution
the Fund Manager is not in breach of the Management Agreement; and
the Fund Manager has not in the reasonable opinion of the Board materially breached the Management Agreement during the
Initial Term.
The Fund Manager may terminate the Management Agreement at any time by providing a written notice at least three months prior to
termination, if:
1. at any time during the term:
(a) the Company fails to make payment of the remuneration in accordance with the Management Agreement and the failure continues
for 21 days from the delivery of a written notice by the Fund Manager to the Company requesting payment;
(b) the Company enters into liquidation (except voluntary liquidation for the purpose of reconstruction);
(c) the Company is guilty of any gross default, breach, non observance or non performance of any of the terms and conditions contained
in the Management Agreement; or
(d) a receiver or receiver and manager is appointed to the whole or part of the undertakings of the Company; and
2.
such notice is given not less than two years after the commencement of the Initial Term.
The Company may immediately terminate the Management Agreement if:
(a) the Fund Manager or any of its directors or servants are found guilty of grave misconduct in relation to the affairs of the Company;
(b) the Fund Manager’s AFSL is suspended or cancelled at any time for any reason;
(c) the Fund Manager commits a fundamental default or breach of its obligations under the Management Agreement or is in breach of any
conditions of its AFSL and such default or breach is not remedied within 30 days after the Company has notified the Fund Manager in
writing to remedy that default or breach;
(d) the Fund Manager enters into liquidation (except voluntary liquidation for the purpose of reconstruction);
(e) a receiver or receiver and manager is appointed to the whole or part of the undertaking of the Fund Manager;
(f ) a change in control of the Fund Manager occurs without the Fund Manager obtaining at least 30 days prior written consent from
the Company;
(g) the Fund Manager is guilty of any gross default, breach, non observance or non performance of any of the terms and conditions
contained in the Management Agreement;
(h) the Fund Manager fails to remedy a breach of the Management Agreement within the time period reasonably specified in a notice from
the Company requiring it to do so;
(i)
the Fund Manager persistently fails to ensure that investments made on behalf of the Company are consistent with the investment
strategy applicable to the Company at the time the relevant investment is made; or
(j) the Fund Manager is not lawfully able to continue to provide services to the Company pursuant to the terms of the
Management Agreement.
The Company may, by written notice to the Fund Manager at any time within six months after the end of any five year period during the term,
terminate the Management Agreement if Shareholders pass an ordinary resolution to terminate and the average Portfolio return for the five
12 month periods comprising the relevant five year period is less than the average percentage increase in the ASX All Ordinaries Index for
those five 12 month periods.
The Board on a regular basis reviews the Management Agreement and Mandate to ensure compliance with the terms of the agreement.
12
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ REPORT
Remuneration Report (Audited) - CONTINUED
Management and performance fees
Total management and performance fees paid and accrued by the Group to Katana Asset Management Ltd for the year ended 30 June 2015 was
$457,651 (30 June 2014: $1,253,613) as follows:
(i) Management fee
The Fund Manager receives a monthly management fee equal to 0.08333% (2014: 0.104167%) of the Portfolio value calculated at the end of each
month. The fee for 2015 was $457,651 (2014: $445,958). The directors and shareholders of Katana Asset Management Ltd are also shareholders in
Katana Capital Limited. During the period the fund manager agreed to reduce the management fee from 1.25% to 1.0% per annum.
(ii) Performance fee
Performance fee to be paid in respect of each performance calculation period of 15.0% (2014: 18.5%) of the amount by which the Fund
Manager outperforms the ASX All Ordinaries during the calculation period (calculated annually for the 12 month period ending 30 June).
The Fund Manager qualified to receive a performance fee of $nil for the financial year ended 30 June 2015 (2014: $807,655). During the year
the fund manager agreed to reduce the performance fee from 18.5% to 15.0% per annum.
Company performance
The profit/(loss) after tax for the group from 2011 is as follows:
Profit/(loss) after tax expense
Earnings/(Loss) per share - cents
Share Price 30 June
($1,157,799)
(2.7)
$0.82
$5,904,101
17.07
$0.95
$1,780,914
4.82
$0.78
$(5,209,056)
(13.26)
$0.60
$3,940,477
9.78
$0.84
2015
2014
2013
2012
2011
Remuneration of directors and key management personnel of the Group
2015
Name
Short-term employee benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Salary and fees
$
Other(i)
$
Cash STI
$
Super-
annuation
$
Termination
benefits
$
Options
$
Total
$
Percentage of
remuneration
which is
performance
based
%
Non-executive directors
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
Total non-executive
directors & KMP
70,000
40,000
40,000
150,000
(i) insurance premiums have not been included in other remuneration.
-
-
-
-
-
-
-
-
6,650
3,800
3,800
14,250
-
-
-
-
-
-
-
-
76,650
43,800
43,800
164,250
-
-
-
-
2014
Name
Short-term employee benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Salary and fees
$
Other(i)
$
Cash STI
$
Super-
annuation
$
Termination
benefits
$
Options
$
Total
$
Percentage of
remuneration
which is
performance
based
%
Non-executive directors
Dalton Leslie Gooding
Peter Wallace
Giuliano Sala Tenna
Total non-executive
directors & KMP
70,000
40,000
40,000
150,000
(i) insurance premiums have not been included in other remuneration.
-
-
-
-
-
-
-
-
6,475
3,701
3,701
13,877
-
-
-
-
-
-
-
-
76,475
43,701
43,701
163,877
-
-
-
-
13
Remuneration Report (Audited) - CONTINUED
Equity instrument disclosures relating to key management personnel
(i) Option holdings
The following options were granted and held by the directors or key management personnel during the financial year:
(cid:114)(cid:1) (cid:46)(cid:83)(cid:1)(cid:37)(cid:66)(cid:77)(cid:85)(cid:80)(cid:79)(cid:1)(cid:40)(cid:80)(cid:80)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:18)(cid:21)(cid:26)(cid:13)(cid:24)(cid:21)(cid:21)(cid:1)(cid:9)(cid:19)(cid:17)(cid:18)(cid:21)(cid:27)(cid:1)(cid:47)(cid:74)(cid:77)(cid:10)(cid:1)
(cid:114)(cid:1) (cid:46)(cid:83)(cid:1)(cid:49)(cid:70)(cid:85)(cid:70)(cid:83)(cid:1)(cid:56)(cid:66)(cid:77)(cid:77)(cid:66)(cid:68)(cid:70)(cid:1)(cid:20)(cid:17)(cid:17)(cid:13)(cid:17)(cid:17)(cid:17)(cid:1)(cid:9)(cid:19)(cid:17)(cid:18)(cid:21)(cid:27)(cid:1)(cid:47)(cid:74)(cid:77)(cid:10)(cid:1)
(cid:114)(cid:1) (cid:46)(cid:83)(cid:1)(cid:40)(cid:74)(cid:86)(cid:77)(cid:74)(cid:66)(cid:79)(cid:80)(cid:1)(cid:52)(cid:66)(cid:77)(cid:66)(cid:1)(cid:53)(cid:70)(cid:79)(cid:79)(cid:66)(cid:1)(cid:18)(cid:18)(cid:19)(cid:13)(cid:22)(cid:17)(cid:17)(cid:1)(cid:9)(cid:19)(cid:17)(cid:18)(cid:21)(cid:27)(cid:1)(cid:47)(cid:74)(cid:77)(cid:10)(cid:15)(cid:1)
These options have been granted in 14 November 2014 to all existing shareholders on a ratio of one option for every one ordinary share held
on the record date at $nil consideration. These options are exercisable until its expiry on 1 March 2016.
(ii) Shareholdings
The numbers of shares in the Company held during the financial year by each director of Katana Capital Limited and other key management
personnel of the Group, including their personally related parties, are set out below.
All equity transactions with key management personnel, other than those arising from the exercise of remuneration options, have been
entered into under terms and conditions no more favourable that those the Group would have adopted if dealing at arm’s length.
2015
Name
Directors of Katana Capital Limited
Ordinary shares
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
Balance at the start
of the year
Received during the
year in the exercise
of options
Other changes
during the year
Balance at the end
of the year
131,102
300,000
100,000
-
-
-
26,117
-
12,500
157,219
300,000
112,500
Other transactions and balances with key management personnel
Dalton Gooding is a partner of Gooding Partners Chartered Accounting firm and as part of providing taxation advisory services, Gooding partners
received $21,035 (2014: $33,352) for tax services provided.
END OF REMUNERATION REPORT (AUDITED)
14
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ REPORT
Indemnification of Directors and Officers
During or since the financial year, the Company has paid premiums in respect of a contract insuring all the directors of the Company and the
Group against legal costs incurred in defending proceedings for conduct other than (a) a wilful breach of duty and (b) a contravention of sections
182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations Act 2001.
During the year the Company paid for Directors’ & Officers’ insurance in the normal course of business, this amount has not been included in
Directors and Executives remuneration.
Indemnification of Auditors
To the extent permitted by law, the Company agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement
agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify
Ernst & Young during or since the financial year.
Auditor Independence
The Directors have obtained an independence declaration from the Company’s auditors, Ernst & Young, as presented on page 15 of this
Annual report.
Non-audit Services
Ernst & Young did not receive any amounts for the provision of non-audit services.
Signed for and on behalf of the Directors in accordance with a resolution of the Board.
