Annual Report
2020-2021
Contango Asset Management Limited
and Controlled Entities
ACN: 080 277 998
Roger Amos
Chairman
Contango Asset Management
Limited
Dear Shareholder,
I am pleased to present Contango Asset Management Limited’s (Contango or
the Company) Annual Report for the year ended 30 June 2021 (FY2021).
The 2021 financial year was one of growth and progress for the Company,
as it completed its shift from a product manufacturer to a marketing and
distribution platform.
The business has developed a platform that provides fund managers with
an end-to-end retail distribution solution which promotes their brand and
grows funds under management (FUM). Contango’s platform consists of
an experienced distribution team that targets the intermediary market, with
access to the highly sought-after direct investor channel through exclusive
marketing relationships and Contango’s own retail investor database.
During the year, the Company’s FUM grew by approximately 79% with net
inflows of funds recorded in every month throughout FY2021. These positive
inflows were complemented by strong investment performance.
The important components for the continuing success of the Company relate
to the marketing and distribution of our retail product set. In this regard, the
Company will continue to invest in the distribution capability required to grow
our existing products organically in the advised and self-directed markets.
The growth of the Company during the year has been made possible by the
drive and energy of the Company’s Chief Executive Officer, Mr Martin Switzer,
and his management team. The Board is very much looking forward to
building on the success of the Company in FY2021 and continuing the growth
trajectory into FY2022.
I would like to thank my fellow Directors for their support and oversight
throughout the year, and our loyal shareholders for supporting our vision.
We look forward to welcoming you to the Annual General Meeting on 11
November 2021.
Yours Sincerely,
Roger Amos
Chairman
Letter from the Chairman
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
3
Letter from the Chairman For the Year Ended 30 June 2021
1 As at 30 June 2021. Source: The Association of Superannuation Funds of Australia
Managing Directors’ Report
Dear Shareholder,
I am pleased to present this report for Contango Asset Management Limited and its Controlled Entities (the
Group or Contango) for the year ended 30 June 2021 (FY2021).
Overview of Contango
Contango is a financial services company with a unique and well regarded marketing and distribution platform
that partners with, and promotes, high quality fund managers to the self-directed and Independent Financial
Adviser channels of the $3.3 trillion1 Australian superannuation industry.
FY2021 saw the completion of the Group’s transition from product manufacturer to a marketing and
distribution platform. Contango now has an operating structure and business model that will allow it to grow
funds under management (FUM), build scale and soon reach profitability.
Funds Under Management
The Group’s FUM grew to $1.143 billion at 30 June 2021 (30 June 2020: $638.1 million) driven by strong net
fund inflows over the year of $323.2 million.
The key drivers of growth were a combination of net inflows and positive investment performance across the
suite of investment products managed by WCM Investment Management (WCM). Since 1 January 2017, the
Group has seen FUM growth of more than $1.030 billion.
The below chart shows the strong growth in retail FUM since 2017:
Since the financial year end, Contango has experienced further strong growth in FUM. As at 30 September
2021, the Group’s FUM was $1.179 billion, demonstrating the success of its business model in supporting its
continued growth trajectory.
WCM International Small Cap
Growth Fund (Managed Fund)
WCM Quality Global Growth Fund
(Managed Fund) - Class B (Hedged)
WCM Quality Global Growth Fund
(Managed Fund) - Class A (Unhedged)
WCM Quality Global Growth Fund
(Quoted Managed Fund) (ASX:WCMQ)
Global Equity Funds
Switzer Dividend Growth Fund
(Quoted Managed Fund) (ASX:SWTZ)
Switzer Higher Yield Fund
(Managed Fund) (CHI-X:SHYF)
Australian Income Funds
WCM Global Growth Limited
(ASX:WQG)
WCM Global Long Short Limited (ASX:WLS)
(Formerly Contango Income Generator
Limited (ASX:CIE))
Listed Investment Companies
NB: Excludes Contango Microcap management rights reassigned in October 2017.
4
Managing Directors’ Report For the Year Ended 30 June 2021
2 As at 30 June 2021. Source: WCM Investment Management.
3 As at 30 September 2021. Source: NAB Asset Servicing.
Overview of Results and Operations
The Group’s total revenue for FY2021 was $5,720,000 (FY2020: $4,933,000). The Group’s net loss
after tax for FY2021 was $800,000 (FY2020: net loss after tax of $1,163,000).
