GARDA CAPITAL LIMITED AND SUBSIDIARIES ABN: 53 095 039 366
ANNUALonly use personal For FINANCIAL REPORT YEAR ENDED 30 JUNE 2015 For personal use only use personal For
2 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 CONTENTS
01 DIRECTORS’ REPORT 5
02 AUDITOR’S INDEPENDENCE DECLARATION 16
03 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 17
04 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 18
05 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 19
06 CONSOLIDATED STATEMENT OF CASH FLOWS 20
07 DIRECTORS’ DECLARATION 56
08
INDEPENDENT AUDITOR’S REPORT 57 For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 3 CHAIRMAN’S LETTER
Dear Shareholders, I am pleased to present the GARDA Capital Limited (GARDA or Company) annual report for 2015. The year has been full of activity where the board and executive of the Company have been able to deliver substantial outcomes for shareholders. Some of the key achievements during the year include: • The rebranding and repositioning of the Company to “GARDA”; • The $75 million recapitalisation and ASX listing of the GARDA Diversified Property Fund (GDF) of which the Company is the responsible entity; • The strategic and long-term co-investment of $10 million by the Company in GDF, aligning the interests of the Company with all unitholders of GDF. The Company is the largest single unit holder in the fund; • Board renewal during the year saw the retirement of Mr Rowan Ward after four years’ service and the appointment of two new non-executive directors, Mr Philip Lee and myself as independent chairman. Your board now consists of five directors; three non-executive directors and two executive directors; • The acquisition of an established debt advisory business that settled in September 2014 and re-branded as GARDA Finance; and • A $2 million investment made into direct real estate via a debt position which was advanced earlier in the calendar year. GARDA is now an integrated real estate business comprising property investment and funds management, including associated real estate services and real estate debt advisory. The Company’s property investments currently consist of the $10 million co-investment in GDF, and a $2 million direct real estate debt investment position. GARDA currently manages approximately $170 million of Australian commercial and industrial real estate including the ASX listed $140 million GARDA Diversified Property Fund (GDF) and approximately a $150 million debt advisory loan book (non-principal positions). The funds management operation is now primarily focused on the prudent growth of the ASX listed GDF. The Company is reviewing its corporate structure having regard for its expanded suite of activities. During the 2016 financial year GARDA may undertake capital initiatives to secure additional financial resources to continue to execute its corporate strategy. I am excited about the 2016 financial year and anticipated continued growth of the Company. I would like to thank my fellow directors, the executive team and GARDA employees for their work and dedication over the past year.
Yours faithfully
David Usasz Chairman
For personal use only use personal For GARDA Capital Limited
4 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 01 DIRECTORS’ REPORT
Your directors present their report on the group (referred to hereafter as the Group or Consolidated Entity) consisting of GARDA Capital Limited (formerly Opus Capital Limited) (GCL or Company) and the entities it controlled at the end of, or during, the year ended 30 June 2015.
The parent entity is a company registered under the Corporations Act 2001.
INFORMATION ON DIRECTORS OF THE RESPONSIBLE ENTITY The directors of GARDA Capital Limited at any time during or since the end of the financial year and up to the date of this report are:
CURRENT DIRECTORS
MR DAVID USASZ MR MATTHEW MADSEN Independent Chairman Managing Director (appointed 21 May 2015) (appointed 22 September 2011)
Experience and Special Responsibilities Experience and Special Responsibilities David has over 32 years’ experience, including a Matthew has almost 20 years’ experience in the funds partner for 20 years with PricewaterhouseCoopers management industry, predominantly in director roles. in Australia and Hong Kong and has been involved in Matthew also has significant property and property tax, merger and acquisition advice, corporate advisory finance experience, acting (including in GARDA Capital consultancy, specialising in corporate reorganisations. Group) as a finance intermediary focused on larger He recently retired as a Non-Executive Director construction and property investment funding. of Cromwell Group having served for over 8 As Managing Director and a substantial years and is a former Non-Executive Director of shareholder (through an associate) of the GARDA Queensland Investment Corporation Ltd. Capital Group, Matthew has been responsible David has also served as a Non-Executive Director for the repositioning of the group. and Chairman of Ambre Energy Limited and Matthew is also Chair of the Advisory Ambre Fuels Limited, a Non-Executive Director Board for residential land developer, of URBIS Pty Ltd and he has acted on advisory Trask Development Corporation. boards for private companies including Stanbroke Pastoral Company and Carter & Spencer. Matthew holds a Diploma in Financial Services, a Diploma in Financial Markets, is an affiliate member He holds a Bachelor of Commerce from the of the Securities Institute of Australia, and a member University of Queensland, is a Fellow of the Institute of the Australian Institute of Company Directors. of Chartered Accountants and is a Fellow of the
Australian Institute of Company Directors. For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 5 CURRENT DIRECTORS CONT’
MR MARK HALLETT MR PHILIP LEE Non-Executive Director Non-Executive Director (appointed 31 January 2011) (appointed 21 May 2015)
Experience and Special Responsibilities Experience and Special Responsibilities Mark has in excess of 30 years’ industry and legal Philip has over 28 years’ experience in stockbroking, experience. A qualified solicitor, Mark has an equities research and corporate finance. impressive range of diverse industry experiences He joined Morgans in 1986 and has served as a across all aspects of corporate litigation, Authorised Representative of Morgans and Joint Head restructuring, and commercial property. of Corporate Finance. He currently holds the position Mark holds an LLB, and is the Principal and legal of Executive Director Corporate Advisory primarily practice director of Hallett Legal. Mark has a focussed on raising capital for growing companies. Philip great depth of skills and experience in business chairs Morgans Risk and Underwriting Committees. ownership and strategic management. Philip holds a Bachelor of Commerce from the University Mark is highly active in managing successful of Canterbury, is a Member of the Australian Institute property syndicates for business associates and of Company Directors and is a Senior Fellow of Finsia. continues to advise the industry on property Philip has served on the Finsia Regional investment, legal and corporate restructuring. Council in Queensland for the past 5 years, including 3 years as Chairman.
MR LEYLAN NEEP PREVIOUS DIRECTORS Executive Director (appointed 31 July 2014) MR ROWAN WARD CFO/Company Secretary Non-Executive Director (appointed 30 July 2012) (appointed 25 January 2011, resigned 21 October 2014) Experience and Special Responsibilities Leylan has over 17 years’ experience in the financial Experience and Special Responsibilities services industry with a strong track record in Rowan Ward has a strong track record of corporate and accounting, finance, and funds management. trustee board representation with excellent knowledge Prior to his role with the Group, Leylan was Chief of legal, accounting and governance responsibilities Operating Officer at Blue Sky Alternative Investments which makes him an outstanding addition to the Limited, and was responsible for all of the operational company. activities of the group, including accounting, funds Rowan enjoys an enviable reputation as a passionate administration, information technology, and compliance. advocate for the protection of the interests of all classes Leylan has worked for a broad range of fund managers of beneficiaries whether unit holders, policy owners or and financial institutions including positions as an members of superannuation funds created over a 25 Associate Director at UBS Investment Bank and as an year career with Suncorp. Analyst with GLG Partners, a London based hedge As part of his responsibilities at Suncorp, he was fund. Leylan also has extensive experience in finance chairman of Suncorp public offer superannuation funds roles with several international investment banks. of $2,000m, Chairman of Trustees of the Suncorp Staff Leylan holds a Bachelor of Commerce from Bond Superannuation Fund with net assets in excess of For personal use only use personal For University and is a qualified Certified Practising $700m, and advisor to the Suncorp board on prudential Accountant (CPA). Leylan is a member of both matters governing over $2,000m of assets relating to the Australian Institute of Company Directors Suncorp Life and Superannuation Limited. In his final and the Governance Institute of Australia. role before leaving Suncorp in 2010, Rowan led a team of 120 professional staff with a budget of $14m. Rowan has attained a Bachelor of Science degree and is a Fellow of the Institute of Actuaries of Australia.
6 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 DIRECTORS’ REPORT CONT’
DETAILS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
DIRECTORS TYPE APPOINTED RESIGNED
David Usasz Independent Chairman 21 May 2015 – Matthew Madsen Managing Director 22 September 2011 – Mark Hallett Non-Executive Director 31 January 2011 – Philip Lee Non-Executive Director 21 May 2015 – Leylan Neep Executive Director 31 July 2014 – Company Secretary 30 July 2012 Rowan Ward Non-Executive Director 25 January 2011 October 2014
KEY MANAGEMENT TYPE APPOINTED RESIGNED PERSONNEL Lachlan Davidson General Counsel 13 January 2014 –
MEETING OF DIRECTORS The number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors during the financial year were:
MEETINGS HELD DIRECTORS ATTENDANCE ELIGIBLE TO ATTEND DURING OFFICE David Usasz 2 3 3 Matthew Madsen 18 18 24 Mark Hallett 20 21 24 Philip Lee 3 3 3 Leylan Neep 23 23 23 Rowan Ward 8 8 8
PRINCIPAL ACTIVITY GARDA Capital Limited is an integrated real estate business comprising property investment, funds management including associated real estate services and real estate debt advisory. The principal activity of the Group during the financial year was acting as responsible entity for and managing property trusts and associated real estate agency activities of property management, leasing and sales. During the year the Group acquired GARDA Finance Pty Ltd, a debt advisory business. The Group has expanded its activities to include: 1. Existing funds and real estate management activities; 2. Real estate investment through a substantial ($10 million) co-investment in the ASX listed GARDA Diversified Property Fund (GDF); 3. Real estate investment through debt positions; and
For personal use only use personal For 4. Commercial real estate debt advisory - providing financial intermediary services such as the arrangement of debt finance facilities for property developers and investors.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 7 REVIEW AND RESULTS OF OPERATIONS
The net profit after tax of the Group for the period ended 30 June 2015 was $483,510 (2014: $241,820 loss) on revenue generated of $4,947,759 (2014: $3,479,113). The Company generated a positive operating cash flow of $1,066,928 (2014: $888,095) for the 2015 year. Assets under management total $168 million. This is a combination of GDF ($141 million) and the Opus Magnum Fund ($27 million), which is to be would up subject to the successful sale of its last remaining property asset. The Group completed the recapitalisation and ASX listing of its commercial and industrial real estate investment trust (REIT), the GARDA Diversified Property Fund. This $140 million asset under management REIT is lowly geared at approximately 30% and is anticipated to grow its assets under management in the future. GDF has current capacity to acquire approximately $30 million of assets without further capital raising. The funds management operation is now primarily focused on the growth of its $140 million ASX listed GARDA Diversified Property Fund. The Group has expanded its activities to include material capital investment into real estate. This will be undertaken via both investment into equity positions as well as through debt positions. The Group invested $12 million during the financial year, comprising $10 million into an equity position in GDF and a $2 million direct real estate debt position. This junior debt position was identified and structured through GARDA Finance Pty Ltd, the debt advisory division of the Group which also arranged the senior debt for this transaction. Each of these investments are consistent with Group strategy and are performing as expected.
INVESTMENT - GARDA DIVERSIFIED PROPERTY FUND The Group made a material capital investment into its flagship fund the GARDA Diversified Property Fund totalling $10 million. The Group holds approximately 10 million units in the GARDA Diversified Property Fund which represents 10.29% of fund units on issue at balance date. The Group is the largest single unit holder in GDF. The Group successfully completed the initial public offer (IPO) of GDF during the financial year with the quotation of units commencing on 2 July 2015. The Group’s investment into GDF is a long term strategic position and aligns the interests of the Group, as manager of GDF, with the investors of GDF.
