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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
152-158 St Georges Terrace
Perth WA 6000
ASX Code: KAT
02Investment report05DIrectors’ report13auDItor’s InDepenDence DeclaratIon14FInancIal statements43aDDItIonal asX InFormatIon44aDDItIonal asX reportIng 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.
01
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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt Katana
Outperformance
vs All Ords Index
AvERAgE
02
YEAR EnDing 30 JunE
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Katana Gross Investment Return
All Ords Index
Relative performance
%
%
%
9.20
49.03
-6.41 -23.57
24.54
19.10 -11.19
8.84
26.79
-2.28
4.63
6.90
25.36 -15.49 -25.97
9.55
7.75 -11.25
15.47
12.70
1.29
-2.58
2.30 23.67
9.08
2.40 14.99 11.35
0.06
-6.63 14.09
-3.57
7.21
TOP 10 HOLDingS
%
3
3
4
.
n
W
C
%
1
9
.
3
Z
n
A
%
2
3.3
PL
W
STO
P
Percentage
of portfolio
valuation
AS AT 30 JUNE 2016
C
A
S
H
&
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q
u
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v
A
L
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S
R
E
m
Ainin
g EquiTiES
4
%
3.19 %
2.5
8 %
C
n
2 . 4
B W X
2 . 4 1 %
S F R
n A B 2 . 3 5 %
S32 2.13%
HFA 2.12%
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
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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 2016.
FY16
financial
year review
The All Ordinaries Index started FY16 at
5,451.2 points and fell by 2.58% during the
course of the year to close at 5,310.4 points
on 30 June 2016. FY16 was characterised as
another year of low global growth during
which the US Federal Reserve commenced
its interest rate hiking cycle and concern
about the level of bad debts in the Chinese
and Italian banking systems increased.
Subsequent to the financial year end, the UK
voted to leave the European Union (‘Brexit’)
in July 2016. Katana outperformed its
benchmark by 7.21% with a positive (gross)
return of 4.63%. This extended its track
record of outperformance to nine out of the
past eleven years since the Fund’s inception
(before fees and taxes). A summary of the
Fund’s returns compared to the All Ords
Index is shown in the table (left).
The Manager continued to hold between
50-60 individual stock positions and a high
level of cash over FY16. The Manager is
committed to maintaining a diversified
portfolio, which it believes, provides
better risk adjusted returns compared
to achieving that same outcome with a
concentrated portfolio.
The bar chart (left) illustrates the Manager’s
track record of outperformance in each
of the past eleven years together with its
average level of outperformance over this
period. The Manager increased the Fund’s
holdings in large energy and mining stocks
in FY16 and reduced its overweight tilt to
financials. These changes are represented
in the top 10 stocks, which now also
include two consumer stocks. All of the top
10 companies have strong balance sheets
and produce robust cash flows. The top 10
holdings as at 30 June 2016 are shown in
the pie chart (left).
outlook
The world remains in a low global growth
environment despite significant monetary
stimulus being injected by many of the
world’s central banks. Growth in the US
economy does appear to be recovering
slowly and interest rates should continue
to normalise over the next several years.
Europe and Japan have implemented
very accommodative monetary policy,
which has resulted in bond yields trading at
negative rates. Despite this, growth in these
geographies remains tepid; unemployment
is only declining slowly; and inflation remains
well below central bank targets. China is
trying to rebalance its economy away from
fixed asset investment and more towards
consumer expenditure and despite it having
some success, there is concern over the high
level of bad debts in its financial system.
Australia continues to grow at a sub-trend
pace with the lower Australian dollar
assisting non-mining sectors such as tourism,
education and agricultural production as it
transitions away from mining investment.
Demand is being driven by the emerging
middle classes in China and other Asian
countries. This region contains some 40% of
the world’s population and should continue
to increase demand for a broad range of
products and services for many years to
come. As an example, seven of the top
10 sources of Australian inbound tourism
are from Asia and there is a similar theme
occurring in education. Low interest rates
have facilitated strong growth in housing
demand although new home approvals are
currently peaking. Healthcare services are
also growing strongly aided by an ageing
population. Volume growth in liquefied
natural gas (LNG) and iron ore exports
are also partly offsetting the decline in
commodity prices.
The low growth environment is
providing a tailwind to companies in
the form of lower interest rates and
lower input costs, which is being partly
offset by reduced consumption growth
due to an ageing population and lower
immigration. In addition, technological
change is disrupting traditional business
models and in many cases, reducing
operating margins. This issue and the
associated uncertain outlook has resulted
in many companies cutting back on
investment and instead simply using
any excess funds to pay higher dividends
and/or to buy back shares.
Katana Capital limited 2016 AnnuAl RepoRt
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Despite the uncertain
environment, the Manager
remains committed to
outperforming its benchmark
and rewarding shareholders
with solid dividends.
Katana paid four quarterly 1.5 cent
dividends, totalling six cents ($0.06) during
FY16. Three of the dividends totalling
4.5c were fully franked and one of 1.5c
was 50% franked.
Despite the uncertain environment,
the Manager remains committed
to outperforming its benchmark
and rewarding shareholders with
solid dividends.
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.
Brad Shallard
Romano Sala Tenna
Investment Managers
KATANA ASSET MANAGEMENT LIMITED
04
While this is exactly what shareholders are
looking for in the short term, profitability
will inevitably decline if this continues over
the longer term.
strategy
Overall, the Manager believes the stock
market will move slightly higher and
provide modest total shareholder returns
in FY17, boosted by low interest rates;
a more reasonably priced Australian dollar;
and a gradual improvement in global
economic growth.
The Manager has added a few large
resource stocks to the portfolio as it
believes we have now seen the low in the
oil price and potentially other commodity
prices, too. It has also increased the Fund’s
holdings of quality small and mid-cap
companies that are able to grow earnings
and dividends despite being in a low
growth environment and trimmed some
of its previous financial positions.
