A N N U A L R E P O R T J U N E 2 0 2 0
Directors’ Report
The Year That Has Been
Statement of Profit or Loss and Balance Sheet
C O N T E N T S
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Auditors Independence Declaration
and Audit Report
Notes to the Financial Statements
Statement of Changes in Equity
Directors’ Report – Continued
Statement of Cash Flows
Directors’ Declaration
2
BlackWall Limited - June 2020
The Year That Has Been
Dividend
2.1cps
fully franked to be
paid 25 Sep 2020
Revenue
$12.1 million
Performance
and Transaction
Fees
$1.9 million
pa average since
listing
Over
93,000 sqm
of managed space
BlackWall Limited - June 2020
3
S
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art, T
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162 Macquarie Stre
Directors’ Report
Chairman’s Perspective
Tim and Jess have asked me to say something meaningful about the
the same. Banks held their breath for a bit and then started forcing
Fortunately, we believe that BlackWall has a path to follow that we think
opportunities and challenges that we should expect post the 2020
property sales and driving up property yields. Many properties that are
will be relevant in any market. We see our future as being providers of
COVID-19 (COVID) crisis. Their thinking was that I have first-hand
selling today on yields of 5-6% were sold in the GFC on double those
flexible real estate solutions. This goes beyond our WOTSO business
experience going through the crash of ‘87 and the GFC in 2008 so I
yields or more.
as a provider of flexible workspace and extends to all forms of real
must have learned something.
Fast forward to 2020 and we are dealing with a health rather than a
estate usage.
The crash of ‘87 lead to a personally challenging corporate collapse
financial crisis and money is not so much freely available as simply “free”.
Changes in technology have created many new businesses and
but the experience did mean that the GFC in 2008 did not come as a
surprise. The warning signs were flashing red in 2007 and we started
preparing our business to survive the coming storm. We were ready
when it hit but we didn’t have the capital that we would have liked
to take advantage of the crisis. This time we are ready, but we are
presented with a different type of crisis and the financial metrics are
unlike any that we have experienced before.
Leading up to the October ‘87 crash, there was a lot of irrational and
unsustainable business behaviour. Australian and NZ businesspeople
were flying around the world buying up diverse assets that, in many
cases, they knew little about. Money was freely available even though
interest rates were 15-20% pa. It felt like a bubble and it was a bubble.
Following ‘87 I was annoyed with myself for not seeing the crash
coming and for not knowing how to respond when it did. In 2008 we
didn’t have the capital to take advantage of the irrational behaviour
that followed but we did know how to respond and we came out
ahead. In 2020 we have capital and we have strong positive cash flow,
created challenges for older industries. Many need to adapt and
change and we would like BlackWall to be part of that process by
providing flexible building solutions. At its core this means short term
leases, but we want to extend this by providing a bespoke turnkey
product that we can adapt and repurpose as tenant needs change.
but we are presented with an entirely new set of issues.
Through WOTSO we already have a number of situations where
A global health crisis, zero interest rates, zero inflation and rapidly
changing
technology combined with extraordinarily optimistic
we have provided tenants with fully fitted premises complete with
furniture, printers and large screen TV monitors for their exclusive use.
valuations for many tech companies is a combination that has not
We did not intend to have WOTSO back within the fold but with
been seen before. We might be heading toward a V shaped recovery
management changes we realised that WOTSO naturally integrates
once a vaccine or treatment for COVID is developed but it seems likely
into the BlackWall Property Trust (BWR). With the WOTSO business
that we will then run into some sort of tech wreck. Perhaps even a
being part of BWR we increase our flexibility and ability to respond to
For me 2006/7 felt a lot like 1986/87. There was excessive confidence
repeat of the 2000 dot-com bubble?
and once again money was freely available. This time it was toxic
collateralised debt circling the globe and a much greater risk to the
global financial system but, at a micro level, the consequences were
4
BlackWall Limited - June 2020
larger tenant needs. For WOTSO the larger capital base means that
it can mature and grow without the need to raise further capital in a
troubled market.
Growing BWR as a flexible workspace provider will have its challenges.
Valuers and banks have a fixation on WALE (Weighted Average Lease
Expiry) but we believe there is less risk with a greater number of tenants
on flexible lease terms. Importantly there is a trade-off between term,
rent and amenity that BlackWall can benefit from.
Seph Glew
Chairman
194 Varsity Parade, Varsity Lakes, QLD
Review of Operations
Despite the current financial climate, BlackWall Limited (BWF
or the Group) will maintain its final dividend at a fully franked
2.1 cents per share.
Most businesses will attest that COVID has thrown up many challenges over the back half of the
financial year. As property and fund managers, we have had to deal with a broad spectrum of
issues, from ensuring our properties are as safe as possible to supporting our tenants through
tough times; all whilst balancing that effect on our investors. We are proud of the way our team
has responded and whilst there has been some financial effect on BWF, our business is resilient
and we are able to maintain our final fully franked dividend, to be paid on 25 September 2020, at
2.1 cents per share bringing our full year dividend to 4.1 cents per share representing a dividend
yield of just under 12% on a share price of 38 cents per share. BWF remains well placed to take
advantage of opportunities that may present themselves over the coming months.
Our FY20 result is the first full year since the sale of the Bakehouse Quarter and is impacted by the
demerger of WOTSO. It is therefore difficult to compare to prior years. Our profit from continuing
operations is $4.2 million and includes a revaluation of our remaining holding in WOTSO. At
30 June 2020, we are holding our 13% share in WOTSO at an equivalent enterprise value of
$30 million or 37 cents per WOTSO share. This is below the 47.5 cents per share value ascribed
to WOTSO for the purpose of two private placements, which raised $3.5 million shortly before
COVID hit Australia. Our June WOTSO valuation is discussed in detail in Note 11 - Investment
- WOTSO.
In January 2020, WOTSO had an unexpected change of management, meaning BWF returned
as WOTSO’s guiding hand. A subsequent review lead to an announcement in July that, subject
to shareholder and court approval, WOTSO will become a stapled security with BWR. We
believe this restructure will cement WOTSO’s growth trajectory and provide BWR with a strong
future growth strategy. WOTSO becomes a ready-made tenant for future property acquisitions
while allowing BWR to remain flexible so that it can respond to opportunities identified within
its portfolio.
BWF was never the ultimate home for WOTSO and, while not our original plan, we are confident
that the stapling proposal will result in doors opening for both entities. The transaction does not
restrict WOTSO from taking on third party leases and does not preclude a future IPO.
4
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BlackWall Limited - June 2020
5
What We Do
BlackWall generates management, performance and transaction fees from real estate investment structures – the largest of these is our ASX listed REIT,
BWR. The BlackWall portfolio under management currently comprises 16 properties with a total value of just under $400 million.
Transaction Fee Track Record
For the last 8 years we have produced performance and transaction fees and this year has been no different with
performance fees of $600,000 relating to our Penrith fund that comes to an end in December 2020. This brings the annual
average of BWF’s performance and transaction fees since listing in 2011 to just under $2 million per annum.
N e u t r a l Bay, NSW
r e e t
,
5 0 Y e o S t
The Immediate Future
As highlighted by our half year report, our view is that commercial property yields are unsustainably
low, resulting in BWR’s cash reserves being deployed to repay debt and advanced on mortgage
rather than to acquire assets. This has resulted in a temporary reduction in our management fee
income while we are awaiting new opportunities. COVID has further impacted our ability to find
and execute turn around projects but we remain of the view that with uncertainty there will be
opportunity. With BWR’s net gearing at 16% and over $15 million of cash on hand, we are well
placed to move quickly when the next opportunity arises.
The Long Term
We aim to double the size of our property portfolio under management in 5 years to over
$800 million by acquiring new assets and further developing our current assets. BWR will
be the main vehicle for our growth. We will be looking to acquire partially or completely
vacant assets in suburban areas with the end goal of changing the asset to what, in
our eyes, will produce a sustainable and flexible income stream. Our ideal building is
multifaceted at completion, made up of services such as a coffee shop, child care, gym,
WOTSO and a couple of larger commercial office tenants.
We will also be on the lookout for distressed portfolios that we can turn around much like
we did with the Reed Property Trust (now BWR), following the GFC.
If we can successfully achieve the above we will grow our management and performance
fees. As we have always maintained, our strategy to acquire real estate requires patience
but can generate material value gains and sustainable income, especially during periods
of dislocation in financial markets.