Dalton Gooding
Chairman
Perth, Western Australia
29 September 2015
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF KATANA CAPITAL LIMITED
15
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the Directors of Katana Capital
Limited
In relation to our audit of the financial report of Katana Capital Limited for the financial year ended
30 June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
G H Meyerowitz
Partner
29 September 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:KATANA:046
16
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
Financial
statements
30 June 2015
CONTENTS
PAGE
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Consolidated statement of
changes in equity
Consolidated statement of
cash flow
Notes to the consolidated
financial statements
Directors’ declaration
Independent auditor’s report to the
members of Katana Capital Limited
17
18
19
20
21
46
47
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
17
Revenue
Dividends
Interest
Distributions income
Investment (loss)/income
Total net investment (loss)/ income
Expenses
Fund manager’s fees
Legal and professional
Directors’ fees and expenses
Administration
Performance fees
Total expenses
Profit/(loss) before income tax
Income tax benefit/(expense)
Profit/(loss) after income tax
CONSOLIDATED
FOR THE YEAR ENDED
Notes
30 June 2015
$
30 June 2014
$
3
13 (b)
13 (b)
850,535
189,207
111,250
(1,694,090)
804,281
188,704
77,414
7,236,354
(543,098)
8,306,753
(457,651)
(100,726)
(171,250)
(670,820)
-
(445,958)
(89,852)
(163,877)
(542,577)
(807,655)
(1,400,447)
(2,049,919)
(1,943,545)
6,256,834
4 (a)
785,746
(352,733)
(1,157,799)
5,904,101
Net profit/(loss) for the year attributable to members of Katana Capital Limited
(1,157,799)
5,904,101
Other comprehensive income, net of tax
Total comprehensive income for the year attributable to the members of
Katana Capital Limited
Earnings/(loss) per share attributable to the ordinary equity holders of the company:
Basic and diluted earnings/(loss) per share
18 (a)
-
-
(1,157,799)
5,904,101
Cents
(2.7)
Cents
17.07
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
18
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Investments - held for trading
Other assets
Total current assets
Non-current assets
Deferred tax assets
Total assets
LIABILITIES
Current Liabilities
Financial liabilities held at fair value through profit or loss
Trade and other payables
Dividends payable
Income tax payable
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Option premium reserve
Profit reserve
(Accumulated losses)/ retained earnings
CONSOLIDATED
AT
Notes
30 June 2015
$
30 June 2014
$
5
6
7
8
9
3,204,027
136,205
37,776,106
22,364
41,138,702
5,647,123
1,671,190
29,043,356
34,675
36,396,344
782,220
-
41,920,922
36,396,344
-
1,065,173
3,317
70,515
1,139,005
35,123
1,806,623
3,317
66,505
1,911,568
10
-
286,228
1,139,005
2,197,796
40,781,917
34,198,548
11
12(a)
12(b)
12(b)
44,917,756
101,100
821,538
(5,058,477)
34,607,708
101,100
-
(510,260)
Total equity
40,781,917
34,198,548
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
19
CONSOLIDATED
Notes
Balance at 1 July 2013
Profit for the year
Other comprehensive income
Total comprehensive loss
for the year
Buy-back of shares
Dividends provided for or paid
Balance at 30 June 2014
11
21
Balance at 1 July 2014
Loss for the year
Other comprehensive income
Total comprehensive loss
for the year
Transfer from retained earnings
to profit reserve
Buy-back of shares
Dividend reinvestment plan
Proceeds from contributions
by shareholders
Transaction costs for issued
share capital
Dividends provided for or paid
Balance at 30 June 2015
11
11
11
11
21
Issued
capital
$
35,609,199
-
-
Option
premium
reserve
$
101,100
-
-
-
-
-
-
101,100
101,100
-
-
-
-
-
-
-
(1,001,491)
-
34,607,708
34,607,708
-
-
-
-
(719,827)
298,382
10,965,093
(233,600)
-
44,917,756
(Accumulated
losses)/
Retained
earnings
$
(4,685,832)
5,904,101
-
Total
$
31,024,467
5,904,101
-
5,904,101
5,904,101
-
(1,728,529)
(510,260)
(510,260)
(1,157,799)
-
(1,001,491)
(1,728,529)
34,198,548
34,198,548
(1,157,799)
-
(1,157,799)
(1,157,799)
Profit
reserve
$
-
-
-
-
-
-
-
-
-
-
-
1,510,705
-
-
(1,510,705)
-
-
-
(719,827)
298,382
-
-
10,965,093
-
-
101,100
-
(689,167)
821,538
-
(1,879,713)
(5,058,477)
(233,600)
(2,568,880)
40,781,917
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
20
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Proceeds on sale of financial assets
Payments for purchases of financial assets
Payments to suppliers and employees
Interest received
Dividends received
Other revenue
Tax received
Net inflow/(outflow) from operating activities
Cash flows from financing activities
Dividends paid
Payments for shares bought back
Proceeds from contributions by shareholders
Transaction costs for issued share capital
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
CONSOLIDATED
Notes
30 June 2015
$
30 June 2014
$
117,112,209
(126,473,130)
(2,101,582)
189,214
1,041,463
7,340
40,226
(10,184,260)
(2,568,880)
(421,448)
10,965,092
(233,600)
7,741,164
(2,443,096)
5,647,123
3,204,027
97,846,071
(93,790,651)
(1,238,145)
208,295
787,023
9,303
2,927
3,824,823
(1,728,529)
(1,001,491)
-
-
(2,730,020)
1,094,803
4,552,320
5,647,123
15
5
The above consolidated statement of cash flow should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
21
1 Corporate information
The financial report of Katana Capital Limited (the ‘’Company’’) and its subsidiaries (the “Group” or the “Consolidated Entity”) for the year ended
30 June 2015 was authorised for issue in accordance with a resolution of the directors on 29 September 2015.
The Company was incorporated on 19 September 2005. In July 2006 it incorporated a wholly owned subsidiary - Kapital Investments (WA) Pty Ltd.
Katana Capital Limited is a company limited by shares, incorporated and domiciled in Australia and whose shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and principle activities are described in the Directors’ report. The Company and its subsidiary are for-profit entities.
2 Summary of significant accounting policies
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards
Board. The financial report has also been prepared on a historical cost basis except for certain financial instruments, which have been
measured at fair value.
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report comprises the financial statements of Katana
Capital Limited and its subsidiaries.
The financial report is presented in Australian dollars.
(b) Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
Changes in accounting policy and disclosures
The Group has adopted all the new and amended Australian Accounting Standards and AASB interpretations effective as at 1 July 2014.
The nature and impact of each new standard and amendment is described below:
REFERENCE
AASB 2012-3
AASB 2013-3
AASB 2013-4
AASB 2013-5
TITLE
Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the
meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may
be considered equivalent to net settlement.
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments
include the requirement to disclose additional information about the fair value measurement when the
recoverable amount of impaired assets is based on fair value less costs of disposal.
Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge
Accounting [AASB 139]
AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances
where a derivative, which has been designated as a hedging instrument, is novated from one counterparty
to a central counterparty as a consequence of laws or regulations.
Amendments to Australian Accounting Standards – Investment Entities [AASB 1, AASB 3, AASB 7, AASB 10,
AASB 12, AASB 107, AASB 112, AASB 124, AASB 127, AASB 132, AASB 134 & AASB 139]
These amendments define an investment entity and require that, with limited exceptions, an investment
entity does not consolidate its subsidiaries or apply AASB 3 Business Combinations when it obtains control
of another entity.
These amendments require an investment entity to measure unconsolidated subsidiaries at fair value
through profit or loss in its consolidated and separate financial statements.
These amendments also introduce new disclosure requirements for investment entities to AASB 12 and
AASB 127.
22
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Changes in accounting policy and disclosures - CONTINUED
REFERENCE
AASB 2013-7
AASB 1031
AASB 2013-9
AASB 2014-1
Part A -Annual
Improvements
2010–2012 Cycle
AASB 2014-1
Part A -Annual
Improvements
2011–2013 Cycle
TITLE
Amendments to AASB 1038 arising from AASB 10 in relation to consolidation and interests of policyholders
[AASB 1038]
AASB 2013-7 removes the specific requirements in relation to consolidation from AASB 1038, which leaves
AASB 10 as the sole source of consolidation requirements applicable to life insurance entities.
Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework
(issued December 2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have
been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards to
delete their references to AASB 1031. The amendments are effective from 1 July 2014.
Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and
Financial Instruments
The Standard contains three main parts and makes amendments to a number of Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031
and also makes minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including incorporating
Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from
the issuance by the International Accounting Standards Board (IASB) of International Financial Reporting
Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs
2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle addresses the following items:
> AASB 2 - Clarifies the definition of ‘vesting conditions’ and ‘market condition’ and introduces the
definition of ‘performance condition’ and ‘service condition’.
> AASB 3 - Clarifies the classification requirements for contingent consideration in a business
combination by removing all references to AASB 137.
> AASB 8 - Requires entities to disclose factors used to identify the entity’s reportable segments when
operating segments have been aggregated. An entity is also required to provide a reconciliation of total
reportable segment assets to the entity’s total assets.
> AASB 116 & AASB 138 - Clarifies that the determination of accumulated depreciation does not depend
on the selection of the valuation technique and that it is calculated as the difference between the gross
and net carrying amounts.
> AASB 124 - Defines a management entity providing KMP services as a related party of the reporting
entity. The amendments added an exemption from the detailed disclosure requirements in paragraph
17 of AASB 124 Related Party Disclosures for KMP services provided by a management entity.
Payments made to a management entity in respect of KMP services should be separately disclosed.
Annual Improvements to IFRSs 2011–2013 Cycle addresses the following items:
> AASB 13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts
within the scope of AASB 139 or AASB 9, regardless of whether they meet the definitions of financial
assets or financial liabilities as defined in AASB 132.
> AASB 140 - Clarifies that judgment is needed to determine whether an acquisition of investment
property is solely the acquisition of an investment property or whether it is the acquisition of a group
of assets or a business combination in the scope of AASB 3 that includes an investment property.
That judgment is based on guidance in AASB 3.
Amendments to Australian
Accounting Standards -
Part B
Defined Benefit Plans:
Employee Contributions
(Amendments to AASB 119)
AASB 2014-Part B makes amendments in relation to the requirements for contributions from employees or
third parties that are set out in the formal terms of the benefit plan and linked to service.
The amendments clarify that if the amount of the contributions is independent of the number of years
of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the
period in which the related service is rendered, instead of attributing the contributions to the periods
of service.
23
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Changes in accounting policy and disclosures - CONTINUED
REFERENCE
Amendments to AASB
1053 – Transition to
and between Tiers, and
related Tier 2 Disclosure
Requirements
[AASB 1053]
TITLE
The Standard makes amendments to AASB 1053 Application of Tiers of Australian Accounting Standards to:
(cid:114)(cid:1)
(cid:114)(cid:1) (cid:78)(cid:66)(cid:76)(cid:70)(cid:1)(cid:34)(cid:34)(cid:52)(cid:35)(cid:1)(cid:18)(cid:17)(cid:22)(cid:20)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:87)(cid:66)(cid:74)(cid:77)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:34)(cid:52)(cid:35)(cid:1)(cid:18)(cid:17)(cid:25)(cid:1)Accounting Policies,
(cid:68)(cid:77)(cid:66)(cid:83)(cid:74)(cid:71)(cid:90)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:34)(cid:34)(cid:52)(cid:35)(cid:1)(cid:18)(cid:17)(cid:22)(cid:20)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:80)(cid:79)(cid:77)(cid:90)(cid:1)(cid:85)(cid:80)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)(cid:81)(cid:86)(cid:83)(cid:81)(cid:80)(cid:84)(cid:70)(cid:1)(cid:241)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:28)
Changes in Accounting Estimates and Errors option in AASB 1 First-time Adoption of Australian
Accounting Standards;
(cid:68)(cid:77)(cid:66)(cid:83)(cid:74)(cid:71)(cid:90)(cid:1)(cid:68)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:68)(cid:74)(cid:83)(cid:68)(cid:86)(cid:78)(cid:84)(cid:85)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:90)(cid:74)(cid:79)(cid:72)(cid:1)(cid:53)(cid:74)(cid:70)(cid:83)(cid:1)(cid:19)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:68)(cid:66)(cid:79)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
AASB 108 option in AASB 1; permit an entity applying Tier 2 reporting requirements for the first time
to do so directly using the requirements in AASB 108 (rather that applying AASB 1) when, and only
when, the entity had not applied, or only selectively applied, applicable recognition and measurement
requirements in its most recent previous annual special purpose financial statements; and
(cid:84)(cid:81)(cid:70)(cid:68)(cid:74)(cid:71)(cid:90)(cid:1)(cid:68)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:90)(cid:1)(cid:83)(cid:70)(cid:84)(cid:86)(cid:78)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:53)(cid:74)(cid:70)(cid:83)(cid:1)(cid:19)(cid:1)
reporting requirements.
(cid:114)(cid:1)
(cid:114)(cid:1)
The adoption of these new and amended standards had no material impact on the Group’s financial statements, except for the adoption
of the revised AASB 124. In accordance with the revised AASB 124, the remuneration paid to Katana Asset Management Ltd for key
management services to the entity has been separately disclosed as a related party transaction, see note 14, and removed from the
aggregate Key Management Personnel compensation disclosure in note 13. The adoption of the revised standard had no impact on profit
or loss or accumulated losses brought forward at the beginning of the comparative period. Comparative information has been restated.
Accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been
adopted for the annual reporting period ended 30 June 2015. The nature of each new standard and amendment is described below:
APPLICATION DATE
FOR KATANA CAPITAL
1 July 2018
REFERENCE
TITLE
SUMMARY
AASB 9
Financial Instruments
AASB 9 (December 2014) is a new standard which replaces AASB 139.
This new version supersedes AASB 9 issued in December 2009 (as amended)
and AASB 9 (issued in December 2010) and includes a model for classification
and measurement, a single, forward-looking ‘expected loss’ impairment model
and a substantially-reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018.
However, the Standard is available for early adoption. The own credit
changes can be early adopted in isolation without otherwise changing the
accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and
measurement of financial assets compared with the requirements of AASB
139. There are also some changes made in relation to financial liabilities.
The main changes are described below.
Financial assets
a. Financial assets that are debt instruments will be classified based on (1)
the objective of the entity’s business model for managing the financial
assets; (2) the characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains
and losses on investments in equity instruments that are not held for
trading in other comprehensive income. Dividends in respect of these
investments that are a return on investment can be recognised in profit
or loss and there is no impairment or recycling on disposal of
the instrument.
c. Financial assets can be designated and measured at fair value through
profit or loss at initial recognition if doing so eliminates or significantly
reduces a measurement or recognition inconsistency that would arise
from measuring assets or liabilities, or recognising the gains and losses
on them, on different bases.
24
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Accounting standards and interpretations issued but not yet effective - CONTINUED
REFERENCE
TITLE
SUMMARY
APPLICATION DATE
FOR KATANA CAPITAL
AASB 9
- CONTINUED
Financial Instruments
- CONTINUED
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to
the measurement of liabilities designated at fair value through profit or loss
(FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in fair
value is to be accounted for as follows:
> The change attributable to changes in credit risk are presented in other
comprehensive income (OCI)
> The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by
changes in the credit risk of liabilities elected to be measured at fair value.
This change in accounting means that gains or losses attributable to
changes in the entity’s own credit risk would be recognised in OCI.
These amounts recognised in OCI are not recycled to profit or loss if the
liability is ever repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment
model that will require more timely recognition of expected credit losses.
Specifically, the new Standard requires entities to account for expected credit
losses from when financial instruments are first recognised and to recognise
full lifetime expected losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9)
issued in December 2013 included the new hedge accounting requirements,
including changes to hedge effectiveness testing, treatment of hedging
costs, risk components that can be hedged and disclosures.
Consequential amendments were also made to other standards as a result of
AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7, AASB
2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from the
issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB
9 (December 2009) and AASB 9 (December 2010)) from 1 February 2015 and
applies to annual reporting periods beginning on after 1 January 2015.
25
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Accounting standards and interpretations issued but not yet effective - CONTINUED
REFERENCE
TITLE
SUMMARY
AASB 15
Revenue from
Contracts with
Customers
AASB
2014-10
Amendments to
Australian Accounting
Standards – Sale or
Contribution of Assets
between an Investor
and its Associate or
Joint Venture
AASB 15 Revenue from Contracts with Customers replaces the existing
revenue recognition standards AASB 111 Construction Contracts, AASB
118 Revenue and related Interpretations (Interpretation 13 Customer
Loyalty Programmes, Interpretation 15 Agreements for the Construction
of Real Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue–Barter Transactions Involving Advertising
Services and Interpretation 1042 Subscriber Acquisition Costs in the
Telecommunications Industry). AASB 15 incorporates the requirements of
IFRS 15 Revenue from Contracts with Customers issued by the International
Accounting Standards Board (IASB) and developed jointly with the US
Financial Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising from
contracts with customers (except for contracts within the scope of other
accounting standards such as leases or financial instruments). The core
principle of AASB 15 is that an entity recognises revenue to depict the
transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations in
the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation
Currently, AASB 15 is effective for annual reporting periods commencing on
or after 1 January 2017. Early application is permitted.
AASB 2014-5 incorporates the consequential amendments to a number
Australian Accounting Standards (including Interpretations) arising from the
issuance of AASB 15.
AASB 2014-10 amends AASB 10 Consolidated Financial Statements and
AASB 128 to address an inconsistency between the requirements in AASB 10
and those in AASB 128 (August 2011), in dealing with the sale or contribution
of assets between an investor and its associate or joint venture.
The amendments require:
(a) a full gain or loss to be recognised when a transaction involves a
business (whether it is housed in a subsidiary or not); and
(b) a partial gain or loss to be recognised when a transaction involves
assets that do not constitute a business, even if these assets are housed
in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or after
1 January 2016. Early adoption permitted.
APPLICATION DATE
FOR KATANA CAPITAL
1 July 2017
1 July 2016
26
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Accounting standards and interpretations issued but not yet effective - CONTINUED
REFERENCE
TITLE
SUMMARY
AASB
2015-1
Amendments to
Australian Accounting
Standards – Annual
Improvements to
Australian Accounting
Standards 2012–2014
Cycle
The subjects of the principal amendments to the Standards are set out below:
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
(cid:114)(cid:1)
(cid:36)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:78)(cid:70)(cid:85)(cid:73)(cid:80)(cid:69)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:74)(cid:84)(cid:81)(cid:80)(cid:84)(cid:66)(cid:77)(cid:1)(cid:109)(cid:1)(cid:88)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:90)(cid:1)(cid:83)(cid:70)(cid:68)(cid:77)(cid:66)(cid:84)(cid:84)(cid:74)(cid:241)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)
(or disposal group) directly from being held for distribution to being
held for sale (or visa versa), an entity shall not follow the guidance in
paragraphs 27–29 to account for this change.
APPLICATION DATE
FOR KATANA CAPITAL
1 July 2016
AASB 7 Financial Instruments: Disclosures:
(cid:114)(cid:1)
(cid:114)(cid:1)
(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:84)(cid:1)(cid:14)(cid:1)(cid:68)(cid:77)(cid:66)(cid:83)(cid:74)(cid:241)(cid:70)(cid:84)(cid:1)(cid:73)(cid:80)(cid:88)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:90)(cid:1)(cid:84)(cid:73)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:86)(cid:74)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)
in paragraph 42C of AASB 7 to a servicing contract to decide whether
a servicing contract is ‘continuing involvement’ for the purposes of
applying the disclosure requirements in paragraphs 42E–42H of AASB 7.
(cid:34)(cid:81)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:34)(cid:34)(cid:52)(cid:35)(cid:1)(cid:24)(cid:1)(cid:85)(cid:80)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:70)(cid:79)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:74)(cid:78)(cid:1)
financial statements - clarify that the additional disclosure required by
the amendments to AASB 7 Disclosure–Offsetting Financial Assets and
Financial Liabilities is not specifically required for all interim periods.
However, the additional disclosure is required to be given in condensed
interim financial statements that are prepared in accordance with AASB
134 Interim Financial Reporting when its inclusion would be required by
the requirements of AASB 134.
AASB 119 Employee Benefits:
(cid:114)(cid:1) (cid:37)(cid:74)(cid:84)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:83)(cid:66)(cid:85)(cid:70)(cid:27)(cid:1)(cid:83)(cid:70)(cid:72)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:1)(cid:14)(cid:1)(cid:68)(cid:77)(cid:66)(cid:83)(cid:74)(cid:241)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:73)(cid:74)(cid:72)(cid:73)(cid:1)(cid:82)(cid:86)(cid:66)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)
corporate bonds used to estimate the discount rate for post-employment
benefit obligations should be denominated in the same currency as the
liability. Further it clarifies that the depth of the market for high quality
corporate bonds should be assessed at the currency level.
AASB 134 Interim Financial Reporting:
(cid:114)(cid:1) (cid:37)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:65)(cid:70)(cid:77)(cid:84)(cid:70)(cid:88)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:74)(cid:78)(cid:1)(cid:241)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:8)(cid:1)(cid:14)(cid:1)
amends AASB 134 to clarify the meaning of disclosure of information
‘elsewhere in the interim financial report’ and to require the inclusion of
a cross-reference from the interim financial statements to the location of
this information.
The Standard makes amendments to AASB 101 Presentation of Financial
Statements arising from the IASB’s Disclosure Initiative project.
The amendments are designed to further encourage companies to apply
professional judgment in determining what information to disclose in
the financial statements. For example, the amendments make clear that
materiality applies to the whole of financial statements and that the
inclusion of immaterial information can inhibit the usefulness of financial
disclosures. The amendments also clarify that companies should use
professional judgment in determining where and in what order information
is presented in the financial disclosures.
The Standard completes the AASB’s project to remove Australian guidance
on materiality from Australian Accounting Standards.
This makes amendments to AASB 10, AASB 12 Disclosure of Interests in Other
Entities and AASB 128 arising from the IASB’s narrow scope amendments
associated with Investment Entities.
1 July 2016
1 July 2015
1 July 2015
AASB
2015-2
AASB
2015-3
AASB
2015-5
Amendments to
Australian Accounting
Standards –
Disclosure Initiative:
Amendments to
AASB 101
Amendments to
Australian Accounting
Standards arising from
the Withdrawal of
AASB 1031 Materiality
Amendments
to Australian
Accounting Standards
– Investment
Entities: Applying
the Consolidation
Exception
27
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of significant accounting policies - CONTINUED
(b) Statement of compliance - CONTINUED
Accounting standards and interpretations issued but not yet effective - CONTINUED
REFERENCE
TITLE
SUMMARY
This Standard makes amendments to AASB 124 Related Party Disclosures
to extend the scope of that Standard to include not-for-profit public
sector entities.
AASB
2015-6
Amendments to
Australian Accounting
Standards – Extending
Related Party
Disclosures to
Not-for-Profit Public
Sector Entities
[AASB 10, AASB 124 &
AASB 1049]
APPLICATION DATE
FOR KATANA CAPITAL
1 July 2016
The Group has not elected to early adopt any new standards or amendments that are issued but not yet effective. New standards or
amendments will be adopted when they become effective.
The Group is in the process of determining the impact of the adoption of these standards and amendments on its financial statements.