The Manager believes that dividends will
continue to form a greater part of total
shareholder returns in this low growth
environment. Although the Manager
has recently deployed some of its cash
holdings into the stock market, it is likely
to maintain higher average cash balances
in FY17 as it will only invest valuable
shareholder funds when it considers the
risk/return equation to be favourable.
The Manager believes the share market
will continue to experience periods of
volatility and will use any weak periods to
add to its holdings.
Corporate
Katana Capital Ltd finished FY16 with
44.7m shares on issue. During the period
from 1 July 2015 to 30 June 2016, 753,968
shares were bought back on market and
were subsequently cancelled. The shares
were acquired at an average price of $0.80
with the price ranging from $0.76 to $0.835
per share. The buyback also provided
liquidity and increased the underlying net
asset backing for all existing shareholders.
Katana Capital limited 2016 AnnuAl 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 2016 and the state of affairs for the Company at that date.
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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:
05
information on Directors
Dalton gooding BBus, FCA.
(Non-Executive Chairman)
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 three years Mr Gooding
has also served as a director of the
following other listed companies:
SIPA Resources Limited
•
- appointed 1 May 2003,
resigned 31 March 2016
•
•
•
Avita Medical Limited
- appointed 14 November 2002,
resigned 30 June 2014
Brierty Limited
- appointed 26 October 2007
TFS Corporation Limited
- appointed 16 October 2014
Company Secretary
gabriel Chiappini BBus, GAICD, CA
Peter Wallace SF Fin, FAICD, AFAIM.
(Non-Executive Director)
giuliano Sala Tenna BCom, FFIN, GAICD.
(Non-Executive Director)
Mr Wallace was appointed to the Board
on 19 September 2005.
Mr Wallace has had 46 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 three years Mr Wallace
has also served as a director of the
following other listed companies:
• Neptune Marine Services Limited
- appointed 8 July 2011
• Goldfields Money Ltd
- appointed 7 August 2014
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 18 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.
During the past three years Mr Giuliano Sala Tenna
has not served any other directorship role with
listed companies.
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 directorships and Company Secretary positions 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).
Katana Capital limited 2016 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 2016, and
the numbers of meetings attended by each director were:
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Peter Wallace
Giuliano Sala Tenna
A = Number of meetings attended
DiRECTORS’ mEETingS
AuDiT & COmPLiAnCE COmmiTTEE mEETingS
A
6
6
6
B
6
6
6
A
2
2
2
B
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.
06
Peter Wallace (Chairman of Committee)
Members acting on the Audit and Compliance Committee of the Board at the date of this report are:
•
• Dalton Gooding
• Giuliano Sala Tenna
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 2016
nO. OF OPTiOnS
30 JunE 2016
169,259
300,000
nil
nil
nil
nil
30 JunE 2016
CEnTS
30 JuNE 2015
CENTS
Basic earnings per share
Basic earnings from continuing operations attributable to the ordinary equity holders
of the company
1.34
(2.70)
The weighted average number of ordinary shares on issue used in the calculation of basic earnings per share was 44,555,004 (2015: 43,623,418).
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 2016:
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 Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
Total Paid
Cents per share
30 JunE 2016
$
30 JuNE 2015
$
676,546
1.5 cents
670,482
1.5 cents
669,654
1.5 cents
669,966
1.5 cents
2,686,648
509,216
1.5 cents
685,492
1.5 cents
685,005
1.5 cents
689,167
1.5 cents
2,568,880
Katana Capital limited 2016 AnnuAl RepoRt
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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, Western Australia.
Principal activity
The principal activity of the Group is that of an Investment Company with an ‘all opportunities’ investment strategy.
Employees
As at 30 June 2016, the Group did not have any full time employees (2015: Nil).
Operating and Financial Review
Company overview
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 started FY16 at 5,451.2 points and fell by 2.58% during the course of the year to close at 5,310.4 points on 30 June 2016.
FY16 was characterised as another year of low global growth during which the US Federal Reserve commenced its interest rate hiking cycle and
concern about the level of bad debts in the Chinese and Italian banking systems increased. Subsequent to the financial year end, the UK voted
to leave the European Union (‘Brexit’) in July 2016. Katana outperformed its benchmark by 7.21% with a positive return of 4.63%. This extended
its track record of outperformance to nine out of the past eleven years since the Fund’s inception (before fees and taxes). Katana increased the
Fund’s holdings in large energy and mining stocks in FY16 and reduced its overweight tilt to financials. These changes are represented in the
top 10 stocks, which also now include two consumer stocks. All of the top 10 companies have strong balance sheets and produce robust cash
flows. The profit after tax for the year was $598,401 (2015: $1,157,799 loss after tax).
investments for future performance
The Manager is committed to maintaining a diversified portfolio, which it believes, provides better risk adjusted returns compared to achieving
that same outcome with a concentrated portfolio. The Manager continued to hold between 50-60 individual stock positions and manage cash
to match risk profile. Similar to a position taken in FY16, Katana’s Fund Manager will seek to continue to find value including in a number of
mid and small-cap companies. In addition to this, during FY16 the Fund Manager invested in a number of successful IPOs and will continue to
assess quality IPO opportunities in which to invest into. Key to the Fund’s investment outlook is its maintenance of the current dividend cycle.
Cash from operations
Net cash inflows from operations were $12,163,093 (2015: outflows $10,184,260) during the year which reflects the Group’s investment from
the Australian equities market.
Net cash flows for the financial year ending 30 June 2017 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.
Liquidity and funding
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.
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 1.5 cent dividend declared on 9 August 2016, the Directors are not aware of any matter or circumstance that has significantly or
may significantly affect the operation of the Company or the results of those operations, or the state of affairs of the Company in subsequent
financial years.
Katana Capital limited 2016 AnnuAl RepoRt
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Likely Developments and Expected Results
The world remains in a low global growth environment despite significant monetary stimulus being injected by many of the world’s central
banks. Growth in the US economy does appear to be recovering slowly and interest rates should continue to normalise here over the next
several years. Europe and Japan have implemented very accommodative monetary policy, which has resulted in bond yields trading at
negative rates. Despite this, growth in these geographies remains tepid; unemployment is only declining slowly; and inflation remains
well below central bank targets. China is trying to rebalance its economy away from fixed asset investment and more towards consumer
expenditure and despite it having some success, there is concern over the high level of bad debts in its financial system.
