A N N U A L R E P O R T 2 0 2 2 Manager of Australia’s First Listed Flexible Property Security Who We Are BlackWall is a fund manager with investment, capabilities across asset, development and property management. This integrated offering means we see opportunities where others don’t. We put our money where our mouth is, and hold strategic positions in the funds that we manage – the largest being Australia’s first listed flexible property security, WOTSO Property (ASX:WOT). We have a close-knit and diverse team of individuals who take an entrepreneurial approach to growing the BlackWall business and brand. and Other Comprehensive Income Contents 3 Directors’ Report 6 Statement of Profit or Loss 6 Balance Sheet 7 Statement of Cash Flows 8 Statement of Changes in Equity 9 Notes to the Financial Statements 21 Directors’ Report – Continued 24 Directors’ Declaration 25 Auditor’s Independence Declaration and Audit Report 2 BlackWall Limited June 2022 Directors’ Report BlackWall Limited (BlackWall, BWF or the Group) has seen revenue growth of 11% in FY 22 and will pay a final dividend of 2.4 cps to bring the full year dividend to 5.0 cps fully franked. This represents a current grossed up dividend yield of 9.5%.* BlackWall Limited generates annuity income from the real estate investment structures it manages, the largest being WOTSO Property (ASX:WOT). Over the past year our assets under management have grown by 12% to $500 million. We drive management fees off these assets which is then passed onto shareholders. We have maintained our dividend for the full year of 5.0 cps (2021: 5.0 cps). Review of Financial Performance Management fee income Transaction income Total Revenue Total operating expenses Operating Profit Government COVID assistance Investment distributions received Funds From Activities Other statutory adjustments (incl. revaluations) Profit Before Tax 2022 $’000 5,739 616 6,355 (4,435) 1,920 223 986 3,129 (1,273) 1,856 2021 $’000 5,396 325 5,721 (3,838) 1,883 504 804 3,191 708 3,899 1 2 3 Management fee income increased by 6% to $5.7 million. This increase is driven predominately by WOT with valuation uplift of some of its properties and an increase in its WOTSO flexspace turnover. Operating profit increased to $1.9 million. Despite operating profit being up, the statutory net profit before tax has decreased to $1.8 million. This was largely driven by our investment in WOT with movement in its ASX share price to $1.39 from $1.47 in 2021. This created a revaluation loss in FY 22. WOT’s market price is not something we can control and we are long term holders of this investment so these movements (up or down) are not a focus for us. Maintained Funds From Activities (FFA). Despite the headwinds of COVID our FFA has been maintained at $3.1 million and we expect this to grow as our assets and revenue under management grow. It is important to note that unlike many other REITs we do not solely require assets to grow in value to get material uplifts in FFA, we have the additional fees charged on the WOTSO revenue which has the capacity to grow. BlackWall issued 4.3 million new shares in FY 22 under its employee option scheme, and a significant portion of the funds raised were used to re-invest in WOTSO Property. WHY? We believe that the pricing conditions for WOT presented a compelling and attractive purchase point with the share price trading well below Net Asset Value (NAV). * On a share price of $0.70. Key Numbers $500 million of assets under management 7 properties acquired by WOT in last two years 5.0 cps fully franked full year dividend $6.4 million total revenue Up 11% BlackWall Limited June 2022 3 Fund Highlights 4 WOTSO Property Following on from the three properties acquired in the 2021 financial year, a further four properties were purchased this year. Two adjoining properties were purchased in Cremorne NSW, WOT expanded into Western Australia with a property in Mandurah, and finally WOT secured a property in Auckland, New Zealand. Each property is earmarked to have a WOTSO and other service based uses. The third party leased sites that WOTSO operates are also slated to increase with negotiations finalised for two new sites in Sydney’s West. WOT has seen a number of strong revaluations throughout the property portfolio which translate to increased management fees. WOTSO’s annualised revenue now sits at $23.7 million meaning the second tranche of BWF’s management fee is activated (5% per annum of all revenue above $20 million per annum). WOTSO has a clear strategy to offer businesses a home close to where their people live and this has translated into strong demand for WOTSO’s flexspace offering. The revenue growth trajectory is significant for both WOTSO itself, but also BWF as the manager. Net Asset Value 8% Wind up of Woods PIPES The seven year term of the Woods PIPES Fund expired at the end of the 2022 financial year. We are pleased to achieve a 45 cents per share PIPES bonus for the fund’s investors, which was on top of the regular 8% per annum distributions, equating to a total internal rate of return (IRR) of 13% per annum. IRR 13% p.a. over 7 years New Fund Launched Pyrmont Bridge Road Mortgage Fund We were excited to bring our first unlisted retail and wholesale fund offering since the launch of the Woods PIPES Fund. The new Pyrmont Bridge Road Mortgage Fund was born out of the restructure of the debt over the Pyrmont property and offers investors consistently strong distributions of 6% per annum, combined with $68 million of capital buffer. The fund is open for new investment now and will be offered on an ongoing basis meaning we can welcome new investors and introduce them to the Group over the 5 year term of the fund. Fund size $20 million BlackWall Limited June 2022 BlackWall as a Corporate Citizen We have continued our longstanding relationship with The Kid’s Cancer Project (TKCP) and this year our team was excited to have raised over $60,000 and ranked first on the leader board for TKCP Better Challenge where participants aim to run, walk or roll 90km over the month of September. Additionally, our very own Jess Glew was appointed as a director of TKCP. Our Vaccine for Caffeine program was a success as various parts of the country emerged from COVID lockdowns late in 2021. The program encouraged WOTSO members to get on board with the national vaccine rollout for a chance to win a share