The GARDA Diversified Property Fund provides the Group with the following investment exposure1: An established and diversified portfolio of seven property assets located in Cairns, Brisbane, Gold Coast and Melbourne; A conservatively geared REIT with approximately 30% loan to value ratio (LVR); A three year senior debt facility with a four year fixed interest rate of 3.845%; The property portfolio has: an occupancy of 94%, a weighted average lease expiry of 3.3 years, a weighted average capitalisation rate of 8.9% and a quality tenant base where the top 10 tenants accounts for 72% of net income; Forecast earnings per unit of 9.46 cents per unit in FY16; Forecast distributions per unit of 9.00 cents per unit in FY16, representing approximately a 95% payout ratio; First quarterly distribution of 2.25 cents per unit announced and to be paid on 22 October 2015; Forecast tax advantaged income of between 33% and 43%. The Group has a stated intention to grow the scale and diversification of GDF. Additionally the fund has a long term For personal use only use personal For gearing range of 30% - 35% LVR. The Group’s investment in GDF was funded through various debt facilities which are fully detailed in the notes to the financial statements.
1 All Property Metrics current as at 30 June 2015
8 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 REVIEW AND RESULTS OF OPERATIONS
WALE (by income) OCCUPANCY (by income)
GDF PORTFOLIO OVERVIEW* GDF is an ASX listed REIT which invests in commercial offices in city and suburban markets as well as industrial facilities along the eastern seaboard of Australia. The fund currently holds seven established property assets independently valued at $140.7 million and an approximate market capitalisation of $97.2 million. An overview of the portfolio of seven properties can be found below:
WALE (by income) OCCUPANCY (by income) 4.4 4.0 3.5 3.4 3.3 2.8 100% 100% 100% 100% 2.8 94% 2.1 91% 86% 88%
7-19 Lake St 436 Elgar Rd 572 Swan St 7-19 Lake St 436 Elgar Rd 572 Swan St 747 Lytton Rd Portfolio Total 747 Lytton Rd Portfolio Total 154 Varsity Pde 154 Varsity Pde 142 Benjamin Pl 142 Benjamin Pl 12–14 The Circuit 12–14 The Circuit
PORTFOLIO INCOME (by geography)
Melbourne 33% Brisbane 30% CAIRNS 7-19 Lake Street, Cairns ($37M)
BRISBANE Gold Coast 7% 747 Lytton Road, Murarrie ($13.6M) GOLD COAST 12-14 The Circuit, Airport ($20M) Cairns 30% 142 Benjamin Place, Lytton ($7.95M) PORTFOLIO INCOME (by sector)
154 Varsity Parade, Varsity Lakes Industrial 5% ($12M)
MELBOURNE 572 Swan Street, Richmond ($31.6M) 436 Elgar Road, Box Hill ($18.5M)
Commercial 95%
LEASE EXPIRY PROFILE (by income) RENT REVIEW PROFILE 30% 27% 30% 5.0% 26% 26% 25% 4.5% 21% 20% 17% 4.0% 16% 15% 3.4% 10% 10% 3.0%
For personal use only use personal For 6% 7% 5% 3% 2% 5% 3% 2.5% 0% 0% 2.0%
% % % % % % t 6 7 8 9 0 1 2 5 4 5 5 5 3 7 n 1 1 1 1 2 2 2 2 7 . 2 6 a Y Y Y Y Y Y Y Y d . 3 . d . c F F F F F F F F e 3 3 e 2 a x d x t V i d e d i a F e ix e F I ix F ix P F F C * All Property Metrics as at 1st July 2015
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 9 PORTFOLIO SUMMARY – PROPERTY*
PORTFOLIO SUMMARY – PROPERTY
7-19 LAKE STREET, CAIRNS, QLD Date acquired: Jun-06 WALE: 3.4
Valuation: $37,000,000 Tenants: 27
Ownership interest: 100% NABERS: 5 star
NLA: 14,813m²
Car spaces: 254
Occupancy: 86%
572 - 576 SWAN STREET, 436 ELGAR ROAD, RICHMOND, VIC BOX HILL, VIC
Date acquired: Nov-07 WALE: 2.1 Date acquired: Sep-07 WALE: 4.0
Valuation: $31,600,000 Tenants: 2 Valuation: $18,500,000 Tenants: 3
Ownership interest: 100% NABERS: 5 star Ownership interest: 100% NABERS: 2 star For personal use only use personal For NLA: 6,587m² NLA: 5,725m²
Car spaces: 178 Car spaces: 197
Occupancy: 100% Occupancy: 100%
* All Property Metrics as at 1st July 2015
10 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 PORTFOLIO SUMMARY – PROPERTY*
747 LYTTON ROAD, 12-14 THE CIRCUIT, MURARRIE, QLD BRISBANE AIRPORT, QLD
Date acquired: May-07 WALE: 2.8 Date acquired: Jan-07 WALE: 4.4
Valuation: $13,600,000 Tenants: 4 Valuation: $20,000,000 Tenants: 3
Ownership interest: 100% NABERS: 3 star Ownership interest: 100% NABERS: 5 star
NLA: 3,617m² NLA: 4,675m²
Car spaces: 169 Car spaces: 51
Occupancy: 91% Occupancy: 100%
154 VARSITY PDE, 142 BENJAMIN PLACE, GOLD COAST, QLD LYTTON, QLD
Date acquired: Aug-07 WALE: 2.8 Date acquired: Sept-07 WALE: 3.5
Valuation: $12,000,000 Tenants: 4 Valuation: $7,950,000 Tenants: 2
Ownership interest: 100% NABERS: 5 star Ownership interest: 100% NABERS: N/A
NLA: 3,994m² NLA: 5,677m²
Car spaces: 130 Car spaces: N/A For personal use only use personal For Occupancy: 88% Occupancy: 100%
* All Property Metrics as at 1st July 2015
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 11 REVIEW AND RESULTS OF OPERATIONS CONT’
INVESTMENT – DIRECT REAL ESTATE DEBT
The Group intends to complement its investments in real estate equity positions such as its co-investment in GDF (detailed above), with direct real estate debt positions.
The Group provided a $2 million advance in February 2015 for a junior debt position, secured over two neighbourhood shopping centres. This opportunity was identified and structured through GARDA Finance Pty Ltd, the debt advisory division of the Group who also arranged the senior debt for this transaction.
The Group’s intention is that it may invest an amount of capital into direct real estate debt positions similar to but not materially greater than the Group’s equity co-investment in GDF.
DIVIDENDS
No dividends were paid or declared during the year or since the end of the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
As at 30 June 2015 the Group’s current assets exceeded its current liabilities by $350,175 (2014: $2,794,941) and total assets exceeded total liabilities by $1,076,223 (2014: $37,847). The directors believe that the going concern basis of preparation is appropriate, and accordingly have prepared the financial report on this basis. The directors are of the reasonable opinion that the Group will be able to meet its liabilities as and when they fall due. On 14 July 2014 the Company executed a share purchase agreement for the acquisition of the issued share capital of Madsen Finance Pty Ltd (now GARDA Finance Pty Ltd). The Company gained control of this entity on 25 September 2014 when all of the conditions precedent to this agreement were satisfied. The Group has therefore consolidated the results of this entity from the date of control until balance date and the position of the entity has also been consolidated as at 30 June 2015. A selective share buy-back offer for GCL shares was approved at the Company’s annual general meeting (AGM) held on 28 November 2014. On 2 December 2014 25,702,940 shares were bought back at a price of $0.001329. Also following approval at the Company’s AGM, the Company’s share capital was consolidated through the conversion of every 1,000 GCL ordinary shares into 1 GCL ordinary share after the buy back and cancellation. During the year, the non-associated directors of GCL as responsible entity (RE) of the Opus Development Fund 1 resolved to transfer the last remaining property (Townsville site) from the fund to GCL in part satisfaction of its outstanding debt to GCL. GCL held a first mortgage over the property as a result of the substantial and sustained continuing financial support of the scheme over the past several years. The transfer of the asset out of the fund has enabled GCL as RE to wind up the scheme during the financial year. Further detail on the transfer is contained in Note 8. During the year three new subsidiaries were incorporated. All of these entities are 100% owned by GCL and therefore the results from date of incorporation and the position of the entity has have been consolidated as at 30 June 2015. They are as follows: GARDA Property Finance Pty Ltd Incorporated on 23 January 2015 GARDA TSV Unit Trust Trustee was incorporated on the 2 February 2015
For personal use only use personal For GARDA REIT Holdings Unit Trust Trustee was incorporated on the 17 June 2015 GARDA Property Finance Pty Ltd, was incorporated to undertake the Group’s investment into real estate through debt positions. The Group’s first investment of a $2 million junior debt position was advanced in early February 2015. GARDA TSV Unit Trust, holds the property transferred from Opus Development Fund 1. GARDA REIT Holdings Unit Trust, holds an investment in GARDA Diversified Property Fund of $10 million.
12 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 REVIEW AND RESULTS OF OPERATIONS CONT’
EVENTS AFTER THE REPORTING PERIOD
On 30 June 2015, the GARDA Diversified Property Fund which GCL acts as responsible entity for, was admitted to the official list of the Australian Securities Exchange (ASX) and on 2 July 2015, GDF began trading on the ASX. During July and August 2015, an entity associated with Matthew Madsen lent a further $250,000 to the GARDA TSV Unit Trust, a subsidiary of GCL. The total balance of the loan is now $500,000. There have been no other matters or circumstances that have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in future financial periods.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
During the 2015 financial year the Group expanded its activities to include: 1. Existing funds and real estate management activities; 2. Real estate investment through a substantial co-investment in the ASX listed GARDA Diversified Property Fund; 3. Real estate investment through debt positions; and 4. Commercial real estate debt advisory - providing financial intermediary services such as the arrangement of debt finance facilities for property developers and investor clients. The future prospects of the Company are now dependent upon each of the four key activities, two of which include corporate activities and earnings, the other two capital investment into real estate. The Group intends to continue to expand each of its operations and investment into all four of these key activities. The recent recapitalisation and ASX listing of the $140 million asset under management GARDA Diversified Property Fund provides the Group with both a platform to increase its assets under management within its funds and real estate management activity while simultaneously providing the opportunity for the Group to both expand its co-investment into and support GDF through further capital investment into GDF. The Group manages one further fund, the Opus Magnum Fund, which will be wound up upon the successful sale of the last remaining real estate asset in this fund. Historically the majority of revenue for GCL and its subsidiaries was derived from both fund management fees and real estate agency fees derived predominantly from GDF. Following the recapitalisation of GDF in June 2015, which began trading on the ASX on 2 July 2015, GCL as responsible entity will seek to grow the value of GDF, and consequently aims to raise the funds under management for the scheme. The Group will review its corporate structure having regard for its expanded suite of activities and may undertake capital initiatives to obtain further financial resources to continue to execute the Group’s strategy.
ENVIRONMENTAL ISSUES
The Group’s operations were not subject to any significant environmental regulations under either Commonwealth or State legislation. However, the directors believe that the Group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply
to the Group. For personal use only use personal For OPTIONS
At the date of this report there are no unissued ordinary shares of GARDA Capital Limited.