(c) Principles of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015. Control is
achieved when the Group is exposed, or has the rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee. Specifically, the Group controls an investee if and only the Group has:
(cid:114)(cid:1) (cid:49)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:70)(cid:1)(cid:9)(cid:74)(cid:15)(cid:70)(cid:15)(cid:1)(cid:70)(cid:89)(cid:74)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:72)(cid:74)(cid:87)(cid:70)(cid:1)(cid:74)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:85)(cid:80)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:77)(cid:70)(cid:87)(cid:66)(cid:79)(cid:85)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:70)(cid:10)
(cid:114)(cid:1) (cid:38)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:13)(cid:1)(cid:80)(cid:83)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:13)(cid:1)(cid:85)(cid:80)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:83)(cid:70)(cid:85)(cid:86)(cid:83)(cid:79)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:87)(cid:80)(cid:77)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:70)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:114)(cid:1) (cid:53)(cid:73)(cid:70)(cid:1)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:85)(cid:80)(cid:1)(cid:86)(cid:84)(cid:70)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:81)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:237)(cid:70)(cid:68)(cid:85)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:83)(cid:70)(cid:85)(cid:86)(cid:83)(cid:79)(cid:84)
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
(cid:114)(cid:1) (cid:53)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:86)(cid:66)(cid:77)(cid:1)(cid:66)(cid:83)(cid:83)(cid:66)(cid:79)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:87)(cid:80)(cid:85)(cid:70)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:70)
(cid:114)(cid:1) (cid:51)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:86)(cid:66)(cid:77)(cid:1)(cid:66)(cid:72)(cid:83)(cid:70)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)
(cid:114)(cid:1) (cid:53)(cid:73)(cid:70)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:8)(cid:84)(cid:1)(cid:87)(cid:80)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:80)(cid:85)(cid:70)(cid:79)(cid:85)(cid:74)(cid:66)(cid:77)(cid:1)(cid:87)(cid:80)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of
the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year
are included in the statement of comprehensive income from the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non controlling interest having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:
(cid:114)(cid:1) (cid:37)(cid:70)(cid:14)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:9)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:72)(cid:80)(cid:80)(cid:69)(cid:88)(cid:74)(cid:77)(cid:77)(cid:10)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:86)(cid:67)(cid:84)(cid:74)(cid:69)(cid:74)(cid:66)(cid:83)(cid:90)
(cid:114)(cid:1) (cid:37)(cid:70)(cid:14)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:66)(cid:83)(cid:83)(cid:90)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:77)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:84)
(cid:114)(cid:1) (cid:37)(cid:70)(cid:14)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:86)(cid:78)(cid:86)(cid:77)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:69)(cid:74)(cid:237)(cid:70)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:83)(cid:69)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:70)(cid:82)(cid:86)(cid:74)(cid:85)(cid:90)
(cid:114)(cid:1) (cid:51)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:66)(cid:74)(cid:83)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:69)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)
(cid:114)(cid:1) (cid:51)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:66)(cid:74)(cid:83)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:83)(cid:70)(cid:85)(cid:66)(cid:74)(cid:79)(cid:70)(cid:69)
(cid:114)(cid:1) (cid:51)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:84)(cid:86)(cid:83)(cid:81)(cid:77)(cid:86)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:69)(cid:70)(cid:241)(cid:68)(cid:74)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:241)(cid:85)(cid:1)(cid:80)(cid:83)(cid:1)(cid:77)(cid:80)(cid:84)(cid:84)
(cid:114)(cid:1) (cid:51)(cid:70)(cid:68)(cid:77)(cid:66)(cid:84)(cid:84)(cid:74)(cid:241)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:8)(cid:84)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:80)(cid:79)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:81)(cid:83)(cid:70)(cid:87)(cid:74)(cid:80)(cid:86)(cid:84)(cid:77)(cid:90)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:48)(cid:36)(cid:42)(cid:1)(cid:85)(cid:80)(cid:1)(cid:81)(cid:83)(cid:80)(cid:241)(cid:85)(cid:1)(cid:80)(cid:83)(cid:1)(cid:77)(cid:80)(cid:84)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:83)(cid:70)(cid:85)(cid:66)(cid:74)(cid:79)(cid:70)(cid:69)(cid:1)(cid:70)(cid:66)(cid:83)(cid:79)(cid:74)(cid:79)(cid:72)(cid:84)(cid:13)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:13)(cid:1)(cid:66)(cid:84)(cid:1)(cid:88)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)
be required if the Group had directly disposed of the related assets or liabilities.
28
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies - CONTINUED
(d) Investments and other financial assets
Financial assets are classified as either financial assets held for trading (financial assets at fair value through profit or loss), loans and
receivables, held to maturity investments or available for sale investments, as appropriate.
When financial assets are initially recognised they are recorded at fair value, plus in the case of investments not held for trading, directly
attributable transaction costs. The Fund Manager determines the classification of its financial assets on initial recognition.
(i) Financial assets held for trading
After initial recognition investments which are classified as held for trading are measured at fair value, gains and losses on these
investments are recognised in the statement of comprehensive income. For financial assets that are actively traded in organised
financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the
reporting date.
For financial assets where there is no quoted market price, fair value is determined by reference to the current market value of another
instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the
financial assets. The fair value of options is determined using an appropriate option pricing model.
Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or
convention in the market place are recognised on the trade date i.e. the date that the Company commits to purchase the asset.
(ii) Loans and receivables
Loans and receivables are non derivative financial assets with fixed and determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the effective interest method.
Amortised cost is calculated by taking into account any discount or premium on acquisition. For financial assets carried at amortised
cost, gains and losses are recognised in the statement of comprehensive income when the financial assets are derecognised or
impaired, as well as through the amortisation process.
(iii) Derecognition of financial assets
A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
(cid:114)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:243)(cid:80)(cid:88)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:70)(cid:89)(cid:81)(cid:74)(cid:83)(cid:70)(cid:69)(cid:28)
(cid:114)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:83)(cid:70)(cid:85)(cid:66)(cid:74)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:243)(cid:80)(cid:88)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:13)(cid:1)(cid:67)(cid:86)(cid:85)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:66)(cid:84)(cid:84)(cid:86)(cid:78)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:1)(cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:80)(cid:1)(cid:81)(cid:66)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:78)(cid:1)(cid:74)(cid:79)(cid:1)(cid:71)(cid:86)(cid:77)(cid:77)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:80)(cid:86)(cid:85)(cid:1)
material delay to a third party lender under a “pass through” arrangement; or
(cid:114)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:243)(cid:80)(cid:88)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:74)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:9)(cid:66)(cid:10)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:84)(cid:86)(cid:67)(cid:84)(cid:85)(cid:66)(cid:79)(cid:85)(cid:74)(cid:66)(cid:77)(cid:77)(cid:90)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
(e) Revenue recognition
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to the entity and specific criteria have been met for each of the Group’s activities as described below.
(i)
Interest income
Interest income is recognised on an accruals basis using the effective interest method, which is the rate that exactly discounts
estimated future cash flows through the expected life of the financial instrument to the net carrying amount of the financial
instrument. Interest on cash on deposit is recognised in accordance with the terms and conditions that apply to the deposit.
(ii) Dividends
Dividends are recognised as revenue when the right to receive payment is established.
29
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of significant accounting policies - CONTINUED
(f) Income tax
The income tax expense or revenue for the year is tax payable on the current year’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.
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 consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting or taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences between the carrying amount and tax losses to the extent that it
is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the company is able to control the timing of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future.
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 net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
(g) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short term deposits with an
original maturity of three months or less.
For the purposes of the statement of cash flow, cash and cash equivalents includes deposits held at call with banks or financial institutions.
(h) Trade and other receivables
Receivables may include amounts for dividends, interest and securities sold where settlement has not yet occurred. Receivables are
recognised and carried at the original invoice amount and interest accrues (using the effective interest rate method, which is the rate that
discounts estimated future cash receipts through the effective life of the financial instrument) to the net carrying amount of the financial
asset. Amounts are generally received within 30 days of being recorded as receivables.
Collectibility of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be
uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group
will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are
considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the
present value of estimated future cash flows, discounted at the original effective interest rate.
(i) Trade and other payables
Liabilities for creditors and other amounts are carried at amortised cost, which is the fair value of the consideration to be paid in the future
for goods and services received, whether or not billed to the Company.
Payables include outstanding settlements on the purchase of investments and distributions payable. The carrying period is dictated by
market conditions and is generally less than 30 days.
(j) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
(k) Goods and Services Tax (GST)
Incomes, expenses and assets, with the exception of receivables and payables, are recognised net of the amount of GST, to the extent that
GST is recoverable from the Australian Tax Office (ATO). Where GST is not recoverable it is recognised as part of the cost of the asset or as
part of the expense item as applicable.
Reduced input tax credits (RITC) recoverable by the Company from the ATO are recognised as receivables in the statement of financial position.
Cash flows are included in the statement of cash flow on a gross basis and the GST component of the cash flows arising from investing
and financing activities, which is recoverable from or payable to the taxation authority are classified as operating cash flows.
30
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies - CONTINUED
(l) Earnings per share
Basic earnings per share (EPS) is calculated as net profit attributable to shareholders divided by the weighted average number of shares.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
(cid:114)(cid:1) (cid:68)(cid:80)(cid:84)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:82)(cid:86)(cid:74)(cid:85)(cid:90)(cid:1)(cid:9)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:84)(cid:10)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:71)(cid:70)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:84)(cid:28)
(cid:114)(cid:1) (cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:69)(cid:74)(cid:84)(cid:68)(cid:83)(cid:70)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:83)(cid:70)(cid:87)(cid:70)(cid:79)(cid:86)(cid:70)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:79)(cid:84)(cid:70)(cid:84)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:88)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:83)(cid:70)(cid:84)(cid:86)(cid:77)(cid:85)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:77)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:81)(cid:80)(cid:85)(cid:70)(cid:79)(cid:85)(cid:74)(cid:66)(cid:77)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:28)
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
(m) Derivative financial instruments
The Group may use derivative financial instruments such as exchange traded options to manage its risks associated with share price
fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured to fair value. Derivatives are carried as assets when their fair value is positive and as liabilities when
their fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to net profit or loss for the year.
Exchange traded options
From time to time, the Group writes and then trades Exchange Traded Options (‘ETO’s’), the Company’s policy for managing its risk for
ETO’s is to ensure it only writes ETO’s against shares that it physically holds. ETO’s are governed by the Australian Stock Exchange (“ASX”)
and are traded on the ASX.
ETO’s are recognised as liabilities at fair value. Any gains or losses arising from changes in the fair value of ETO’s, are taken directly to net
profit or loss for the year.
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
(o) Pension benefits
Defined contribution plan
Contributions to superannuation funds are charged to the statement of comprehensive income when incurred.
(p) Share based payments
Equity settled transactions
The Company can provide benefits to its employees (including key management personnel) in the form of share based payments,
whereby employees render services in exchange for shares or rights over shares (equity settled transactions).
There are currently no formal plans in place to provide these benefits.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined by an external valuer using a binomial model.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than (if applicable):
(cid:114)(cid:1) (cid:47)(cid:80)(cid:79)(cid:14)(cid:87)(cid:70)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:69)(cid:80)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:69)(cid:70)(cid:85)(cid:70)(cid:83)(cid:78)(cid:74)(cid:79)(cid:70)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:80)(cid:83)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:77)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)
receive payment in equity or cash, and
(cid:114)(cid:1) (cid:36)(cid:80)(cid:79)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:74)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:44)(cid:66)(cid:85)(cid:66)(cid:79)(cid:66)(cid:1)(cid:36)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:9)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:10)(cid:15)(cid:1)
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of:
(a) The grant date fair value of the award.
(b) The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee
turnover during the vesting period and the likelihood of non-market performance conditions being met.
(c) The expired portion of the vesting period.
31
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of significant accounting policies - CONTINUED
(p) Share based payments - CONTINUED
Equity settled transactions - CONTINUED
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above, less the amounts
already charged in previous periods. There is a corresponding entry to equity. Equity-settled awards granted by Katana Capital Limited to
employees of subsidiaries are recognised in the parent’s separate financial statements as an additional investment in the subsidiary with
a corresponding credit to equity. As a result, the expense recognised by Katana Capital Limited in relation to equity-settled awards only
represents the expense associated with grants to employees of the parent. The expense recognised by the Group is the total expense
associated with all such awards.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally
anticipated to do so. Any award subject to a market condition or non-vesting condition is considered to vest irrespective of whether or
not that market condition or non-vesting condition is fulfilled, provided that all other conditions are satisfied.