Australia continues to grow at a sub-trend pace with the lower Australian dollar assisting non-mining sectors such as tourism, education and
agricultural production as it transitions away from mining investment. Demand is being driven by the emerging middle classes in China and
other Asian countries. This region contains some 40% of the world’s population and should continue to increase demand for a broad range
of products and services for many years to come. As an example, seven of the top 10 sources of Australian inbound tourism are from Asia and
there is a similar theme occurring in education. Low interest rates have facilitated strong growth in housing demand although new home
approvals are currently peaking. Healthcare services are also growing strongly aided by an ageing population. Volume growth in liquefied
natural gas (LNG) and iron ore exports are also partly offsetting the decline in commodity prices.
The low growth environment is providing a tailwind to companies in the form of lower interest rates and lower input costs, which is being
partly offset by reduced consumption growth due to an ageing population and lower immigration. In addition, technological change is
disrupting traditional business models and in many cases, reducing operating margins. This issue and the associated uncertain outlook has
resulted in many companies cutting back on investment and instead simply using any excess funds to pay higher dividends and/or to buy
back shares. While this is exactly what shareholders are looking for in the short term, profitability will inevitably decline if this continues over
the longer term.
08
Environmental Regulation and Performance
The principal activities of the Group are not subject to any significant environmental regulations.
Share Options
unissued shares
There were no options outstanding as at 30 June 2016.
Shares issued on the exercise of Options
There were no options exercised during the financial year to acquire fully paid ordinary shares in the Group.
Options granted as remuneration
There were no options granted as remuneration.
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 (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 and Romano Sala Tenna.
Katana Capital limited 2016 AnnuAl RepoRt
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Remuneration Report (Audited) - COntInUed
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 linked to company performance. However, 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 acts 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.
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. During the year there were no
external consultants utilised to provide remuneration recommendation.
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 2016 is detailed on page 11 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.
The initial Management Agreement was due to expire at the end of 2015, however the agreement was renewed at the shareholder’s
Annual General Meeting held on 24 November 2015 for a further period of 5 years and was renewed on the following basis:
1.
2.
3.
the renewal is approved by Shareholders of the Company, such approval being sought 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.
Katana Capital limited 2016 AnnuAl RepoRt
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Directors’ Report
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Remuneration structure - COntInUed
(iii) Compensation of Katana Asset Management Ltd - COntInUed
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)
(j)
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
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.
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 2016
was $671,663 (30 June 2015: $457,651) as follows:
(i) Management fee
The Fund Manager receives a monthly management fee equal to 0.08333% (2015: 0.08333%) of the Portfolio value calculated at the end
of each month. The fee for 2016 was $391,089 (2015: $457,651). The directors and shareholders of Katana Asset Management Ltd are also
shareholders of Katana Capital Limited.
(ii)
Performance fee
Performance fee to be paid in respect of each performance calculation period of 15.0% (2015: 15.0%) 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 $280,574 for the financial year ended 30 June 2016 (2015: $nil).
Katana Capital limited 2016 AnnuAl RepoRt
Remuneration Report (Audited) - COntInUed
Company performance
The profit/(loss) after tax for the group from 2012 is as follows:
2016
2015
2014
2013
2012
Profit/(loss) after tax expense
Earnings/(Loss) per share - cents
Share Price 30 June
$598,401
1.34
$0.79
$(1,157,799)
(2.70)
$0.82
$5,904,101
17.07
$0.95
$1,780,914
4.82
$0.78
$(5,209,056)
(13.26)
$0.60
Remuneration of directors and key management personnel of the group
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SHORT‑TERm EmPLOYEE BEnEFiTS
POST‑
EmPLOYmEnT
BEnEFiTS
LOng‑TERm
BEnEFiTS
SHARE‑BASED
PAYmEnTS
2016
name
2015
name
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.
SHORT‑TERm EmPLOYEE BEnEFiTS
S
E
E
F
D
n
A
Y
R
A
L
A
S
$
S
E
E
f
D
N
A
Y
R
A
L
A
S
$
)
i
(
R
E
H
T
O
$
-
-
-
-
)
i
(
R
E
h
T
O
$
-
-
-
-
i
T
S
H
S
A
C
$
-
-
-
-
I
T
S
h
S
A
C
$
-
-
-
-
L
A
T
O
T
D
E
S
A
B
F
O
E
g
A
T
n
E
C
R
E
P
n
O
i
T
A
R
E
n
u
m
E
R
S
i
H
C
i
H
W
E
C
n
A
m
R
O
F
R
E
P
$
%
11
‑
R
E
P
u
S
n
O
i
T
A
u
n
n
A
$
6,650
3,800
3,800
14,250
S
T
i
F
E
n
E
B
n
O
i
T
A
n
m
R
E
T
i
$
-
-
-
-
S
n
O
i
T
P
O
$
-
-
-
-
POST‑
EmPLOYmEnT
BEnEFiTS
LOng‑TERm
BEnEFiTS
SHARE‑BASED
PAYmEnTS
76,650
43,800
43,800
164,250
‑
R
E
P
u
S
I
N
O
T
A
u
N
N
A
$
6,650
3,800
3,800
14,250
I
N
O
T
A
N
M
R
E
T
I
S
T
I
f
E
N
E
B
$
-
-
-
-
S
N
O
T
P
O
I
$
-
-
-
-
S
I
I
h
C
h
W
f
O
E
G
A
T
N
E
C
R
E
P
I
N
O
T
A
R
E
N
u
M
E
R
L
A
T
O
T
$
76,650
43,800
43,800
164,250
-
-
-
-
D
E
S
A
B
E
C
N
A
M
R
O
f
R
E
P
%
-
-
-
-
Non-executive directors
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
Total non-executive
directors, offices &
KmP
70,000
40,000
40,000
150,000
(i)
insurance premiums have not been included in other remuneration.