The Group’s management and service fees in FY2021 totalled $5,190,000 (FY2020: $4,243,000)
representing an increase of 22% underpinned by the Group’s strong growth in FUM across its product
suite. The increase in management and service fees is consistent with the increase in the average
level of FUM over the period. The Group earned performance fees from both its WCM Quality Global
Growth Equity Strategy and WCM International Small Cap Growth Strategy portfolios totalling
$128,000 (FY2020: $165,000).
The Group’s results for the reporting period include costs in excess of $450,000 before tax primarily
related to the strategic transition of the Group’s business, from a financial products manufacturer
to a distributor, which was successfully completed in the second half of FY2021. Other strategic
initiatives taken throughout FY2021 included activities that directly grew FUM, significantly increased
the Company’s retail investor base, and further developed the Group’s marketing and distribution
capabilities.
The Group remains well capitalised. Contango held cash of $5,525,000 and had a receivable from
NAOS Asset Management Limited of $1,660,000 (being $7,345,000 in total), with debt of $1,252,000
as at 30 June 2021. The receivable from NAOS represents the final instalment payable to Contango
in June 2022 in consideration for the assignment of an investment mandate in October 2017. This
receivable is included in the Consolidated Statement of Financial Position as at 30 June 2021 at its
discounted value of $1,552,000 in accordance with accounting standards.
Partnership with WCM
WCM is a top quartile global and international equities specialist with total FUM of over A$130 billion2.
Based in Laguna Beach, California, WCM’s investment process is based on the belief that corporate
culture is the biggest influence on a company’s ability to grow its competitive advantage or ‘moat’.
This investment process has resulted in the WCM Quality Global Growth Equity Strategy Composite
outperforming the MSCI World Index by 5.5% per annum over the past decade.
Contango has an exclusive retail distribution arrangement to distribute WCM’s investment strategies
into the Australian market. WCM’s superior investment performance has contributed to the Group’s
FUM growth over recent years and will be a key factor in driving future FUM inflows. Since partnering
with Contango in June 2017, WCM now has over $1.082 billion3 in FUM in Australia across its suite of
retail and wholesale products.
A key priority for the Group over the reporting period was to continue to build WCM’s global equities
brand in Australia in both the direct and financial advisory markets. Activities that have been
undertaken by Contango to achieve this include:
• implementing targeted investor and advisor engagement strategies;
• co-ordination of live-streamed events through channels such as the Switzer Financial Group;
• hosting regular investor and advisor webinars with key WCM investment personnel;
• engaging with industry participants such as consultants, research houses and wealth platforms;
• enhancing ongoing digital communication with investors and advisers;
• national advertising campaigns increasing investor and advisor awareness of the WCM brand; and
• individual manager roadshows targeted at the advisor and broker channels.
Managing Directors’ Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
5
1 Year
24.6%
3 Years
14.5%
21.1%
5 Years
15.0%
19.9%
10 Years
14.5%
15.9%
Inception
9.7%
WCM Quality Global Growth Equity Strategy Composite
MSCI ACWI Index ($AUD)
4 Data as at 30 June 2021. Performance is in AUD, net of fees and includes the reinvestment of all income. Past performance is not indicative of future
performance. WCM applies the same investment principles, philosophy and execution approach of its WCM Quality Global Growth Equity Strategy
Composite (QGG), which was created on 31 March 2008, to WCM Global Growth Limited, the WCM Quality Global Growth Fund (Quoted Managed Fund)
and the WCM Quality Global Growth Fund (Managed Fund). It should be noted that due to certain factors, there may be variances between the investment
returns demonstrated by each portfolio in the future. The benchmark for QGG is the MSCI All Country World Index (MSCI ACWI). For further information
please refer to contango.com.au.
28.1% 28.3%
Global Equities Update
The WCM “large cap”, “small cap” and “long short” strategies continued to provide investors with strong investment
returns over the reporting period and maintained their long-term outperformance against their respective benchmarks.
The investment returns were achieved notwithstanding a pronounced market rotation away from growth towards value
and low-quality factors during the March 2021 quarter.