of $27,000 to be spent at local businesses. It was our way of supporting the vaccine rollout and helping local businesses doing it tough. We also formally launched our employee development program, the BlackWOT Academy. The team enjoyed the first iteration of the program, which culminated in the three day BlackWOT personal development conference held in Noosa, QLD. The Year Ahead As we gaze into our crystal ball for next year and beyond, we are conscious of the various economic factors at play, such as rising inflation, the threat of a global downturn and the ongoing influence of COVID. However, we believe, that with a clear and strategic outlook there will be a number of opportunities that we can embrace as a Group. We can offer our existing and new investors even more choice via our listed and unlisted structures as we continue to expand our reach as a proven and trusted manager. Tim Brown and Jessie Glew Joint Managing Directors 1 6 2 M a c q u a ri e S t , H o b a r t T A S BlackWall Limited June 2022 5 Financial Statements Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 Balance Sheet at 30 June 2022 Note 3 3 5 2 11 4 6 Management fees Transaction income Total Revenue Operating expenses Operating Profit Government COVID stimulus Depreciation - property, plant and equipment Finance costs - interest expense Revaluation (loss) / gain Profit Before Income Tax From Continuing Operations Income tax expense Profit After Tax From Continuing Operations Discontinued operation - WOTSO Franchise Profit for the Year Other comprehensive income Total Comprehensive Income Earnings Per Share 2022 $’000 5,739 616 6,355 (4,435) 1,920 223 (44) (6) (237) 1,856 (210) 1,646 - 1,646 - 1,646 2021 $’000 5,396 325 5,721 (3,838) 1,883 504 (51) (4) 1,567 3,899 (845) 3,054 (25) 3,029 - 3,029 Profit Attributable to the Ordinary Equity Holders: Basic earnings per share Diluted earnings per share 19 19 2.5 cents 2.5 cents 4.8 cents 4.8 cents Assets Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-current Assets Investments Employee loans Investment using equity method Right of use lease asset Property, plant and equipment Total Non-current Assets Total Assets Liabilities Current Liabilities Trade and other payables Right of use lease liability Provision for employee benefits Provision for tax payable Total Current Liabilities Non-current Liabilities Deferred tax liabilities Right of use lease liability Provision for employee benefits Total Non-current Liabilities Total Liabilities Net Assets Equity Share capital Reserves Retained earnings Total Equity Statutory net assets per share Note 2022 $’000 2021 $’000 7 8 10 9 12 11 13 16 14 17 15 16 14 1,166 1,293 2,459 23,412 1,056 40 444 122 25,074 27,533 916 137 701 273 2,027 2,592 329 25 2,946 4,973 3,133 332 3,465 22,602 - 58 579 141 23,380 26,845 482 132 493 396 1,503 2,870 464 11 3,345 4,848 22,560 21,997 16,447 73 6,040 22,560 $0.33 14,080 73 7,844 21,997 $0.35 6 BlackWall Limited June 2022 Reconciliation of Operating Cash Flows Profit for the Year from Continuing Operations Non-Cash Flows in Profit: Unrealised loss / (gain) Depreciation on right of use lease asset Depreciation on property, plant and equipment Interest expense on lease liability Equity accounted (profit) / loss Changes in Operating Assets and Liabilities: (Increase) / decrease in trade and other receivables (Decrease) / increase in deferred tax liabilities Increase in trade and other payables (Decrease) / increase in income taxes payable Increase in provisions 2022 $’000 1,646 237 138 44 20 (253) (961) (278) 434 (123) 222 2021 $’000 3,054 (1,567) 118 51 21 14 807 465 - 750 73 Net Cash Flows from Operating Activities 1,126 3,786 Statement of Cash Flows for the year ended 30 June 2022 Cash Flows From Operating Activities Management fee receipts and recoveries Government COVID stimulus Payments to suppliers and employees Income tax (paid) / refund Net interest paid Net Cash Flows From Operating Activities Cash Flows From Investing Activities Returns of capital from WOT / BWR investment Proceeds on disposal of Gymea Bay investment Dividend received from IndigoBlack investment Investment in WOT Payment for property, plant and equipment Proceeds on disposal of WOTSO Franchise (net of cash disposed) Net Cash Flows Used In Investing Activities Cash Flows Used In Financing Activities Proceeds from issue of shares Dividends paid to shareholders Rental payments Net Cash Flows Used In Financing Activities Net (Decrease) / Increase in Cash Held Reconciliation of Cash Balances: Cash and cash equivalents at the beginning of the year Net (decrease) / increase in cash held - continuing Net increase in cash held - WOTSO Franchise Cash and Cash Equivalents at End of the Year All items inclusive of GST where applicable. Note 2 8 9 9 11 18 2022 $’000 5,690 223 (4,172) (611) (4) 1,126 968 181 90 (2,015) (25) - (801) 1,311 (3,450) (153) (2,292) (1,967) 3,133 (1,967) - 1,166 2021 $’000 7,045 504 (4,133) 370 - 3,786 804 - - (1,633) (28) 428 (429) - (2,841) (129) (2,970) 387 2,724 387 22 3,133 7 BlackWall Limited June 2022 Statement of Changes in Equity for the year ended 30 June 2022 No. of Shares on Issue Issued Capital $’000 Retained Earnings $’000 Reserves $’000 Balance at 1 July 2021 Profit for the year Other comprehensive income Total Comprehensive Income for the Year Transactions with Owners in Their Capacity as Owners: Dividend paid Issue of shares Total Transactions with Owners Balance at 30 June 2022 Balance at 1 July 2020 Profit for the year Other comprehensive income Total Comprehensive Income for the Year Transactions with Owners in Their Capacity as Owners: Dividend paid Total Transactions with Owners Balance at 30 June 2021 Share Capital and Reserves (a) Summary Table 67,466,445 ordinary shares (June 2021: 63,141,445) Total (b) Movement in Shares on Issue Number of Shares At the beginning of reporting period Issue of shares under options scheme At Reporting Date 8 63,141,445 - - - - 4,325,000 4,325,000 67,466,445 63,141,445 - - - - - 14,080 - - - - 2,367 2,367 16,447 14,080 - - - - - 63,141,445 14,080 7,844 1,646 - 1,646 (3,450) - (3,450) 6,040 7,656 3,029 - 3,029 (2,841) (2,841) 7,844 73 - - - - - - 73 73 - - - - - 73 Total $’000 21,997 1,646 - 1,646 (3,450) 2,367 (1,083) 22,560 21,809 3,029 - 3,029 (2,841) (2,841) 21,997 2022 $’000 16,447 16,447 2021 $’000 14,080 14,080 2022 No. 2021 No. 63,141,445 4,325,000 63,141,445 - No