ANNUAL FINANCIAL REPORT YEAR ENDED 30 JUNE 2015 GARDA CAPITAL LIMITED AND SUBSIDIARIES ABN:

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1 ANNUAL FINANCIAL REPORT YEAR ENDED 30 JUNE GARDA CAPITAL LIMITED AND SUBSIDIARIES ABN:

2 2 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

3 CONTENTS 01 DIRECTORS REPORT 5 02 AUDITOR S INDEPENDENCE DECLARATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS DIRECTORS DECLARATION INDEPENDENT AUDITOR S REPORT 57 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 3

4 CHAIRMAN S LETTER Dear Shareholders, I am pleased to present the GARDA Capital Limited (GARDA or Company) annual report for. 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 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 GARDA Capital Limited 4 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

5 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. The parent entity is a company registered under the Corporations Act 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 Independent Chairman (appointed 21 May ) Experience and Special Responsibilities David has over 32 years experience, including a partner for 20 years with PricewaterhouseCoopers in Australia and Hong Kong and has been involved in tax, merger and acquisition advice, corporate advisory consultancy, specialising in corporate reorganisations. He recently retired as a Non-Executive Director of Cromwell Group having served for over 8 years and is a former Non-Executive Director of Queensland Investment Corporation Ltd. David has also served as a Non-Executive Director and Chairman of Ambre Energy Limited and Ambre Fuels Limited, a Non-Executive Director of URBIS Pty Ltd and he has acted on advisory boards for private companies including Stanbroke Pastoral Company and Carter & Spencer. He holds a Bachelor of Commerce from the University of Queensland, is a Fellow of the Institute of Chartered Accountants and is a Fellow of the Australian Institute of Company Directors. MR MATTHEW MADSEN Managing Director (appointed 22 September 2011) Experience and Special Responsibilities Matthew has almost 20 years experience in the funds management industry, predominantly in director roles. Matthew also has significant property and property finance experience, acting (including in GARDA Capital Group) as a finance intermediary focused on larger construction and property investment funding. As Managing Director and a substantial shareholder (through an associate) of the GARDA Capital Group, Matthew has been responsible for the repositioning of the group. Matthew is also Chair of the Advisory Board for residential land developer, Trask Development Corporation. Matthew holds a Diploma in Financial Services, a Diploma in Financial Markets, is an affiliate member of the Securities Institute of Australia, and a member of the Australian Institute of Company Directors. GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 5

6 CURRENT DIRECTORS CONT MR MARK HALLETT Non-Executive Director (appointed 31 January 2011) Experience and Special Responsibilities Mark has in excess of 30 years industry and legal experience. A qualified solicitor, Mark has an impressive range of diverse industry experiences across all aspects of corporate litigation, restructuring, and commercial property. Mark holds an LLB, and is the Principal and legal practice director of Hallett Legal. Mark has a great depth of skills and experience in business ownership and strategic management. Mark is highly active in managing successful property syndicates for business associates and continues to advise the industry on property investment, legal and corporate restructuring. MR LEYLAN NEEP Executive Director (appointed 31 July ) CFO/Company Secretary (appointed 30 July 2012) Experience and Special Responsibilities Leylan has over 17 years experience in the financial services industry with a strong track record in accounting, finance, and funds management. Prior to his role with the Group, Leylan was Chief Operating Officer at Blue Sky Alternative Investments Limited, and was responsible for all of the operational activities of the group, including accounting, funds administration, information technology, and compliance. Leylan has worked for a broad range of fund managers and financial institutions including positions as an Associate Director at UBS Investment Bank and as an Analyst with GLG Partners, a London based hedge fund. Leylan also has extensive experience in finance roles with several international investment banks. Leylan holds a Bachelor of Commerce from Bond University and is a qualified Certified Practising Accountant (CPA). Leylan is a member of both the Australian Institute of Company Directors and the Governance Institute of Australia. MR PHILIP LEE Non-Executive Director (appointed 21 May ) Experience and Special Responsibilities Philip has over 28 years experience in stockbroking, equities research and corporate finance. He joined Morgans in 1986 and has served as a Authorised Representative of Morgans and Joint Head of Corporate Finance. He currently holds the position of Executive Director Corporate Advisory primarily focussed on raising capital for growing companies. Philip chairs Morgans Risk and Underwriting Committees. Philip holds a Bachelor of Commerce from the University of Canterbury, is a Member of the Australian Institute of Company Directors and is a Senior Fellow of Finsia. Philip has served on the Finsia Regional Council in Queensland for the past 5 years, including 3 years as Chairman. PREVIOUS DIRECTORS MR ROWAN WARD Non-Executive Director (appointed 25 January 2011, resigned 21 October ) Experience and Special Responsibilities Rowan Ward has a strong track record of corporate and trustee board representation with excellent knowledge of legal, accounting and governance responsibilities which makes him an outstanding addition to the company. Rowan enjoys an enviable reputation as a passionate advocate for the protection of the interests of all classes of beneficiaries whether unit holders, policy owners or members of superannuation funds created over a 25 year career with Suncorp. As part of his responsibilities at Suncorp, he was chairman of Suncorp public offer superannuation funds of 2,000m, Chairman of Trustees of the Suncorp Staff Superannuation Fund with net assets in excess of 700m, and advisor to the Suncorp board on prudential matters governing over 2,000m of assets relating to Suncorp Life and Superannuation Limited. In his final 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