Tim Brown and Jessie Glew
Joint Managing Directors
6
BlackWall Limited - June 2020 N e u t r a l Bay, NSW
r e e t
,
5 0 Y e o S t
Financial Statements
Statement of Profit or Loss and other Comprehensive
Income for the year ended 30 June 2020
Balance Sheet at 30 June 2020
Note
2020
$’000
2019
$’000
Restated
2019
$’000
REVENUE
BlackWall
Management fees
Performance and transaction fees
Staff payroll recovery
Government COVID stimulus
Total BlackWall
Investments
Unrealised gain / (loss) - BWR
Unrealised gain - WOTSO
Share of net profit of IndigoBlack
Other investment income
Total Investments
WOTSO Franchise
Franchise income
Total WOTSO Franchise
TOTAL REVENUE
EXPENSES
Operating expenses
Franchise expenses
Depreciation - right of use asset
Depreciation - property, plant and equipment
Finance costs - lease liability interest
Finance costs - interest expense
Other investment expenses
TOTAL EXPENSES
Profit Before Income Tax From Continuing Operations
Income tax expense
Profit After Tax From Continuing Operations
Discontinued operation - WOTSO profit/(loss)
Discontinued operation - Kirela profit/(loss)
Profit for the Year
Other comprehensive income
Profit and Other Comprehensive Income
Profit and Other Comprehensive Income Attributable to:
Owners of the Company
Non-controlling Interests
Earnings Per Share
Profit Attributable to the Ordinary Equity Holders:
Basic and diluted earnings per share
Basic and diluted earnings per share (continuing operations)
Note
4
4
2
5
5
25
6
3
7
3
22
12
22
22
8
9
17
18
2020
$’000
4,725
598
737
225
6,285
1,608
2,700
72
15
4,395
1,434
1,434
12,114
(4,526)
(694)
(782)
(249)
(103)
(8)
-
(6,362)
5,752
(1,535)
4,217
1,195
(876)
4,536
-
4,536
4,536
-
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Performance fee receivable - Penrith
Provision for tax receivable
Total Current Assets
Non-current Assets
Investment - BWR
Investment - WOTSO
Investment using equity method - IndigoBlack
Right of use lease asset
Property, plant and equipment
Performance fee receivable - Penrith
WOTSO demerged assets
Total Non-current Assets
5,845
2,424
1,311
-
9,580
(88)
-
-
658
570
-
-
10,150
TOTAL ASSETS
(5,218)
-
-
(74)
-
-
(477)
(5,769)
4,381
(981)
3,400
146
(423)
3,123
-
3,123
3,189
(66)
LIABILITIES
Current Liabilities
Trade and other payables
Right of use lease liability
Provision for employee benefits
Deferred rent payable - WOTSO Franchise
Tenant deposits - WOTSO Franchise
Provision for tax payable
Interest rate hedge
Total Current Liabilities
Non-current Liabilities
Deferred tax liabilities
Right of use lease liability
Provision for employee benefits
Interest rate hedge
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Retained earnings
TOTAL EQUITY
20
20
7.2 cents
6.7 cents
5.2 cents
5.5 cents
10
4
16
11
25
22
12
4
13
22
14
3
16
15
22
14
2,724
548
598
354
4,224
16,313
3,893
72
2,308
725
-
-
23,311
27,535
517
624
335
62
20
-
-
1,558
2,373
1,699
96
-
4,168
5,726
11,493
3,479
-
-
14,972
15,509
-
-
-
246
433
6,207
22,395
37,367
1,962
-
469
-
150
778
724
4,083
1,351
-
84
341
1,776
5,859
21,809
31,508
14,080
73
7,656
21,809
17,555
73
13,880
31,508
7
BlackWall Limited - June 2020 Statement of Cash Flows for the year ended 30 June 2020
Reconciliation of Operating Cash Flows
Profit for the Year
Noncash Flows in Profit:
Depreciation on property, plant and equipment
Unrealised gains
Equity accounted profit - IndigoBlack
Discontinued operation
Performance fee accrual - Penrith
Rent waiver received - WOTSO Franchise
Depreciation on right of use lease asset
Interest expense on lease liability
Net gain on investments
Changes in Operating Assets and Liabilities:
Decrease / (increase) in trade and other receivables
Increase / (decrease) in deferred tax liabilities
Increase / (decrease) in trade and other payables
Increase / (decrease) in income taxes payable
Increase / (decrease) in provisions
Net Cash Flows from Operating Activities (Excluding WOTSO Demerger)
2020
$’000
4,536
249
(4,308)
(72)
(2,134)
(165)
(62)
782
103
-
2,586
1,588
(264)
(1,132)
(39)
1,668
2019
$’000
2,911
101
-
-
-
-
-
-
-
(4)
(3,068)
(253)
(374)
(2,035)
(181)
(2,903)
Cash Flows From Operating Activities (Excluding WOTSO Demerger)
BWF Management receipts
WOTSO Franchise receipts
Payroll recovery receipts
Government COVID stimulus
Bank interest received
Payments to suppliers and employees
Interest paid
Income tax paid
WOTSO Franchise expenses
Investment Income receipts
Fortitude Valley outgoings
Net Cash Flows From Operating Activities (Excluding WOTSO Demerger)
Cash Flows From Investing Activities (Excluding WOTSO Demerger)
Returns of capital from BWR and other investments
Investment in WOTSO
Payment for BWF property, plant and equipment
Loans repaid
Cash leaving group on disposal of Kirela
Proceeds from sale of Pyrmont Bridge Trust units
Proceeds from sale of Fortitude Valley
Net cash entering group on acquisition of Kirela
Proceeds from sale of Pelathon Management shares
Advance to WOTSO
Payment for BWR units
Cash leaving group on deconsolidation of Singapore
Payment for Fortitude Valley property fit-out
Net Cash Flows From Investing Activities (Excluding WOTSO Demerger)
Cash Flows From Financing Activities (Excluding WOTSO Demerger)
Proceeds from exercise of options
Dividends paid to shareholders
Repayment of right of use leases
Repayment of NAB borrowings on Brisbane property
Net Cash Flows From Financing Activities (Excluding WOTSO Demerger)
Net Increase / (Decrease) in Cash Held (Excluding WOTSO Demerger)
Reconciliation Of Cash Balances (Excluding WOTSO Demerger):
Cash and cash equivalents at the beginning of the year
Less WOTSO demerger cash balances
Beginning Cash Balances
Net increase / (decrease) in cash held
Cash at End of the Period (Excluding WOTSO Demerger)
Cash Flow Information – WOTSO Demerger:
Net cash flows from / (used in) operating activities
Net cash flows from / (used in) investing activities
Net cash flows from / (used in) financing activities
Net Increase / (Decrease) in Cash Held - WOTSO Demerger
Reconciliation of Cash Balances - WOTSO Demerger:
Cash at the beginning of the year
Net increase / (decrease) in cash held
Cash at End of the Period (WOTSO Demerger)
All items inclusive of GST where applicable
2020
$’000
8,303
1,510
737
165
8
(5,831)
(1,459)
(1,079)
(686)
-
-
1,668
804
(6,852)
(728)
(202)
(13)
-
-
-
-
-
-
-
-
(6,991)
-
(2,588)
(808)
-
(3,396)
(8,719)
11,493
(50)
11,443
(8,719)
2,724
1,443
(5,771)
5,305
977
50
977
1,027
2019
$’000
5,588
-
1,436
-
1
(6,730)
(121)
(3,267)
-
315
(125)
(2,903)
1,122
-
(70)
-
-
10,360
4,980
1,586
108
(932)
(187)
(16)
(7)
16,944
1,237
(2,520)
-
(2,100)
(3,383)
10,658
923
(138)
785
10,658
11,443
1,549
(1,637)
-
(88)
138
(88)
50
8
BlackWall Limited - June 2020 Statement of Changes in Equity for the year ended 30 June 2020
No. of Shares on
Issue
Issued Capital
$’000
Retained
Earnings
$’000
Reserves
$’000
Attributable to
Owners of the Parent
$’000
Non-controlling
Interests
$’000
Balance at 1 July 2019
Profit for the year
Other comprehensive income
Total Comprehensive Income for the Year
Transactions with Owners in Their Capacity as Owners:
Dividend paid
Demerger of WOTSO
Issue of shares
Balance at 30 June 2020
Balance at 1 July 2018
Profit for the year
Other comprehensive income
Total Comprehensive Income for the Year
Transactions with Owners in Their Capacity as Owners:
Dividend paid
Foreign currency reserve
Issue of shares – exercise of employee share options at 60 cents per share
Share issue expenses
Deconsolidation of subsidiary
63,115,445
-
-
-
-
-
26,000
26,000
63,141,445
61,040,445
-
-
-
-
-
2,075,000
-
-
2,075,000
17,555
-
-
-
-
(3,498)
23
(3,475)
14,080
16,318
-
-
-
-
-
1,245
(8)
-
1,237
Balance at 30 June 2019
63,115,445
17,555
13,880
4,536
-
4,536
(2,588)
(8,172)
-
(10,760)
7,656
13,277
3,189
-
3,189
(2,520)
-
-
-
(66)
(2,586)
13,880
73
-
-
-
-
-
-
-
73
85
-
-
-
-
(1)
-
-
(11)
(12)
73
31,508
4,536
-
4,536
(2,588)
(11,670)
23
(14,235)
21,809
29,680
3,189
-
3,189
(2,520)
(1)
1,245
(8)
(77)
(1,361)
31,508
-
-
-
-
-
-
-
-
-
(148)
(66)
-
(66)
-
-
-
-
214
214
-
Total
$’000
31,508
4,536
-
4,536
(2,588)
(11,670)
23
(14,235)
21,809
29,532
3,123
-
3,123
(2,520)
(1)
1,245
(8)
137
(1,147)
31,508
Share Capital and Reserves
(a) Summary Table
63,141,445 ordinary shares (June 2019: 63,115,445)
Total
2020
$’000
14,080
2019
$’000
17,555
(c) Reserves
Share options reserve
14,080
17,555
Total
2020
$’000
73
73
2019
$’000
73
73
(b) Movement in Shares on Issue
At the beginning of reporting period
Issue of shares to employees
Issue of shares – employee share options at 60 cents per share
At Reporting Date
No.
63,115,445
26,000
-
No.
61,040,445
-
2,075,000
63,141,445
63,115,445
No further shares have been issued since 30 June 2020. No amounts are unpaid on any of the shares. Ordinary
shares participate in dividends. At shareholders’ meetings, each ordinary share is entitled to one vote when a poll
is called, otherwise each shareholder has one vote on a show of hands. All shares are fully paid.
The following options are on issue as at the date of this report:
Options
Expiry date
Exercise price
Number
Employee and Directors options
28 February 2021
$1.00
4,500,000
9
BlackWall Limited - June 2020 Notes to the Financial Statements
1. Segment Information ($’000)
The segment information for the Group is as follows. For information on segment reporting, refer to the Statement of Significant Accounting Policies for more details.