further shares have been issued since 30 June 2022. No amounts are unpaid on any of the shares. Ordinary shares participate in dividends. All ordinary shares carry one vote per share without restriction. All shares are fully paid. (c) Reserves Share options reserve Total The following options are on issue at the date of this report: 2022 $’000 73 73 2021 $’000 73 73 67,466,445 63,141,445 Employee and Directors options Options Expiry Date Exercise Price 05 October 2023 $0.55 Number 475,000 BlackWall Limited June 2022 Notes to the Financial Statements 1. Segment Information 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. Revenue $’000 Operating Expense $’000 Operating Profit $’000 COVID Stimulus $’000 Interest and Depn $’000 Revaluation (Loss) / Gain $’000 Pre-tax Profit $’000 Profit or Loss 2022 BlackWall Investments Corporate Total Operations 2022 Profit or Loss 2021 BlackWall Investments Corporate Continuing Operations WOTSO Franchise Total Operations 2021 Balance Sheet 2022 BlackWall Investments Corporate Consolidated Balance Sheet 2021 BlackWall Investments Corporate Consolidated 6,099 256 - 6,355 5,730 (9) - 5,721 432 6,153 (3,071) (607) (757) (4,435) (2,749) (578) (511) (3,838) (122) (3,960) 3,028 (351) (757) 1,920 2,981 (587) (511) 1,883 310 2,193 223 - - 223 504 - - 504 - 504 (44) (6) - (50) (51) (4) - (55) (312) (367) Assets $’000 4,013 23,520 - 27,533 Assets $’000 4,181 22,664 - 26,845 - (237) - (237) - 1,567 - 1,567 - 1,567 3,207 (594) (757) 1,856 3,434 976 (511) 3,899 (2) 3,897 Liabilities $’000 (2,103) (2,597) (273) Net Assets $’000 1,910 20,923 (273) (4,973) 22,560 Liabilities $’000 (1,473) (2,979) (396) Net Assets $’000 2,708 19,685 (396) (4,848) 21,997 9 BlackWall Limited June 2022 2. COVID Impact In the current year, WOTSO Property (WOT), an investee of the Group, continued to provide rent relief to During 2022 the group disposed of its investment in Gymea Bay Unit Trust (GBUT). GBUT redeveloped 2 tenants in the form of rent waivers and deferrals, as required by the mandatory code of conduct between landlords and tenants. WOTSO Limited, a stapled group member of WOT, also reinstated its suspension policy residential properties in the south of Sydney. The income of $181,000 reflects BWF’s 25% share of the profit on sale of the properties. during the year, which was available to any members located in COVID affected lockdown areas, and allowed these members to suspend their membership without penalty. This resulted in average revenue decreases of approximately 65% across impacted sites during the lockdowns for WOTSO Limited. The policy ended in The IndigoBlack income is the share of profit from BWF’s investment in this construction business. BWF also received a cash dividend from the entity of $90,000. November 2021 and WOTSO Limited’s revenue has since recovered with June annualised revenue reaching See Note 9 for further information. just shy of $24 million, close to 50% higher than pre-COVID levels. This decrease in WOT’s revenue, as a result of the COVID related rent relief and membership suspension policy meant a reduction in BlackWall’s management fees that could have been charged. 4. Net Unrealised (Loss) / Gain on Investments BWF qualified for the government’s JobSaver program and other related stimulus measures since the start of the pandemic in March 2020. The government stimulus revenue received for the current financial year was $223,000 (2021: $504,000). 3. Revenue Revenue is earned through management, performance and transaction fees from real estate investment structures. Fund management fees Property management fees Project management fees Leasing fees Expense recovery and other fees Management Fees Total Transaction fee - Asset acquisitions Transaction fee - Asset disposal Transaction fee - Capital raising Transaction income - IndigoBlack Transaction income - Gymea Bay Transaction Income Total Total Revenue Timing of revenue recognition: - Management fees incurred over time - Transaction income at a point in time 10 2022 $’000 3,161 693 762 214 909 5,739 328 35 - 363 72 181 616 6,355 5,739 616 6,355 2021 $’000 3,176 633 287 505 795 5,396 189 - 150 339 (14) - 325 5,721 5,396 325 5,721 Unrealised (loss) / gain - WOT Total 2022 $’000 (237) (237) 2021 $’000 1,567 1,567 The unrealised (loss) / gain is driven by the ASX price of WOT securities at 30 June. For additional information refer to Note 8 - Investments. 5. Operating Expenses Employee and consultant expenses Other operating expenses Depreciation – right of use assets Lease interest costs Total 6. Income Tax Expense Current tax Deferred tax Total Prima facie tax payable on profit from ordinary activities before income tax at 25.0% (2021: 26.0%) Add / (less) tax effect of: Non-deductible items Deductible items Change in tax rate - restatement of deferred tax balances Over provision in prior years Total 2022 $’000 3,330 947 138 20 4,435 2022 $’000 488 (278) 210 464 (226) - - (28) 210 2021 $’000 2,806 893 118 21 3,838 2021 $’000 348 497 845 1,014 5 (10) (115) (49) 845 BlackWall Limited June 2022 7. Trade and Other Receivables 9. Equity Accounted Investments Trade receivables: Related parties Other parties Total Trade Receivables Other receivables Total 2022 $’000 1,289 - 1,289 4 1,293 2021 $’000 237 82 319 13 332 Investee IndigoBlack Construction Gymea Bay Unit Trust Further information relating to trade and other receivables to related parties is set out in Note 24 - Related Party Transactions. None of the receivables were impaired as at 30 June 2022 (2021: $nil). 8. Investments WOTSO Property is listed on the ASX under the code “WOT”. At 30 June 2022, WOT was quoted at $1.39 per security on the ASX (2021: $1.47 per security), and the net asset value was $1.56 per security (2021: $1.44 per security). A reconciliation of investments is set out below: June 2022 Balance at the beginning of the year Return of capital Purchases Mark to market valuation Balance at the End of the Year June 2021 Balance at the beginning of the year Return of capital Conversion to stapled securities Purchases Mark to market valuation Balance at the End of the Year WOT $’000 22,602 (968) 2,015 (237) 23,412 WOTSO Limited $’000 3,893 - (3,893) - - - Total $’000 22,602 (968) 2,015 (237) 23,412 Total $’000 20,206 (804) - 1,633 1,567 22,602 WOT $’000 - - 19,402 1,633 1,567 22,602 BWR $’000 16,313 (804) (15,509) - - - During the 2021 year, BlackWall’s investments in BWR and WOTSO Limited were replaced by a single holding in the stapled entity, WOT. 2022 Ownership % 25 - 2021 Ownership % 25 25 IndigoBlack Construction $’000 Gymea Bay Unit Trust $’000 58 72 (90) - 40 - 181 - (181) - 2022 $’000 40 - 40 Total 2022 $’000 58 253 (90) (181) 40 2021 $’000 58 - 58 Total 2021 $’000 72 (14) - - 58 Carrying amount at beginning of year Share of comprehensive income / (loss) Dividend received Disposal of investments Carrying Amount at End of Year 10. Employee Loans Loans have been made to Directors and employees in order for them to acquire shares under the employee share scheme. The loans attract interest at a rate equivalent to the deemed ATO loan interest rate and are secured against the shares. At 30 June 2022, $1.1 million in loans have been issued to employees of the Group (2021: $nil). 