WCM Quality Global Growth Equity Strategy Composite
WCM Quality Global Growth Equity Strategy Composite is WCM’s “large cap” strategy which delivered a return of 28.1%
over the reporting period, in line with its benchmark, the MSCI All Country World Index. The rolling 3 years, 5 years, and
since inception returns for the strategy continue to be comfortably above the benchmark.
The WCM Quality Global Growth Equity Strategy (ex-Australia) is accessible to Australian retail investors through the
Group’s three investment products, being:
• WCM Global Growth Limited (ASX:WQG), a listed investment company;
• WCM Quality Global Growth Fund (Quoted Managed Fund) (ASX:WCMQ), an exchange-traded managed fund; and
• WCM Quality Global Growth Fund (Managed Fund), an unlisted managed fund offering both hedged and unhedged
units.
Each investment product provides exposure to the same underlying portfolio of quality global companies, excluding
Australia.
Annualised returns of the WCM Quality Global Growth Equity Strategy Composite4 versus its benchmark are shown below:
WCM Global Growth Limited (WQG)
WQG is an ASX listed investment company which continued to deliver outstanding results to its shareholders in FY2021.
Since WQG’s listing in June 2017, Contango has worked in conjunction with the WQG Board to develop strategies to
enhance shareholder value and grow the company. The most recent examples of this being WQG’s Dividend Policy and
Dividend Reinvestment Plan (DRP) and Bonus Option Issue.
Managing Directors’ Report For the Year Ended 30 June 2021
6
Dividend Policy and DRP
In July 2020, WQG announced the commencement of partial franking of its dividends, together with the
implementation of a DRP in relation to its final dividend of 2.0 cents per share for the 2020 financial year (FY2020).
Contango in support offered WQG shareholders a one-time DRP participation incentive for the FY2020 final dividend
which was paid in September 2020.
WQG further enhanced its dividend policy, announcing on 17 February 2021 the commencement of fully franked
dividends, where possible, and declaring a fully franked interim dividend of 2.0 cents per share for FY2021. Since the
financial year end, WQG further advised that it was implementing a progressive dividend policy with the declaration of
an increased final fully franked dividend for FY2021 of 2.5 cents per share.
The strong support from WQG’s shareholders for the DRP has continued, with the DRP participation rate being one of
the highest for any listed investment company.
Bonus Option Issue
The Contango team worked closely with the WQG Board to design and develop a loyalty initiative to reward WQG
shareholders for their ongoing support.
On 17 February 2021, WQG issued eligible shareholders with bonus loyalty options (Options). The Options were issued
on a one (1) for three (3) basis allowing the holders to subscribe for new WQG shares at a fixed price of $1.50 per
share. The Options are listed on the ASX under the code “WQGOA” and commenced trading on 14 April 2021. The
Options are exercisable any time up to and including 31 August 2022.
Contango believes that the initiative rewards the loyalty and ongoing support of WQG’s existing shareholders as well
as providing potentially significant longer-term benefits to WQG shareholders including:
• expanding WQG’s scale and increasing the liquidity of WQG shares;
• increasing the breadth and depth of the WQG shareholder base;
• lowering WQG’s fixed operating cost per share; and
• reinforcing WQG’s position as a leading global equities listed investment company.
As at 30 September 2021, approximately 12.2 million Options had already been exercised.
WCM Quality Global Growth Fund (Quoted Managed Fund) (WCMQ)
WCMQ is an exchange-traded managed fund that is well supported in the direct and intermediary channels and is
approved for use on several leading wealth platforms.
At 30 June 2021, WCMQ’s FUM had reached over $305 million, growing by over 150% from June 2020.
WCMQ paid an unfranked distribution of 23.0727 cents per unit to investors in respect of the year ended 30 June 2021.
WCM Quality Global Growth Fund (Managed Fund)
The WCM Quality Global Growth Fund (Managed Fund) is available to retail investors via several wrap platforms. A
number of leading research houses have initiated coverage on the fund with two providing ‘Recommended’ ratings.
The fund is approved for use on several of Australia’s market leading wealth platforms and is included in a number of
model portfolios with various financial planning groups.
In June 2020, in response to investor demand, Contango added a new class of units (Class B) to WCM Quality Global
Growth Fund (Managed Fund). Class B units are hedged back into Australian dollars to reduce the risk associated
with exposure to international currencies. The Class B units have been well supported and have been awarded a
‘Recommended’ rating by a leading research house.