Income
Gains / (Losses)
Total
Revenue
Expenses
EBITDA
Interest
and Depn
Pre-tax
6,285
87
1,434
-
7,806
4,070
1,973
13,849
9,580
658
-
10,238
10,196
-
20,434
-
4,308
-
-
4,308
-
1,065
5,373
-
(88)
-
(88)
-
-
(88)
6,285
4,395
1,434
-
12,114
4,070
3,038
19,222
9,580
570
-
10,150
10,196
-
20,346
(3,075)
(527)
(694)
(924)
(5,220)
(2,626)
(2,170)
(10,016)
(4,522)
(57)
(967)
(5,546)
(8,935)
(423)
(14,904)
3,210
3,868
740
(924)
6,894
1,444
868
9,206
5,058
513
(967)
4,604
1,262
(423)
5,440
(196)
(8)
(938)
-
(1,142)
(5,157)
(1,451)
(7,750)
(223)
-
-
(223)
(724)
-
(947)
3,014
3,860
(198)
(924)
5,752
(3,713)
(583)
1,456
4,835
513
(967)
4,381
537
(423)
4,495
Assets
1,140
23,487
2,554
354
27,535
-
27,535
2020
Liabilities
(814)
(2,958)
(1,954)
-
(5,726)
-
(5,726)
Net Assets
Assets
Liabilities Net Assets
2019
326
20,529
600
354
21,809
-
21,809
1,663
29,036
-
-
30,699
6,668
37,367
(296)
(3,707)
-
(778)
(4,781)
(1,078)
(5,859)
1,367
25,329
-
(778)
25,918
5,590
31,508
Profit or Loss 2020
BlackWall
Investments
WOTSO Franchise
Corporate
Continuing Operations
WOTSO demerging
Kirela discontinued
TOTAL Operations
Profit or Loss 2019
BlackWall
Investments
Corporate
Continuing Operations
WOTSO demerging
Kirela discontinued
TOTAL Operations
Balance Sheet
BlackWall
Investments
WOTSO Franchise
Corporate
WOTSO demerging
Consolidated
10
BlackWall Limited - June 2020 2. COVID Impact
BWF has been impacted by COVID in a number of ways.
BWF Management Fees - Property management fees are charged by BWF on a % of gross property income.
Most of the properties that BWF manages have provided some form of rent relief to their tenants through the
COVID period either through the waivers of rent or rent deferrals. BWF has adopted the mandatory code of
conduct between landlords and tenants that was introduced by the federal government in April. This has resulted
in a reduction of property management fees for the June quarter of $35,000. This reduction in income adjusts
BWF (as manager of BlackWall Penrith Fund No.3) is entitled to a fee equating to 30% of the property value in
excess of $16.5 million (the property value when the fund was established) plus any capital expenditure. The
Penrith property was independently valued in June 2020 at $21.5 million with a resulting fee of $1,031,000
due to be paid when the fund terminates in December 2020. An amount of $433,000 accrued in FY18 was
paid in the current financial year, and the remainder of $598,000 has been accrued in the current financial year
given that there are only a few months until the fund terminates. In the unlikely event of further market changes
unitholders’ exit unit price will be adjusted.
Rental waivers, provided to tenants of managed properties as a result of COVID, had a $35,000 unfavourable
as the rent relief changes and has improved since year end. There has also been less leasing transactions which
impact to property management fees.
has meant a reduction in leasing fees in the second half of the year.
WOTSO Franchise Income - All WOTSO sites including the Neutral Bay franchise were effected by COVID.
Members were allowed to suspend their membership from mid March to 30 June without penalty. For the
Neutral Bay franchise this resulted in a reduction in average revenue of around 60% for these months. Members
5. Net Unrealised Gains on Investments ($’000)
are now returning to the site and revenue has recovered to 90% of pre-COVID numbers. In line with the
requirements of the mandatory code of conduct regarding commercial leasing, the WOTSO Franchise received
Unrealised gain / (loss) - BWR
Unrealised gain - WOTSO
a rent waiver of $62,000 with a further $62,000 rent deferral in the reporting period. The deferred rent payable
Total
2020
1,608
2,700
4,308
2019
(88)
-
(88)
will be repaid over the remaining 5 years of the lease.
BWF qualified for the government’s JobKeeper and cash flow boost programmes. This resulted in revenue of
Further details regarding unrealised gain - WOTSO can be found in Note 11 – Investment - WOTSO.
6. Other Investment Income ($’000)
2020
2019
$243,000 being received to 30 June 2020.
3. WOTSO Franchise
BWF has taken over the management of the WOTSO site at its Neutral Bay head office in Sydney. WOTSO is
the Franchisor, and a new BWF subsidiary (BWF Franchise Pty Ltd) is the Franchisee.
BWF pays a franchise fee to WOTSO - currently set at 8% of gross rental income. The franchise fee paid to
WOTSO allows for the Franchisee to access branding, website, management systems, marketing, financial
analysis, fit-out specifications, and staff training provided or facilitated by WOTSO. BWF records the site
Total
revenue, and operating and payroll costs in its own financial records as disclosed on the face of the Profit or
Loss and the franchise is now disclosed as a separate segment in the segment report.
Interest income
Other income
Distributions from Pyrmont Bridge Trust
Realised gain - Fortitude Valley
Rental income from property
4. Management and Performance Fees ($’000)
Fund management fees
Property management fees
Project management fees
Leasing fees
Expense recovery and other fees
Management Fees Total
Performance fee - Penrith (details below)
Transaction fee - BWR
Performance and Transaction Fees Total
2020
3,096
747
226
310
346
4,725
598
-
598
2019
2,931
1,266
374
765
509
5,845
-
2,424
2,424
7. Operating Expenses ($’000)
BWF employee and consultant expenses
BWF operating expense
Bakehouse staff termination expense
BWF rent expense
BWF Expenses
Rent expense is now included under right of use asset depreciation and lease liability interest charges as
detailed in Note 22 - Adoption of AASB 16 Leases.
11
8
7
-
-
-
15
2020
3,369
1,157
-
-
4,526
1
2
315
300
40
658
2019
3,006
1,142
924
146
5,218
BlackWall Limited - June 2020 8. Other Investment Expenses ($’000)
11. Investment - WOTSO
Property outgoings
Property depreciation
Property finance costs
Loss on sale of investments
Total
9. Income Tax Expense ($’000)
Current tax
Deferred tax
Total
Prima Facie Tax Payable on Profit from Ordinary Activities
Before Income Tax at 27.5% (2019: 27.5%)
Add / (Less) Tax Effect of:
Non-deductible items
Deductible items
Change in tax rate - restatement of deferred tax balances
Capital losses
Franking credits
Financial assets
Under / (over) provision in prior years
Total
2020
-
-
-
-
-
2020
513
1,022
1,535
1,582
14
(17)
(137)
-
-
-
93
1,535
2019
(166)
(27)
(122)
(162)
(477)
2019
1,257
(276)
981
1,205
4
(9)
-
47
115
(381)
-
981
10. Current Assets – Trade and Other Receivables ($’000)
Trade Receivables:
Related parties – BlackWall Property Trust
Related parties – Pyrmont Bridge Property
Related parties – various
Other parties
Total Trade Receivables
Other receivables
Total
2020
2019
136
19
292
91
538
10
548
2,750
113
242
154
3,259
220
3,479
WOTSO demerged from the group on 8 January 2020 (refer to Note 17 - Discontinued Operations). BWF
continues to own 13% of WOTSO at reporting date. This has decreased from the 14% at demerger due to two
private placements completed in January 2020.
Accounting Standard AASB 9 Financial Instruments requires financial assets to be fairly valued at each reporting
date with the movement in asset value reflected in the Statement of Profit or Loss. WOTSO is an unlisted entity
and its shares are not traded on an active market.
After the demerger, WOTSO made two private placements at 47.5 cents per share, indicating a pre-money
valuation of $35 million.
Since then, the restrictions created by COVID have had an effect on WOTSO and the broader market. Revenue
for WOTSO was down, on average, 60% for the months of April to June. As of August, it has recovered to close
to 90% of its pre-COVID revenue.
At June, a revaluation has been undertaken that reflects some of these changes and the subsequent recovery
as well as the renegotiation of some leases which are close to being finalised. WOTSO has been valued using a
discounted cash flow model, allowing more recent data to be utilised to determine its fair value. The model has
relied on several key assumptions, as follows:
• forecast cash flows for the next 5 years to June 2025 have been discounted using a discount rate of
11.2%. This discount rate takes into account management’s estimate of WOTSO’s weighted average
cost of capital, based on the risk-free rate and the volatility of the share price relative to market
movements;
• although WOTSO has consistently opened 3 new sites per year in the last few years, only current
operations have been included in the valuation; with no growth from new sites forecast within the five
year period. The uncertainty over the timing and extent of growth through new sites was considered
to be too significant to value accurately;
• all sites are forecast to continue growing to reach maturity by June 2022. Maturity is defined as
achieving 85% of the target revenue of a site; where the target revenue is calculated as the target
desk price times the total number of desks;
• monthly target desk prices range from $200 (for a flexidesk in Hobart) to $800 (for an office desk in
Bondi or Manly) and are considered competitive rates within each site’s operating environment; and
• the economy will continue to recover over the next 2 years allowing for WOTSO sites to continue
growing revenue. A second COVID lockdown that affects our sites would likely have a material impact
on this valuation.
The $30 million discounted cash flow valuation is equivalent to a 5.2 x EBITDA multiple (adjusted for AASB 16
Leases), based on FY21 projections. This was found to be comparable with other high growth businesses
within the sector. It equates to a value of 37cents per WOTSO share.
Further information relating to trade and other receivables to related parties is set out in Note 27 - Related Party
Transactions. None of the receivables were impaired as at 30 June 2020 (2019: $nil).