There have been no options issued during or since the end of the financial year. There are nil options on issue as at the date of this report.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 13 REVIEW AND RESULTS OF OPERATIONS CONT’
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR The Group has agreed to indemnify current and former directors against all liabilities to another person (other than the Group or related entity) that may arise from their position of directors of the Group, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Group will meet the full amount of any such liabilities, including costs and expenses. In addition, the Group has agreed to indemnify certain key officers against all liabilities to another person (other than the Group or related entity) that may arise from their position in the Group, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Group will meet the full amount of any such liabilities, including costs and expenses. The indemnities were limited as required under the Corporations Act 2001. The Group has paid premiums in respect of their officers for liability and legal expenses for the year ended 30 June 2015. Such insurance contracts insure against certain liability (subject to specified exclusions) for persons who are or have been officers of the Group. Details of the nature of the liabilities covered or the amount of the premium paid has not been included as such disclosure is prohibited under the terms of the contract. The Group has not indemnified its auditor.
PROCEEDINGS ON BEHALF OF THE GROUP No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purposes of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was a party to one such proceeding during the year, but it settled on payment of a relatively minor amount to that third party. Under the GCL complaints handling procedures there are various complaints that GCL as responsible entity of various schemes has received. GCL has dealt with these matters. Some of these matters may potentially be considered by the Financial Ombudsman Service.
NON-AUDIT SERVICES
Non audit services in the form of taxation and other regulatory services were provided by the Group’s auditor during the year, refer to note 23 for details. The directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. For personal use only use personal For
14 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration forms part of the Directors’ Report and can be found on page 16.
This report is signed in accordance with a resolution of the board of directors of GARDA Capital Limited.
Mr David Usasz Mr Matthew Madsen Chairman Managing Director
28 September 2015 28 September 2015 For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 15 02 AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 GARDA Capital Limited (formerly: Opus Capital Limited) and subsidiaries Annual Financial Report 30 June 2015
Tel: +61 7 3237 5999 Level 10, 12 Creek St Fax: +61 7 3221 9227 Brisbane QLD 4000 www.bdo.com.au GPO Box 457 Brisbane QLD 4001 Australia
DECLARATION OF INDEPENDENCE BY P A GALLAGHER TO THE DIRECTORS OF GARDA CAPITAL LIMITED
As lead auditor of GARDA Capital Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of GARDA Capital Limited and the entities it controlled during the period.
P A Gallagher Director
BDO Audit Pty Ltd
Brisbane, 28 September 2015
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
For personal use only use personal For by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
16 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 03 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015 2015 2014 NOTE $ $ Revenue and other income 4 4,947,759 3,479,113
Employee benefits expense (1,580,279) (1,343,698)
Professional costs (807,588) (734,251)
Facilities management costs (225,208) (233,225)
Depreciation of plant and equipment (22,470) (13,876)
Amortisation of intangibles (266,277) -
Insurance (136,419) (170,070)
Postage, printing and stationery costs (31,739) (12,459)
Occupancy costs (222,974) (105,415)
Communications (16,968) (14,793)
Other expenses (249,243) (220,904)
Finance costs (384,271) (834,015)
Impairment of receivables - 79,938
Fair value loss on financial assets held for sale (7,642) -
Loss on disposal of assets - (13,700) Profit/(loss) before income tax 892,145 (244,085) Income tax (expense)/benefit 6 (408,635) 2,265 Profit/(loss) for the year after income tax 483,510 (241,820) Other comprehensive income for the year, net of tax - -
Total comprehensive income for the year 483,510 (241,820) attributable to: Owners of GARDA Capital Limited
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements. For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 17 04 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015 2015 2014 NOTE $ $ CURRENT ASSETS Cash and cash equivalents 27 2,426,668 3,942,707 Trade and other receivables 7 438,245 820,247 Inventories 8 663,791 - Other assets 3,024 - TOTAL CURRENT ASSETS 3,531,728 4,762,954 NON-CURRENT ASSETS Trade and other receivables 7 2,000,000 - Deferred tax assets 6 - 96,902 Property, plant and equipment 9 58,052 56,104 Financial assets 10 10,004,824 14,266 Intangible assets 11 1,036,439 79,061 TOTAL NON-CURRENT ASSETS 13,099,315 246,333
TOTAL ASSETS 16,631,043 5,009,287 CURRENT LIABILITIES Trade and other payables 12 665,839 914,759 Interest bearing loans and borrowings 13 250,000 - Financial liability held at fair value through profit or loss 14 1,250,000 - Provisions 15 659,456 1,053,254 Provision for income tax 356,258 -
TOTAL CURRENT LIABILITIES 3,181,553 1,968,013 NON-CURRENT LIABILITIES Deferred tax liability 6 37,674 - Interest bearing loans and borrowings 13 3,979,643 3,000,000 Financial liability held at fair value through profit or loss 14 8,350,000 - Provisions 15 5,950 3,427
TOTAL NON-CURRENT LIABILITIES 12,373,267 3,003,427 TOTAL LIABILITIES 15,554,820 4,971,440
For personal use only use personal For NET ASSETS 1,076,223 37,847 EQUITY Contributed equity 16 1,942,421 1,387,555 Retained earnings (866,198) (1,349,708)
TOTAL EQUITY 1,076,223 37,847
The Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.
18 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 05 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015 CONTRIBUTED RETAINED TOTAL EQUITY EARNINGS $ $ $ Balance at 1 July 2013 1,387,555 (1,335,822) 51,733
Comprehensive income Profit/(loss) for the year - (241,820) (241,820) Other comprehensive income, net of tax - - - Total comprehensive income for the year - (241,820) (241,820)
Transactions with owners in their capacity as owners Share based payments - 227,934 227,934
Balance at 30 June 2014 1,387,555 (1,349,708) 37,847
Balance at 1 July 2014 1,387,555 (1,349,708) 37,847
Comprehensive income Profit /(loss) for the year - 483,510 483,510
Other comprehensive income, net of tax - - - Total comprehensive income for the year - 483,510 483,510
Transactions with owners in their capacity as owners Share issue 589,026 - 589,026 Share buy back (34,160) - (34,160)
Balance at 30 June 2015 1,942,421 (866,198) 1,076,223
The Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements. For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 19 06 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015 2015 2014 NOTE $000’S $000’S CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 5,360,506 3,779,893 Cash payments in the course of operations (3,891,344) (2,777,199) Interest received 157,018 63,275 Distributions received 223 210 Interest paid (299,964) - Income tax paid (83,060) - GST paid (176,451) (178,084)
Net cash provided by/(used in) operating activities 27 1,066,928 888,095
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds/(payments) for property, plant and equipment (7,813) (33,130) Funds transferred for wind up expenses 13,220 1,587,433 Wind up expenses (paid) (427,156) (650,722) Payments for acquisition of units (4,400,000) - Payments for acquisition of shares (454,482) - Proceeds on sale of financial assets available for sale 1,800 - Payments for improvements to inventories (424,376) -
Loans provided (2,000,000) - Net cash provided by/(used in) investing activities (7,698,807) 903,581
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 550,000 - Proceeds/(repayment) of shareholder loan 4,100,000 - Proceeds from related party loans 500,000 - Payments for share buy back (34,160) -
Net cash provided by/(used in) financing activities 5,115,840 - For personal use only use personal For Net increase/(decrease) in cash held (1,516,039) 1,791,676 Cash at the beginning of the financial year 3,942,707 2,151,031
Cash at the end of the financial year 27 2,426,668 3,942,707
The Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements.
20 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 1: GENERAL INFORMATION
Introduction These financial statements cover GARDA Capital Limited (formerly: Opus Capital Limited) GCL( or Company) and its subsidiaries (together referred to as the Group or Consolidated Entity). GARDA Capital Limited is an unlisted public company, incorporated and domiciled in Australia. The following is a summary of the material accounting policies adopted by the Group in the preparation of these financial statements. The accounting policies have been consistently applied, unless otherwise stated.
Operations and principal activities The principal activity of the group during the financial year was acting as responsible entity for and managing property trusts. There were no significant changes in the nature of the Group’s activities during the year.
Currency The financial report is presented in Australian dollars. The financial report is rounded to the nearest dollar.
Registered office The registered office and principal place of business of the Group is situated at Level 21, 12 Creek Street, Brisbane QLD 4000.
Authorisation of financial report The financial report was authorised for issue on 28 September 2015 in accordance with a resolution of the directors.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for-profit entity for the financial reporting purposes under Australian Accounting Standards.
Compliance with IFRS The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Historical cost convention The financial statements have been prepared on a historical cost basis, except intangible assets which have been measured at fair value less costs to sell.
Critical accounting estimates and judgements The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on historical experiences and the best available current information on current trends and economic data, obtained both externally and within the Group. These estimates and judgements made assume a reasonable expectation of future events but actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period and For personal use only use personal For future periods if the revision affects both current and future periods.
Key estimates – impairment The Group assesses impairment at each reporting date by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. No impairment has been recognised in respect of the intangible assets comprising of the licence (GARDA Funds
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 21 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
BASIS OF PREPARATION CONT’ Management Limited) at the end of the reporting period. As the licence is currently not in use a separate assessment has been performed for this asset. The fair value has been determined based on the known costs to obtain or acquire an Australian financial services licence. It is the intention of the directors to use this licence in future business activities. Based on this assessment the directors have concluded that there is no impairment to the licence. No impairment has been recognised in respect of the intangible assets comprising of the identifiable intangible assets and goodwill arising from the acquisition of Madsen Finance Pty Ltd (now GARDA Finance Pty Ltd) during the period. The Group has considered external and internal sources of information for indications of impairment and assessed the likelihood that future cash flows support the carrying values, and determined that there have been no significant changes to the assets and liabilities making up the business unit since the acquisition (initial recoverable amount calculation) or events or circumstances surrounding the business.
Key judgements – indefinite life of licence Included in intangible assets is an asset relating to the Australian financial services licence held by GARDA Funds Management Limited. This asset arose when GARDA Capital Limited acquired GARDA Funds Management Limited in 2011. The directors have determined that this asset has an indefinite life as the licence does not have an expiry. The licence will remain in place until it is forgone or there is a breach in the requirements of the licensing requirements of such a nature that the regulator determines to remove the licence. Therefore, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group. Currently the licence is not in use however the directors do have plans in the near future to commence use of the licence.
Key judgements – recognition of deferred tax asset A deferred tax asset has been recognised to the extent that it relates to deductible temporary differences. The directors believe that it is probable that sufficient taxable profits against which the deductions can be offset will occur in the same period as the expected reversal of the deductible temporary difference.
Key judgement – Going Concern As at 30 June 2015 the Consolidated Entity’s current assets exceeded its current liabilities by $350,175 (2014: $2,794,941) and total assets exceeded total liabilities by $1,076,223 (2014: $37,847). The Consolidated Entity also had operating cash inflows of $1,066,928 (2014: $888,095) for the year and made a net profit of $483,510 (2014: $241,820 loss). The directors are of the reasonable opinion that the Consolidated Entity will be able to meet its liabilities as and when they fall due. The going concern basis presumes that funds will be available to finance future operations and that the realisation of assets and liabilities will occur in the normal course of business.
ACCOUNTING POLICIES
a. Consolidation The consolidated financial statements incorporate the assets, liabilities and results of all subsidiaries of GARDA Capital Limited at the end of the reporting period. Subsidiaries are all entities, including special purpose entities, over which GARDA Capital Limited has control. The Group has control over an entity when it is exposed to, or has rights to, variable returns from its involvement in the entity, and has the ability to use its power to affect these returns. A reporting entity has power when it has rights that give it the current ability to direct the activities that significantly affect the investee’s returns. The Group not only has to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes. The existence and effect of potential voting rights where the Group has the practical ability to exercise them are considered when assessing whether the Group controls another entity.