Managing Directors’ Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
7
At 30 June 2021, the unhedged Class A units had FUM of approximately $92 million and the hedged Class B
units had FUM of approximately $71 million, together growing the WCM Quality Global Growth Fund (Managed
Fund) FUM to a combined total of $163 million. This represents an increase in FUM of 265% from 30 June 2020.
Class A units paid an unfranked distribution of 21.5387 cents per unit to investors, and Class B units paid an
unfranked distribution of 44.1184 cents per unit to investors, in respect of FY2021.
WCM International Small Cap Growth Strategy Composite
The WCM International Small Cap Growth Strategy Composite delivered a return of 42.5% in FY2021,
significantly outperforming its benchmark, the MSCI ACWI ex USA Small Cap Index, by 7.2%. The rolling 2 years,
3 years, 5 years, and since inception returns for the strategy also well exceed the benchmark.
The WCM International Small Cap Growth Strategy Composite is available to wholesale investors via the WCM
International Small Cap Growth Fund (Managed Fund), an unlisted managed fund.
Annualised returns of the WCM International Small Cap Growth Strategy Composite5 versus its benchmark are
shown below:
5 Data as at 30 June 2021. Performance is in AUD, net of fees and includes the reinvestment of all income. Past performance is not
indicative of future performance. WCM applies the same investment principles, philosophy and execution approach of its WCM
International Small Cap Growth Composite (SIG), which was created 31 December 2014, to the WCM International Small Cap
Growth Fund (Managed Fund). It should be noted that due to certain factors, there may be variances between the investment returns
demonstrated by each portfolio in the future. The benchmark for SIG is the MSCI ACWI ex-US Small Cap Index. For further information
please refer to contango.com.au
1 Year
35.3%
2 Years
15.1%
3 Years
9.6%
5 Years
Inception
37.7%
26.3%
26.0%
26.1%
42.5%
12.2%
11.4%
MSCI ACWI ex USA Small Cap Index ($AUD)
WCM International Small Cap Growth Strategy Composite
WCM International Small Cap Growth Fund (Managed Fund)
The WCM International Small Cap Growth Fund (Managed Fund) is a wholesale vehicle targeted at leading
wealth managers and high net worth investors. Due to global demand and outstanding investment
performance, access to this strategy for new investors is expected to close in the coming months.
At 30 June 2021, the fund had FUM of approximately $153 million, growing by over 290% from 30 June 2020.
The WCM International Small Cap Growth Fund (Managed Fund) paid an unfranked distribution of 49.153172
cents per unit to investors in respect of FY2021.
Managing Directors’ Report For the Year Ended 30 June 2021
8
6 Data as at 30 June 2021. Performance is in AUD, net of fees and includes the reinvestment of all income. Past performance is not
indicative of future performance. WCM applies the same investment principles, philosophy and execution approach of its WCM Quality
Global Growth Long Short Strategy (QGLS), which was created 30 June 2014, to the Contango Income Generator Limited portfolio. It
should be noted that due to certain factors, there may be variances between the investment returns demonstrated by each portfolio in
the future. The benchmark for QGLS is the MSCI All Country World Index (MSCI ACWI). For further information please refer to contango.
com.au.
WCM Quality Global Growth Long Short Equity Strategy Composite
The WCM Quality Global Growth Long Short Equity Strategy Composite has, since its inception on 30 June 2014,
generated a return of 23.0% per annum, outperforming its benchmark, the MSCI All Country World Index, by an
annualised 9.6% per annum6.
The WCM Quality Global Growth Long Short Equity Strategy has recently been made available to investors via WCM
Global Long Short Limited, an ASX listed investment company.
Annualised returns of the WCM Quality Global Growth Long Short Equity Strategy Composite versus its benchmark
are shown below:
1 Year
22.2%
2 Years
16.3%
3 Years
5 Years
Inception
22.2%
24.4%
20.2%
23.0%
13.5%
13.3%
13.4%
MSCI ACWI Index ($AUD)
WCM Quality Global Growth Long Short Strategy Composite
13.6%
WCM Global Long Short Limited (ASX:WLS) (formerly Contango Income Generator Limited
(ASX:CIE))
On 18 September 2020, CIE’s shareholders approved the adoption of a new strategy for CIE’s investment portfolio,
namely a global long short strategy managed by WCM. The WCM Quality Global Growth Long Short Equity Strategy
(QGLS) is the latest addition to the WCM product suite that is promoted by Contango to its Australian clients.