The BWF holding of 13% is thus valued (unadjusted for a minority interest discount) at $3.9 million. This is an
increase of $2.7 million above the value recognised at demerger according to the ATO methodology.
12
BlackWall Limited - June 2020 Sensitivity
The below sensitivity analysis considers several key assumptions within the discounted cash flow and the
impact of their movement on the fair value of BWF’s investment in WOTSO.
Assumption
Maturity revenue
as % of target revenue
Maturity date
Discount rate
Used in
Valuation
Sensitivity
85%
80%
Impact
to BWF
$’000
(480)
Jun’22
11.2%
Dec’21
9.5%
940
180
Sensitivity
90%
Dec’22
12.9%
Impact
to BWF
$’000
480
(290)
(160)
On 24 July 2020 the Directors released an ASX announcement indicating that they have resolved to proceed
with a transaction whereby BWR would acquire WOTSO to form a stapled security structure.
12. Non-current Assets – Property, Plant and Equipment ($’000)
Continuing Operations:
Continuing Operations:
At cost
Less accumulated depreciation
Written Down Value
WOTSO:
At cost
Less accumulated depreciation
Written Down Value
Total
2020
Carrying amount at the beginning of year
Additions
Depreciation expense
Disposal due to demerger
Carrying Amount at the End of Year
2019
Carrying amount at the beginning of year
Additions
Depreciation expense
Carrying Amount at the End of Year
2020
2,138
(1,413)
725
-
-
-
725
WOTSO
Continuing
Operations
5,232
-
-
(5,232)
-
3,860
2,096
(724)
5,232
246
728
(249)
-
725
250
70
(74)
246
2019
846
(600)
246
7,274
(2,042)
5,232
5,478
Total
5,478
728
(249)
(5,232)
725
4,110
2,166
(798)
5,478
13. Current Liabilities – Trade and Other Payables ($’000)
Trade Payables:
Related parties
Other parties
Total Trade Payables
Sundry payables and accrued expenses
Income received in advance from WOTSO tenants
Total
2020
2019
1
439
440
77
-
517
219
1,445
1,664
239
59
1,962
Further information relating to trade payables from related parties is set out in Note 27 - Related Party Transactions.
14. Current and Non-current Liabilities – Provisions ($’000)
Current – employee benefits
Non-current – employee benefits
Total Provisions
Balance at the beginning of year
Net additional provision increase (decrease)
Balance at the End of Year
2020
335
96
431
553
(122)
431
2019
469
84
553
651
(98)
553
The number of BWF employees as at 30 June 2020 was 30 (2019: 64). The reduction being a result of WOTSO
demerging.
15. Non-current Liabilities – Deferred Tax Liabilities ($’000)
Deferred Tax Liabilities / (Assets) Balance Comprises:
Financial assets
Provision for employee benefits
Accrued expenses
Total
Movements:
Balance at the beginning of year
Charged to the profit and loss
Balance at the End of Year
2020
2019
2,537
(112)
(52)
2,373
1,351
1,022
2,373
1,546
(151)
(44)
1,351
1,627
(276)
1,351
13
BlackWall Limited - June 2020 16. Provision for Tax Payable ($’000)
(b) Profit or Loss Information – WOTSO Demerger
Payable at the beginning of year
Current year tax liability
Payments made
Under / (over) provision in prior years
(Refund) Payable at the End of Year
17. Discontinued Operations ($’000)
2020
778
-
(1,235)
103
(354)
2019
2,813
1,492
(3,519)
(8)
778
REVENUE
Revenue from members
Franchise fees
Total Revenue
EXPENSES
Staff costs
Rent expenses
Operating expenses
In the current financial year two separate subsidiaries of the Group have been discontinued. Firstly, WOTSO was
Total Operating Expenses
demerged on 8 January 2020, and then separately the Kirela Development Unit Trust (Kirela) subsidiary was
Operating Profit
discontinued on 30 June 2020. The summarised net impact in the Statement of Profit or Loss is set out below:
Gain on demerger of WOTSO after tax
(Loss) on disposal of Kirela after tax
Total Gain After Tax from Discontinued Operations
Other Expenses
Depreciation on fit-out
Depreciation on right of use lease assets
Interest on right of use lease liabilities
Impairment of goodwill – Bondi
Equity accounting and discontinued operations
1,195
(876)
319
Detailed notes and disclosures regarding the WOTSO demerger have been set out in the note below.
Total Other Expenses
Detailed notes and disclosures on the Kirela disposal have been set out in Note 18 - Disposal of Subsidiary.
WOTSO Demerger
(a) Description
On 20 December 2019 BWF shareholders approved the demerger of WOTSO. The completion of the demerger
was successfully completed on 8 January 2020. The demerger was detailed in the Explanatory Statement
released to the ASX on 19 November 2019. The demerger involved a capital reduction and distribution satisfied
by an in-specie distribution of 86% of the shares in WOTSO Limited. BWF retained a 14% interest in WOTSO
on 8 January 2020.
As required by AASB 5 Discontinued Operations, the activities of WOTSO have been reflected separately as a
discontinued operation in the Statement of Profit or Loss with comparatives restated.
(Loss) / Profit Before Income Tax
Income tax
(Loss) / Profit From Demerger Operations
Intercompany eliminations (fees and income tax)
Consolidated (Loss) / Profit
To 8 January 2020
3,767
303
4,070
(1,362)
-
(1,264)
(2,626)
1,444
(421)
(3,602)
(972)
(162)
-
(5,157)
(3,713)
745
(2,968)
225
(2,743)
14
BlackWall Limited - June 2020 (c) Assets and Liabilities Information – WOTSO Demerger
The following are the WOTSO demerger assets and liabilities at the date of demerger:
(d) Cash Flow Information – WOTSO Demerger
The cash flows from the WOTSO demerger contained in the Group cash flow statement until date of demerger are
Assets
Cash and cash equivalents
Receivables and other assets
Loan to JV (Malaysia)
Rental deposits for leased sites
Deferred tax asset
Property, plant and equipment
Right of use lease asset
WOTSO Demerger Assets
Intercompany eliminations
WOTSO Consolidated Assets
Liabilities
Payables and other liabilities
Provisions for employee benefits
Loan from BWR
Right of use lease liability
WOTSO Demerger Liabilities
Intercompany eliminations
WOTSO Consolidated Liabilities
WOTSO Demerger Net Assets
WOTSO Consolidated Net Assets
At 8 January 2020
as follows:
To 8 January 2020
1,027
138
371
528
768
12,750
48,850
64,432
93
64,525
2,925
210
600
51,284
55,019
(133)
54,886
9,413
9,639
Cash Flows from Operating Activities
Tenant receipts
Franchise fees
Operating expenses
Net Cash Inflow / (Outflow) from Operating Activities
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Cash acquired on consolidation of Bondi
Loan to JV (Malaysia)
Net Cash Inflow / (Outflow) from Investing Activities
Cash Flows from Financing Activities
Borrowings from BWR
Proceeds from issue of shares to BWF
Repayment of leases
Net Cash Inflow / (Outflow) from Financing Activities
Net Cash Inflow / (Outflow)
3,976
333
(2,866)
1,443
(5,722)
17
(66)
(5,771)
600
6,852
(2,147)
5,305
977
(e) Completion of WOTSO Demerger
The Directors announced the completion of the demerger to the ASX on 14 January 2020. The effective date
of the demerger was 8 January 2020.
BWF distributed approximately 86% of the shares in WOTSO to BWF shareholders, with the remaining 14%
retained by BWF. WOTSO was treated as a separate reportable segment until demerger date, and is now held
as a financial asset. The remaining 86% interest in WOTSO represents a demerger distribution.
The ATO in its class ruling on the demerger apportioned the reduction in BWF’s share capital based on the
10 day pre and post demerger Volume Weighted Average Price (VWAP) of BWF shares on the ASX. BWF has
adopted the ATO methodology in accounting for the demerger.
This distribution was apportioned between a capital distribution (through share capital) and a demerger dividend
(through retained earnings). The reduction of share capital is calculated as 20% of the BWF Share Capital (the
proportion of BWF Share Capital attributable to the WOTSO distribution). The remaining value of the distribution
is apportioned to retained earnings.
15
BlackWall Limited - June 2020 The ATO methodology resulted in the following:
The following were the results of Kirela operations to the date of disposal:
Fair Value of WOTSO at Demerger
Capital distribution
Demerger dividend
Total Demerged (86%)
Retained investment in WOTSO (14%)
Total Fair Value of WOTSO Distribution
Gain on Demerger
Fair value of WOTSO at demerger
Less: carrying value of assets at demerger
Less: operating losses to date of demerger
Less: write down of investment
Less: demerger costs
Add: income tax
Net Gain on Demerger
Treatment in
Financial Statements
Reduction in share capital
Reduction in retained earnings
Financial asset (investment)
refer note (c) above
refer note (b) above
3,498
8,172
11,670
1,900
13,570
13,570
(9,639)
(2,743)
(707)
(168)
882
1,195
Revenue
Operating expenses
(Loss) Before Tax
Taxation
(Loss) After Tax
19. Dividends ($’000)
Fully franked dividends paid to members during the financial year were as follows:
2019 final dividend of 2.1 cents paid on 9 October 2019
(2018 final: 2.1 cents)
2020 interim dividend of 2.0 cents paid on 20 March 2020
(2019 interim: 2.0 cents)
2020
3,038
(3,621)
(583)
(293)
(876)
2020
1,325
1,263
2019
-
(423)
(423)
-
(423)
2019
1,291
1,229
Total
2,588
2,520
18. Disposal of Subsidiary ($’000)
In addition, the Board has declared a final fully franked dividend of 2.1 cents per share to be paid on
25 September 2020.
Kirela
On 30 June 2020, the Group disposed of its entire holding in Kirela to WOTSO Limited. Kirela is the entity
that previously owned the Bakehouse Quarter property in North Strathfield. Cash proceeds of $50,000 were
received for the disposal of Kirela.