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:
• Mr Dalton Gooding nil (2015: 149,744)
• Mr Peter Wallace nil (2015: 300,000)
• Mr Giuliano Sala Tenna nil (2015: 112,500)
The options were granted on 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 expired on 1 March 2016.
Katana Capital limited 2016 AnnuAl RepoRt
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(ii)
Shareholdings
The numbers of shares in the Company held during the financial year by each director of Katana Capital Ltd 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.
2016
NAME
BALAnCE AT
THE START OF
THE YEAR
RECEivED DuRing
THE YEAR in
THE EXERCiSE
OF OPTiOnS
OTHER CHAngES
DuRing THE YEAR
(PuRCHASES /
(DiSPOSALS)
BALAnCE AT
THE EnD OF
THE YEAR
Directors of Katana Capital Limited
Ordinary shares
Dalton Gooding
Peter Wallace
Giuliano Sala Tenna
12
157,219
300,000
112,500
-
-
-
12,040
-
(112,500)
169,259
300,000
-
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 $48,620 (2015: $21,035) for tax services provided.
EnD OF REmunERATiOn REPORT (AuDiTED)
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 13 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
28 September 2016
Katana Capital limited 2016 AnnuAl RepoRt
Auditor’s Independence Declaration
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Katana Capital limited 2016 AnnuAl RepoRt
30 JUNE 2016
Financial
statements
ChAnGes In equIt Y
fInAnCIAl posItIon
ComprehensIve InCome
15 ConsolIDAteD stAtement of
16 ConsolIDAteD stAtement of
17 ConsolIDAteD stAtement of
18 ConsolIDAteD stAtement of
19 notes to the ConsolIDAteD
40 DIreCtors’ DeCl ArAtIon
41 InDepenDent AuDItor’s report
fInAnCIAl stAtements
CAsh flow
14
Katana Capital limited 2016 AnnuAl RepoRt Consolidated statement of comprehensive income
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Dividends
Interest
Distributions income
Investment income/(loss)
COnSOLiDATED
FOR THE YEAR EnDED
NOTES
30 JunE 2016
$
30 JuNE 2015
$
991,780
111,391
67,012
824,944
850,535
189,207
111,250
(1,694,090)
3
Total net investment income/(loss)
1,995,127
(543,098)
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
net profit/(loss) for the year attributable to
members of Katana Capital Limited
Other comprehensive income, net of tax
Total comprehensive income / (loss) for the year attributable to the
members of Katana Capital Limited
14 (b)
14 (b)
(391,089)
(121,706)
(172,511)
(494,887)
(280,574)
(457,651)
(100,726)
(171,250)
(670,820)
-
15
(1,460,767)
(1,400,447)
534,360
(1,943,545)
4 (a)
64,041
785,746
598,401
(1,157,799)
598,401
(1,157,799)
-
-
598,401
(1,157,799)
CEnTS
CENTS
Earnings/(loss) per share attributable to the
ordinary equity holders of the company:
Basic and diluted earnings/(loss) per share
18 (a)
1.34
(2.70)
the above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Consolidated statement of financial position
AS AT 30 JUNE 2016
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Investments - held for trading
Other assets
Income tax receivable
Total current assets
non-current assets
Deferred tax assets
16
Total assets
LiABiLiTiES
Current Liabilities
Trade and other payables
Dividends payable
Income tax payable
Total current liabilities
non-current liabilities
Total liabilities
net assets
EquiTY
Issued capital
Option premium reserve
Profit reserve
(Accumulated losses)/ retained earnings
COnSOLiDATED
AT
NOTES
30 JunE 2016
$
30 JuNE 2015
$
5
6
7
12,197,366
791,760
25,681,307
7,738
33,892
3,204,027
136,205
37,776,106
22,364
-
38,712,063
41,138,702
8
1,424,732
782,220
40,136,795
41,920,922
9
1,852,834
3,317
-
1,065,173
3,317
70,515
1,856,151
1,139,005
1,856,151
1,139,005
38,280,644
40,781,917
11
12(a)
12(b)
12(c)
44,504,730
101,100
920,226
(7,245,412)
44,917,756
101,100
821,538
(5,058,477)
Total equity
38,280,644
40,781,917
the above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Consolidated statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
iSSuED
CAPiTAL
$
OPTiOn
PREmium
RESERvE
$
NOTES
PROFiT
RESERvE
$
(ACCumuLATED
LOSSES)
$
TOTAL
$
Balance at 1 July 2014
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
34,607,708
-
-
-
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
12(b)
11
11
11
11
21
-
(719,827)
298,382
10,965,093
(233,600)
-
101,100
-
-
-
-
-
-
-
-
-
-
-
-
-
(510,260)
(1,157,799)
-
(1,157,799)
34,198,548
(1,157,799)
-
(1,157,799)
1,510,705
-
-
-
-
(689,167)
(1,510,705)
-
-
-
-
(1,879,713)
-
(719,827)
298,382
10,965,093
(233,600)
(2,568,880)
Balance at 30 June 2015
44,917,756
101,100
821,538
(5,058,477) 40,781,917
17
Balance at 1 July 2015
Profit for the year
Other comprehensive income
Total comprehensive loss for the year
-
-
-
44,917,756
101,100
821,538
Transfer from retained earnings to profit reserve
Buy-back of shares
Dividend reinvestment plan
Adjustment on transaction cost from prior year
Dividends provided for or paid
12(b)
11
11
11
21
-
(1,546,260)
1,063,154
70,080
-
598,401
(5,058,477) 40,781,917
598,401
-
598,401
598,401
-
-
-
-
2,785,336
-
-
-
(2,686,648)
(2,785,336)
-
-
-
-
-
(1,546,260)
1,063,154
70,080
(2,686,648)
-
-
-
-
-
-
-
-
Balance at 30 June 2016
44,504,730
101,100
920,226
(7,245,412) 38,280,644
the above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Consolidated statement of cash flow
FOR THE YEAR ENDED 30 JUNE 2016
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 (paid)/received
COnSOLiDATED
NOTES
30 JunE 2016
$
30 JuNE 2015
$
82,405,225
(69,452,092)
(1,259,048)
111,373
1,034,368
6,144
(682,877)
117,112,209
(126,473,130)
(2,101,582)
189,214
1,041,463
7,340
40,226
net inflow/(outflow) from operating activities
15
12,163,093
(10,184,260)
18
Cash flows from financing activities
Dividends paid
Payments for shares bought back
Proceeds from contributions by shareholders
Transaction costs for issued share capital
(2,686,648)
(483,106)
-
-
(2,568,880)
(421,448)
10,965,092
(233,600)
net cash inflow/(outflow) from financing activities
(3,169,754)
7,741,164
net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
8,993,339
3,204,027
(2,443,096)
5,647,123
Cash and cash equivalents at end of year
5
12,197,366
3,204,027
the above consolidated statement of cash flow should be read in conjunction with the accompanying notes.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
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 2016 was authorised for issue in accordance with a resolution of the directors on 28 September 2016.