If a non-vesting condition is within the control of the Group, Company or the employee, the failure to satisfy the condition is treated as a
cancellation. If a non-vesting condition within the control of neither the Group, Company nor employee is not satisfied during the vesting
period, any expense for the award not previously recognised is recognised over the remaining vesting period, unless the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified.
An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for
the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
Shares in the Group reacquired on-market are classified and disclosed as reserved shares and deducted from equity.
(q) Parent entity financial information
The financial information for the parent entity, Katana Capital Limited, disclosed in note 22 has been prepared on the same basis as the
consolidated financial statements.
(r) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the strategic steering committee.
(s) Significant accounting judgements, estimates and assumptions
The determination of fair value of unlisted securities requires the application of a discounted cashflow valuation model. A discounted
cashflow model requires that certain judgements and assumptions are made, including an estimate for the discount rate applied and
an estimation of future uncertain cashflows.
3 Investment income
Realised gains on investments held for trading
Unrealised (losses)/gains on investments held for trading
Other
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
2,697,922
(4,399,843)
7,831
(1,694,090)
253,991
6,973,060
9,303
7,236,354
32
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 Income tax expense
(a) Income tax benefit
Current tax expense
Deferred tax (benefit)/expense
Deferred income tax expense included in income tax expense comprises:
Increase in deferred tax assets (Note 8)
Decrease/(increase) in deferred tax liabilities (Note 10)
(b) Reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2014 - 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Franking credits
Franking rebate
Non Assessable Income
Tax losses recouped - previously not recognised
Adjustment in respect of prior year income tax expense
Income Tax (benefit)/expense
5 Current assets - Cash and cash equivalents
Cash at bank
Short term bank bills
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
282,702
(1,068,448)
(785,746)
321,655
746,793
1,068,448
66,505
286,228
352,733
152,148
(438,376)
(286,228)
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
(1,943,545)
(583,063)
86,677
(288,924)
(436)
-
-
(785,746)
6,256,834
1,877,050
83,352
(277,839)
(1,858)
(1,328,719)
747
352,733
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
3,204,027
-
3,204,027
1,147,121
4,500,002
5,647,123
33
FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
63,425
5
72,775
-
136,205
1,518,730
7
129,653
22,800
1,671,190
6 Current assets - Trade and other current receivables
Unsettled trades - listed equities
Interest receivable
Dividend receivable
Distribution receivable
There are no receivables past due or impaired.
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
7 Current assets - Investments held for trading
Equity securities - classified as held at fair value through profit or loss
Convertible notes
Australian listed trusts
Australian unlisted trusts
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
33,812,802
-
2,923,029
1,040,275
37,776,106
24,551,209
-
3,484,148
1,007,999
29,043,356
Held for trading investments consist of investments in ordinary shares and therefore have no fixed maturity date or coupon rate.
For fair value measurements refer to Note 16(h).
8 Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Other
Investments
Provisions
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions (Note 10)
Net deferred tax assets
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
973,703
61,555
15,707
1,050,965
(268,745)
782,220
430,562
297,408
1,340
729,310
(729,310)
-
The deferred tax asset is recognised as an asset at this time due to the Company’s view that utilising the tax asset is considered probable.
34
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9 Current liabilities - Trade and other payables
Unsettled trades - listed equities
Management fee - Katana Asset Management Ltd
Trade creditors
Performance fee payable
PAYG tax instalments
Custody fees payable
Redemptions payable
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
776,316
135,135
31,148
13,073
-
23,397
86,104
1,065,173
801,015
113,872
46,434
807,655
14,250
23,397
-
1,806,623
Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.
10 Non-current liabilities - Deferred tax liabilities
The balance comprises temporary differences attributable to:
Deferred tax liabilities
Investments
Dividends receivable
Other
Total Deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions (Note 8)
Net deferred tax liabilities
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
232,895
21,832
14,018
268,745
(268,745)
-
976,640
38,896
2
1,015,538
(729,310)
286,228
35
FOR THE YEAR ENDED 30 JUNE 2015
11 Issued capital
Ordinary shares fully paid
45,342,549
34,002,419
44,917,756
34,607,708
CONSOLIDATED ENTITY
AT
CONSOLIDATED ENTITY
AT
30 June 2015
Shares
30 June 2014
Shares
30 June 2015
$
30 June 2014
$
(a) Movements in ordinary share capital:
Date
Details
1 July 2013
30 June 2014
Opening balance
Buy-back of shares
Balance
1 July 2014
30 June 2015
Opening balance
Proceeds from contributions by shareholders
Buy-back of shares
Dividend reinvestment plan
Decrease due to transaction costs for issued share capital
Balance
Number of
shares
35,194,896
(1,192,477)
34,002,419
34,002,419
11,790,421
(780,780)
330,489
-
45,342,549
$
35,609,199
(1,001,491)
34,607,708
34,607,708
10,965,093
(719,827)
298,382
(233,600)
44,917,756
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
During the period from 1 July 2014 to 30 June 2015, 780,780 shares were bought back on market and were subsequently cancelled.
The shares were acquired at an average price of $0.92 with the price ranging from $0.84 to $0.94 per share.
The Company has a dividend reinvestment plan (DRP) for its dividend distribution, which shareholders have the discretion to join or exit.
The DRP shares are managed via an on-market buyback of shares that are then re-distributed to shareholders. During the year as part of
the DRP the Company issued 330,489 new shares to meet the DRP shortfall for buyback shares acquired on-market.
Katana Capital issued 45,706,657 options to existing shareholders on 14 November 2014. The options were provided to existing
shareholders on a ratio of one option for every one ordinary share held on the record date for $nil consideration payable. The options have
an exercise price of $1.00 and expire on 1 March 2016.
(b) Capital management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal
returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity. Management is constantly adjusting the capital structure to take advantage of favourable
costs of capital or high returns on assets. The Company defines its capital as the total funds under management, being $41,920,922 at
30 June 2015 (30 June 2014: $36,396,344), including equities and cash reserves. The Company does not have any additional externally
imposed capital requirements however has as a goal the ability to continue to grow assets under management and maintain a sustainable
dividend return to shareholders. To assist with meeting its internal guidelines, Katana Asset Management Limited holds regular Investment
Committee meetings to assess the equity portfolio.
36
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12 Reserves and accumulated losses
(a) Reserves
Option premium reserve
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
101,100
101,100
101,100
101,100
The option premium reserve is used to record the value of share based payments provided to employees, including KMP, as part of
their remuneration.
(b) Profit reserve
The profit reserve is made up of amounts allocated from retained earnings that are preserved for future dividend payments.
Movement in profit reserve were as follows:
Opening balance
Transferred from retained earnings (i)
Dividends paid
CONSOLIDATED
AT
30 June 2015
$
-
1,510,705
(689,167)
821,538
30 June 2014
$
-
-
-
-
(i) The amount transferred to profit reserve is the profit for the period 1 January 2015 to 28 February 2015 in accordance with a resolution of the Board of Directors dated 16 April 2015.
(c) Accumulated losses
Movements in accumulated losses were as follows:
Opening balance
Net (loss)/profit after tax attributable to members of the Company
Profit reserves
Dividends
Closing balance
13 Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
- Director fees
Post-employment benefits
CONSOLIDATED
AT
30 June 2015
$
30 June 2014
$
(510,260)
(1,157,799)
(1,510,705)
(1,879,713)
(5,058,477)
(4,685,832)
5,904,101
-
(1,728,529)
(510,260)
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
-
150,000
14,250
164,250
-
150,000
13,877
163,877
37
FOR THE YEAR ENDED 30 JUNE 2015
14 Related party transactions
(a) Directors
The names of persons who were Directors of the Katana Capital Limited at any time during the financial year and of this report are as
follows: Mr Dalton Gooding, Mr Giuliano Sala Tenna and Mr Peter Wallace.
(b) Related party transactions
All related party transactions are made at arm’s length on normal commercial terms and conditions.
Outstanding balances at period end are unsecured and settlement occurs in cash.
Related parties during the year are outlined below:
Director related:
Dalton Gooding is a partner of Gooding Partners Chartered Accounting firm and as part of providing taxation advisory services,
Gooding Partners received $21,035 (2014: $33,352) for tax services provided.
Other Key management services - Katana Asset Management Ltd:
Katana Asset Management Ltd, the Fund Manager for the Group, provides the Group with Key Management Services. The directors of
Katana Asset Management Ltd are Brad Shallard and Romano Sala Tenna.
Katana Capital paid management fees of $457,651 to the Fund Manager for management services provided during the year
(2014: $445,958). There was no performance fees paid to the Fund Manager during the period (2014: $807,655). The Fund Manager
and its directors have the following shareholdings:
2015
Name
Brad Shallard
Romano Sala Tenna
2014
Name
Brad Shallard
Romano Sala Tenna
Balance at the
start of the year
Other changes
during the year1
Balance at the
end of the year
2,968,498
3,284,070
643,824
773,704
3,612,322
4,057,774
Balance at the
start of the year
Other changes
during the year1
Balance at the
end of the year
2,602,717
2,828,378
365,781
455,692
2,968,498
3,284,070
1 Acquired through on market transactions during the year.
Wholly owned group transactions
There are no transactions with companies within the wholly owned group.
15 Reconciliation of profit/(loss) after income tax to cash inflow from operating activities
(Loss)/profit for the year
(Increase)/decrease in financial assets held for trading
Decrease/(Increase) in trade and other receivables
(Increase)/decrease in deferred tax assets
(Decrease)/Increase in trade and other payables
Increase in financial liabilities held at fair value through profit or loss
(Decrease)/increase in current tax liabilities
Net cash (outflow)/inflow from operating activities
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
(1,157,799)
(8,734,365)
1,295,548
(782,220)
(489,566)
33,508
(349,366)
(10,184,260)
5,904,101
(3,033,185)
(883,437)
286,228
1,451,044
33,567
66,505
3,824,823
38
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including price risk and interest rate risk), credit risk and liquidity risk.
The Group’s overall risk management program focuses on ensuring compliance with the Company’s Investment Mandate and seeks to
maximise the returns derived for the level of risk to which the Company is exposed.
The Group uses derivative financial instruments to alter certain risk exposures. Financial risk management is carried out by the Investment
Manager under policies approved by the Board of Directors (the “Board”).
The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the
case of interest rate, foreign exchange and other price risks and ratings analysis for credit risk.