Franking credits available for the subsequent periods based on a tax
rate of 26.0% (2019: 27.5%)
2020
3,032
2019
2,794
The above amounts represent the balance of the franking account as at the end of the reporting period,
Kirela was disposed of as its assets and liabilities relate to the lease that WOTSO holds at the Bakehouse
adjusted for:
Quarter. WOTSO was therefore the natural owner of the entity.
Assets and liabilities sold were as follows:
Cash and cash equivalents
Receivables and other assets
Payables and other liabilities
Loan payables
Net Identifiable Assets Sold
Add: gain on disposal
Net Cash Proceeds Received
16
• franking credits that will arise from the payment of the amount of the provision for income tax;
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting
date; and
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
2020
63
985
(209)
(789)
50
-
50
BlackWall Limited - June 2020 20. Earnings Per Share
Basic and diluted earnings per share
Basic and diluted earnings per share (continuing)
Calculated as Follows:
Profit attributable to the owners of the Group
Profit attributable to the owners of the Group (continuing)
Weighted average number of shares for basic EPS
Weighted average number of shares for diluted EPS
21. Auditor’s Remuneration ($’000)
Remuneration of ESV for:
Audit and assurance services
Taxation services
Other services
Total
67
44
5
116
62
9
-
71
22. Adoption of AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019 using the modified retrospective approach. BWF Franchise
Pty Ltd (a wholly owned subsidiary of BWF) leases part of the office building located at 50 Yeo Street, Neutral
Bay, NSW housing the WOTSO Franchise under a five year lease term. BWF has a separate lease for its head
office in the same building of around 150 sqm.
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at
the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate
as of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on
1 July 2019 was 3.75%.
Right of use assets for property leases were measured at the amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at
30 June 2019. There were no onerous lease contracts that would have required an adjustment to the right of
use assets at the date of initial application.
2020
7.2 cents
6.7 cents
2019
5.2 cents
5.5 cents
$4,536,000
$4,217,000
63,129,692
63,129,692
$3,189,000
$3,400,000
61,370,171
61,370,171
Practical Expedients Applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the
standard:
• reliance on previous assessments on whether leases are onerous; and
• the exclusion of initial direct costs for the measurement of the right of use asset at the date of initial
application.
BWF’s Leasing Activities and Accounting Methodology
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions. Right of use assets are measured at cost comprising the following:
2020
2019
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• make-good costs as prescribed in the relevant lease.
The following changes have been made to the financial statements for BWF’s continuing operations:
• on initial adoption of AASB 16, on 1 July 2019, BWF recognised right of use lease assets and lease
liabilities of $3,090,000 relating to property leases;
• the lease liability was recognised as the present value of all remaining lease payments, discounted
using the lessee’s incremental borrowing rate of 3.75%; and
• there were no prepaid or accrued lease payments at this date that required an adjustment to the
associated right of use assets.
The impact on reporting in the Profit or Loss is illustrated below:
Profit or Loss
Revenue
Rent expense
Other operating expenses
EBITDA
Depreciation - right of use asset
Depreciation - property, plant and equipment
EBIT
Finance cost - lease liability interest
Finance cost - interest expense
Profit Before Income Tax
Normalised
Pre-AASB 16
AASB 16
Impact
Per Financial
Statements
12,114
(932)
(5,220)
5,962
-
(249)
5,713
-
(8)
5,705
-
932
-
932
(782)
-
150
(103)
-
47
12,114
-
(5,220)
6,894
(782)
(249)
5,863
(103)
(8)
5,752
As shown above EBITDA is higher by an amount of $932,000 after the implementation of AASB 16; however
overall impact to profit before income tax is $47,000 due to a difference in the classification of lease expenses.
17
BlackWall Limited - June 2020 23. Contingencies
26. Controlled Entities
The Group had no contingent assets or liabilities at 30 June 2020 (2019: $nil).
24. Subsequent Events
On 24 July 2020 the BWF directors released an announcement to the ASX outlining a proposal for BWR to
acquire the WOTSO WorkSpace business and certain real estate assets currently held by Pelorus Private Equity
Limited. This will take the form of a stapled security structure. The transaction will require various shareholder
and court approvals and is expected to complete early in the new calendar year.
The impact of the COVID pandemic is ongoing. It is not practical to estimate the potential impact, positive
or negative, after the reporting date on the various revenue stream and the performance of the Group. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
The Board has declared a final fully franked dividend of 2.1 cents per share to be paid on 25 September 2020.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
Name
Parent Entity:
BlackWall Limited
Subsidiaries of Parent Entity:
BlackWall Management Services Pty Ltd
BlackWall Fund Services Limited
BWF Franchise Pty Ltd
APG Asset Management Pty Ltd
BlackWall Management (NZ) Ltd
Bakehouse Management Pty Ltd
WOTSO Workspace Pty Ltd
WOTSO Chermside Pty Ltd
WOTSO S.E.A. Pty Ltd
WOTSO Coffee Pty Ltd
Kirela Development Unit Trust
Country of
incorporation
Percentage owned
2019
2020
%
%
Australia
n/a
n/a
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
99.99
-
-
-
-
-
100
100
-
100
100
99.99
100
100
100
100
100
25. Equity Accounted Investments ($’000)
27. Related Party Transactions ($’000)
IndigoBlack Constructions Pty Ltd is a start up construction company that BWF owns 25% of. The entity had
not earned material profits until this year. The investment has resulted in a $72,000 share of associates profit
being taken up in the current year.
(a) Related Parties, Associates, Managed Funds
In these financial statements, related parties are parties as defined by AASB 124 Related Party Disclosures
rather than the definition of related parties under the Corporations Act 2001 and ASX Listing Rules.
Associates
Interests held in associates by the Group are set out in Note 25 - Equity Accounted Investments.
Managed Funds
The Group holds investments in a number of property funds for which it acts as either manager or responsible
entity.
18
BlackWall Limited - June 2020 Fees and Transactions
Management fees are charged to these entities predominantly for property and fund management services.
(b) Interests in Related Parties
As at year end the Group owned securities in the following related entities:
The management fees are paid under a management agreement and the fees charged are determined with
reference to arm’s length commercial rates.
These services principally relate to:
• funds management: provision of strategic investment advice, asset management and investment
portfolio services; and
• property management: property portfolio advisory services, maintenance and insurances, strategic
advice and management supervision services, administration, leasing, project management,
marketing and risk management services.
The Group recharges its related parties, associates and managed funds, for administration services which
include accounting and bookkeeping fees, corporate secretarial services and those expenses that are incurred
by members of the Group on behalf of the related parties, associates and managed funds. In addition, the
Group pays the following fees to related parties:
Name
BWR
WOTSO
Pyrmont Bridge Trust
Kirela
Holdings (No.’000)
2019
2020
11,488
10,519
-
-
11,488
-
-
-
Distribution/Returns of
Capital/Interest
2019
2020
804
-
-
-
804
1,079
-
315
43
1,437
During the current year Kirela was sold to WOTSO Limited. Refer to Note 18 - Disposal of Subsidiary for further
details.
(c) Key Management Personnel Compensation
2020
1,111
2019
1,072
• rent for WOTSO BWF Franchise and BWF head office. The rent paid is determined with reference to
Total remuneration paid
arm’s length commercial rates; and
• director fees.
Detailed remuneration disclosures and relevant interests are provided in the Directors’ Report.
Other transactions and outstanding balances with related parties, associates and managed funds relate to
loans payable and receivable and distributions from managed funds. All transactions with related parties were
made on arm’s length commercial terms and conditions and at market rates, and were approved by the Board
where applicable.
The following table discloses the revenue and expenses between related parties as well as the balances
outstanding at year end between BWF and its related parties.
28. Parent Entity Information ($’000)
Results:
Profit after tax
Total Comprehensive Income After Tax
Revenue:
Management fees
Transaction and performance fees
Distribution / returns of capital from funds
WOTSO income
Expenses:
Rent and outgoings paid
Outstanding Balances:
Trade and other receivables - current
Trade and other payables - current
2020
2019
4,102
458
804
-
458
447
1
5,146
2,453
1,437
59
4,153
3,105
219
Financial Position:
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Share capital
Accumulated losses
Reserves
Total Equity
2020
2019
6,328
6,328
603
2,737
3,340
(225)
-
(225)
3,115
14,080
(11,024)
59
3,115
1,048
1,048
28
11,129
11,157
(136)
-
(136)
11,021
17,555
(6,593)
59
11,021
The parent entity had no contingencies or capital commitments at 30 June 2020 (2019: Nil).
19
BlackWall Limited - June 2020 29. Financial Risk Management ($’000)
(d) Liquidity Risk
(a) Financial Risk Management
The main risks the Group is exposed to through its financial instruments are market risk (including foreign
exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s principal financial
instruments are cash, financial assets and borrowings. Additionally, the Group has various other financial
instruments such as trade debtors and trade creditors, which arise directly from its operations.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies
and processes for measuring and managing risk, and the management of capital. The Board has overall
responsibility for the establishment and overseeing of the risk management framework. It monitors the Group’s
risk exposure by regularly reviewing finance and property markets. The Group holds the following major financial
At 30 June 2020
Financial Liabilities
Trade and other payables
At 30 June 2019
Financial Liabilities
Trade and other payables
Interest rate hedge
Maturing
Within 1 Year
Maturing
2-5 Years
Maturing
over 5 Years
517
517
1,962
724
2,686
-
-
-
341
341
-
-
-
-
-
Total
517
517
1,962
1,065
3,027
instruments:
Cash and cash equivalents
Investment in BWR
Investment in WOTSO
2020
2,724
16,313
3,893
2019
11,493
15,509
-
(e) Fair Value Measurements
(i) Fair Value Hierarchy
The Trust classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs
used in making measurements. The fair value hierarchy has the following levels:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
(b) Sensitivity Analysis
The Group is not exposed to any material credit, interest or liquidity risks. There are no subsidiaries in the group
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices); and
subject to foreign exchange risk.
• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable
Investment in BWR units are subject to price risk, a 10% decrease in the ASX trading price (from the price at
30 June 2020, i.e. $1.42 per unit) would result in an unrealised loss after tax of $1,182,000.
Investments in WOTSO shares are subject to price risk. WOTSO has been valued using a discounted cash flow
model which relies on several key assumptions. A sensitivity table is included in Note 11 - Investment - WOTSO.
(c) Capital 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
• maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, issue new shares, buy-back shares, purchase or sell assets.
inputs).
The fair value of financial assets traded in active markets is subsequently based on their quoted market prices
at the end of the reporting period without any deduction for estimated future selling costs. The quoted market
price used for financial assets held by the Group is the current bid price.
The following table presents the Group’s financial assets measured at fair value as at 30 June. Refer to Note
31 - Critical Accounting Estimates and Judgments for further details of assumptions used and how fair values
are measured.
At 30 June 2020
Financial assets
At 30 June 2019
Financial assets
Level 1
Level 2
Level 3
Total
16,313
15,509
-
-
3,893
20,206
802
16,311
(ii) Valuation Techniques Used To Derive Level 3 Fair Values
The fair value of the unlisted securities is determined using a discounted cash flow model. The assumptions of
the model are set out in Note 11 - Investment - WOTSO.
20
BlackWall Limited - June 2020 (iii) Fair Value Measurements Using Significant Observable Inputs (Level 3)
The following table is a reconciliation of the movements in financial assets classified as Level 3 for the year
Key Estimates - Financial Assets
All financial assets at Fair Value Through the Profit or Loss (FVTPL) have been classified as financial assets, with
ended 30 June:
gains and losses recognised as profit or loss.
At 30 June 2020
Balance at the beginning of the year
Repayment of loans due to demerger of WOTSO
Initial investment in WOTSO
Fair value movement of investment in WOTSO
Balance at the End of the Year
At 30 June 2019
Balance at the beginning of the year
Sale of Pyrmont units
Sale of Kirela units
Sale of Pelathon Management Group units
Return of capital
Repayment by WOTSO Bondi
Advance to UEM Sunrise
Balance at the End of the Year
The fair value of the listed securities is based on the closing price from the Australian Securities Exchange as at
the reporting date. The investment in the unlisted WOTSO group has been fair valued using a discounted cash
flow model. The assumptions used in that model together with related sensitivity analysis is set out in Note 11
- Investment - WOTSO.
The fair value of financial instruments not traded in an active market is determined using valuation techniques
including a discounted cash flow model. The main inputs used include:
• discount rates for financial assets and financial liabilities are determined using a capital asset pricing
model to calculate a rate that reflects the risk specific to the asset;
• revenue growth rates for locations currently below capacity is based on growth rates achieved in the
past or at similar locations where there is no past evidence;
• sales prices for products are related to the product being offered and are adapted for each location
with consideration given to economic factors prevailing at the location and competitor prices; and
• current economic environment operates within a range similar to the past. The impact of COVID or
similar economic event is not possible to quantify reliably.
802
(802)
1,193
2,700
3,893
11,949
(10,360)
(871)
(100)
(43)
(45)
272
802
There were no transfers between Level 1, 2 and 3 financial instruments during the period.
32. Statement of Significant Accounting Policies
30. Changes In Liabilities Arising From Financing Activities ($’000)
were authorised for issue in accordance with a resolution of the Directors on the date they were issued.
BWF is a publicly listed company, incorporated and domiciled in Australia. The financial statements for the Group
Total liabilities from financing activities as at 1 July 2018
Net cash from/(used in) financing activities
Repayment of debt on disposal of Fortitude Valley property
Total liabilities from financing activities as at 30 June 2019
Net cash from/(used in) financing activities
Total Liabilities From Financing Activities as at 30 June 2020
Borrowings
Total
These financial statements are general purpose financial statements that have been prepared in accordance
(2,100)
-
2,100
-
-
-
(2,100)
-
2,100
-
-
with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001. The financial statements of the Company also comply with
IFRS as issued by the International Accounting Standards Board.
The financial statements have been prepared on an accruals basis and are based on historical costs modified
by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value
-
basis of accounting has been applied.
31. Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and the best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends in economic data, obtained both externally and within the Group.
Key Estimates - Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may
lead to impairment of assets.
BWF is a group of the kind referred to in ASIC Instrument 2016/191 and, in accordance with that Instrument,
amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars,
unless otherwise indicated.
The following is a summary of the material accounting policies adopted by the Group in the preparation of the
financial statements. The accounting policies have been consistently applied, unless otherwise stated.
21
BlackWall Limited - June 2020 Going Concern
The financial statements have been prepared on a going concern basis, which contemplates continuity of
Intercompany Balances
All intercompany balances and transactions between entities within the Group, including any unrealised profits
normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of
or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
business.
necessary to ensure consistencies with those policies applied by the parent entity.
Segment Reporting
AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about
Joint Ventures
Interests in joint ventures are accounted for using the equity method. Under the equity method of accounting,
components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
the investments are initially recognised at cost and adjusted thereafter to recognise the group’s share of the post
resources to the segment and to assess its performance. The Group’s primary format for segment reporting
acquisition profits or losses of the investee in profit or loss. Dividends received or receivable from joint ventures
is based on business segments. The business segments are determined based on the Group management
are recognised as a reduction in the carrying amount of the investment.
and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis. The operating businesses are organised
and managed separately according to the nature of the products and services provided, with each segment
representing a strategic business unit that offers different products and serves different markets
BWF has adopted four reporting segments: BlackWall, Investments, WOTSO Franchise and Corporate.
When the group’s share of losses in an equity accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity. The carrying amount of equity accounted
investments is tested for impairment in accordance with these policies.
The BlackWall segment engages in funds and asset management as well as property services that include
property management, leasing and general property consultancy. Income earned by the segment includes
Non-controlling Interests
Non-controlling interests (not held by the Group) are allocated their share of net profit and comprehensive
recurring income from fund and asset management mandates and transaction-based income, typically related
income after tax in the statement of profit or loss and other comprehensive income and are presented within
to those mandates. Management treats these operations as one fee-earning operating segment. The assets
equity in the consolidated balance sheet, separately from parent shareholders’ equity. Comprehensive income
assigned to the segment are those it is required to hold to comply with its AFSL capital adequacy requirements.
after tax in the statement of profit or loss and other comprehensive income are presented within equity in the
The Investments segment includes interests in property related investments such as units in related party listed
and unlisted unit trusts, loans and cash. It generates income from dividends, distributions and interest.
Presentation of Financial Statements
Both the functional and presentation currency of BWF and its Australian subsidiaries is Australian dollars. Various
consolidated balance sheet, separately from parent shareholders’ equity.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
functional currencies including Singapore Dollars and Malaysian Ringgit results are translated to presentation
Plant and equipment are measured on the cost basis less accumulated depreciation and impairment losses.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
an item if it is probable that the future economic benefits embodied within the part will flow to the Group and
its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the
day-to-day servicing of property, plant and equipment are recognised in profit and loss as incurred.
currency.
Principles of Consolidation
The consolidated financial statements comprise the financial statements of BWF and its subsidiaries. A list of
controlled entities is contained in Note 26 - Controlled Entities. All controlled entities have a June financial year
end and use consistent accounting policies. Investments in subsidiaries held by the Group are accounted for at
cost, less any impairment charges (refer to Note 28 - Parent Entity Information).
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls
an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
22
BlackWall Limited - June 2020 Depreciation
The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful lives to
the Group commencing from the time the asset is held ready for use.
The estimated useful lives used for each class of depreciable assets are:
Furniture, fixtures and fittings
Office equipment
over 2 to 10 years
over 4 to 10 years
Right of use assets are depreciated on a straight-line basis, with reference to the remaining lease term, including
options to extend if reasonably certain to extend the lease term.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Disposal
An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits
are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is
derecognised.
Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine
Financial Instruments
Non-derivative Financial Instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other
receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised at fair value plus, for instruments not at fair value through
profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non- derivative financial
instruments are measured as described below.
Recognition
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised if the Group’s contractual rights to the cash flow from the financial assets
expire or if the Group transfers the financial assets to another party without retaining control or substantially
all risks and rewards of the asset. Purchases and sales of financial assets are accounted for at trade date, i.e.
the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the
Group’s obligations specified in the contract expire or are discharged or cancelled.
Financial Assets
All financial assets at FVTPL have been classified as financial assets, with gains and losses recognised in profit
or loss. The Group classifies its financial assets in the following measurement categories: those to be measured
subsequently at fair value and those to be measured at amortised cost. The classification depends on the
Group’s business model for managing the financial assets and the contractual terms of the cash flows.
whether there is any indication that those assets have been impaired.
(i) Equity Investments
If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
All equity investments are measured at fair value. Equity investments that are held for trading are measured at
costs to sell and value in use, is compared to the asset’s carrying value. In assessing value in use, either the
fair value through profit or loss.
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset, or the income of the
(ii) Loans and Receivables
asset is capitalised at its relevant capitalisation rate.
An impairment loss is recognised if the carrying value of an asset exceeds its recoverable amount. Impairment
losses are expensed to the profit and loss.
Loans and receivables including loans to related parties are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and are stated at amortised cost using the
effective interest rate method. Gains and losses are recognised in profit or loss when the loans and receivables
are derecognised or impaired, as well as through the amortisation process.