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.
19
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 2015.
The nature and impact of each new standard and amendment is described below:
REfERENCE
TITLE
AASB 2013-9
AASB 2015-3
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.
Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian
Accounting Standards.
The adoption of these amendments had no material impact on the Group’s financial statements.
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 2016. The nature of each new standard and amendment is described below:
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.
APPLICATION
DATE fOR
KATANA CAPITAL
1 July 2018
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt APPLICATION
DATE fOR
KATANA CAPITAL
1 July 2018
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
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 9
- COntInUed
Financial
Instruments
- COntInUed
20
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.
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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt 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 1057
Application
of Australian
Accounting
Standards
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
AASB 2015-8 amended the AASB 15 effective date so it is now effective
for annual reporting periods commencing on or after 1 January 2018.
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 2016-3 Amendments to Australian Accounting Standards –
Clarifications to AASB 15 amends AASB 15 to clarify the requirements on
identifying performance obligations, principal versus agent considerations
and the timing of recognising revenue from granting a licence and provides
further practical expedients on transition to AASB 15.
This Standard lists the application paragraphs for each other Standard (and
Interpretation), grouped where they are the same. Accordingly, paragraphs
5 and 22 respectively specify the application paragraphs for Standards and
Interpretations in general. Differing application paragraphs are set out for
individual Standards and Interpretations or grouped where possible.
The application paragraphs do not affect requirements in other Standards
that specify that certain paragraphs apply only to certain types of entities.
APPLICATION
DATE fOR
KATANA CAPITAL
1 July 2018
21
1 July 2016
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
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
22
•
The subjects of the principal amendments to the Standards are set out below:
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
•
Changes in methods of disposal – where an entity reclassifies an asset
(or disposal group) directly from being held for distribution to being
held for sale (or vice versa), an entity shall not follow the guidance in
paragraphs 27–29 to account for this change.
AASB 7 Financial Instruments: Disclosures:
•
Servicing contracts - clarifies how an entity should apply the guidance
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.
Applicability of the amendments to AASB 7 to condensed interim
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.
APPLICATION
DATE fOR
KATANA CAPITAL
1 July 2016
AASB 119 Employee Benefits:
• Discount rate: regional market issue - clarifies that the high quality
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:
• Disclosure of information ‘elsewhere in the interim financial report’ -
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.
This Standard inserts scope paragraphs into AASB 8 and AASB 133 in place
of application paragraph text in AASB 1057. This is to correct inadvertent
removal of these paragraphs during editorial changes made in August 2015.
There is no change to the requirements or the applicability of AASB 8 and
AASB 133.
1 July 2016
1 July 2016
AASB 2015-2
AASB 2015-9
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
Amendments
to Australian
Accounting
Standards – Scope
and Application
Paragraphs
[AASB 8, AASB 133
& AASB 1057]
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt 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 16
Leases
The key features of AASB 16 are as follows:
lessee accounting
•
Lessees are required to recognise assets and liabilities for all leases with a
term of more than 12 months, unless the underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial
assets and lease liabilities similarly to other financial liabilities.
Assets and liabilities arising from a lease are initially measured on a
present value basis. The measurement includes non-cancellable lease
payments (including inflation-linked payments), and also includes
payments to be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to exercise an
option to terminate the lease.
AASB 16 contains disclosure requirements for lessees.
•
lessor accounting
•
AASB 16 substantially carries forward the lessor accounting requirements
in AASB 117. Accordingly, a lessor continues to classify its leases as
operating leases or finance leases, and to account for those two types of
leases differently.
AASB 16 also requires enhanced disclosures to be provided by lessors
that will improve information disclosed about a lessor’s risk exposure,
particularly to residual value risk.
•
•
•
APPLICATION
DATE fOR
KATANA CAPITAL
1 July 2019
23
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases—Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal
Form of a Lease
The new standard will be effective for annual periods beginning on or after
1 January 2019. Early application is permitted, provided the new revenue
standard, AASB 15 Revenue from Contracts with Customers, has been
applied, or is applied at the same date as AASB 16.
This Standard amends AASB 112 Income Taxes (July 2004) and AASB 112
Income Taxes (August 2015) to clarify the requirements on recognition of
deferred tax assets for unrealised losses on debt instruments measured at
fair value.
This Standard amends AASB 107 Statement of Cash Flows (August 2015)
to require entities preparing financial statements in accordance with Tier 1
reporting requirements to provide disclosures that enable users of financial
statements to evaluate changes in liabilities arising from financing activities,
including both changes arising from cash flows and non-cash changes.
This standard amends to IFRS 2 Share-based Payment, clarifying how to
account for certain types of share-based payment transactions.