For personal use only use personal For Where subsidiaries have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 26 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated in full on consolidation. The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
22 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
a. Consolidation Cont’ equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of GARDA Capital Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or available for sale financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the profit or loss. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. Consideration is measured at the fair value of the assets transferred, liabilities incurred and equity interests issued by the group on acquisition date. Consideration also includes the acquisition date fair values of any contingent consideration arrangements, any pre-existing equity interests in the acquiree and share-based payment awards of the acquiree that are required to be replaced in a business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with limited exceptions, initially measured at their fair values at acquisition date. Goodwill represents the excess of the consideration transferred and the amount of the non-controlling interest in the acquiree over fair value of the identifiable net assets acquired. If the consideration and non-controlling interest of the acquiree is less than the fair value of the net identifiable assets acquired, the difference is recognised in profit or loss as a bargain purchase price, but only after a reassessment of the identification and measurement of the net assets acquired.
b. Income Tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).
For personal use only use personal For Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 23 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
b. Income Tax Cont’
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. The charge for current income tax expense is based on the profit/(loss) for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date. Deferred tax is accounted for using the balance sheet method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss. Tax Consolidation GARDA Capital Limited and its wholly owned Australian subsidiaries have implemented the tax consolidation legislation. The head entity, GARDA Capital Limited, and its subsidiaries in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, GARDA Capital Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate GARDA Capital Limited for any current tax payable assumed and are compensated by GARDA Capital Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to GARDA Capital Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly owned tax consolidated entities.
c. Finance costs Finance costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary
For personal use only use personal For costs incurred in connection with arrangements of borrowings and finance charges in respect of finance leases. Interest payments in respect of financial instruments classified as liabilities are included in finance costs. Loan establishment costs are offset against financial liabilities in accordance with the effective interest method and amortised over the term of the facility to which they relate.
24 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
d. Revenue & Other Income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. 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. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows: Provision of services Revenue from providing services is recognised in the profit and loss in proportion to the stage of completion of the service to be performed at the reporting date. Invoices raised for services not yet completed are recognised as deferred income on the Statement of Financial Position. Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST). Interest income Interest income is recognised using the effective interest method. Distributions Distribution income is recognised as revenue when the right to receive payment is established.
e. Financial Instruments Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Finance instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of
For personal use only use personal For an income or expense item in profit or loss. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost less impairment. Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period. Trade receivables are recognised at original invoice amounts less any provision for impairment and are generally due
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 25 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
e. Financial Instruments Cont’ for settlement within 14 days (ii) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses) as part of the available for sale reserve. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are included in current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as non-current assets. (iii) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. (iv) Designation at fair value through profit or loss The Group has designated financial assets and financial liabilities at fair value through profit or loss in either of the following circumstances:- The assets and liabilities are managed, evaluated and reported internally on the fair value basis. The designation eliminates or significantly reduces an accounting mismatch that would otherwise arise. Note 10 and 14 sets out the amount of each class of financial asset or financial liability that has been designated at fair value through profit or loss . A description of the basis for each designation is set out in the note for the relevant asset or liability class. Impairment A financial asset is assessed for impairment at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have a negative effect on the estimated future cashflows of that asset. In the case of available for sale financial assets, a significant or prolonged decline in the value of the instrument below cost is considered to determine whether an impairment has arisen. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cashflows discounted as the original effective interest rate. An impairment loss in respect of an available for sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of available for sale financial assets recognised previously in equity is reclassified to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available for sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available for sale financial assets that are equity securities, the reversal is recognised directly in other comprehensive income. The carrying amount of receivables is reduced by the use of an allowance account where there is objective evidence
that the entity will not be able to recover all amounts due. Evidence of impairment may include indications that the For personal use only use personal For customer is experiencing significant financial difficulty, where debt collection procedures have been commenced; there is a fair probability that the customer will be put into administration or liquidation. The amount of the provision is the difference between the carrying amount of the receivable and the present value of the estimated future cashflows, discounted at the effective interest rate. When receivables for which impairment has previously been recognised are determined to be uncollectible, they are
26 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
written off against the allowance account. If no provision for impairment was previously recognised, the impairment is written off against the receivable directly. Impairment losses arising from the use of allowance accounts or bad debts e. Financial Instruments Cont’ are recognised in the profit or loss. Receivables are determined to be uncollectible only when there is no expectation of recovering any additional cash. This may occur when a final distribution has been made from administrators / liquidators, or where unsuccessful attempts have been made to recover the debt through legal actions or debt collection agencies and the prospect of recovering any additional cash is remote. Financial guarantees Where material, financial guarantees issued that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of financial guarantee contracts has been assessed using a probability-weighted discounted cash flow approach. The probability has been based on: – the likelihood of the guaranteed party defaulting in a period; – the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and – the maximum loss exposed if the guaranteed party were to default. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
f. Impairment of Assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the profit or loss. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. g. Fair Values Fair values may be used for financial and non-financial asset and liability measurement as well as sundry disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is based on the presumption that the transaction takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous
For personal use only use personal For market. The principal or most advantageous market must be accessible to, or by, the group. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. The fair value measurement of a non-financial asset takes into account the market participant’s ability to generate economic benefits by using the asset at its highest and best use or by selling it to another market participant that would use the asset at its highest and best use.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 27 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
In measuring fair value, the group uses valuation techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. g. Fair Values Cont’ Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
h. Cash & Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the Statement of Financial Position.
i. Goods & Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. Cash flows are presented in the Cash Flow Statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
j. Inventories Inventories are valued at net realisable value. Net realisable value is determined by reference to an independent valuation performed by an external expert, or using an internal Director’s valuation model, and is supported by market evidence. Movements in the net realisable value of inventory are included in profit or loss for the year in which they arise.
k. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 2(f) for details of impairment). The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
For personal use only use personal For The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.
28 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Group k. Property, Plant and Equipment Cont’ commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of asset is: Class of Fixed Asset Depreciation Rate Plant and Equipment 10 – 33% Leasehold Improvements 10% Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the profit or loss.
l. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
m. Employee Benefits Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Short-term employee benefits Liabilities for wages, salaries and sick leave, profit-sharing and bonuses and the value of fringe benefits received (including non-monetary benefits) that are expected to be settled wholly within twelve months of the end of the reporting period are recognised in Other Liabilities in respect of employee services provided to the end of the reporting period and are measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Long-term employee benefits Liabilities for long service leave and annual leave are not expected to be settled within twelve months of the end of the reporting period. They are recognised as provisions for employee benefits and are measured at the present value of the expected future payments to be made in respect of services provided to the end of the reporting period using the projected unit credit method. Consideration is given to expected future salary and wage increases, experience of employee departures and periods of service. Expected future payments are discounted using national government bond rates at the end of the reporting period with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer
For personal use only use personal For settlement for at least twelve months after the end of the reporting period. Contributions are made by the Group to employee superannuation funds and are recognised in profit or loss when incurred. Equity-settled compensation Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 29 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. n. Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be requested to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected costs of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.
o. Intangibles Property management rights Property management rights acquired as part of a business combination are recognised separately from goodwill. The management rights are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated on a straight line basis, based on the forecast term of the management rights which is currently 4 years. Licence The licence was acquired as part of a business combination and has been recognised separately from goodwill. The licence is carried at fair value at the date of acquisition less any impairment losses. The licence is not amortised as it has been determined that it has an indefinite useful life. Sale and performance fees Under the constitution of the Opus Mangum Fund to which the Company acts in the capacity as responsible entity, the Company is entitled to receive sale and performance fees at the time of disposal of properties under management, where certain criteria are met. This right to future benefits (where certain conditions are met) is an intangible asset of the Company which is carried at amortised cost, being zero. Revenue in relation to these assets is recognised at the time of sale, being when the fee is due and payable under the constitution of the relevant scheme. Procurement and trail fees Procurement and trail fees are classified as intangible assets with a finite life. They are recorded at cost and amortised on a straight line basis over the expected useful life of the fees being 1 to 5 years. Goodwill Goodwill is measured as described in note 2(a). Goodwill on acquisitions of subsidiaries is included in goodwill as intangible assets. Goodwill is not amortised but is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the For personal use only use personal For goodwill relates. Impairment losses on goodwill cannot be reversed.
p. Contributed Equity Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
30 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’
q. Comparative Figures When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year
r. Adoption of New and Revised Accounting Standards and Interpretations The Fund applied, for the first time, certain standards and amendments which are effective for annual periods beginning on or after 1 July 2014. The nature and the impact of each new standard and/or amendment was not significant.
s. New and Amended Accounting Standards and Interpretations Not Yet Adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:
NEW/REVISED NATURE OF CHANGE APPLICATION IMPACT TO THE GROUP PRONOUNCEMENTS DATE TO THE GROUP AASB 9 Financial The AASB has issued the complete 30 June 2019 AASB 9 may have a potential Instruments AASB 9. The new standard includes increase in the Group’s loans (December 2014) revised guidance on the classification and advances provisioning. and measurement of financial However, the Group has not assets, including a new expected yet fully assessed the impact credit loss model for calculating of AASB 9 as this standard impairment, and supplements the does not apply mandatorily new general hedge accounting before 1 January 2018. requirements previously published. This supersedes AASB 9 (issued in December 2009-as amended) and AASB 9 (issued in December 2010). A ASB 15 The standard contains a single 30 June 2018 The Group has not yet Revenue from Contracts model that applies to contracts with assessed the full impact of with Customers customers and two approaches this Standard. to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.