Impairment losses recognised in prior periods are assessed at each reporting date for any indication that
the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that
Fair Value
The fair values of investments that are actively traded in organised financial markets are determined by reference
the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
to quoted market bid prices at the close of business on the balance date. For investments in related party
depreciation or amortisation, if no impairment loss has been recognised.
unlisted unit trusts, fair values are determined by reference to published unit prices of these investments which
are based on the net tangible assets of each of the investments.
23
BlackWall Limited - June 2020 Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has
Trade and Other Receivables
Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable
been impaired. A financial instrument is considered to be impaired if objective evidence indicates that one or
more events have had a negative effect on the estimated future cash flows of that asset. In the case of available-
debts. An estimate for doubtful debts is made when there is objective evidence that the Group will not be able
to collect the receivable. Financial difficulties of the debtor and default payments are considered objective
for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine
evidence of impairment. Bad debts are written off when identified as uncollectable.
whether an impairment has arisen.
An impairment loss in respect of a financial instrument measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at 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.
Trade and Other Payables
Liabilities for trade creditors are carried at cost which is the fair value of the consideration to be paid in the future
for goods or services received, whether or not billed to the Group at balance date. The amounts are unsecured
and are usually paid within 30 days of recognition.
Individually significant financial instruments are tested for impairment on an individual basis. The remaining
financial assets are assessed collectively in groups that share similar credit risk characteristics.
Interest Bearing Borrowings
Interest bearing borrowings are initially recognised at fair value less any related transaction costs. Subsequent
Impairment losses are recognised in the profit or loss. An impairment loss is reversed if the reversal can be
to initial recognition, interest bearing borrowings are stated at amortised cost.
related objectively to an event occurring after the impairment loss was recognised. For financial instruments
measured at amortised cost, the reversal is recognised in profit and loss.
Financial Liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal
payments and amortisation.
Investments in Associates
Investments in associate companies are recognised in the financial statements by applying the equity method
of accounting where significant influence is exercised over an investee. Significant influence exists where the
investor has the power to participate in the financial and operating policy decisions of the investee but does not
have control or joint control over those policies.
Under the equity method of accounting, investments in the associates are carried in the consolidated balance
sheet at cost plus any post-acquisition changes in the Group’s share of net assets of the associates. The
Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and
its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post acquisition
movements are adjusted against the carrying amount of the investment. When the Group’s share of losses
exceeds its interest in an equity accounted investee, the carrying amount of the interest is reduced to nil and
the recognition of further losses is discontinued except to the extent that the Group has an obligation or has
made payments on behalf of the investee.
Cash and 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.
Employee Benefits
Other Long Term Employee Benefits
The Group’s net obligation in respect of long term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on-costs. These
employee benefits have not been discounted to the present value of the estimated future cash outflows to be
made for those benefits.
Short Term Benefits
Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting
from employees’ services provided to the reporting date and are calculated at undiscounted amounts based
on remuneration wage and salary rates that the Group expects to pay as at reporting date including related
on-costs.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income statement net of any reimbursement.
Revenue
BWF Property Fees include management fees and transaction fees. They are recognised when it becomes
legally due and payable to the Group.
24
BlackWall Limited - June 2020 Investment Income
Finance income comprises interest on funds invested, gains on the disposal of financial assets. Interest income
Deferred Tax Calculation
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
is recognised as interest accrues using the effective interest method. Dividend and distribution revenue is
recognised when the right to receive income has been established.
liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be
credited directly to equity, in which case the deferred tax is adjusted directly against equity.
In-specie distributions and returns of capital are brought on to the balance sheet by an adjustment in the
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
carrying value of the relevant investment and then reflected in the profit or loss as an unrealised gain.
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
All revenue is stated net of the amount of GST.
Leases
AASB 16 was adopted by the Group on 1 July 2019, applying the modified retrospective approach. Initial
adoption methodology has been detailed in Note 22 - Adoption of AASB 16 Leases. Right of use assets and
liabilities are recognised for all leases with a lease term of more than 12 months; unless the underlying asset
is of a low value. Initial recognition of both the right of use asset and corresponding lease liability is calculated
using the present value of remaining lease payments; discounted using the rate implicit in the lease or, if not
easily determinable, the lessee’s incremental borrowing rate. The right of use asset is adjusted for any prepaid
or accrued lease payments or onerous lease contracts.
Business Combination
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
• fair values of the assets transferred;
• equity interests issued by the Group; and
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
Deferred Income Tax Assets
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised. The carrying amount of deferred income tax
assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Benefit Brought to Account
The amount of benefits brought to account or which may be realised in the future is based on the assumption
that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions
of deductibility imposed by the law.
Tax Consolidation
BWF has elected to form a tax consolidated group with its wholly-owned entities for income tax purposes
under the tax consolidation regime with effect from 1 January 2011. As a consequence, all members of the
tax consolidated group are taxed as a single entity from that date. The head entity within the tax consolidated
• fair value of any asset or liability resulting from a contingent consideration arrangement.
group is BWF.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date.
Income Tax
Current Income Tax Expense
The charge for current income tax expense is based on the profit 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 sheet date.
Accounting for Deferred Tax
Deferred tax is accounted for using the balance sheet liability 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, excluding a business
combination, where there is no effect on accounting or taxable profit or loss.
In addition to its own current and deferred tax amounts, BWF 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 in conjunction with any tax funding arrangement amounts.
The Group recognises deferred tax assets arising from unused tax losses of the tax consolidated group to the
extent that it is probable that future taxable profits of the tax consolidated group will be available against which
the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised
assessments of the probability of recoverability is recognised by the head entity only.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in the Group.
25
BlackWall Limited - June 2020 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 balance sheet 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.
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
The final dividend for June period is declared and authorised after the end of the reporting period, therefore
provision for dividend is not booked in the current year accounts.
EPS
The Group presents basic and diluted EPS data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year. Any change of presentation has been made in order to make the
financial statements more relevant and useful to the user.
New Accounting Standards and Interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the
current reporting period. The Group’s assessment of the impact of these new standards and interpretations is
set out below.
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019 using the modified retrospective approach. Under the new
standard leases are recognised on the balance sheet with no distinction between operating and finance leases.
It also requires that a right of use asset and financial liability for future rental payments be recognised. For more
details, refer to Note 22 - Adoption of AASB 16 Leases.
26
BlackWall Limited - June 2020 Directors’ Report
Continued
2. Distribution of Shareholders
The distribution of shareholders by size of holding was:
Category (Shares Held)
No. of Shareholders
ASX Additional Information
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is
as follows. The shareholder information set out below was current as at 14 August 2020.
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Number of Shareholders
266
436
197
254
61
1,214
1. Shareholders
BWF’s top 20 largest shareholdings were:
Investor
1 Vintage Capital Pty Limited
2 Seno Management Pty Ltd
3 Frogstorm Pty Ltd
4 Lymkeesh Pty Ltd
5 Sandhurst Trustees Ltd
6 Glenahilty Pty Ltd
7 Koonta Pty Ltd
8 SAO Investments Pty Ltd
9 Truebell Capital Pty Ltd
10 National Nominees Limited
11 Kiut Investments Pty Ltd
12 Frolic Events Pty Ltd
13 Bin24 Business Advisors Pty Limited
14 Mr Richard Hill and Mrs Evelyn Hill
15 Pinnatus Pty Ltd
16 Mr Archibald Geoffrey Loudon
17 Methuselah Capital Management Pty Ltd
18 Tampopo Pty Ltd
19 Mr Simon Charles Farr
20 Balpina Pty Ltd
Ordinary Shares
(No.)
Shares
(%)
5,734,678
5,488,000
4,608,338
4,351,488
2,762,000
2,724,515
2,401,625
2,225,000
2,194,894
2,163,858
1,976,175
1,456,537
1,275,000
1,183,295
1,178,434
986,973
939,263
777,983
735,374
600,000
9.08
8.69
7.30
6.89
4.37
4.31
3.80
3.52
3.48
3.43
3.13
2.31
2.02
1.87
1.87
1.56
1.49
1.23
1.16
0.95
BWF has 63,141,445 ordinary shares on issue. All shares carry one vote per share without restrictions. All
shares are quoted on the Australian Securities Exchange (ASX: BWF).
3. Substantial Shareholders
BWF’s substantial shareholders are set out below:
Investor
Joseph (Seph) Glew
Robin Tedder
Paul Tresidder
Stuart Brown
Archibald Geoffrey Loudon
Ordinary Shares
(No.)
Shares
(%)
9,237,770
8,150,424
8,103,258
4,614,038
4,505,959
14.63
12.91
12.83
7.31
7.14
4. Directors and KMPs’ Relevant Interests
Details of each KMP’s relevant interests in BWF is shown below:
Investor
16 August 2019
Net Change
14 August 2020
Seph Glew (non-executive director)
Timothy Brown (joint MD and CFO)
Jessie Glew (joint MD and COO)
Richard Hill (non-executive director)
Robin Tedder (non-executive director)
Stuart Brown (non-executive director) –
resigned 24 January 2020
8,920,000
1,453,141
535,000
1,969,278
9,237,424
5,689,038
317,770
3,396
-
-
(1,087,000)
(1,075,000)
9,237,770
1,456,537
535,000
1,969,278
8,150,424
4,614,038
Total
27,803,881
(1,840,834)
25,963,047
27
BlackWall Limited - June 2020 Information on Officeholders
The names of the Officeholders during or since the end of the year are set out below.