(a) Mandate
The Fund Manager must manage the Portfolio in accordance with guidelines for management set out in the Mandate, which may be
amended by written agreement between the Company and the Fund Manager from time to time. The mandate provides that the Portfolio
will be managed with the following investment objectives:
(cid:114)(cid:1) (cid:85)(cid:80)(cid:1)(cid:66)(cid:68)(cid:73)(cid:74)(cid:70)(cid:87)(cid:70)(cid:1)(cid:66)(cid:1)(cid:81)(cid:83)(cid:70)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:79)(cid:84)(cid:70)(cid:1)(cid:83)(cid:70)(cid:85)(cid:86)(cid:83)(cid:79)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:80)(cid:86)(cid:85)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:52)(cid:57)(cid:1)(cid:34)(cid:77)(cid:77)(cid:1)(cid:48)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:74)(cid:70)(cid:84)(cid:1)(cid:42)(cid:79)(cid:69)(cid:70)(cid:89)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:114)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:69)(cid:15)(cid:1)(cid:53)(cid:73)(cid:70)(cid:1)(cid:46)(cid:66)(cid:79)(cid:69)(cid:66)(cid:85)(cid:70)(cid:1)(cid:81)(cid:70)(cid:83)(cid:78)(cid:74)(cid:85)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:39)(cid:86)(cid:79)(cid:69)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:85)(cid:66)(cid:76)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:27)
(i)
listed securities;
(ii) rights to subscribe for or convert to listed securities (whether or not such rights are tradable on a securities exchange);
(iii) any securities which the Fund Manager reasonably expects will be quoted on the ASX within a 24 month period from the date
of investment;
(iv) listed securities for the purpose of short selling;
(v) warrants or options to purchase any investment and warrants or options to sell any investment;
(vi) discount or purchase of bills of exchange, promissory notes or other negotiable instruments accepted, drawn or endorsed by any
bank or by the Commonwealth of Australia, any State or Territory of Australia, or by any corporation of at least an investment grade
credit rating granted by a recognised credit rating agency in Australia;
(vii) deposits with any bank or corporation declared to be an authorised dealer in the short term money market;
(viii) debentures, unsecured notes, loan stock, bonds, promissory notes, certificates of deposit, interest bearing accounts, certificates of
indebtedness issued by any bank or by the Commonwealth of Australia, any State or Territory of Australia, any Australian government
authority, or a corporation of at least an investment grade credit rating granted by a recognised credit rating agency in Australia;
(ix) units or other interest in cash management trusts;
(x) underwriting or sub-underwriting of securities as and where permitted by relevant laws and regulations and the Fund Manager’s
AFSL; and
(xi) any other investment, or investment of a particular kind, approved by the Company in writing as and where permitted by the Fund
Manager’s AFSL.
The Mandate specifies the following risk control features:
The Portfolio may comprise securities in up to 80 companies from time to time.
(cid:114)(cid:1) (cid:79)(cid:80)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:78)(cid:66)(cid:90)(cid:1)(cid:83)(cid:70)(cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:1)(cid:78)(cid:80)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:18)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:84)(cid:84)(cid:86)(cid:70)(cid:69)(cid:1)(cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:15)
(cid:114)(cid:1) (cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:68)(cid:86)(cid:78)(cid:86)(cid:77)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:72)(cid:70)(cid:66)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:80)(cid:83)(cid:85)(cid:71)(cid:80)(cid:77)(cid:74)(cid:80)(cid:1)(cid:78)(cid:66)(cid:90)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:70)(cid:89)(cid:68)(cid:70)(cid:70)(cid:69)(cid:1)(cid:22)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:66)(cid:71)(cid:85)(cid:70)(cid:83)(cid:1)(cid:85)(cid:66)(cid:89)(cid:15)
(cid:114)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:39)(cid:86)(cid:79)(cid:69)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:66)(cid:69)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:66)(cid:78)(cid:70)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:1)(cid:81)(cid:83)(cid:70)(cid:14)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:84)(cid:70)(cid:85)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:67)(cid:70)(cid:77)(cid:80)(cid:88)(cid:1)(cid:86)(cid:79)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:74)(cid:80)(cid:83)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:87)(cid:66)(cid:77)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:80)(cid:66)(cid:83)(cid:69)(cid:1)
is received to do otherwise.
(b) Portfolio composition and management
The aim of the Fund Manager is to build for the Group a portfolio of 20 to 60 companies, with an emphasis towards holding a larger
number of smaller positions. Under the current Mandate, the Company’s Portfolio may vary from between 0 to 80 securities, depending
upon investment opportunities and prevailing market conditions. The Fund Manager may construct a Portfolio comprising of any
combination of cash, investment and debt, subject to gearing limits in the Mandate. Under the Mandate, total cumulative gearing on the
Portfolio may not exceed 50% of the total value of the net tangible assets of the Group after tax.
The capacity to short sell securities, as well as employ debt, allows the Fund Manager the flexibility to implement an absolute return
strategy. It should also be noted that, despite the focus on emerging and green chip companies, in periods of overly negative market of
stock sentiment, the best investment opportunities on a risk return basis are often found in the ASX S&P Index top 20 and ASX S&P Index
top 100 stocks by market capitalisation. Often the larger stocks rebound first, hence providing not just safer returns, but quicker returns.
39
FOR THE YEAR ENDED 30 JUNE 2015
16 Financial risk management - CONTINUED
(b) Portfolio composition and management - CONTINUED
Under the current Mandate, the following parameters will apply to individual investments unless the prior approval of the Directors is
received to do otherwise:
SIZE OF COMPANY
MINIMUM INVESTMENT
PER SECURITY
INDICATIVE BENCHMARK
INVESTMENT PER SECURITY
MAXIMUM INVESTMENT
PER SECURITY
ASX S&P Top 20
ASX S&P Top 100/Cash Hybrids
ASX S&P Top 500
Outside of ASX S&P Top 500/Other Instruments
1%
1%
No Minimum
No Minimum
5%
3%
2%
1%
12.5%
10%
7.5%
5%
AS A PERCENTAGE OF TOTAL PORTFOLIO
(c) Asset allocation
The Fund Manager’s allocation of the Portfolio will be weighted in accordance with various macro-economic factors. These factors will
invariably impact the medium and long term Performance of the Group. These factors include:
(cid:114)(cid:1) (cid:72)(cid:77)(cid:80)(cid:67)(cid:66)(cid:77)(cid:1)(cid:70)(cid:68)(cid:80)(cid:79)(cid:80)(cid:78)(cid:90)(cid:28)
(cid:114)(cid:1) (cid:34)(cid:86)(cid:84)(cid:85)(cid:83)(cid:66)(cid:77)(cid:74)(cid:66)(cid:79)(cid:1)(cid:70)(cid:68)(cid:80)(cid:79)(cid:80)(cid:78)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:68)(cid:80)(cid:79)(cid:80)(cid:78)(cid:74)(cid:68)(cid:1)(cid:68)(cid:90)(cid:68)(cid:77)(cid:70)(cid:28)
(cid:114)(cid:1) (cid:84)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:86)(cid:84)(cid:85)(cid:83)(cid:66)(cid:77)(cid:74)(cid:66)(cid:79)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:28)
(cid:114)(cid:1) (cid:81)(cid:73)(cid:66)(cid:84)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:68)(cid:90)(cid:68)(cid:77)(cid:70)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:114)(cid:1) (cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:85)(cid:90)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:9)(cid:70)(cid:15)(cid:72)(cid:15)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:83)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:78)(cid:70)(cid:83)(cid:74)(cid:85)(cid:10)(cid:15)
The Fund Manager may form views on the factors outlined above, may re-weight the Portfolio accordingly.
(d) Market risk
Market risk is the risk that changes in foreign exchange rates, interest rates and prices will affect the Company income or the carrying
value of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
(i) Price Risk
The Company is exposed to equity securities, convertible notes and derivative securities price risk. This arises from investments held
by the Company for which prices in the future are uncertain. The paragraph below sets out how this component of price risk is
managed and measured.
Investments are classified in the statement of financial position as held for trading. All securities investments present a risk of loss of
capital. Except for equities sold short, the maximum risk resulting from financial instruments is determined by the fair value of the
financial instruments. Possible losses from equities sold short can be unlimited.
The Investment Manager mitigates price risk through diversification and a careful selection of securities and other financial
instruments within specified limits set by the Board.
The table on page 40 summarises the impact of an increase/decrease in the Australian Securities Exchange All Ordinaries Index on the
Company’s net assets attributable to shareholders at 30 June 2015. The analysis is based on the assumptions that the index increased/
decreased by 10% (2014: 10%) with all other variables held constant and that the fair value of the Company’s portfolio of equity
securities and derivatives moved according to the historical correlation with the index. The impact mainly arises from the possible
change in the fair value of listed equities, unlisted unit trusts and equity derivatives with combined value of $37,776,106
(2014: $29,008,233) that represented the maximum exposure as at reporting date.
(ii) Foreign exchange risk
The Company does not hold any monetary and non-monetary assets denominated in currencies other than the Australian dollar.
(iii) 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.
Compliance with the Company’s policy is reported to the Board on a monthly basis. The Company may also enter into derivative
financial instruments to mitigate the risk of future interest rate changes.
40
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Financial risk management - CONTINUED
(d) Market risk - CONTINUED
(iii) Interest rate risk - CONTINUED
The table below summarises the Company’s exposure to financial assets/liabilities at the balance sheet date.
Financial Assets
Cash and short term deposits - floating
WEIGHTED AVERAGE
INTEREST
Rate (% p.a.)
YEAR ENDED
CONSOLIDATED
30 June 2015
30 June 2014
1.88%
3,204,027
5,647,123
The table below summarises the impact of an increase/decrease of interest rates on the Company’s operating profit and net assets
attributable to shareholders through changes in fair value or changes in future cash flows. The analysis is based on the assumption
that interest rates changed by +/- 50 basis points (2014: +/- 50 basis points) from the year end rates with all other variables held
constant. The impact mainly arises from changes in the fair value of fixed interest securities.
(e) Summarised sensitivity analysis
The following table summarises the sensitivity of the Company’s operating profit and other comprehensive income to interest rate
risk and other price risk. The reasonably possible movements in the risk variables have been determined based on management’s best
estimate, having regard to a number of factors, including historical levels of changes in interest rates, historical correlation of the Company
investments with the relevant benchmark and market volatility. However, actual movements in the risk variables may be greater or less
than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of the
economies, markets and securities in which the Company invest. As a result, historic variations in risk variables should not be used to
predict future variations in the risk variables.
PRICE RISK
-10%
+10%
-10%
+10%
IMPACT ON
OPERATING PROFIT
IMPACT ON
OTHER COMPREHENSIVE INCOME
30 June 2015
30 June 2014
(3,777,611)
(2,900,823)
3,777,611
2,900,823
-
-
-
-
30 June 2015
30 June 2014
(f) Credit risk
INTEREST RATE RISK
-50bps
+50bps
-50bps
+50bps
IMPACT ON
OPERATING PROFIT
IMPACT ON
OTHER COMPREHENSIVE INCOME
(16,020)
(28,236)
16,020
28,236
-
-
-
-
Credit risk primarily arises from investments in debt securities and from trading derivative products. Other credit risk arises from cash and
cash equivalents, deposits with banks and other financial institutions and amounts due from brokers. None of these assets are impaired
nor past due but not impaired.
As at 30 June 2015 the Company does not hold any debt securities (30 June 2014: Nil).
The Company does trade in Exchange Traded Options (“ETO’s”). The Investment Manager has established limits such that, at any time, such
that options are not traded without holding the physical security in the portfolio and contracts are with counterparties included in the
Board’s Approved Counterparties list. As at 30 June 2015 the Company held no Exchange Traded Options (30 June 2014: 4 ETO’s).
Compliance with the Company’s policy is reported to the Board on a monthly basis.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets.
The majority of cash assets are held with one bank.
41
FOR THE YEAR ENDED 30 JUNE 2015
16 Financial risk management - CONTINUED
(g) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments.