7 DIRECTORS REPORT CONT DETAILS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL DIRECTORS TYPE APPOINTED RESIGNED David Usasz Independent Chairman 21 May Matthew Madsen Managing Director 22 September 2011 Mark Hallett Non-Executive Director 31 January 2011 Philip Lee Non-Executive Director 21 May Leylan Neep Executive Director Company Secretary 31 July 30 July 2012 Rowan Ward Non-Executive Director 25 January 2011 October KEY MANAGEMENT PERSONNEL TYPE APPOINTED RESIGNED Lachlan Davidson General Counsel 13 January 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: DIRECTORS ATTENDANCE ELIGIBLE TO ATTEND MEETINGS HELD DURING OFFICE David Usasz Matthew Madsen Mark Hallett Philip Lee Leylan Neep Rowan Ward 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 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 7

8 REVIEW AND RESULTS OF OPERATIONS The net profit after tax of the Group for the period ended 30 June was 483,510 (: 241,820 loss) on revenue generated of 4,947,759 (: 3,479,113). The Company generated a positive operating cash flow of 1,066,928 (: 888,095) for the 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. 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 exposure 1 : 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 ; 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 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 8 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

9 REVIEW AND RESULTS OF OPERATIONS 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 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) 100% 100% 100% 100% 86% 91% 88% 94% 7-19 Lake St 747 Lytton Rd 154 Varsity Pde 142 Benjamin Pl The Circuit 436 Elgar Rd 572 Swan St Portfolio Total 7-19 Lake St 747 Lytton Rd 154 Varsity Pde 142 Benjamin Pl The Circuit 436 Elgar Rd 572 Swan St Portfolio Total PORTFOLIO INCOME (by geography) CAIRNS 7-19 Lake Street, Cairns (37M) Melbourne 33% Brisbane 30% BRISBANE GOLD COAST 747 Lytton Road, Murarrie (13.6M) The Circuit, Airport (20M) 142 Benjamin Place, Lytton (7.95M) 154 Varsity Parade, Varsity Lakes (12M) Gold Coast 7% Cairns 30% PORTFOLIO INCOME (by sector) Industrial 5% MELBOURNE 572 Swan Street, Richmond (31.6M) 436 Elgar Road, Box Hill (18.5M) Commercial 95% LEASE EXPIRY PROFILE (by income) 30% 27% RENT REVIEW PROFILE 30% 26% 26% 5.0% 25% 21% 4.5% 6% 5% 10% 16% 3% 0% 2% 20% 15% 10% 5% 0% 3% 7% 17% 4.0% 3.4% 3.0% 2.5% 2.0% Vacant FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY25 Fixed 4% Fixed 3.75% Fixed 3.5% Fixed 3.25% Fixed 3% CPI at 2.67% * All Property Metrics as at 1st July GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 9