Joseph (Seph) Glew
Non-Executive Director and Chairman
Robin Tedder
Non-Executive Director
Seph has worked in the commercial property industry in New Zealand, the USA and Australia and has driven
Robin began his career on the dealing desk of a merchant bank in 1976. In 1981 he founded Hatmax Capital
large scale property development and financial structuring for real estate for over 40 years. In addition, since
Markets which grew rapidly through organic development and merger with Australian Gilt Securities in 1988,
the early 1990s Seph has run many “turn around” processes in relation to distressed properties and property
such that by the time he departed after 14 years as CEO in 1995, over 80 people were employed across debt
structures for both private and institutional property owners.
While working for the Housing Corporation of New Zealand and then AMP, Seph qualified as a registered valuer
and holds a Bachelor of Commerce. In the 1980s he served as an Executive Director with New Zealand based
property group Chase Corporation and as a Non-Executive Director with a number of other listed companies
in New Zealand and Australia.
Timothy Brown
Joint Managing Director and CFO
capital markets, both the Sydney Futures Exchange and ASX, in asset management and corporate finance. In
1995 Robin established Vintage Capital which became an active investor in funds management, commercial
property, retailing, healthcare and logistics. He has been an investor in the Group’s projects since 1997, is a
former member of ASX, and has served on various boards of both listed and private companies since 1984. He
is the Chairman of the Group’s Board Audit Committee.
Alex Whitelum - Appointed 23 April 2020
Company Secretary
Tim is Joint Managing Director and Chief Financial Officer for the BlackWall Group and its funds. Tim joined
the Group in 2008 as Financial Controller and became Chief Financial Officer in 2009. He has a Bachelor of
Commerce from the University of New South Wales and is a member of the Institute of Chartered Accountants
of Australia. With over 20 years experience in the financial services and property industries, he started his career
with Deloitte and joined Lend Lease Corporation in 2002. Tim is also on the board of Eastern Suburbs Cricket
Alex joined the BlackWall Group in 2020 and executes all aspects of the Group’s corporate and fund transactions,
is responsible for corporate governance functions and oversees investor relations. Previously, Alex was a lawyer
at Clayton Utz in their Corporate, M&A and Capital Markets team. Alex holds a Bachelor of Laws (Hons) and
a Bachelor of Commerce (Economics) from Macquarie University. He is admitted as a solicitor to the Supreme
Court of New South Wales and the High Court of Australia.
Stuart Brown - Resigned 24 January 2020
Non-Executive Director
Stuart Brown was a member of the BlackWall family for the last 20 years and resigned from the Group in
January. Stuart has been an integral part of the business. He helped drive the establishment of BlackWall
and later WOTSO. More recently, Stuart identified and negotiated the acquisition of 55 Pyrmont Bridge Road,
Pyrmont.
Sophie Gowland - Resigned 27 March 2020
Company Secretary
Club and Coogee Boy’s Preparatory School.
Jessie Glew
Joint Managing Director and COO
Jessie is Joint Managing Director and Chief Operating Officer for the BlackWall Group and its funds. Jessie
has been with the Group since early 2011. Prior to her appointment as Joint Managing Director, Jessie was
the Group’s General Manager of Property. She has a Bachelor of International Communication from Macquarie
University and is finalising a Bachelor of Property Economics at the University of Technology Sydney.
Richard Hill
Non-Executive Director
Richard Hill has extensive investment banking experience and was the founding partner of the corporate
advisory firm Hill Young and Associates. Richard has invested in the Group’s projects since the early 1990s.
Prior to forming Hill Young, Richard held a number of Senior Executive positions in Hong Kong and New York
with HSBC. He was admitted as an attorney in New York State and was registered by the US Securities and
Exchange Commission and the Ontario Securities Commission. Richard has served as a director (Chairman) of
the Westmead Institute for Medical Research and director (Chairman) of Sirtex Medical Limited (Sirtex), formally
listed on ASX.
28
BlackWall Limited - June 2020 Meeting Attendances
Director
Seph Glew
Timothy Brown
Jessie Glew
Richard Hill
Robin Tedder
Stuart Brown - resigned 24 January 2020
No. of Board
Meetings Held
Board Meeting
Attendance
ESV continues in office in accordance with section 327 of the Corporations Act 2001.
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001
is set out in these financial statements.
10
10
10
10
10
5
10
10
10
10
10
5
Rounding of Amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, and in accordance with that
legislative instrument amounts in the Directors’ Report and the financial statements are rounded off to the
nearest thousand dollars, unless otherwise indicated.
The Audit Committee, comprised of Seph Glew (first half FY20), Richard Hill (second half FY20) and Robin
Remuneration Report (Audited)
Tedder, met twice during the reporting period. Each committee member attended each meeting.
Environmental Regulation
The Board is responsible for determining the remuneration of KMP. For the reporting period the Board has
determined that KMP included the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the Chief
Operating Officer (COO). KMP determine the employees’ remuneration.
The Group’s operations are not regulated by any environmental regulation under a law of the Commonwealth or of
When determining the remuneration of KMP, senior executives or employees, the following is taken into
a State or a Territory other than those that pertain to the ownership and development of real estate. However, the
consideration:
Group believes that it has adequate systems in place for the management of its environmental requirements and
is not aware of any instances of non-compliance of those environmental requirements as they apply to the Group.
• remuneration is aligned with the delivery of returns to shareholders;
Indemnities of Officers
• responsibilities, results, innovation and entrepreneurial behaviour are recognised and rewarded; and
• the Group’s financial position and market conditions.
During the financial year the Group has paid premiums to insure each of the Directors named in this report along
with Officers of the Group against all liabilities for costs and expenses incurred by them in defending any legal
proceedings arising out of their conduct while acting in the capacity of Director or Officer of the Group, other
The remuneration payable to KMP is reviewed at times deemed appropriate by the Board. There are no
performance conditions for Board members or contracts for KMP. Any performance payments are at the
discretion of the Board. The nature and the amount of each element of remuneration paid to the Board members
than conduct involving a wilful breach of duty.
and KMP for the reporting period are listed below:
No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for
Short Term
any person who is or has been an auditor to the Group.
Corporate Governance Statement
A description of the Group’s current corporate governance practices is set out in the Group’s corporate
governance statement which can be accessed at blackwall.com.au
Auditor and Non-audit Services
An amount of $49,000 was paid to the auditor for non-audit services during the year (2019: $9,400) as detailed
in Note 21 - Auditor’s Remuneration. The Directors are satisfied that the provision of non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
Directors’ Fees Salary and Other
Post-employment
Superannuation
Total
2020
($)
2019
($)
2020
($)
Seph Glew
95,833
75,000
-
2019
($)
-
2020
($)
2019
($)
2020
($)
2019
($)
-
-
95,833
75,000
Timothy Brown
Jessie Glew
Stuart Brown
-
-
-
-
-
-
251,142
220,320
23,858
24,535
275,000
244,855
251,142
219,224
23,858
20,826
275,000
240,050
276,469
326,606
18,959
24,999
295,428
351,605
Richard Hill
85,000
85,000
Robin Tedder
85,000
75,000
-
-
-
-
-
-
-
-
85,000
85,000
85,000
75,000
Total
265,833
235,000
778,753
766,150
66,675
70,360 1,111,261 1,071,510
The nature and scope of each type of non-audit service provided means that auditor independence was not
For Timothy Brown an amount of $85,308 was cashed out from leave entitlement balances during the 2019 year.
compromised.
Stuart Brown resigned 24 January 2020.
29
BlackWall Limited - June 2020 Share Options
(a) Unissued ordinary options
The following options are currently on issue.
Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes are in accordance with the Corporations Act 2001, including:
Employees and Directors
28 February 2021
100 cents
4,500,000
professional reporting requirements; and
Expiry Date
Issue Price of Shares Number Under Option
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
(b) Shares issued on the exercise of options
The following ordinary shares were issued during the year in the exercise of B Options. No further shares have
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance
for the financial year ended on that date; and
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
been issued since 30 June 2020. No amounts are unpaid on any of the shares on issue.
become due and payable.
Employees
n/a
n/a
n/a
International Financial Reporting Standards as issued by the International Accounting Standards Board.
Exercise Date
Issue Price of Shares
Number of Shares Issued
The Statement of Significant Accounting Policies confirms that the financial statements also comply with
The Directors have been given the declarations by the Joint Managing Directors and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
Subsequent Events and Significant Changes in Affairs
This declaration is made in accordance with a resolution of the Board of Directors.
On 24 July 2020 the BWF directors released an announcement to the ASX outlining a proposal for BWR to
acquire the WOTSO WorkSpace business and certain real estate assets currently held by Pelorus Private Equity
Limited. This will take the form of a stapled security structure. The transaction will require various shareholder
and court approvals and is expected to complete early in the new calendar year.
The impact of the COVID pandemic is ongoing. It is not practical to estimate the potential impact, positive
or negative, after the reporting date on the various revenue stream and the performance of the Group. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
The Board has declared a final fully franked dividend of 2.1 cents per share to be paid on 25 September 2020.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
Signed in accordance with a resolution of the Board of Directors.
Tim Brown
Director
Jessica Glew
Director
Sydney, 26 August 2020
Sydney, 26 August 2020
Tim Brown
Director
Sydney, 26 August 2020
Jessica Glew
Director
Sydney, 26 August 2020
30
BlackWall Limited - June 2020
Auditors Independence Declaration and Audit Report
31
BlackWall Limited - June 2020
-
-
-
-
-
-
32
-
-
-
-
-
-
-
-
-
-
-
BlackWall Limited - June 2020
33
BlackWall Limited - June 2020
W
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a
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M
,
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a
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3 Militar
4
7
34
BlackWall Limited - June 2020
Notes
35
BlackWall Limited - June 2020 BlackWall Limited
ACN
146 935 131
TELEPHONE
+61 2 9033 8611
ADDRESS
50 Yeo Street,
Neutral Bay, NSW, 2089
EMAIL
info@blackwall.com.au
WEBSITE
www.blackwall.com.au
REGISTRY
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
www.computershare.com.au