Cash flow interest rate risk is the risk that future cash flows on a financial instrument will fluctuate because of changes in the market interest rates.
To control liquidity and cash flow interest rate risk, the Company invests in financial instruments which under normal market conditions are
readily convertible to cash. In addition the Company invests within the Mandate guidelines to ensure that there is no concentration of risk.
The Company held no derivatives (ETO’s) as at 30 June 2015 (30 June 2014: $35,123 liability).
Financial liabilities of the Company comprise trade and other payables and dividends payable. Trade and other payables have no
contractual maturities but are typically settled within 30 days.
(h) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
(a) Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b) Level 2 - valuation technique for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable.
(c) Level 3 - valuation technique for which the lowest level input that is significant to the fair value movement that is not observable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have
occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The following table presents the Company’s assets and liabilities measured and recognised at fair value at 30 June 2015.
Group - as at 30 June 2015
Assets
Financial assets held at fair value through
profit and loss
- Equity securities
- Listed Unit Trust
- Unlisted Unit Trust
Total Assets
Liabilities
Financial liabilities held at fair value through
profit and loss
- Options
Total Liabilities
Group - as at 30 June 2014
Assets
Financial Assets held at fair value through
profit and loss
- Equity securities
- Listed Unit Trust
- Unlisted Unit Trust
Total Assets
Liabilities
Financial liabilities held at fair value through
profit and loss
- Options
Total Liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
33,312,802
2,923,029
-
36,235,771
-
-
1,040,275
1,040,275
500,000
-
-
500,000
33,812,802
2,923,029
1,040,275
37,776,106
-
-
-
-
-
-
Level 1
$
Level 2
$
Level 3
$
24,551,209
3,484,148
-
28,035,357
-
-
1,007,999
1,007,999
35,123
35,123
-
-
-
-
-
-
-
-
-
-
Total
$
24,551,209
3,484,148
1,007,999
29,043,356
35,123
35,123
42
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Financial risk management - CONTINUED
(h) Fair value measurements - CONTINUED
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 Company is the current bid price. These instruments are included in Level 1.
The fair value of financial instruments that are not traded in an active market (for example, unlisted investments) is determined using
valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at
the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to estimate fair value for long
term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the
remaining financial instruments. In determining the fair value of the securities the company holds in the unlisted investments,
the company referred to the Net Tangible Assets of the investee, recent trading in units of the investee and all other market factors
associated with the unlisted investment.
Financial assets at fair value through profit or loss are dependent on the change of input variables used to determine fair value, namely
changes in market prices of equity securities. The majority of the investments are invested in shares of companies listed on the Australian
Stock Exchange which are valued based on market observable information.
There were no transfers between level 1 and level 2 during the year.
The following table presents the changes in level 3 instruments for the year ended 30 June 2015:
Opening balance
Purchases
Sales
Gains/(losses) recognised in profit or loss
Closing balance
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
-
500,000
-
-
500,000
-
-
-
-
-
The level 3 financial instrument above relates to an unlisted investment that was purchased on 19 June 2015. The input to the valuation
includes the adjusted net assets as at 30 June 2015 of the investee, the purchase price, and the indicative initial public offering (IPO) price
per share sourced directly from the investee on its plan for IPO in FY16. An increase or decrease of 10% on the valuation would result in an
increase/(decrease) in fair value by $50,000 (2014: $nil).
17 Segment reporting
For management purposes, the Group is organised into one main operating segment, which invests in equity securities, debt instruments,
and related derivatives. All of the Group’s activities are interrelated, and each activity is dependent on the others. Accordingly, all significant
operating disclosures are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the
financial statements of the Group as a whole.
The Group operates from one geographic location, being Australia, from where its investing activities are managed.
The Group does not derive revenue of more than 10% from any one of its investments held.
43
FOR THE YEAR ENDED 30 JUNE 2015
18 Earnings per share
(a) Basic earnings per share:
Profit/(loss) per share from continuing operations attributable to the ordinary equity holders
of the Company
(2.7)
17.07
(b) Reconciliation of earnings used in calculating earnings per share
CONSOLIDATED
YEAR ENDED
30 June 2015
Cents
30 June 2014
Cents
Basic earnings/(loss) per share
(Loss)/profit from continuing operations
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
(1,157,799)
5,904,101
Profit/(loss) attributable to the ordinary equity holders of the Company used in calculating
basic earnings per share
(1,157,799)
5,904,101
(c) Weighted average number of shares used as the denominator
CONSOLIDATED
YEAR ENDED
30 June 2015
Number
30 June 2014
Number
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
43,623,418
34,592,393
Adjustments for calculation of diluted earnings per share:
Options
-
-
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
43,623,418
34,592,393
Basic earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be
issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
There were 45,706,657 options on issue as at 30 June 2015 (30 June 2014: Nil) that are not considered dilutive.
19 Events occurring after reporting date
Other than the events below, the directors are not aware of any matter or circumstance that has significantly or may significantly affect the
operations of the company or the results of those operations, or the state of affairs of the company in subsequent financial years.
On 3 August 2015 the Company declared a fully franked 1.5 cent per share dividend.
At the time of writing this report, the Directors note and following 30 June 2015, that there has been a correction in the All Ordinaries with the
index down from 5,451 points at 30 June 2015 to 5,076 points at 25 September 2015, representing a decrease of 6.9%. As this is the only Securities
Exchange the Company invests in, changes in the value of the Company’s investments are reflected in the Company’s Net Tangible Asset Backing
per share which is reported to the Australian Securities Exchange (ASX) monthly and is available via the ASX website. From 30 June 2015 to
31 August 2015, the Company’s Net Tangible Asset Backing per share has decreased by 3.21%.The further impact for the month of September
will be determined and reflected in the Company’s Net Tangible Asset Backing per share in 30 September 2015 monthly report to ASX.
44
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Remuneration of auditors
(a) Audit services
Ernst & Young Australia
Audit and review of financial reports
Total remuneration for audit and other assurance services
(b) Non-audit services
Other services
Total remuneration for other assurance services
21 Dividends
Dividend paid during 1st Quarter of the year
Dividend paid during 2nd Quarter of the year
Dividend paid during 3rd Quarter of the year
Dividend paid during 4th Quarter of the year
Total dividends paid and payable
Total Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
56,500
56,500
54,000
54,000
-
-
-
-
PARENT ENTITY
YEAR ENDED
30 June 2015
$
30 June 2014
$
509,216
1.5 cents
685,492
1.5 cents
685,005
1.5 cents
689,167
1.5 cents
2,568,880
352,672
1 cent
435,278
1.25 cents
427,917
1.25 cents
512,662
1.5 cents
1,728,529
CONSOLIDATED
YEAR ENDED
30 June 2015
$
30 June 2014
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2014: 30%)
357,740
93,360
The above amounts represent the balance of the franking account as at the reporting date, adjusted for:
(a) franking credits that will arise from the payment of the amount of the current tax liability;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were
paid as dividends.
45
FOR THE YEAR ENDED 30 JUNE 2015
PARENT ENTITY
AS AT
2015
$
41,138,598
-
41,138,598
1,264,879
-
1,264,879
44,917,756
101,100
821,538
(5,146,680)
40,693,714
2014
$
36,396,344
-
36,396,344
1,911,568
286,228
2,197,796
34,607,708
101,100
-
(510,260)
34,198,548
(1,246,002)
5,904,101
(1,246,002)
5,904,101
22 Parent entity financial information
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Option premium reserve
Profit reserve
Accumulated loss
Profit or loss for the year
Total comprehensive income
Investment in controlled entity at cost
The investment in the controlled entity is for 100% of the issued capital of Kapital Investments (WA) Pty Ltd.
Tax consolidation legislation
Katana Capital Limited and its wholly owned Australian controlled entities implemented the tax consolidation legislation from 1 July 2007.
(i) Members of the tax consolidated Group and the tax sharing arrangement.
Katana Capital Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated Group from 1 July 2007. Katana
Capital Limited is the head entity of the tax consolidated Group. Members of the Group have entered into a tax sharing agreement that
provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations.
No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is
remote (see Note 4).
(ii) Tax effect accounting by members of the tax consolidated Group
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences are recognised in the separate
financial statements of the members of the tax consolidated Group using the Group allocation method. Current tax liabilities and assets
and deferred tax assets arising from the unused tax losses and tax credits of the members of the tax consolidated Group are recognised by
Katana Capital Limited, the head entity of the tax consolidated Group.
Members of the tax consolidated Group have entered into a tax funding agreement. Amounts are recognised as payable to or receivable
by the Company and each member of the consolidated Group in relation to tax contribution amounts paid or payable between the
parent entity and other members of the tax consolidated Group in accordance with this agreement. Where the tax contribution amount
recognised by each member of the tax consolidated Group for a particular period is different to the aggregate of the current tax liability or
asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the distribution is recognised as a
contribution from (or distribution to) equity participants.
23 Commitments and contingencies
There are no outstanding contingent liabilities or commitments as at 30 June 2015 (30 June 2014: Nil).
46
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
DIRECTORS’ DECLARATION
30 JUNE 2015
In accordance with a resolution of the directors of Katana Capital Limited, I state that:
(a) The financial statements and notes of the consolidated entity set out on pages 17 to 45 are in accordance with the Corporations Act 2001,
including
(i) Giving a true and fair view of the financial position as at 30 June 2015 and of its performance for the year ended on that date of the
consolidated entity.
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2011;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(b).
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(d) this declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the
Corporations Act 2011 for the financial year ended 30 June 2015.
On behalf of the Board
Katana Capital Limited
Dalton Gooding
Chairman
29 September 2015
Perth, Western Australia
INDEPENDENT AUDIT REPORT
TO MEMBERS OF KATANA CAPITAL LIMITED
47
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Katana Capital Limited
Report on the financial report
We have audited the accompanying financial report of Katana Capital Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements
financial statements comply with International Financial Reporting Standards
, that the
.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy
of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GHM:JT:KATANA:047
48
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
INDEPENDENT AUDIT REPORT
TO MEMBERS OF KATANA CAPITAL LIMITED
Opinion
In our opinion:
1.
the financial report of Katana Capital Limited is in accordance with the Corporations Act 2001,
including:
a.
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and
of its performance for the year ended on that date
b.
complying with Australian Accounting Standards and the Corporations Regulations 2001
2.
the financial report also complies with International Financial Reporting Standards
Note 2.
as disclosed in
Report on the remuneration report
9 to 13
We have audited the Remuneration Report included in pages 6 to 11 of the directors' report for the year
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Katana Capital Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
29 September 2015
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CORPORATE GOVERNANCE
49
Katana Capital Limited (Katana) is committed to continuously improving and achieving high standards of corporate governance. The Board
assesses its governance framework and practice believing good corporate governance is closely related to performance and serves in the best
interests of shareholders and stakeholders.
Katana ‘s corporate governance statement has been prepared in accordance with the 3rd Edition of the Australian Securities Exchange’s (‘ASX’)
Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council (‘ASX Principles and Recommendations’) and is
included in the company’s Annual Report pursuant to ASX Listing Rule 4.10.3. The Corporate Governance Report is available at www.katanacapital.
com.au. The ASX Principles and Recommendations and the company’s response as to how and whether it follows those recommendations are set
out below.
A description of the Company’s main corporate governance practices and its ‘if not, why not’ report on compliance with the guidelines is set out
below. Where the Company’s practices depart from a recommendation, the Board has disclosed the departure along with reasons for adoption of
its own practices.