10 PORTFOLIO SUMMARY PROPERTY* PORTFOLIO SUMMARY PROPERTY 7-19 LAKE STREET, CAIRNS, QLD Date acquired: Jun-06 Valuation: 37,000,000 Ownership interest: 100% WALE: 3.4 Tenants: 27 NABERS: 5 star NLA: 14,813m² Car spaces: 254 Occupancy: 86% SWAN STREET, RICHMOND, VIC 436 ELGAR ROAD, 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 NLA: 6,587m² NLA: 5,725m² Car spaces: 178 Car spaces: 197 Occupancy: 100% Occupancy: 100% * All Property Metrics as at 1st July 10 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

11 PORTFOLIO SUMMARY PROPERTY* 747 LYTTON ROAD, MURARRIE, QLD THE CIRCUIT, 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, GOLD COAST, QLD 142 BENJAMIN PLACE, 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 Occupancy: 88% Occupancy: 100% * All Property Metrics as at 1st July GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 11

12 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 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 the Group s current assets exceeded its current liabilities by 350,175 (: 2,794,941) and total assets exceeded total liabilities by 1,076,223 (: 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 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 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. A selective share buy-back offer for GCL shares was approved at the Company s annual general meeting (AGM) held on 28 November. On 2 December 25,702,940 shares were bought back at a price of 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. They are as follows: GARDA Property Finance Pty Ltd Incorporated on 23 January GARDA TSV Unit Trust Trustee was incorporated on the 2 February GARDA REIT Holdings Unit Trust Trustee was incorporated on the 17 June 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. 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

13 REVIEW AND RESULTS OF OPERATIONS CONT EVENTS AFTER THE REPORTING PERIOD On 30 June, 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, GDF began trading on the ASX. During July and August, 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 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, which began trading on the ASX on 2 July, 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. 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 13

14 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 The Group has paid premiums in respect of their officers for liability and legal expenses for the year ended 30 June. 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 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

15 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 Chairman Mr Matthew Madsen Managing Director 28 September 28 September GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 15

16 02 AUDITOR S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 Tel: Fax: Level 10, 12 Creek St Brisbane QLD 4000 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, 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 BDO Audit Pty Ltd ABN is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN , 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. 16 GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE

17 03 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 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 Income tax (expense)/benefit 6 Profit/(loss) for the year after income tax Other comprehensive income for the year, net of tax 892,145 (408,635) 483,510 - (244,085) 2,265 (241,820) - Total comprehensive income for the year attributable to: Owners of GARDA Capital Limited 483,510 (241,820) The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements. GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 17

18 04 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE CURRENT ASSETS NOTE Cash and cash equivalents 27 2,426,668 3,942,707 Trade and other receivables 7 438, ,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, ,333 TOTAL ASSETS 16,631,043 5,009,287 CURRENT LIABILITIES Trade and other payables , ,759 Interest bearing loans and borrowings ,000 - Financial liability held at fair value through profit or loss 14 1,250,000 - Provisions ,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 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

19 05 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE CONTRIBUTED EQUITY RETAINED EARNINGS TOTAL Balance at 1 July ,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 Balance at 30 June 1,387,555 (1,349,708) 37,847 Balance at 1 July 1,387,555 (1,349,708) 37,847 Comprehensive income Profit /(loss) for the year - 483, ,510 Other comprehensive income, net of tax Total comprehensive income for the year - 483, ,510 Transactions with owners in their capacity as owners Share issue 589, ,026 Share buy back (34,160) - (34,160) Balance at 30 June 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. GARDA CAPITAL LIMITED AND SUBSIDIARIES ANNUAL FINANCIAL REPORT 30 JUNE 19

20 06 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE CASH FLOWS FROM OPERATING ACTIVITIES NOTE 000 S 000 S 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 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, ,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 - 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

21 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 Authorisation of financial report The financial report was authorised for issue on 28 September 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 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 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 21

22 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 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 the Consolidated Entity s current assets exceeded its current liabilities by 350,175 (: 2,794,941) and total assets exceeded total liabilities by 1,076,223 (: 37,847). The Consolidated Entity also had operating cash inflows of 1,066,928 (: 888,095) for the year and made a net profit of 483,510 (: 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. 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

23 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). 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 23

24 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 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