NOTE 3: DIVIDENDS 2015 2014 $ $ Dividends paid or declared during the year - - Franking credits available 3,420,802 3,334,836
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax, For personal use only use personal For (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 31 NOTE 4: REVENUE AND OTHER INCOME
2015 2014 $ $ Operating revenue Management fees – property trusts 1,061,908 1,182,781 Management fees – property management 743,824 762,003 Management fees – facilities management 236,431 245,752 Projects income 167,269 107,019 Real estate commission 326,500 58,000 Leasing fees 340,823 455,335 Recovery of professional fees 260,623 183,915 Registry costs 83,273 81,000 Capital works fee 85,295 235,587 Asset sale fee 267,000 - Participation fee 116,000 - Procurement fees 570,193 - Trail fees 288,676 -
4,547,815 3,311,392 Non-Operating revenue Interest 157,018 63,275 Distributions received 223 210 Sundry income 240,603 103,043
397,844 166,528 Other income Profit on disposal of assets 2,100 227 Fair value gain on financial assets held for sale - 966
2,100 1,193 Total Revenue and Other Income 4,947,759 3,479,113
NOTE 5: PROFIT/(LOSS) BEFORE INCOME TAX 2015 2014 $ $ Profit/(loss) before income tax includes the following specific expenses: Employee benefits expense: a. Contributions to superannuation funds 130,924 104,503
For personal use only use personal For Other expenses: Rental expense on operating leases b. Minimum lease payments 215,994 101,558
32 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 6: INCOME TAX
2015 2014 $ $ The components of income tax expense comprise: Current tax 374,045 (24,079) Deferred tax – origination and reversal of temporary differences 34,590 21,773 Under/(over) provision for tax in prior year - 41
408,635 (2,265) The prima facie tax on profit/loss before income tax is reconciled to income tax as follows: Profit/(loss) before income tax 892,145 (244,085) Prima facie tax payable on profit/(loss) before income tax at 30% (2014: 30%) 267,643 (73,225) Entertainment 2,609 2,603 Non-deductible director remuneration - 68,380 Under/(over) provisions for tax in prior year - 41 Non-deductible recognition of Goodwill 125,619 - Other non-deductible items 12,764 (64)
408,635 (2,265) Unrecognised deferred tax assets - - Recognition of prior year tax losses not previously recognised as a deferred tax asset - - Income tax expense 408,635 (2,265)
Composition of deferred tax balances Tax losses - 24,079 Provision for employee benefits 14,684 11,572 Other assets 208 416 Accrued expenses 53,629 23,747 Lease incentive liability 12,280 7,045 Provision for windups - - Legal fees (blackhole) expensed 9,567 14,351 Contingent liabilities - 18,600 Entry cost base adjustment – intangibles (99,944) - Entry cost base adjustment – goodwill (123,089) - Entry cost base adjustment – PP&E (2,572) -
For personal use only use personal For Amortisation of intangibles 79,883 - Depreciation 558 - Blackhole expenditure (114) - Legal fees (cost base) 14,943 - Accrued income - (2,551) Other liabilities 2,293 (357)
(37,674) 96,902
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 33 NOTE 6: INCOME TAX CONT’
Movements in deferred tax balances
2015 OPENING BALANCE CHARGED TO INCOME STATEMENT CLOSING BALANCE $ $ $ Tax losses 24,079 (24,079) - Provision for employee benefits 11,572 3,112 14,684 Other assets 416 (208) 208 Accrued expenses 23,747 29,882 53,629 Lease incentives 7,045 5,235 12,280 Provision for windups - - - Legal fees (blackhole) expensed 14,351 (4,784) 9,567 Contingent liabilities 18,600 (18,600) - Entry cost base adjustment – - (99,944) (99,944) intangibles Entry cost base adjustment – - (123,089) (123,089) goodwill Entry cost base adjustment – - (2,572) (2,572) PP&E Amortisation of intangibles - 79,883 79,883 Depreciation - 558 558 Blackhole expenditure - (114) (114) Legal fees (cost base) - 14,943 14,943 Accrued income (2,551) 2,551 - Other liabilities (357) 2,650 2,293
Deferred tax asset 96,902 (134,576) (37,674)
2014 OPENING BALANCE CHARGED TO INCOME STATEMENT CLOSING BALANCE $ $ $ Tax losses - 24,079 24,079 Provision for employee benefits 9,874 1,698 11,572 Other assets - 416 416 Accrued expenses 31,039 (7,292) 23,747 Lease incentives - 7,045 7,045 Provision for windups 55,942 (55,942) - Legal fees (blackhole) expensed 19,134 (4,783) 14,351 Contingent liabilities - 18,600 18,600 Accrued income - (2,551) (2,551)
For personal use only use personal For Other liabilities - (357) (357)
Deferred tax asset 115,989 (19,087) 96,902 As at 30 June 2015 all revenue losses have been brought to account as a review has been performed in the current year as to whether the group satisfies the requirements of the same business test and have concluded that this test can be met. As at the 30 June 2015 there are no carried forward losses (2014: $80,262)
34 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 6: INCOME TAX CONT’
Deferred tax assets not brought to account The benefits of which will only be realised if the conditions for deductibility set out in Note 2(b) occur:
2015 2014 $ $ Tax losses: operating losses - - Tax losses: capital losses 2,915,849 2,873,061
2,915,849 2,873,061
NOTE 7: TRADE AND OTHER RECEIVABLES
2015 2014 $ $ Current - - Trade receivables 210,849 676,114 Prepayments 71,536 58,221 Sundry receivables 155,860 85,912
438,245 820,247 Non-Current Loan – secured 2,000,000 -
2,000,000 - All current receivables are non-interest bearing. The non-current loan provided has an interest rate of 13% applicable. It is secured by a second ranking mortgage and general security agreement and is repayable February 2017. Refer to Note 18 for details of the credit quality of trade and other receivables.
NOTE 8: INVENTORIES
2015 2014 $ $ Palmer Street, Townsville 663,791 -
Total Inventories 663,791 - The property was transferred into a subsidiary, GARDA TSV Unit Trust during the year from Opus Development Fund 1. This was in part satisfaction of its outstanding debt to GCL as first mortgagee. The transfer of the property allowed GCL as RE to wind up the scheme. The net realisable value of Palmer Street was determined by an independent valuation at the time of the transfer being $200,000. This valuation was an ‘as is’ valuation. Additional costs have been incurred to stabilise the property mainly for civil works. These costs have been included in the value reflected above.
NOTE 9: PROPERTY, PLANT AND EQUIPMENT
For personal use only use personal For 2015 2014 $ $ Plant and equipment Plant and equipment at cost 161,462 124,232 Accumulated depreciation (115,702) (70,247)
Total Inventories 45,760 53,985
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 35 NOTE 9: PROPERTY, PLANT AND EQUIPMENT CONT’
2015 2014 $ $ Leasehold improvements Leasehold improvements at cost 13,956 3,063 Accumulated amortisation (1,664) (944)
12,292 2,119 Total property, plant and equipment 58,052 56,104 Movements during the year
PLANT AND EQUIPMENT LEASEHOLD IMPROVEMENTS TOTAL $ $ $ Balance at 1 July 2013 35,823 14,500 50,323 Additions 31,657 1,700 33,357 Disposals (1,110) (12,590) (13,700) Depreciation expense (12,385) (1,491) (13,876)
Balance at 30 June 2014 53,985 2,119 56,104 Balance at 1 July 2014 53,985 2,119 56,104 Additions 900 93,023 93,923 Additions – business 14,505 - 14,505 combination Disposals (2,015) (81,995) (84,010) Depreciation expense (21,615) (855) (22,470)
Balance at 30 June 2015 45,760 12,292 58,052
NOTE 10: FINANCIAL ASSETS
2015 2014 $ $ Available for sale financial assets Units in unit trusts 120 14,266
120 14,266 Movements during the period
2015 2014 $ $ Balance at beginning of year 14,266 13,300 Transferred to financials assets held at fair value through profit or loss (4,704) - Disposals (1,800) -
For personal use only use personal For Gain (loss) on fair value (7,642) 966
Balance at end of year 120 14,266
36 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 10: FINANCIAL ASSETS CONT’
2015 2014 $ $ Financial assets measured as at fair value through profit or loss Units in GARDA Diversified Property Fund 10,004,704 -
Movements during the period
2015 2014 $ $ Balance at beginning of year - - Additions 10,000,000 - Transfers from available for sale financial asset 4,704 -
Balance at end of year 10,004,704 - Investments have been designated at fair value through profit or loss on initial recognition when the Group holds related liabilities to those investments which are also at fair value through profit or loss, and the designation therefore eliminates or significantly reduces an accounting mismatch that would otherwise arise. The Group measures the financial asset at fair value for internal reporting purposes as well. Financial assets measured at fair value through profit or loss is equity investments in the listed trust - GARDA Diversified Property Fund. 10,000,000 units (IPO offer price of $1.00) were acquired in GARDA Diversified Property Fund in June 2015, and 4,704 units were purchased in prior years. This total holding represents approximately 10.29% of the issued units in GARDA Diversified Property Fund at balance date. On 2 July 2015 GARDA Diversified Property Fund listed on the Australian Securities Exchange.
NOTE 11: INTANGIBLE ASSETS 2015 2014 $ $ Property management rights at cost 755,654 755,654 Accumulated amortisation and impairment (755,654) (755,654)
- -
License 79,061 79,061
Trail and procurement rights 581,773 - Accumulated amortisation (266,277) -
315,496 -
Goodwill 641,882 -
Total intangible assets 1,036,439 79,061 For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 37 NOTE 11: INTANGIBLE ASSETS CONT’
Movements during the period
PROCUREMENT LICENCE $ TRAIL RIGHTS $ GOODWILL $ TOTAL $ RIGHTS $ Balance at 1 July 2014 79,061 - - - 79,061 Additions - 194,876 386,897 641,882 1,223,655 Impairment expense - - - - - Amortisation expense - (181,252) (85,025) - (266,277)
Balance at 30 June 2015 79,061 13,624 301,872 641,882 1,036,439 Balance at 1 July 2013 79,061 - - - 79,061 Impairment expense - - - - - Amortisation expense - - - - -
Balance at 30 June 2014 79,061 - - - 79,061 Impairment assessment of Goodwill The goodwill acquired in the business combination during the year, is tested for impairment annually. There have been no substantial changes to the business unit since acquisition that would lead to impairment, and as a result there has been no impairment to goodwill at balance date.
NOTE 12: TRADE AND OTHER PAYABLES 2015 2014 $ $ Trade payables 99,008 590,533 Sundry creditors and accruals 482,905 259,551 Annual leave accrual 42,994 35,147 Rent incentive liability 40,932 29,528
665,839 914,759
NOTE 13: INTEREST BEARING LOANS AND BORROWINGS 2015 2014 $ $ Current Related party loan (unsecured) 250,000 -
250,000 - Non-Current Shareholder loan (secured) 3,150,000 3,250,000 Establishment fee (170,357) (250,000)
Shareholder loan (unsecured) 200,000 - For personal use only use personal For Related party loans (unsecured) 250,000 - Unsecured loans 550,000 -
3,979,643 3,000,000
The approximate fair value of financial liabilities is determined to be the carrying value.
38 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 13: INTEREST BEARING LOANS AND BORROWINGS CONT’
Shareholder Loan This loan facility has been advanced to the Group by the major shareholder, M3SIT Pty Ltd as trustee for the M3 Solutions Investment Trust. The original facility was advanced in 2012. The Company entered into a Second and Third Deed of Variation of Facility Agreement in June 2014 and September 2014 respectively. Under this agreement various loan details were amended including the outstanding amount being revised to $3,250,000 (comprised of $1,970,000 of principal and $1,280,000 in capitalised interest and fees), the interest rate was revised downwards from 13% to 8%, and the repayment date has been extended to 30 June 2018. A second establishment fee of $250,000 was also included. Both the outstanding late fees and interest were incorporated into the facility at the 30 June 2014. Interest on this loan was paid during the current financial year and $100,000 in repayments were made. The $3,150,000 shareholder loan is fully drawn and secured by a registered fixed and floating charge over all the assets of GARDA Capital Group. There are no covenants imposed. In January 2015 a $200,000 unsecured loan facility was advanced to a subsidiary of GCL to part fund the Group’s investment into real estate through a debt position to a third party. It is subject to 10% interest and has a term of 24 months being repayable in January 2017. Related Party Loans GARDA Property Finance Pty Ltd, being a subsidiary of GCL was incorporated during the year and is the vehicle through which the Group currently has invested into real estate through debt positions. A number of parties have advanced capital to this company to fund the Group’s investment into real estate via a debt position with a third party. This includes funding obtained from Madsen Nominees Pty Ltd ATF Madsen Family Trust, a related entity of Matthew Madsen. The related party loan facility of $250,000 is subject to 10% interest and has a term of 24 months being repayable in January 2017. In May 2015 a loan was entered into by GARDA TSV Unit Trust, a subsidiary of GCL, with MB & PM Madsen Investments Pty Ltd for $250,000. This loan was sought to fund remedial works at the property acquired in Townsville. This loan is repayable by 30 June 2016 and has therefore been classified as current. An interest rate of 10% is applicable. Refer to Note 21 for further details on the shareholder and related party loans. Unsecured loans GARDA Property Finance Pty Ltd, being a subsidiary of GCL obtained unsecured loans from third parties to the value of $550,000 during the year to part fund the Group’s investment into real estate via debt positions with third parties. The loans are subject to 10% interest and have a term of 24 months being repayable in January 2017.