11. Property, Plant and Equipment At cost Less accumulated depreciation Total Written Down Value Carrying amount at the beginning of year Additions Depreciation expense Carrying Amount at the End of Year 2022 $’000 924 (802) 122 2022 $’000 141 25 (44) 122 2021 $’000 899 (758) 141 2021 $’000 164 28 (51) 141 11 BlackWall Limited June 2022 12. Right of Use Lease Asset 15. Deferred Tax Liabilities Right of use lease asset Less: Accumulated depreciation Written Down Value of Right of Use Lease Assets 2022 $’000 773 (329) 444 2021 $’000 770 (191) 579 BWF leases its head office located in Neutral Bay NSW. BWF has entered into an option agreement with its Deferred Tax Liabilities / (Assets) Balance Comprises: Financial assets Provision for employee benefits Accrued expenses Lease assets Neutral Bay landlord that is expected to see its lease terminated as part of a sale of the asset. An option fee of $10,000 has been received and $490,000 is receivable if the option is exercised. The option expires in Total Movements: Balance at the beginning of year Charged to the profit and loss Balance at the End of Year 16. Lease Liabilities Opening balance Interest charged Repayments Additions Disposals Modifications Total Lease Liabilities Current Non-current Total September and can be extended for another year. 13. Trade and Other Payables Trade payables: Other parties Related parties Total Trade Payables Sundry payables and accrued expenses Total 2022 $’000 2021 $’000 680 102 782 134 916 403 - 403 79 482 Further information relating to trade payables from related parties is set out in Note 24 - Related Party Transactions. 14. Provisions Current – employee benefits Non-current – employee benefits Total Provisions Balance at the beginning of year Net additional provision increase Balance at the End of Year The number of BWF employees as at 30 June 2022 was 21 (2021: 20). 2022 $’000 701 25 726 504 222 726 2021 $’000 493 11 504 431 73 504 12 The disposal in 2021 was due to the WOTSO Franchise subsidiary leaving the group. 17. Provision for Tax Payable Payable / (Refund) at the beginning of year Current year tax liability (Payments made) / Refunds received (Over) / under provision in prior years Payable at the End of Year 2022 $’000 396 516 (611) (28) 273 2022 $’000 2,801 (182) (21) (6) 2,592 2,870 (278) 2,592 2022 $’000 596 20 (153) - - 3 466 137 329 466 2021 $’000 3,007 (126) (7) (4) 2,870 2,373 497 2,870 2021 $’000 2,323 45 (393) 301 (1,808) 128 596 132 464 596 2021 $’000 (354) 396 347 7 396 BlackWall Limited June 2022 18. Dividends 21. Contingencies Fully franked dividends paid to shareholders during the financial year were as follows: The Group had no contingent assets or liabilities at 30 June 2022 (2021: $nil). 2021 final dividend of 2.6 cents paid on 15 September 2021 (2020 final: 2.1 cents) 2022 interim dividend of 2.6 cents paid on 7 April 2022 (2021 interim: 2.4 cents) Total 2022 $’000 1,696 1,754 3,450 2021 $’000 1,325 1,516 2,841 In addition, the Board has declared a final fully franked dividend of 2.4 cents per share to be paid on 8 September 2022. 22. Subsequent Events The Board has declared a final fully franked dividend of 2.4 cents per share to be paid on 8 September 2022. To the best of the Directors’ knowledge, since the end of the financial year there have been no other matters or circumstances that have materially affected the Group’s operations or may materially affect its operations, state of affairs or the results of operations in future financial years. Franking credits available for the subsequent periods based on a tax rate of 25.0% (2021: 25.0%) 2022 $’000 1,437 2021 $’000 2,026 23. Controlled Entities The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for: (a) franking credits that will arise from the payment of the amount of the provision for income tax; (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. 19. Earnings Per Share Basic earnings per share Diluted earnings per share 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 20. Auditor’s Remuneration Remuneration of ESV for: Audit and assurance services Taxation services Other services Total 2022 2.5 cents 2.5 cents $1,646,000 $1,646,000 65,629,785 65,704,671 2021 4.8 cents 4.8 cents $3,029,000 $3,054,000 63,141,445 63,141,445 2022 $ 43,000 11,050 24,200 78,250 2021 $ 51,000 11,000 23,000 85,000 Parent Entity: BlackWall Limited Subsidiaries of Parent Entity: BlackWall Management Services Pty Ltd BlackWall Fund Services Limited BlackWall Management (NZ) Ltd Bakehouse Management Pty Ltd Bakehouse Quarter Trust APG Asset Management Pty Ltd Country of Incorporation Australia Australia Australia New Zealand Australia Australia Australia Percentage Owned 2022 (%) 2021 (%) n/a 100 100 100 100 100 - n/a 100 100 100 99.99 - 100 24. Related Party Transactions (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 9 - 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. 