The amendments provide requirements on the accounting for:
> The effects of vesting and non-vesting conditions on the measurement
of cash-settled share-based payments
> Share-based payment transactions with a net settlement feature for
withholding tax obligations
> A modification to the terms and conditions of a share-based payment
that changes the classification of the transaction from cash-settled to
equity-settled
1 July 2017
1 July 2017
1 July 2018
2016-1
2016-2
IFRS 2
(Amendments)
Amendments
to Australian
Accounting
Standards –
Recognition
of Deferred
Tax Assets for
Unrealised Losses
[AASB 112]
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 107
Classification and
Measurement of
Share-based
Payment
Transactions
[Amendments to
IFRS 2]
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 yet to assess the impact of the adoption of these standards and amendments on its financial statements.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
2 Summary of significant accounting policies - COntInUed
(c) Principles of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2016.
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:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns
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:
•
•
•
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual agreements
The Group’s voting rights and potential voting rights
24
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:
• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interests
• De-recognises the cumulative translation differences recorded in equity
•
•
•
•
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate,
as would be required if the Group had directly disposed of the related assets or liabilities.
(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 Group 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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt 2 Summary of significant accounting policies - COntInUed
(d)
investments and other financial assets - COntInUed
(iii) De-recognition 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:
>
>
>
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party lender under a “pass through” arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks
and 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.
25
(ii) Dividends
Dividends are recognised as revenue when the right to receive payment is established.
(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 Group 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.
Collectability 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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
2 Summary of significant accounting policies - COntInUed
(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 Group.
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)
26
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 Group 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.
(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:
> costs of servicing equity (other than dividends) and preference share dividends;
> other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
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 Group’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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt 2 Summary of significant accounting policies - COntInUed
(p) Share based payments
Equity settled transactions
The Group 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):
> Non-vesting conditions that do not determine whether the Group or Company receives the services that entitle the employees to
receive payment in equity or cash, and
> Conditions that are linked to the price of the shares of Katana Capital Limited (market conditions).
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:
27
(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.
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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
3
Investment income
Realised (losses)/gains on investments held for trading
Unrealised gains/(losses) on investments held for trading
Other
4
(a)
Income tax expense
Income tax benefit
28
Current tax expense
Deferred tax benefit
Deferred income tax benefit included in income tax expense comprises:
Increase in deferred tax assets (Note 8)
(Increase)/decrease in deferred tax liabilities (Note 10)
(b) Reconciliation of income tax expense to prima facie tax payable
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30% (2015 - 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Franking credits denied
Franking credits
Franking rebate
Non Assessable Income
Income Tax Benefit
5 Current assets - Cash and cash equivalents
Cash at bank
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
(121,310)
940,110
6,144
824,944
2,697,922
(4,399,843)
7,831
(1,694,090)
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
578,471
(642,512)
(64,041)
837,036
(194,524)
642,512
282,702
(1,068,448)
(785,746)
321,655
746,793
1,068,448
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
534,360
160,308
(1,943,545)
(583,063)
(9,020)
102,652
(342,175)
24,194
(64,041)
-
86,677
(288,924)
(436)
(785,746)
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
12,197,366
12,197,366
3,204,027
3,204,027
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
6 Current assets - Trade and other current receivables
Unsettled trades - listed equities
Interest receivable
Dividend receivable
There are no receivables past due or impaired.
Due to the short-term nature of these receivables, their carrying value approximates their fair value.
7 Current assets - Investments held for trading
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
717,853
23
73,884
791,760
63,425
5
72,775
136,205
Equity securities
Australian listed trusts
Australian unlisted trusts
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
29
23,292,498
1,829,186
559,623
25,681,307
33,812,802
2,923,029
1,040,275
37,776,106
Held for trading investments consist primarily 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 2016
$
30 JuNE 2015
$
1,749,834
121,947
16,220
1,888,001
(463,269)
1,424,732
973,703
61,555
15,707
1,050,965
(268,745)
782,220
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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
9 Current liabilities - Trade and other payables
Unsettled trades - listed equities
Management fee - Katana Asset Management Ltd
Trade creditors
Performance fee payable
Custody fees payable
Other payables
Redemptions payable
Due to the short-term nature of these payables, their carrying value approximates their fair value.
30
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 2016
$
30 JuNE 2015
$
1,376,883
120,945
39,500
280,574
34,808
124
-
1,852,834
776,316
135,135
31,148
13,073
23,397
-
86,104
1,065,173
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
413,065
22,172
28,032
463,269
(463,269)
-
232,895
21,832
14,018
268,745
(268,745)
-
11 Issued capital
COnSOLiDATED EnTiTY
AT
COnSOLiDATED EnTiTY
AT
30 JunE 2016
SHARES
30 JuNE 2015
ShARES
30 JunE 2016
$
30 JuNE 2015
$
Ordinary shares fully paid
44,683,578
45,342,549
44,504,730
44,917,756
(a) movements in ordinary share capital:
DATE
DETAiLS
numBER OF SHARES
$
1 July 2014
30 June 2015
1 July 2015
30 June 2016
Opening balance
Proceeds from contributions by shareholders
Buy-back of shares
Dividend reinvestment plan
Decrease due to transaction costs for issued share capital
Balance
Opening balance
Adjustment on transaction cost from prior year
Buy-back of shares
Dividend reinvestment plan
Balance
34,002,419
11,790,421
(780,780)
330,489
-
45,342,549
45,342,549
-
(753,968)
94,997
44,683,578
34,607,708
10,965,093
(719,827)
298,382
(233,600)
44,917,756
44,917,756
70,080
(603,893)
120,787
44,504,730
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
11 Issued capital - COntInUed
(a) movements in ordinary share capital: - COntInUed
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
During the period from 1 July 2015 to 30 June 2016, 753,968 shares were bought back on market and were subsequently cancelled.
The shares were acquired at an average price of $0.80 with the price ranging from $0.76 to $0.835 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 94,997 new shares to meet the DRP shortfall for buyback shares acquired on-market.
(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 Group defines its capital as the total funds under management, being $40,136,795 at
30 June 2016 (30 June 2015: $41,920,922), including equities and cash reserves. The Group 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.