NOTE 14: FINANCIAL LIABILITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS 2015 2014 $ $ Current Shareholder loan (unsecured) 1,250,000 -
1,250,000 - Non-Current Shareholder loan (unsecured) 7,416,667 -
Related party loans (unsecured) 933,333 - For personal use only use personal For 8,350,000 -
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 39 NOTE 14: FINANCIAL LIABILITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS CONT’
Financial liabilities have been designated at fair value through profit or loss on inception as the fair value of the liability is related to the fair value of the investment (refer note 10) in GARDA Diversified Property Fund. The designation therefore eliminates or significantly reduces the accounting mismatch that would otherwise arise. The Group measures the above liability at fair value for internal reporting purpose. Shareholder Loan In June 2015 unsecured loan facilities were advanced to fund the acquisition of units by a subsidiary of GCL in GARDA Diversified Property Fund. Under this agreement interest is calculated at the end of each quarter starting 30 September 2015 and is the annualised distribution rate expressed as a percentage of the actual distributed earnings (distributions to Unitholders) in GARDA Diversified Property Fund. Interest is payable 7 days after the distribution date. The $1,250,000 facility has a term of 12 months being repayable in June 2016 and the $7,416,667 facility has a term of 24 months being repayable in June 2017. Related Party Loans GARDA REIT Holdings Unit Trust, a subsidiary of GCL, was incorporated to hold the units in GARDA Diversified Property Fund. The acquisition of the units in GARDA Diversified Property Fund was funded via a number of loans including $933,333 provided by related entities of Matthew Madsen. The loans have a term of 24 months being repayable in June 2017. Under these agreements interest is calculated at the end of each quarter starting 30 September 2015 and is the annualised distribution rate expressed as a percentage of the actual distributed earnings (distributions to Unitholders) in GARDA Diversified Property Fund. Interest is payable 7 days after the distribution date.
NOTE 15: PROVISIONS
2015 2014 $ $ Current Provision for windup costs 659,456 1,053,254
659,456 1,053,254 Non-Current Provision for employee entitlements 5,950 3,427
5,950 3,427 Movements in provision for windup costs
2015 2014 $ $ Opening balance at beginning of year 1,053,254 186,474 Amount (used) provided during the year (393,798) 866,780
Balance at end of year 659,456 1,053,254 A provision for windup costs has been recognised to reflect costs associated with the windup of the trusts for which GARDA Capital Limited is the responsible entity for. These costs are based on an estimate of the costs to wind up the
remaining trusts. For personal use only use personal For
40 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 16: CONTRIBUTED EQUITY
2015 2014 $ $ 1,955,050 ordinary shares (2014: 1,288,975,860) 1,942,421 1,387,555
MOVEMENTS DURING 2015 2014 2015 2014 THE YEAR NUMBER NUMBER $ $ Balance at beginning of year 1,288,975,860 1,288,975,860 1,387,555 1,387,555 Shares issued on acquisition of subsidiary * 691,751,161 - 589,026 - Share buyback ** (25,702,940) - (34,160) - Share consolidation 1000:1 *** (1,953,069,031) - - -
Balance at end of year 1,955,050 1,288,975,860 1,942,421 1,387,555
* During the 2015 year an entity associated with Matthew Madsen (Managing Director of GCL) was issued 691,751,161 shares at a value of $589,026 being $0.000851 per share. This was as part of the consideration for the acquisition of Madsen Finance Pty Ltd (now GARDA Finance Pty Ltd).
** On 2 December 2014 25,702,940 shares were bought back at a price of $0.001329.
*** Subsequent to the buyback on 3 December 2014 a 1,000 to 1 share consolidation occurred.
Ordinary Shares All ordinary shares are fully paid. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Capital Risk Management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital and meet external capital requirements such as its Australian financial services licence. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. The board’s policy is to maintain a strong capital base so as to ensure compliance with the requirements of its Australian financial services licence (AFSL) and the Corporations Act 2001. The Company is required under the terms of its AFSL to meet the base level financial requirements. That is, the licensee must: a) be able to pay all its debts as and when they become due and payable; and b) either: (i) have total assets that exceed total liabilities as shown in the licensee’s most recent balance sheet lodged with ASIC and have no reason to suspect that the licensee’s total assets would currently not exceed its total liabilities; or (ii) have adjusted assets that exceed adjusted liabilities calculated at the balance date shown in the licensee’s most recent balance sheet lodged with ASIC and have no reason to suspect that the licensee’s adjusted assets would
For personal use only use personal For currently not exceed its adjusted liabilities. Under the Corporations Act 2001, GCL as a responsible entity must also meet minimum net tangible asset cash needs requirements. GARDA Capital Limited complies with all of these requirements. The board and management effectively manage the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders, if any, and share issues.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 41 NOTE 16: CONTRIBUTED EQUITY CONT’
Capital Risk Management Cont’ The Group monitors capital on the combination of a number of factors. These include: (a) AFSL requirements; (b) responsible entity requirements under the Corporations Act 2001; and (c) cash flow requirements.
NOTE 17: SHARE BASED PAYMENTS During the 2014 year an entity associated with Mr Madsen acquired 256,506,196 shares from the major shareholder M3SIT Pty Ltd in an off market transfer. The consideration paid for the shares was $100, but fair value was attributed to each of the shares at $0.000889 therefore the benefit provided has been recorded as $227,934. The shares transferred above are recognised as an employee benefit expense with a corresponding increase in retained earnings. There is therefore no impact to the net assets of the parent entity or the Group. No shares were issued to employees during the 2014 or 2015 financial years. There were no share based payments in the 2015 financial year.
NOTE 18: FINANCIAL RISK MANAGEMENT The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from related parties, investments in unit trusts, bank loans and shareholder loans. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:
2015 2014 NOTE $ $ Financial assets Cash and cash equivalents 27 2,426,668 3,942,707 Trade and other receivables 7 2,438,245 820,247 Financial assets 10 10,004,824 14,266
Total financial assets 14,869,737 4,777,220 Financial liabilities – at cost Trade and other payables 12 665,839 914,759 Interest bearing loans 13 4,229,643 3,000,000 Financial liability held at fair value through 14 9,600,000 - profit and loss Total financial liabilities 14,495,482 3,914,759
Financial Risk Management Policies The directors’ overall risk management strategy seeks to assist the company in meeting its financial targets, while minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the board of directors on a regular basis. These include the credit risk policies and future cash flow requirements.
For personal use only use personal For The main purpose of non-derivative financial instruments is to raise finance for company operations. The company does not have any derivative instruments at 30 June 2015. The board and senior executives of the Group meet on a regular basis to analyse financial risk exposure. The overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects of financial performance.
42 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 18: FINANCIAL RISK MANAGEMENT CONT’
Specific Financial Risk Exposures and Management The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk relating to interest rate risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. 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 risk and maturity analysis for liquidity risk. The board have overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the board’s objectives, policies and processes for managing or measuring the risks from the previous period. Further details regarding these policies are set out below:
(a) Credit Risk Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when trade and other receivables fail to settle their obligations owing to the Group. Credit risk is reviewed regularly by the board of GCL. Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and includes the regular monitoring of the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment. Depending on the division within the Group, credit terms are generally 30 days from the date of invoice. Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating. Where the Group is unable to ascertain a satisfactory credit risk profile in relations to a customer or counterparty, the risk may be further managed through obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of default. For details on collateral held on receivables refer to note 7. The credit quality of cash and cash equivalents is considered strong. The counterparty to these financial assets is large financial institutions with strong credit ratings. Credit risk related to balances with banks is managed by management in accordance with approved board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard and Poor’s (S&P) rating of at least AA-. All cash and cash equivalents are currently with AA- rated banks. Credit risk exposures The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. They are summarised below:
2015 2014 NOTE $ $ Cash and cash equivalents 27 2,426,668 3,942,707 Trade and other receivables (net of impairment) 7 2,438,245 820,247
4,864,913 4,762,954 For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 43 NOTE 18: FINANCIAL RISK MANAGEMENT CONT’
(a) Credit Risk Cont’ The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those receivables specifically provided for and detailed below and the loan provided to Parkes Property Company Pty Ltd of $2,000,000. The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled within the terms and conditions agreed between the Group and the customer or counterparty to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group. The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.
2015 2014 AGEING OF RECEIVABLES $ $ Not past due 2,434,317 816,964 Past due 31-60 days - 262 Past due >60 days 3,928 3,021 Impaired - -
2,438,245 820,247
(b) Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
• preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities; • monitoring undrawn credit facilities; • obtaining funding from a variety of sources; • maintaining a reputable credit profile; • managing credit risk related to financial assets; • only investing surplus cash with major financial institutions; and • comparing the maturity profile of financial liabilities with the realisation profile of financial assets. The Group did not have any financing facilities available at balance date. The table below reflects the contractual maturity of fixed and floating rate financial liabilities. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing at 30 June 2015. The amounts disclosed represent undiscounted cash flows. The remaining contractual maturities of the financial liabilities are:
2015 2014 NOTE $ $ Less than one year Trade and other payables 12 665,839 914,759 Financial liability held at fair value through 14 1,250,000 -
For personal use only use personal For profit or loss Interest bearing loans 13 250,000 - Interest on loans 22,883 -
2,188,722 914,759
44 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 18: FINANCIAL RISK MANAGEMENT CONT’
(b) Liquidity risk Cont’
2015 2014 NOTE $ $ Between one and five years Financial liability held at fair value through 14 8,350,000 - profit or loss Interest bearing loans: Shareholder loan 13 3,179,643 3,000,000 Related party loan 13 250,000 - Unsecured loan 13 550,000 - Interest on loans 915,595 -
13,245,238 3,000,000
(c) Market Risk Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. The financial instruments which primarily expose the Group to interest rate risk are borrowings and cash equivalents.
2015 2014 FLOATING RATE INSTRUMENTS $ $ Cash and cash equivalents 2,426,668 3,942,707
2,426,668 3,942,707 Interest rate risk is managed by constant monitoring of interest rates. Interest rates over the 12 month period were analysed and a sensitivity determined to show the effect on profit and equity if the interest rates at reporting date had been 100 basis points higher or lower, with all other variables held constant. This level of sensitivity was considered reasonable given the current level of both short-term and long-term Australian interest rates. The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance date, namely variable rate cash holdings and borrowings. At 30 June 2015, if interest rates had moved, as illustrated in the table below, with all other variables held constant, profit and equity would have been affected as follows:
PROFIT EQUITY JUDGMENTS OF REASONABLY POSSIBLE MOVEMENTS: HIGHER/(LOWER) HIGHER/(LOWER) 2015 $ 2014 $ 2015 $ 2014 $
+1.00% (100 basis points) 24,267 39,427 24,267 39,427 For personal use only use personal For -1.00% (100 basis points) (24,267) (39,427) (24,267) (39,427)
Price Risk Price risk is the risk that the value of investments will fluctuate because of changes in market prices (other than those arising from interest rate and currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. Any
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 45 NOTE 18: FINANCIAL RISK MANAGEMENT CONT’
(c) Market Risk Cont’ investment and borrowing decisions must be approved by the board. To limit its price risk, the Board makes investment and borrowing decisions on advice from professional advisors. The financial instruments which primarily expose the Group to price risk are financial assets held at fair value through profit or loss and financial liabilities held at fair value through profit or loss.