13 BlackWall Limited June 2022 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 units 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. Entity WOT BWR Holdings 2022 No. 2021 No. 16,843,284 - 15,375,201 - (c) Key Management Personnel Compensation 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 Total remuneration paid by members of the Group on behalf of the related parties, associates and managed funds. In addition, the Distribution/Returns of Capital/Interest 2022 $ 968,307 - 968,307 2021 $ - 804,149 804,149 2022 $ 2021 $ 970,000 820,000 Group pays the following fees to related entities: Detailed remuneration disclosures and relevant interests are provided in the Directors’ Report. • rent for BWF head office. The rent paid is determined with reference to arm’s length commercial rates; and • director fees. 25. Parent Entity Information 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 Results: Profit / (loss) after tax made on arm’s length commercial terms and conditions and at market rates, and were approved by the Board Total Comprehensive Income / (Loss) After Tax 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. Revenue: Management fees Transaction and performance fees Distribution / returns of capital from funds Expenses: Rent and outgoings paid Outstanding Balances: Trade and other receivables – current Employee loans Trade and other payables - current 14 2022 $ 2021 $ 4,999,788 387,650 968,307 4,404,085 990,488 804,149 180,744 397,392 1,288,708 1,055,530 101,751 236,981 - - 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 2022 $’000 368 368 298 1,096 1,394 (873) (3,179) (4,052) (2,658) 16,447 (19,164) 59 (2,658) 2021 $’000 (2,217) (2,217) 3 714 717 (495) (2,165) (2,660) (1,943) 14,080 (16,082) 59 (1,943) The parent entity had no contingencies or capital commitments at 30 June 2022 (2021: $nil). The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 28. BlackWall Limited June 2022 26. Financial Risk Management (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 instruments: At 30 June 2022 Financial Liabilities Trade and other payables Lease liabilities At 30 June 2021 Financial Liabilities Trade and other payables Lease liabilities Maturing Within 1 Year $’000 Maturing 2-5 Years $’000 Maturing over 5 Years $’000 916 137 1,053 482 132 614 - 329 329 - 464 464 - - - - - - Total $’000 916 466 1,382 482 596 1,078 Financial Assets Cash and cash equivalents Investment in WOT Employee loans Financial Liabilities Trade and other payables Lease liabilities 2022 $’000 1,166 23,412 1,056 916 466 2021 $’000 3,133 22,602 - 482 596 (b) Sensitivity Analysis The Group is not exposed to any material credit, foreign exchange, interest or liquidity risks. (e) Fair Value Measurements (i) Fair Value Hierarchy The Group 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; • 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 • Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The fair value of financial assets traded in active markets is subsequently based on their quoted market prices The investment in WOT securities are subject to price risk, a 10% decrease in the ASX trading price (from the at the end of the reporting period without any deduction for estimated future selling costs. The quoted market price at 30 June 2022, i.e. $1.39 per security) would result in an unrealised loss after tax of $1.8 million. price used for financial assets held by the Group is the current bid price. (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. The following table presents the Group’s financial assets measured at fair value as at 30 June. Refer to the Critical Accounting Estimates and Judgment note for further details of assumptions used and how fair values are measured. At 30 June 2022 Investment in WOT At 30 June 2021 Investment in WOT Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 23,412 22,602 - - - - 23,412 22,602 15 BlackWall Limited June 2022 (ii) Valuation Techniques Used To Derive Level 3 Fair Values There are no financial assets classified as level 3 of the fair value hierarchy at 30 June 2022 (2021: $nil). (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 ended 30 June: At 30 June 2022 Balance at the beginning of the year Movement Balance at the End of the Year At 30 June 2021 Balance at the beginning of the year Reduction due to WOTSO Limited forming part of the WOT stapled security Balance at the End of the Year There were no transfers between Level 1, 2 and 3 financial instruments during the period. 27. Critical Accounting Estimates and Judgments $’000 - - - 3,893 (3,893) - 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. 28. Statement of Significant Accounting Policies BWF is a publicly listed company, incorporated and domiciled in Australia. The financial statements for the Group were authorised for issue in accordance with a resolution of the Directors on the date they were issued. These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards The Directors evaluate estimates and judgments incorporated into the financial statements based on historical Board and the Corporations Act 2001. The financial statements of the Group also comply with IFRS as issued by knowledge and best available current information. Estimates assume a reasonable expectation of future events the International Accounting Standards Board. and are based on current trends in economic data, obtained both externally and within the Group. Key Estimates - COVID The impact of the COVID pandemic is ongoing. It is not practical to estimate the potential impact, positive or negative, on the various revenue streams and the performance of the Group. The situation is dependent on measures imposed by the federal and state governments, and other countries, such as maintaining social distancing requirements, quarantine, vaccinations, travel restrictions and any economic stimulus that may be provided. 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. 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. 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. Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of Key Estimates - Financial Assets All financial assets at Fair Value Through the Profit or Loss (FVTPL) have been classified as financial assets, with business. gains and losses recognised as profit or loss. The fair value of the listed securities is based on the closing price from the Australian Securities Exchange as at the reporting date. 16 Segment Reporting AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Group’s primary format for segment reporting is based on business segments. The business segments are determined based on the Group management BlackWall Limited June 2022 and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a When the Group’s share of losses in an equity accounted investment equals or exceeds its interest in the entity, segment as well as those that can be allocated on a reasonable basis. The operating businesses are organised including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has and managed separately according to the nature of the products and services provided, with each segment incurred obligations or made payments on behalf of the other entity. The carrying amount of equity accounted representing a strategic business unit that offers different products and serves different markets investments is tested for impairment in accordance with these policies. The Group has adopted three reporting segments: BlackWall, Investments, and Corporate. 