ASX Principles and Recommendations (1)
If not, why not (2)
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Recommendation 1.1
Recommendation 1.2
Recommendation 1.3
Recommendation 1.4
Recommendation 1.5
Recommendation 1.6
Recommendation 1.7
Recommendation 2.1
Recommendation 2.2
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
Recommendation 2.6
Recommendation 3.1
Recommendation 4.1
Recommendation 4.2
Recommendation 4.3
Recommendation 5.1
Recommendation 6.1
Recommendation 6.2
Recommendation 6.3
Recommendation 6.4
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
Recommendation 7.4
Recommendation 8.1
Recommendation 8.2
Recommendation 8.3
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Indicates where the Company has followed the Principles and Recommendations.
(2)
Indicates where the company has provided an “if not, why not” disclosure.
50
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
CORPORATE GOVERNANCE
Principle 1: Lay solid foundations for management and oversight
The Board has a Corporate Governance Statement which outlines the role and duties of the Board.
The Company considers that the primary responsibility of the Board is to oversee the Company’s business activities and management for the
benefit of the shareholders by:
(a) supervising the Company’s framework of control and accountability systems to enable risk to be assessed and managed which includes but is
not limited to the points noted below:
(b) ensuring the Company is properly managed by:
i.
setting and communicating clear objectives;
ii. appointing and removing the Managing Director of the Company;
iii.
ratifying the appointment and, where appropriate, the removal of the Chief Financial Officer and the Company secretary;
iv.
input into and final approval of management’s development of corporate strategy and performance objectives;
v.
reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance;
vi. monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources are available;
(c) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
(d) approval of the annual budget;
(e) monitoring the financial performance of the Company;
(f ) approving and monitoring financial and other reporting;
(g) overall corporate governance of the Company, including conducting regular reviews of the balance of responsibilities within the Company to
ensure division of functions remain appropriate to the needs of the Company;
(h) liaising with the Company’s external auditors either directly or via the Audit Committee as appropriate; and
(i) monitoring, and ensuring compliance with, all of the Company’s legal obligations, in particular those obligations relating to the environment,
native title, cultural heritage and occupational health and safety.
Katana does not employ a Chief Executive Officer or Managing Director, but instead has a Fund Manager that is responsible for the Investment Risk
Management and management of the equity Portfolio. The Fund Manager is responsible for running the affairs of the Company under delegated
authority from the Board and to implement the policies and strategy set by the Board. In carrying out their responsibilities the Fund Manager must
report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company’s financial condition and
operational results.
Matters which are not covered by the delegations require Board approval.
The Corporate Governance Statement is available on the Company’s website in the Corporate Governance section.
The Remuneration Committee annually assesses and evaluates the performance of the Board and the Managing Director.
Katana undertakes appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director.
Security holders will be provided with all material information in its possession relevant to a decision on whether or not to elect or re-elect a
director in the relevant notice of meeting. Katana enters in to written agreements with its Directors and Senior Executives which set out the terms
of their appointment.
Performance measures are established by the Board and outcomes of the review are reported to the Board.
Each Director has access to the Company Secretary for advice and support in effectively discharging their roles. The Company Secretary is
accountable directly to the board. Additionally, each Board member may seek external professional advice at the expense of the Company in
respect of their roles with the approval of the Chairman.
The Company does not have a documented procedure for the evaluating the performance of the Board, its committees, directors or senior executives.
An evaluation of the performance of the Board, its directors and senior executives is undertaken informally each year. The Chairman of the Board is
the driver of this process. This year the Chairman conducted interviews with each director and senior executives.
The evaluation of the performance of the Board’s various committees is undertaken on an exception basis. This is also an informal process which is
driven by the Chairman of the Board.
51
Principle 2: Structure the board to add value
The Katana Board comprises Three Directors:
Mr Dalton Gooding
Mr Peter Wallace
Mr Giuliano Sala Tenna
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Independent
Independent
Independent
11 November 2005
19 September 2005
19 September 2005
The Company is in compliance with Recommendation 2.4, the Board consists of a majority of independent Directors where an independent
Director is a Non-Executive Director who meets the criteria for independence included in the ASX Best Practice Recommendations.
The Board does not have a Nomination Committee. The duties of such committee have been considered and adopted by the full Board.
The Company does not have a documented procedure for the selection and appointment of directors. The Board informally reviews the skill set of
and market expectations for its directors on a regular basis and considers these factors when appointing / re-electing directors. The Board invites
persons with relevant industry experience and financial experience to assist it in its appointment of directors.
Each new member of the Board participates in an induction program which encompasses: the duties, roles, and responsibilities of each Director;
the operations of the Board and its Committees; and outlines the Company’s culture and values as well as the strategic, financial, operational,
and risk issues within the Company.
A biography profiling each Directors’ skill, experience, and expertise is set out in the Directors’ Report along with their respective term of office.
Principle 3: Act ethically and responsibly
Katana has implemented a suite of policies including a Code of Business Conduct which provides guidelines aimed at maintaining high ethical
standards and corporate behaviour. The principals of the policies include:
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Respect the law and act in accordance with it;
Respect confidentiality and not misuse company information, assets or resources;
Avoid real or perceived conflicts of interest;
Act in the best interest of stakeholders; and
Perform their duties in ways that minimise environmental impacts and maximise workplace safety.
Directors and employees are expected to comply with all Company policies and to act professionally with integrity, honesty and responsibility at
all times. Katana encourages the reporting of instances which may involve a breach (or suspected breach) of the Code of Conduct.
Principle 4: Safeguard integrity in financial reporting
The Board has established an Audit and Risk Management Committee to facilitate the verification and the safeguarding of the integrity of the
Company’s financial reporting, internal control structure, risk management procedures, and the internal and external audit function.
The Audit and Risk Committee comprises a majority of independent Directors. The full board are members of the Audit and Risk Management
Committee. The Committee’s charter is published on the Company’s website. The Audit and Risk Committee is chaired by Mr Peter Walalce,
an independent director, who is not the chair of the board.
The committee meets at least twice per annum and meetings are co-ordinated to coincide with the release of the Company’s interim and full
year financial reports and audits. The Committee has access to external auditors and a high degree of financial literacy is prevalent amongst the
committee members. The details, qualifications, and experience of each committee member and the attendance of committee members at Audit
and Risk Management Committee meetings are contained in the Directors’ Report.
The Managing Director and the Chief Financial Officer equivalent have provided the Board with a declaration in accordance with Section 295A
of the Corporations Act 2001, assuring the Board that a sound system of risk management and internal control is operating effectively in aspects
related to financial reporting risks.
The Audit and Risk Management Committee Charter is available on the Company’s website in the ‘Investors’ section.
Katana ensures that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.
52
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
CORPORATE GOVERNANCE
Principle 5: Make timely and balanced disclosures
The Company’s continuous disclosure policy has been adopted to ensure compliance with obligations under the continuous disclosure regime
of the Corporations Law and the Listing Rules of the Australian Stock Exchange Limited and to ensure that all Katana shareholders have access to
material information about the Company and its prospects.
The disclosure obligations include:
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All employees, Company officers and Directors must comply with the ASX Listing Rules and Corporations Law provisions relating to a timely
disclosure of price sensitive information to the ASX. The Company does this by releasing written announcements to the ASX.
The Fund Manager together with the board are accountable for the establishment, communication and maintenance of this policy and ensuring
that material information is disclosed to the ASX.
The Continuous Disclosure Policy can be found on the company’s website.
Principle 6: Respect the rights of security holders
The Company places considerable importance on effective communications with shareholders and other stakeholders. Katana’s communication
strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient
information to make informed investment decisions on the operations and results of the company. The strategy provides for the use of systems
that ensure a regular and timely release of information about the company is provided to shareholders. Mechanisms employed include:
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Announcements lodged with ASX;
(cid:114)(cid:1) Half Yearly Report
(cid:114)(cid:1) Monthly Net Tangible Asset Backing ASX disclosure;
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(cid:114)(cid:1)
(cid:114)(cid:1)
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Presentations at the Annual General Meeting;
Annual Report
Promote effective communication with shareholders; and
Encourage shareholder participation at AGMs.
The Company’s Information Disclosure Policy is available on the Company’s website in the Investor Centre section.
Principle 7: Recognise and manage risk
The Company is committed to the identification; monitoring and management of risks associated with its business activities and has embedded in
its management and reporting systems a number of risk management controls. The Fund Manager is charged with implementing appropriate risk
management systems within the Company and in particular with the investment process.
The Board monitors and receives advice on areas from the Fund Manager on operational and financial risk, and considers strategies for appropriate
risk management arrangements. The Fund Manager has an Investment Committee that meets on a regular basis to analyse, monitor and review
the investment portfolio.
Specific areas of risk identified initially and which will be regularly considered at Board meetings include financial performance, performance of
portfolio, compliance within regulatory framework, markets, statutory compliance and continuous disclosure obligations. The Fund Manager has
its own Investment Committee that regularly reviews the Company’s portfolio and reviews the performance of individual stocks. The Investment
Committee also makes recommendations on significant investments and conducts its own research to assist with this process.
The annual report details material financial and investment risks which arose during the reporting period (see notes to financial statements).
The board and committee have met during the year to review the entity’s risk management framework and associated risks. The board and
committee do not consider that the Company currently has any material exposure to economic risk. The Company faces economic risks inherent
to its business, which may materially impact the Company’s ability to create or preserve value for security holders over the short, medium or long
term. The Company has policies and procedures in place to help mitigate and manage the financial risks. The Board and committee do not believe
that the company has any environmental or social sustainability risks.
The Managing Director and the Chief Financial Officer equivalent have provided the Board with a declaration in accordance with Section 295A
of the Corporations Act 2001, assuring the Board that a sound system of risk management and internal control is operating effectively in aspects
related to financial reporting risks.
The Company does not have an internal audit function, however manages part of this process via, internal controls and risk management overseen
by the fund manager as part of their mandate terms and conditions. Information on the Company’s charter of the Audit and Risk Committee is
available on the Company’s website in the ‘Investors’ section.
53
Principle 8: Remunerate fairly and responsibly
As the company does not presently have any employees including employment of a Managing Director and Senior Executives there is no
requirement for remuneration committee
The company’s policy and framework for remuneration of Executives and Non Executive Directors are disclosed in the Remuneration Report that
can be found in the Annual Report.
54
KATANA CAPITAL LIMITED 2015 ANNUAL REPORT
ADDITIONAL ASX INFORMATION
Ordinary Fully Paid Shares (Total)
As of 30 Sep 2015
RANGE OF UNITS
Range
Total holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Rounding
Total
Units
8,529
167,412
620,900
10,072,488
34,254,076
38
47
74
255
70
484
45,123,405
UNMARKETABLE PARCELS
Minimum $ 500.00 parcel at $ 0.81 per unit
618
33
Minimum Parcel Size
Holders
% of Issued
Capital
0.02
0.37
1.38
22.32
75.91
0.00
100.00
Units
4767
As of 01 Oct 2015
TOP 20 SHAREHOLDERS
Rank Name
1.
2.
WONDER HOLDINGS PTY LTD
MR STEPHEN JAMES LAMBERT + MRS RUTH LYNETTE LAMBERT + MR SIMON LEE LAMBERT
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