2015 2014 FLOATING RATE INSTRUMENTS $ $ Financials assets held at fair value through profit or loss 10,004,704 - Financial liabilities held at fair value through profit or loss (9,600,000) -
At 30 June 2015, if unit price had moved, as illustrated in the table below, with all other variables held constant, profit and equity would have been affected as follows:
PROFIT EQUITY JUDGMENTS OF REASONABLY POSSIBLE MOVEMENTS: HIGHER/(LOWER) HIGHER/(LOWER) 2015 $ 2014 $ 2015 $ 2014 $ +1.00% (100 basis points) 4,000 - 4,000 - -1.00% (100 basis points) (4,000) - (4,000) -
(d) Net Fair Values The net fair values of financial assets and liabilities approximate their carrying value. No financial assets or liabilities are readily traded on organised markets in standardised form.
NOTE 19: FAIR VALUE MEASUREMENT The following assets and liabilities are recognised and measured at fair value on a recurring basis: • Financial liabilities held at fair value through profit or loss • Derivatives • Available for sale financial asset • Investment properties There are various methods used in estimating the fair value of a financial instrument. The methods comprise: Level 1 – the fair value is calculated using quoted prices in active markets. Level 2 – the fair value is estimated using inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data. Due to their short-term nature the net fair values of financial assets and liabilities approximate their carrying value as disclosed in the statement of financial position. No financial assets or liabilities are readily traded on organised markets in standardised form.
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL NOTE $ $ $ $ 30 June 2015 Assets For personal use only use personal For Financial assets 10,004,704 - 120 10,004,824
10,004,704 - 120 10,004,824
46 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 19: FAIR VALUE MEASUREMENT CONT’
Liabilities Financial liabilities held at fair value through profit or loss 9,600,000 - - 9,600,000 9,600,000 - - 9,600,000 30 June 2014 Assets Financial assets - - 14,266 14,266
- - 14,266 14,266 Liabilities Financial liabilities held at fair value through profit or loss ------Refer note 10 for transfers during the year between Level 1 and Level 3 for recurring fair value measurements.
Disclosed fair values Due to their short-term nature, the carrying amount of trade receivables and payables are assumed to approximate their fair values. The fair value of financial assets and financial liabilities held at fair value through profit or loss as disclosed in note 10 and 14 were determined by reference to share price in an active market (Level 1). The following table sets out the valuation techniques used to measure fair value within Level 3, including details of the significant unobservable inputs used and the relationship between unobservable inputs and fair value.
RELATIONSHIP BETWEEN VALUATION UNOBSERVABLE DESCRIPTION RANGE OF INPUTS UNOBSERVABLE APPROACH INPUTS1 INPUTS AND FAIR VALUE Financial assets held Based on net asset Net asset value of N/A The higher the net as available for sale value of the funds the fund asset value of the fund the higher the investment value.
1 There were no significant inter-relationships between unobservable inputs that materially affect fair values.
NOTE 20: KEY MANAGEMENT PERSONNEL Key Management Personnel share holdings (number of shares)
HELD AT THE GRANTED OR DISPOSALS / HELD AT THE SHARE BEGINNING OF ACQUIRED SHARE BUYBACK END OF THE 2015 CONSOLIDATION THE REPORTING DURING THE DURING THE REPORTING
For personal use only use personal For 1000 : 1 PERIOD YEAR YEAR PERIOD Directors David Usasz1 - - - - - Matthew Madsen2 256,506,196 691,751,161 (690,802,633) - 948,528
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 47 NOTE 20: KEY MANAGEMENT PERSONNEL CONT’
HELD AT THE GRANTED OR DISPOSALS / HELD AT THE SHARE BEGINNING OF ACQUIRED SHARE BUYBACK END OF THE 2015 CONSOLIDATION THE REPORTING DURING THE DURING THE REPORTING 1000 : 1 PERIOD YEAR YEAR PERIOD Mark Hallett3 - - - - - Phillip Lee4 - - - - - Leylan Neep - - - - - Rowan Ward5 - - - - - Key Management Lachlan Davidson - - - - - Total 256,506,196 691,751,161 (690,802,633) - 948,528
1 Appointed 21 May 2015
2 Shares were issued as part consideration on the acquisition of GARDA Finance Pty Ltd.
3 Mark Hallett is a joint trustee of a trust that is a shareholder of M3SIT Pty Ltd, the trustee of a trust which owned 948,258 (2014: 948,257,357) shares in GCL at 30 June 2015.
4 Appointed 21 May 2015
5 Resigned on the 21 October 2014.
HELD AT THE GRANTED OR HELD AT THE END 2014 BEGINNING OF THE ACQUIRED DURING DISPOSALS OF THE REPORTING REPORTING PERIOD THE YEAR PERIOD Directors Matthew Madsen 256,506,196 256,506,196 Mark Hallett - - - - Leylan Neep - - - - Rowan Ward - - - - Key Management Lachlan Davidson - - - - Total - 256,506,196 - 256,506,196
No other shares are held nominally by any of the directors or other key management personnel.
Key management personnel compensation The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
2015 2014 $ $ Short-term employee benefits 773,986 643,422
For personal use only use personal For Post-employment benefits 42,136 30,610 Other long-term benefits (incl long service leave and annual leave) - - Termination payments - - Equity based compensation - 227,934
816,122 901,966
48 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 20: KEY MANAGEMENT PERSONNEL CONT’
Share Based Compensation Shares in GARDA Capital Limited are able to be granted in an employee share scheme. An employee share scheme is designed to provide long-term incentives for executives and staff to deliver long-term shareholder returns. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. In the prior year an off market transfer of shares occurred between an associated entity of Matthew Madsen and the major shareholder of the Company M3SIT Pty Ltd. As per the Australian Accounting Standards, the difference between the consideration paid and fair value attributed to the shares has been recognised as a remuneration benefit. No other ordinary shares in the Company were provided as remuneration to any of the directors or key management of GARDA Capital Limited in the current or prior period.
NOTE 21: RELATED PARTY TRANSACTIONS The related parties that exist are key management personnel, entities which GARDA Capital Limited acts as the responsible entity for and other related parties which includes entities over which key management personnel have significant influence over. For details of disclosures relating to key management personnel, refer to the Directors’ Report. Trade receivables are made to the funds and trusts that GARDA Capital Limited acts as the responsible entity for on an arm’s length basis. Repayment terms are on normal terms and conditions being payment within 30 days with no interest being charged. Transactions between related parties are on normal terms and conditions no more favourable than those available to other parties unless otherwise stated. Entities for which GARDA Capital Limited is the responsible entity
2015 2014 $ $ Amounts receivable Trade and other receivables 203,683 434,207
203,683 434,207 Transactions with related parties Responsible entity management and administration fees 1,061,908 1,182,781 Property and facility management fees 729,992 743,127 Facility maintenance and project charges 232,171 245,752 Projects income 159,511 100,440 Real estate commission 326,500 58,000 Leasing commissions 340,823 455,335 Recovery of professional expenses 260,623 183,915 Registry costs 81,000 81,000 Capital works fee 85,295 235,587 Asset sale fee 267,000 - Procurement fees 423,023 -
For personal use only use personal For Trail fees 172,800 - Investment income 223 210
4,140,869 3,286,147
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 49 NOTE 21: RELATED PARTY TRANSACTIONS CONT’
Entities for which GARDA Capital Limited is the responsible entity Cont’ The Group paid expenses on behalf of the trusts/funds that it acts as responsible entity during the year of $211,566 (2014: $559,493). These costs are on-charged to the relevant entity and reimbursed at no mark-up. The Group recovered bad debts from the trusts/funds that it acts as responsible entity during the year of $204,746 (2014: $103,043). Of the bad debts recovered $200,000 represents the transfer of the Townsville site to GCL from the Opus Development Fund 1. This amount was based on an independent valuation of the property.
Registered charges In its capacity as responsible entity the Group has entered into a number of registered charges in relation to borrowings of the trusts. The liability in relation to these charges is limited and enforceable to the extent to which it can be satisfied out of the property of the scheme to which the charge relates. Other related parties Hallett Legal Pty Ltd, a law firm in which Mark Hallett is a director, provided legal services to the Consolidated Entity during the year. Fees of $24,389 (2014: $15,771) were paid by the Consolidated Entity for these services. These transactions were entered into on normal commercial terms. As at 30 June 2015 the Consolidated Entity owed $nil (2014: $7,226) to Hallett Legal Pty Ltd. A share purchase agreement for the acquisition of the issued share capital of Madsen Finance Pty Ltd (now GARDA Finance Pty Ltd) was executed on 14 July 2014 of which Matthew Madsen is a director. The issued share capital in Madsen Finance Pty Ltd was purchased from a related entity of Mr Madsen. Refer to note 22 for further details on this acquisition. Madsen Finance Pty Ltd has subsequently changed its name to GARDA Finance Pty Ltd. As at 30 June 2015, loan facilities exist with M3SIT Pty Ltd, being the majority shareholder in the company. The amount outstanding under the secured facility at 30 June 2015 was $3,150,000 (2014: $3,250,000). The terms of this facility and repayments for the year are disclosed in Note 13, interest of $255,025 has been paid (2014: $nil). Further unsecured loan facilities were advanced during the year with the amount outstanding at 30 June 2015 being $8,666,667 (2014: $Nil). The terms of this facility are disclosed in Note 14. Madsen Advisory Pty Ltd, an entity which Matthew Madsen is a Director, provided advisory services to the subsidiary GARDA Finance Pty Ltd during the year and fees of $191,250 were paid by GARDA Finance Pty Ltd for these services. During the year GARDA Finance Pty Ltd received rent of $7,500 from Madsen Advisory Pty Ltd for sublet office space. As part of the terms of the share purchase agreement for the acquisition of GARDA Finance Pty Ltd, Madsen Advisory Pty Ltd repaid a loan of $55,000 to GARDA Finance during the year, MB & PM Madsen repaid $94,938 that was owing to GARDA Finance and MB & PM Madsen Investments Pty Ltd, a related entity of Mr Madsen was repaid $127,880 owing to them by GARDA Finance during the year. GARDA Property Finance Pty Ltd, being a subsidiary of GCL incorporated during the year is the vehicle in which the Group currently invests into real estate via debt positions with third parties. Capital has been advanced from a number of parties to fund the Group’s initial investment. One of these entities is a related party to Matthew Madsen a director and one is a shareholder of GCL. Details of the lenders and the amounts are detailed in the table below. See note 13 for the terms of these facilities.