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 recurring income from fund and asset management mandates and transaction-based income typically related to those mandates. Management treats these operations as one fee earning operating segment. The assets assigned to the segment are those it is required to hold to comply with its AFSL capital adequacy requirements. 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. The Corporate segment relates to company taxation and selected corporate overheads. Presentation of Financial Statements Both the functional and presentation currency of BWF and its Australian subsidiaries is Australian dollars. Non-Controlling Interests Non-controlling interests (not held by the Group) are allocated their share of net profit and comprehensive income after tax in the statement of profit or loss and other comprehensive income and are presented within equity in the 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. 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 Various functional currencies including New Zealand Dollar results are translated to presentation currency. day-to-day servicing of property, plant and equipment are recognised in profit and loss as incurred. Principles of Consolidation The consolidated financial statements comprise the financial statements of BWF and its subsidiaries. A list of Depreciation The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful lives to controlled entities is contained in Note 23 - Controlled Entities. All controlled entities have a June financial year the Group commencing from the time the asset is held ready for use. 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 25 - Parent Entity Information). The estimated useful lives used for each class of depreciable assets are: 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 Furniture, fixtures and fittings Office equipment over 2 to 10 years over 4 to 10 years 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. 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. Intercompany Balances All intercompany balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where Disposal An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits necessary to ensure consistencies with those policies applied by the parent entity. are expected from its use or disposal. Associates Interests in associates are accounted for using the equity method. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post acquisition profits or losses of the investee in profit or loss. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. Any gain or loss arising on derecognition 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. 17 BlackWall Limited June 2022 Impairment of Assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. (i) Equity Investments All equity investments are measured at fair value. Equity investments that are held for trading are measured at fair value through profit or loss. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less (ii) Loans and Receivables costs to sell and value in use, is compared to the asset’s carrying value. In assessing value in use, either the Loans and receivables including loans to related parties are non-derivative financial assets with fixed or estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects determinable payments that are not quoted in an active market and are stated at amortised cost using the current market assessments of the time value of money and the risks specific to the asset, or the income of the effective interest rate method. Gains and losses are recognised in profit and loss when the loans and receivables asset is capitalised at its relevant capitalisation rate. are derecognised or impaired, as well as through the amortisation process. 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. 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 the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised. 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. Fair Value The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance date. For investments in related party 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. Impairment At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has 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- for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine 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. Recognition A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. 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. Financial assets are derecognised if the Group’s contractual rights to the cash flow from the financial assets Impairment losses are recognised in the profit or loss. An impairment loss is reversed if the reversal can be expire or if the Group transfers the financial assets to another party without retaining control or substantially related objectively to an event occurring after the impairment loss was recognised. For financial instruments all risks and rewards of the asset. Purchases and sales of financial assets are accounted for at trade date, i.e. measured at amortised cost, the reversal is recognised in profit and loss. 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. 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. 18 BlackWall Limited June 2022 Under the equity method of accounting, investments in the associates are carried in the consolidated balance Investment Income Finance income comprises interest on funds invested and gains on the disposal of financial assets. Interest sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. The Group’s income is recognised as interest accrues using the effective interest method. Dividend and distribution revenue share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of is recognised when the right to receive income has been established. 