31
12 Reserves and accumulated losses
(a) Reserves
Option premium reserve
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
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 / (accumulated losses) 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 2016
30 JuNE 2015
821,538
2,785,336
(2,686,648)
920,226
-
1,510,705
(689,167)
821,538
(i) The amount transferred to profit reserve are the profits for the periods 1 July 2015 to 31 July 2015 and 1 October 2015 to
31 December 2015 in accordance with a resolution of the Board of Directors dated 4 September 2015 and 2 February 2016,
respectively, (2015: 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
Transfer to profit reserves
Dividends paid
Closing balance
COnSOLiDATED
AT
30 JunE 2016
$
30 JuNE 2015
$
(5,058,477)
598,401
(2,785,336)
-
(7,245,412)
(510,260)
(1,157,799)
(1,510,705)
(1,879,713)
(5,058,477)
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
13 Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
- Director fees
Post-employment benefits
14 Related party transactions
(a) Directors
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
150,000
14,250
164,250
150,000
14,250
164,250
32
The names of persons who were Directors of the Katana Capital Limited at any time during the financial year and at the date 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 $48,620 (2015: $21,035) 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 incurred management fees of $391,089 to the Fund Manager for management services provided during the year (2015:
$457,651). There was a performance fee of $280,574 due to the Fund Manager for the year (2015: $nil). The Fund Manager and its
directors have the following shareholdings:
2016
name
Brad Shallard
Romano Sala Tenna
2015
name
Brad Shallard
Romano Sala Tenna
BALAnCE AT THE
START OF THE YEAR
OTHER CHAngES
DuRing THE YEAR
(nET PuRCHASES)
BALAnCE AT THE
EnD OF THE YEAR
3,612,322
4,057,774
331,770
329,728
3,944,092
4,387,502
BALANCE AT ThE
START Of ThE YEAR
OThER ChANGES
DuRING ThE YEAR
(NET PuRChASES)
BALANCE AT ThE
END Of ThE YEAR
2,968,498
3,284,070
643,824
773,704
3,612,322
4,057,774
Wholly owned group transactions
There are no transactions with companies within the wholly owned group.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
33
15 Reconciliation of profit/(loss) after income tax to cash inflow
from operating activities
Profit/(loss) for the year
(Increase)/decrease in financial assets held for trading
(Increase)/decrease in trade and other receivables
(Increase)/decrease in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in financial liabilities held at fair value through profit or loss
Increase/(decrease) in deferred tax liabilities
(Decrease)/increase in current tax liabilities
net cash inflow/(outflow) from operating activities
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
598,401
12,111,018
(655,555)
(837,036)
785,633
-
194,524
(33,892)
12,163,093
(1,157,799)
(8,734,365)
1,295,548
(782,220)
(489,566)
33,508
-
(349,366)
(10,184,260)
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:
>
>
to achieve a pre-tax and pre expense return which outperforms the ASX All Ordinaries Index; and
the preservation of capital invested. The Mandate permits the Fund Manager to undertake investments in:
(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.
> no investment may represent more than 10% of the issued securities of a company at the time of investment.
>
>
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 Fund Manager will adhere to the parameters on a pre stock basis as set out in the table below unless the prior approval of the
Board is received to do otherwise.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
16 Financial risk management - COntInUed
(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 Group’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.
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
34
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
(c) Asset allocation
minimum
invESTmEnT
PER SECuRiTY
inDiCATivE
BEnCHmARK
invESTmEnT
PER SECuRiTY
mAXimum
invESTmEnT
PER SECuRiTY
AS A PERCENTAGE Of TOTAL PORTfOLIO
1%
1%
No Minimum
No Minimum
5%
3%
2%
1%
12.5%
10%
7.5%
5%
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:
> global economy;
> Australian economy and positioning within the economic cycle;
>
sectors within the Australian market;
> phase of the interest rate cycle; and
>
state of the property market (e.g. comparative investment merit).
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 Group 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 Group is exposed to equity securities, convertible notes and derivative securities price risk. This arises from investments held by
the Group 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 35 summarises the impact of an increase/decrease in the Australian Securities Exchange All Ordinaries Index
on the Group’s net assets attributable to shareholders at 30 June 2016. The analysis is based on the assumptions that the index
increased/decreased by 10% (2015: 10%) with all other variables held constant and that the fair value of the Group’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 $25,681,307
(2015: $37,776,106) that represented the maximum exposure as at reporting date.
(ii) Foreign exchange risk
The Group does not hold any monetary and non-monetary assets denominated in currencies other than the Australian dollar.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
16 Financial risk management - COntInUed
(d) market risk - COntInUed
(iii) Interest rate risk
The Group’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 Group’s policy is reported to the Board on a monthly basis. The Group may also enter into derivative financial
instruments to mitigate the risk of future interest rate changes.
The table below summarises the Group’s exposure to financial assets/liabilities at the balance sheet date.
WEigHTED AvERAgE
inTEREST RATE
YEAR EnDED
COnSOLiDATED
(% P.A.)
30 JunE 2016
30 JuNE 2015
Financial Assets
Cash and short term deposits - floating
1.43%
12,197,366
3,204,027
The table above summarises the impact of an increase/decrease of interest rates on the Group’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 (2015: +/- 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.
35
(e) Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’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 Group
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 Group invest. As a result, historic variations in risk variables should not be used to predict
future variations in the risk variables.
‑10%
PRiCE RiSK
+10%
‑10%
+10%
imPACT On OPERATing PROFiT
imPACT On OTHER COmPREHEnSivE inCOmE
30 June 2016
30 June 2015
(2,568,131)
(3,777,611)
2,568,131
3,777,611
-
-
-
-
30 June 2016
30 June 2015
(f)
Credit risk
inTEREST RATE RiSK
‑50BPS
+50BPS
‑50BPS
+50BPS
imPACT On OPERATing PROFiT
imPACT On OTHER COmPREHEnSivE inCOmE
(60,987)
(16,020)
60,987
16,020
-
-
-
-
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 2016 the Group does not hold any debt securities (30 June 2015: nil).
The Group 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 2016 the Group held no Exchange Traded Options (30 June 2015: nil).
Compliance with the Group’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, which has a credit rating of A-1, which is the significant concentration risk.
(g) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with financial instruments.