AMOUNT OWING INTEREST PAID 2015 LENDER $ $ Madsen Nominees Pty Ltd ATF MB & PM Madsen Family Trust 250,000 10,479 M3SIT Pty Ltd ATF M3 Solutions Investment Trust 200,000 8,329
In May 2015 a loan was entered into by GARDA TSV Unit Trust, a subsidiary of GCL, with MB & PM Madsen Investments
For personal use only use personal For Pty Ltd for $250,000. This loan was sought to fund remedial works at the property acquired in Townsville. This loan is due by the 30 June 2016 and has therefore been classified as current. An interest rate of 10% is applicable. This loan was unsecured at balance date. Interest of $2,392 was paid during the 2015 year. GARDA REIT Holdings Unit Trust, a subsidiary of GCL, was incorporated to hold the units in GARDA Diversified Property Fund (GDF). The acquisition of the units in GARDA Diversified Property Fund was funded via a number of loans as detailed in the following table. Interest is payable at a rate equivalent to the respective annual distributions from GDF.
50 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 21: RELATED PARTY TRANSACTIONS CONT’
Other related parties Cont’
AMOUNT OWING LENDER TERM $ MB & PM Madsen Investments Pty Ltd 666,667 24 Months MB & PM Madsen ATF MB & PM Madsen Superfund 266,666 24 Months M3SIT Pty Ltd ATF M3 Solutions Investment Trust 7,416,667 24 Months M3SIT Pty Ltd ATF M3 Solutions Investment Trust 1,250,000 12 Months
NOTE 22: ACQUISITION OF ASSETS AND LIABILITIES OF GARDA FINANCE PTY LTD (FORMERLY MADSEN FINANCE PTY LTD)
During the year the Company acquired 100% of the shares in GARDA Finance Pty Ltd and on the 25 September 2014 gained control of this entity. The net assets of GARDA Finance Pty Ltd at the date of acquisition were as follows: 25 SEPTEMBER 2014 $ (a) Consideration transferred Cash consideration 450,888 Shares issued by GCL 589,026 Contingent consideration * 64,351
Total consideration 1,104,265
* The contingent consideration requires GCL to pay the vendor additional consideration based on an earn out for three (3) years following the completion of the transaction. The vendor receives a percentage on amounts above a cumulative hurdle being if profit before interest and tax (PBIT) in each of the years 2015, 2016 and 2017 exceeds $950,000, $500,000 and $500,000 respectively. No amount is payable if the PBIT target is not met. The directors have determined that $64,351 represents the estimated fair value of this obligation.
25 SEPTEMBER 2014 $ (b) Assets acquired and liabilities assumed at the date of acquisition Current assets Cash and cash equivalents (3,594) Trade and other receivables 84,221 Prepayments 3,651 Non-current assets Property, plant and equipment 14,505 Identifiable intangible assets 581,773 Current liabilities Trade and other payables (52,915) Provision for income tax (65,274) Deferred tax liability (99,984)
For personal use only use personal For Net assets 462,383
At the date of acquisition the carrying value of trade and other receivables reflected the fair value.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 51 NOTE 22: ACQUISITION OF ASSETS AND LIABILITIES OF GARDA FINANCE PTY LTD (FORMERLY MADSEN FINANCE PTY LTD) CONT’
25 SEPTEMBER 2014 $ (c) Goodwill arising on acquisition Consideration transferred 1,104,265 Fair value of identifiable net assets acquired (462,383)
Goodwill arising on acquisition 641,882
The fair value of the future procurement and trail fees relating to the existing client list of GARDA Finance Pty Ltd at the time of acquisition was determined and recognised as an identifiable intangible asset. The purchase price was struck in excess of this value as the Group perceived that there was additional value in the key management’s experience and ability to generate new contracts. The key personnel have been retained within the contract and the contingent consideration has been incorporated into the contract to encourage new business to be obtained. The goodwill has resulted due to these factors. None of the goodwill arising from this acquisition is expected to be deductible for tax purposes, however part of the amount representing goodwill will form the tax cost base should the business be disposed of in the future.
25 SEPTEMBER 2014 $ (d) Net cash outflow arising on acquisition Consideration paid in cash 450,888 Cash and cash equivalent balances acquired 3,594
454,482
(e) Impact of acquisition on the results of the Group Included in the profit for the year is a profit of $8,377 attributable to GARDA Finance Pty Ltd. Revenue for the year includes $809,167 in respect of GARDA Finance Pty Ltd. Had the acquisition of GARDA Finance Pty Ltd been effected at 1 July 2014, the revenue of the Group from operations for the twelve months ended 30 June 2015 would have been $5,045,979, and the profit for the year from operations would have been $415,995. The directors of the Group consider these ‘pro-forma’ numbers to represent an approximate measure of the performance of the combined group on a yearly basis and to provide a reference point for comparison in future years. In determining the ‘pro-forma’ revenue and profit of the Group had GARDA Finance Pty Ltd been acquired at the beginning of the current year, the directors have: • Calculated depreciation and amortisation of plant and equipment and identifiable intangible assets acquired on the basis of the fair values arising in the initial accounting of the business combination rather than the carrying amounts recognised in the pre-acquisition financial statements; • Assumed that the results for GARDA Finance Pty Ltd will improve enabling the seller of GARDA Finance to achieve their earn-out consideration.
NOTE 23: AUDITORS’ REMUNERATION
2015 2014
$ $ For personal use only use personal For Remuneration of the auditor for: Audit and review of the financial report 57,807 48,023 Compliance audit 1,600 -
52 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 23: AUDITORS’ REMUNERATION CONT’
2015 2014 $ $ Other services paid to BDO: Taxation services 46,305 - Independent experts report 22,861 - Other 3,525 -
132,098 48,023
NOTE 24: COMMITMENTS
2015 2014 $ $ Operating leases
Future minimum lease payments receivable: Within one year 242,998 166,800 One year to five years 1,061,981 929,187 Later than five years - -
1,304,979 1,095,987 Sub-lease payments expected to be received in relation to operating leases - -
Lease incentives of approximately $96,000 were received during the year.
NOTE 25: CONTINGENT ASSETS AND LIABILITIES There are no contingent assets or contingent liabilities as at 30 June 2015.
NOTE 26: PARENT ENTITY INFORMATION The Parent Entity of the Group is GARDA Capital Limited.
2015 2014 PARENT ENTITY FINANCIAL INFORMATION $ $ Current assets 4,133,875 3,908,171
Non-current assets 1,442,674 384,565
Total assets 5,576,549 4,292,736 Current liabilities 1,197,228 1,188,493 Non-current liabilities 2,979,643 3,000,000
Total liabilities 4,176,871 4,188,493 Net assets 1,399,678 104,243
Contributed equity 1,942,421 1,387,555 For personal use only use personal For Retained earnings (542,743) (1,283,312)
Total equity 1,399,678 104,243 Profit/(loss) after income tax 740,569 (399,700) Other comprehensive income - -
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 53 NOTE 26: PARENT ENTITY INFORMATION CONT’
Controlled Entities of the Parent Entity
PERCENTAGE OWNED 2015 2014 COUNTRY OF % % INCORPORATION GARDA Property Services Pty Ltd 100% 100% Australia GARDA Real Estate Services Pty Ltd 100% 100% Australia GARDA Facilities Management Pty Ltd 100% 100% Australia GARDA Services Pty Ltd 100% 100% Australia GARDA Funds Management Limited 100% 100% Australia GARDA Finance Pty Ltd 1 100% - Australia GARDA TSV Pty Ltd ATF GCL TSV Unit Trust 2 100% - Australia GARDA Property Finance Pty Ltd 3 100% - Australia GARDA REIT Holdings Unit Trust 4 100% - Australia
1 On 14 July 2014 the Company executed a share purchase agreement for the acquisition of the issued share capital of GARDA Finance Pty Ltd (formerly Madsen Finance Pty Ltd). The Company gained control of this entity on the 25 September 2014 when all of the conditions precedent to this agreement were satisfied. The Group has therefore consolidated the results of this entity from the date of control until balance sheet date and the position of the entity has also been consolidated as at 30 June 2015. Refer to note 22 for details of this acquisition. 2 Incorporated on the 23 January 2015. 3 Trustee GARDA TSV Pty Ltd was incorporated on 2 February 2015. 4 Trustee GARDA REIT Holdings Pty Ltd was incorporated on the 17 June 2015.
Contingent Liabilities Refer to Note 25 for details of the contingent liabilities of the parent.
NOTE 27: CASH FLOW INFORMATION 2015 2014 RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH PROFIT/(LOSS) $ $ Profit/(loss) 483,510 (241,820)
Non-cash items in profit/(loss) Impairment of receivables 104,536 106,730 (Profit) / loss on disposal of assets (2,100) 13,472 Amortisation of borrowing costs 84,305 - Capitalisation of borrowing costs (4,662) (250,000) Depreciation 22,470 13,876 Amortisation of intangibles 266,277 - Interest accrued - 834,015
Employee share issue - 227,934 For personal use only use personal For Fair value loss / (gain) on financial assets available for sale 7,642 (966)
54 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 NOTE 27: CASH FLOW INFORMATION CONT’
2015 2014 RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH PROFIT/(LOSS) $ $ Movements in assets and liabilities Trade and other receivables 125,970 (225,504) Other assets (3,024) - Provisions 22,658 (67,691) Provision for income tax 290,989 (21,353) Deferred tax balances 34,592 19,088 Revenue in advance - (68,783) Trade and other payables (301,884) 549,097 Deferred consideration on acquisition (64,351) -
1,066,928 888,095
2015 2014 $ $ Reconciliation to cash at the end of the year Cash at bank 2,426,668 3,942,707
Cash at bank includes $639,700 (2014: $1,053,254) in funds that are held to cover the estimated windup costs of trusts for which GARDA Capital Limited is the responsible entity. For details of loan facilities refer to Note 13. No other facilities are held.
NOTE 28: EVENTS AFTER THE REPORTING PERIOD On 30 June 2015, the GARDA Diversified Property Fund (GDF) which GCL acts as responsible entity for, was admitted on to the official list of the Australian Securities Exchange (ASX) and on 2 July 2015, GDF began trading on the ASX. During July and August 2015, an entity associated with Matthew Madsen lent a further $250,000 to the GARDA TSV Unit Trust, a subsidiary of GCL and the entire loan is now secured by the property in Townsville. The total balance of the loan at reporting date is $500,000. There have been no other matters or circumstances that have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated group, the results of those operations, or the
state of affairs of the consolidated group in future financial periods. For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 55 07 DIRECTOR’S DECLARATION
The directors of GARDA Capital Limited (‘Consolidated Entity’) declare that:
1. The attached financial statements and notes thereto set out on pages 17-55 comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements and give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015 and of its performance for the financial year ended on that date;
2. The Consolidated Entity has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards;
3. In the director’s opinion, there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of directors of GARDA Capital Limited made pursuant to section 295(5) of the Corporations Act 2001.
Mr David Usasz Mr Matthew Madsen Chairman Managing Director
28 September 2015 28 September 2015 For personal use only use personal For
56 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 08 INDEPENDENT AUDITOR’S REPORT
Tel: +61 7 3237 5999 Level 10, 12 Creek St Fax: +61 7 3221 9227 Brisbane QLD 4000 www.bdo.com.au GPO Box 457 Brisbane QLD 4001 Australia
INDEPENDENT AUDITOR’S REPORT
To the members of GARDA Capital Limited
Report on the Financial Report We have audited the accompanying financial report of GARDA Capital Limited, which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
For personal use only use personal For
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 57 08 INDEPENDENT AUDITOR’S REPORT
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of GARDA Capital Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of GARDA Capital Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.
BDO Audit Pty Ltd
P A Gallagher Director
Brisbane, 28 September 2015
For personal use only use personal For
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
58 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 For personal use only use personal For
GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015 | 59 For personal use only use personal For
60 | GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 2015