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 In-specie distributions and returns of capital are brought on to the balance sheet by an adjustment in the carrying value of the relevant investment and then reflected in the profit and loss as an unrealised gain. of further losses is discontinued except to the extent that the Group has an obligation or has made payments All revenue is stated net of the amount of GST. 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. Trade and Other Receivables Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate for credit loss impairment 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 evidence of impairment. Bad debts are written off when identified as uncollectable. 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 Leases AASB 16 was adopted by the Group on 1 July 2019, applying the modified retrospective approach. 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. 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 for goods or services received, whether or not billed to the Group at balance date. The amounts are unsecured balance sheet date. and are usually paid within 30 days of recognition. 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. Revenue BWF Property Fees include management fees and transaction income. They are recognised when it becomes legally due and payable to the Group. 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. 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 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. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on 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. 19 BlackWall Limited June 2022 Deferred Income Tax Assets Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available Dividends The final dividend for June period is declared and authorised after the end of the reporting period, therefore against which deductible temporary differences can be utilised. The carrying amount of deferred income tax provision for dividend is not booked in the current year accounts. 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 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 that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions dilutive potential ordinary shares. 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 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 under the tax consolidation regime with effect from 1 January 2011. As a consequence, all members of the financial statements more relevant and useful to the user. New Accounting Standards and Interpretations BWF has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those of the previous financial year. Several amendments apply for the first time in the current year. However, they do not impact the annual consolidated financial statements of the Group. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Based on our preliminary assessment, we do not expect them to have a material impact on the Group. tax consolidated group are taxed as a single entity from that date. The head entity within the tax consolidated group is BWF. 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. 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. 20 BlackWall Limited June 2022 Directors’ Report Continued 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 1 August 2022. 2. Distribution of Shareholders The distribution of shareholders by size of holding was: Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Number of Shareholders No. of Shareholders 293 483 225 295 60 1,356 1. Shareholders The Group’s top 20 largest shareholdings were: Investor 1 Seno Management Pty Ltd 2 Vintage Capital Pty Limited 3 Lymkeesh Pty Ltd 4 Frogstorm Pty Ltd5 National Nominees Limited 6 Sandhurst Trustees Ltd 7 Glenahilty Pty Ltd 8 Koonta Pty Ltd 9 Sao Investments Pty Ltd 10 Kiut Investments Pty Ltd 11 Frolic Events Pty Ltd 12 Bin24 Business Advisors Pty Limited 13 Maloo Investments Pty Ltd 14 Pinnatus Pty Ltd 15 Mr Richard Hill & Mrs Evelyn Hill 16 Frolic Events Pty Ltd 17 Oyama Pty Limited 18 Mr Archibald Geoffrey Loudon 19 Tampopo Pty Ltd 20 Frogstorm Pty Ltd Shares No. 6,215,000 5,734,678 4,304,742 3,400,000 3,173,152 2,762,000 2,724,515 2,550,985 2,225,000 1,976,175 1,960,000 1,950,000 1,464,370 1,178,434 1,151,295 1,000,000 1,000,000 986,973 777,983 708,338 Shares % 9.21 8.50 6.38 5.04 4.70 4.09 4.04 3.78 3.30 2.93 2.91 2.89 2.17 1.75 1.71 1.48 1.48 1.46 1.15 1.05 BWF has 67,466,445 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 Seph Glew Paul Tresidder Robin Tedder Archibald Geoffrey Loudon Stuart Brown Shares No. Shares % 10,582,667 8,728,258 8,495,017 4,810,959 4,114,038 15.69 12.94 12.59 7.13 6.10 4. Directors’ and KMPs’ Relevant Interests Details of each KMP’s relevant interests in BWF is shown below: Investor Timothy Brown (Joint MD and CFO) Jessica Glew (Joint MD and COO) Seph Glew (Non-Executive Chairman) Richard Hill (Non-Executive Director) Robin Tedder (Non-Executive Director) 5 August 2021 1,460,000 550,178 9,962,770 1,969,278 8,195,017 Net Change 1,500,000 1,500,000 619,897 - 300,000 1 August 2022 2,960,000 2,050,178 10,582,667 1,969,278 8,495,017 Total 22,137,243 3,919,897 26,057,140 21 BlackWall Limited June 2022 Information on Officeholders The names of the Officeholders during or since the end of the year are set out below. Robin Tedder Non-Executive Director Joseph (Seph) Glew Non-Executive Director and Chairman Seph has worked in the commercial property industry in New Zealand, the USA and Australia and has driven large scale property development and financial structuring for real estate for over 40 years. In addition, since the early 1990s Seph has run many “turn-around” processes in relation to distressed properties and property structures for both private and institutional property owners. Robin began his career on the dealing desk of a merchant bank in 1976. In 1981 he founded Hatmax Capital Markets which grew rapidly through organic development and merger with Australian Gilt Securities in 1988, such that by the time he departed after 14 years as CEO in 1995, over 80 people were employed across debt 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. 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 Alexander Whitelum Company Secretary in New Zealand and Australia. Timothy Brown Joint Managing Director and CFO 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 Tim is Joint Managing Director and Chief Financial Officer for the BlackWall Group and its funds. Tim joined the Court of New South Wales and the High Court of Australia. Group in 2008 as Financial Controller and became Chief Financial Officer in 2009. He took on the Managing Director role along with Jessie in late 2019. 