To control liquidity, the Group invests in financial instruments which under normal market conditions are readily convertible to cash.
The Group held no derivatives (ETO’s), as at 30 June 2016 (30 June 2015: $nil).
Financial liabilities of the Group comprise trade and other payables and dividends payable. Trade and other payables have no
contractual maturities but are typically settled within 30 days.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
16 Financial risk management - COntInUed
(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 2016.
group - as at 30 June 2016
LEvEL 1
$
LEvEL 2
$
LEvEL 3
$
TOTAL
$
36
Assets
Financial assets held at fair value
through profit and loss
- Equity securities
- Listed Unit Trust
- Unlisted Unit Trust
- Options
Assets
Liabilities
Financial liabilities held at fair value
through profit and loss
- Options
Total Liabilities
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
23,292,498
1,829,186
-
-
25,121,684
-
-
LEvEL 1
$
-
-
559,623
-
559,623
-
-
LEvEL 2
$
33,312,802
2,923,029
-
36,235,831
-
-
1,040,275
1,040,275
-
-
-
-
-
-
-
LEvEL 3
$
500,000
-
-
500,000
23,292,498
1,829,186
559,623
-
25,681,307
-
-
TOTAL
$
33,812,802
2,923,029
1,040,275
37,776,106
-
-
-
-
-
-
-
-
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 investment 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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
16 Financial risk management - COntInUed
(h) Fair value measurements - COntInUed
The following table presents the changes in level 3 instruments for the year ended 30 June 2016:
group
Opening balance
Transfer out to Level 1
Purchases
Sales
Gains and losses recognised in profit or loss
Closing balance
2016
$
500,000
(500,000)
-
-
-
2015
$
-
-
500,000
-
-
500,000
The level 3 financial instrument above relates to an unlisted investment that was purchased on 19 June 2015 and subsequently listed on
the Australian Stock Exchange on 11 November 2015.
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.
37
18 Earnings per share
(a) Basic earnings per share:
Profit/(loss) per share attributable to the ordinary equity holders of the Company
1.34
(2.70)
(b) Reconciliation of earnings used in calculating earnings per share
COnSOLiDATED
YEAR EnDED
30 JunE 2016
CEnTS
30 JuNE 2015
CENTS
Basic earnings/(loss) per share
Profit/((loss) from continuing operations
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
598,401
(1,157,799)
Profit/(loss) attributable to the ordinary equity holders of the Company used in
calculating basic earnings per share
598,401
(1,157,799)
(c) Weighted average number of shares used as the denominator
COnSOLiDATED
YEAR EnDED
30 JunE 2016
numBER
30 JuNE 2015
NuMBER
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
44,555,004
43,623,418
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
44,555,004
43,623,418
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 JUNE 2016
18 Earnings per share - COntInUed
(c) Weighted average number of shares used as the denominator - COntInUed
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.
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 9 August 2016, the company announced a 50% franked 1.5 cent per share dividend.
20 Remuneration of auditors
38
(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 2016
$
30 JuNE 2015
$
57,500
57,500
56,500
56,500
-
-
-
-
PAREnT EnTiTY
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
676,546
1.5 cents
670,482
1.5 cents
669,654
1.5 cents
669,966
1.5 cents
2,686,648
509,216
1.5 cents
685,492
1.5 cents
685,005
1.5 cents
689,167
1.5 cents
2,568,880
COnSOLiDATED
YEAR EnDED
30 JunE 2016
$
30 JuNE 2015
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2015: 30%)
103,503
357,740
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.
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
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
PAREnT EnTiTY
AS AT
2016
$
2015
$
38,623,965
1,424,732
40,048,697
1,768,053
-
1,768,053
44,504,730
101,100
920,226
(7,245,412)
38,280,644
41,176,373
782,220
41,958,593
1,264,879
-
1,264,879
44,917,756
101,100
821,538
(5,146,680)
40,693,714
598,401
(1,246,002)
598,401
(1,246,002)
39
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 2016 (30 June 2015: Nil).
24 Corporate Governance
The Board is committed to achieving the highest standards of corporate governance. The Board reviews and improves its
policies and procedures to ensure they are effective for the Group and fulfil the expectations of stakeholders.
The Company’s Corporate Governance Statement has been approved by the Board and can be located on the Company’s website at
http://www.katanaasset.com/katana-capital-limited/#corporate-charters
Financial StatementSKatana capital limited 2016 AnnuAl RepoRt
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Directors’ declaration
30 JUNE 2016
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 14 to 39 are in accordance with the Corporations Act 2001,
including
(i) Giving a true and fair view of the financial position as at 30 June 2016 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 2016.
On behalf of the Board
Katana Capital Limited
Dalton gooding
CHAIRMAN
28 September 2016
Perth, Western Australia
Katana Capital limited 2016 AnnuAl RepoRt
Independent audit report
TO MEMBERS OF KATANA CAPITAL LIMITED
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Katana Capital limited 2016 AnnuAl RepoRt
Independent audit report
TO MEMBERS OF KATANA CAPITAL LIMITED
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8 to 12
Katana Capital limited 2016 AnnuAl RepoRt
Additional ASX Information
Ordinary Fully Paid Shares
Range of units AS OF 19 SEPTEMEBER 2016
RAngE
TOTAL HOLDERS
uniTS % OF iSSuED CAPiTAL
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
1,000,000,000 - 9,999,999,999
Rounding
Total
44
40
58
216
76
0
434
10,549
131,589
488,656
8,582,045
35,470,739
0
44,683,578
0.02
0.29
1.09
19.21
79.38
0.00
0.01
100.00
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unmarketable Parcels
minimum
PARCEL SiZE
HOLDERS
Minimum $ 500.00 parcel at $ 0.78 per unit
642
36
uniTS
4565
43
Top 20 Shareholders AS OF 19 SEPTEMEBER 2016
RAnK
nAmE
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
WONDER HOLDINGS PTY LTD
MR STEPHEN JAMES LAMBERT + MRS RUTH LYNETTE LAMBERT +
MR SIMON LEE LAMBERT
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