Management Fee
1.2% p.a.
In return for the performance of its duties as manager of the investments of the Company, the Manager will receive a management fee of 0.1% of the value of the Portfolio at the close of the last Business Day of each month.
Performance Fee
20% of performance over benchmark (Reserve Bank of Australia Cash Rate) to a maximum of 3% of the value of the Portfolio in any calendar year. All under-performance is carried forward
(a) The Manager will be entitled to be paid and the Company must pay to the Manager a fee in respect of each Performance Calculation Period, subject to paragraphs (b) and (d) of 20% of BA where BA is calculated in accordance with the following formula:
BA = FV- (IV x (I+R))
where:
BA is the base amount to be used in calculating the performance fee outlined above;
FV is the value of the Portfolio before tax calculated on the last Business Day of a Performance Calculation Period;
IV is the value of the Portfolio before tax calculated on the last Business Day of the preceding Performance Calculation Period; and
R is the lower of:
| (i) the average rate published by the Reserve Bank of Australia as the target cash rate over the Performance Calculation Period or its equivalent, as determined by the Board; and |
| (ii) 10% per annum, expressed as a decimal. |
(b) If the value of the Portfolio calculated on the last Business Day of a Performance Calculation Period is less than the value of the Portfolio calculated on the last Business Day of the preceding Performance Calculation Period, no performance fee is payable in respect of that Performance Calculation Period.
(c) If the amount calculated is a negative number, this amount will be carried forward into the next Performance Calculation Period. Any negative performance must be recouped before the Manager is entitled to a further performance fee.
(d) “Performance Calculation Period” is:
| (i) the period from the Listing Date to the end of the then current calendar month; |
| (ii) the period from the first day to the last day of each succeeding calendar month following expiry of the preceding Performance Calculation Period; and |
| (iii) if the term of the Management Agreement expires on a day other than the last day of a calendar month, the last Performance Calculation Period will expire on the termination date. |
(e) In the calculation of the performance fee for a Performance Calculation Period, changes in the value of the Portfolio as a result of the issue of Securities by the Company, capital reductions by the Company and dividend distributions by the Company will be disregarded or adjusted for that Performance Calculation Period in a manner approved by the auditor of the Company at the conclusion of that Performance Calculation Period.
(f) The value of the Portfolio (less dividends, tax, performance fees due and other accruals) at the end of each Performance Calculation Period, provided it exceeds the value of the Portfolio (after dividends, tax, performance fees and other accruals, including the Hurdle Rate accrual) at the end of the previous Performance Calculation Period, will be the basis on which the value of the Portfolio for the following Performance Calculation Period will be calculated.
(g) The maximum performance fee payable to the Manager in any calendar year is 3% of the value of the Portfolio. Any excess performance fee payable to the Manager will not be carried forward to the following or any subsequent calendar years.
(h) The Company must indemnify the Manager against any GST payable in respect of any management fee or performance fee due to the Manager.
Expenses
The Company is liable for and must pay out of the Portfolio or reimburse the Manager the following fees, costs and expenses when properly incurred in connection with the investment and management of the Portfolio or the acquisition, disposal or maintenance of any investment:
(a) fees payable in respect of the Company to any financial market, the ASIC or other regulatory body;
(b) all costs, stamp duties, financial institutions duties, bank account debits tax and legal fees and other duties, taxes, fees, disbursements and expenses, commissions and brokerage incurred by the Company or the Manager in connection with:
| (i) the acquisition and negotiation of any investment or proposed investment; |
| (ii) any sale or proposed sale, transfer, exchange, replacement or other dealing or proposed dealing with or disposal or proposed disposal of any investment; |
| (iii) the receipt of income or other entitlements from the investments of the Portfolio; and |
| (iv) the engagement of a custodian to hold any investment on behalf of the Company; and |
(c) outgoings in relation to the Portfolio such as rates, levies, information and professional services, duties, taxes, marketing costs and insurance premiums.
Notwithstanding the above, the Manager is solely responsible for payment of the fees of any investment manager engaged by the Manager to assist it in undertaking its duties under the Management Agreement.