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 and New Zealand. 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 Club and Coogee Boy’s Preparatory School. Jessica Glew Joint Managing Director and COO Meeting Attendances Director Seph Glew Timothy Brown Jessie Glew Richard Hill Robin Tedder No. of Board Meetings Held Board Meeting Attendance 7 7 7 7 7 7 7 7 7 7 Jessie is Joint Managing Director and Chief Operating Officer (COO) for the BlackWall group and its funds. Jessie has been with BlackWall since early 2011. She was made COO in early 2018 and took on the Managing The Audit Committee, comprised of Richard Hill and Robin Tedder, met twice during the reporting period. Both Director role along with Tim in late 2019. Jessie has a Bachelor of International Communication from Macquarie committee members attended each meeting. University and finalising a Bachelor of Property Economics at the University of Technology Sydney. In addition Jessica is a Board Member of The Kids’ Cancer Project. Richard Hill Non-Executive Director Richard Hill has extensive investment banking experience and was the founding partner of the corporate advisory firm Hill Young & 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 & 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), formerly listed on ASX. 22 Environmental Regulation The Group’s operations are not regulated by any environmental regulation under a law of the Commonwealth or of a State or a Territory other than those that pertain to the ownership and development of real estate. However, the 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. BlackWall Limited June 2022 Indemnities of Officers During the financial year the Group has paid premiums to insure each of the Directors named in this report along The remuneration payable to KMP is reviewed at times deemed appropriate by the Board. There are no 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 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 Directors’ Fees 2021 2022 $ $ Salary and Other 2021 $ 2022 $ Post-employment Superannuation Total 2022 $ 2021 $ 2022 $ 2021 $ Timothy Brown Jessie Glew Seph Glew Richard Hill - - - - 100,000 100,000 85,000 85,000 Robin Tedder 85,000 85,000 322,500 251,142 27,500 23,858 350,000 275,000 322,500 251,142 27,500 23,858 350,000 275,000 - - - - - - - - - - - - 100,000 100,000 85,000 85,000 85,000 85,000 An amount of $78,250 was paid to the auditor for non-audit services during the year (2021: $85,000) as Total 270,000 270,000 645,000 502,284 55,000 47,716 970,000 820,000 detailed in Note 20 - 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. Loans have been made to KMP in order for them to acquire shares under BlackWall’s employee share scheme. The nature and scope of each type of non-audit service provided means that auditor independence was not The loans attract interest at a rate equivalent to the deemed ATO loan interest rate and are secured against the compromised. shares. The following loans were outstanding at year-end: 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. ESV continues in office in accordance with section 327 of the Corporations Act 2001. Timothy Brown Jessie Glew Total Rounding of Amounts The Group 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 Share Options 2022 $ 524,000 505,330 1,029,330 2021 $ - - - nearest thousand dollars, unless otherwise indicated. Remuneration Report (Audited) (a) Unissued Options The following options are currently on issue. The Board is responsible for determining the remuneration of KMP. For the reporting period the Board has determined that KMP included the Managing Director (MD), Chief Financial Officer (CFO), and the Chief Operating Officer (COO). KMP determine the employees’ remuneration. Richard Hill Employees Total When determining the remuneration of KMP, senior executives or employees, the following is taken into consideration: • remuneration is aligned with the delivery of returns to shareholders; • responsibilities, results, innovation and entrepreneurial behaviour are recognised and rewarded; and • the Group’s financial position and market conditions. Expiry Date 05 October 2023 05 October 2023 Exercise Price Number Under Option 300,000 175,000 55 cents 55 cents 475,000 23 BlackWall Limited June 2022 (b) Shares Issued on the Exercise of Options The following ordinary shares were issued during the year in the exercise of options. No shares have been issued since 30 June 2022. No amounts are unpaid on any of the shares on issue. Exercise Date Issue Price of Shares Number of Shares Issued Seph Glew Jessica Glew Timothy Brown Employees Robin Tedder Jessica Glew Timothy Brown Seph Glew Employees 23 August 2021 23 August 2021 23 August 2021 23 August 2021 24 August 2021 8 March 2022 8 March 2022 8 March 2022 8 March 2022 55 cents 55 cents 55 cents 55 cents 55 cents 55 cents 55 cents 55 cents 55 cents 500,000 535,630 500,000 250,000 300,000 964,370 1,000,000 100,000 175,000 Subsequent Events and Significant Changes in Affairs Directors’ Declaration In the Directors’ opinion: (a) the financial statements and notes are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the Group’s financial position as at 30 June 2022 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 become due and payable. The Statement of Significant Accounting Policies confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. 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. The Board has declared a final fully franked dividend of 2.4 cents per share to be paid on 8 September 2022. This declaration is made in accordance with a resolution of the Board of Directors. No other matter or circumstance has arisen since 30 June 2022 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 Jessie Glew Director Tim Brown Director Jessie Glew Director Sydney, 17 August 2022 Sydney, 17 August 2022 Sydney, 17 August 2022 Sydney, 17 August 2022 24 BlackWall Limited June 2022 Auditor’s Independence Declaration and Audit Report 25 BlackWall Limited June 2022 - - - - 26 BlackWall Limited June 2022 castle NSW w e or St, N 1 Tu d BlackWall Limited June 2022 27 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