On 15 January 2021, the Board of CIE entered into a binding term sheet with WAM Capital Limited (WAM) and
WAM’s investment manager in relation to a selective buy-back of WAM’s 69.6% holding of ordinary shares in CIE
following the close of WAM’s takeover offer for CIE on 13 November 2020.
At an Extraordinary General Meeting of CIE held on 14 July 2021 CIE shareholders approved a special resolution
to buy-back WAM’s 69.6% holding of ordinary shares in CIE and approved a change of name to WCM Global Long
Short Limited (WLS).
With the adoption of the new name and strategy, Contango is now working with the Board of WLS on several
initiatives to market the WCM long short strategy.
Managing Directors’ Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
9
Income Update
Contango has two income products that are targeted at the direct and intermediary market – the Switzer Higher
Yield Fund (Managed Fund) (SHYF) and the Switzer Dividend Growth Fund (Quoted Managed Fund) (SWTZ).
During FY2021, Contango announced that it had partnered with two best of breed investment managers to
manage these products with retail interest in the advised and self-directed markets.
Switzer Higher Yield Fund (Managed Fund) (SHYF)
On 2 December 2020, Contango announced the appointment of Coolabah Capital Institutional Investments, a
leading active credit manager, to manage SHYF.
SHYF is a zero-duration bond fund that seeks to provide investors with an attractive cash yield with low capital
volatility by investing in a portfolio of high quality and liquid fixed income securities.
The existing $23 million fund was re-launched as a quoted managed fund with its units quoted on the Chi-X
Australia Exchange on 23 December 2020. Investors may purchase and redeem units in SHYF via their broker or
directly with Switzer Asset Management Limited, the responsible entity.
SHYF was the first fixed income product in Australia to launch as a quoted managed fund and just the third
product to use this structure.
Since the re-launch of the fund, SHYF has delivered a return of 1.3% net of fees, which exceeds the 0.8% return for
its benchmark of RBA Cash Rate + 1.5%.
Switzer Dividend Growth Fund (Quoted Managed Fund) (SWTZ)
On 21 April 2021, Contango announced the appointment of Blackmore Capital Pty Limited (Blackmore) to manage
SWTZ.
SWTZ aims to provide investors with tax effective income and long-term capital growth by investing in a core
portfolio of blue-chip Australian shares.
With the appointment of Blackmore as the investment manager of SWTZ, Contango’s transition from a product
manufacturer to a marketing and distribution platform was completed.
At 30 June 2021, SWTZ had 2,495 unitholders and FUM of approximately $82 million. While the current landscape
has been challenging for value oriented, yield generation stocks, SWTZ has delivered on its objective of providing a
consistent and reliable income stream for its investors.
For FY2021, the fund delivered a return of 25.6% net of fees, marginally below its benchmark, the ASX200
Accumulation Over Index, of 27.8%. SWTZ paid a distribution yield of 2.9%, or 4.2% including franking credits, in
FY2021.
Growth in Retail Investor Base
As at 30 June 2021, Contango had 14,460 direct unitholders and shareholders across its product suite. This is an
increase of 18.6% during FY2021.
The Year Ahead
Contango’s strategic priorities for the year ahead are to sustain its growth in FUM, to deliver exceptional client
service through its marketing and distribution platform, to strengthen its existing manager partnerships, and
identify best of breed partners for the launch of new products through Contango’s well regarded distribution
platform.
Managing Directors’ Report For the Year Ended 30 June 2021
10
Martin Switzer
CEO and Managing Director
Contango Asset Management
Limited
The Group’s future results will largely depend on a combination of its
ability to grow and retain FUM, strong investment performance of its
funds, and partnering with new, high quality fund managers. This will
be supported by the continued commitment to invest in the future
growth of the business in a prudent manner, while maintaining a
strong focus on costs.
With an operating structure and business model that can grow FUM
and build scale, the Group is set to achieve profitability shortly and
realise its long-term growth objectives.
Yours Sincerely
Martin Switzer
CEO and Managing Director
Contango Asset Management Limited
Managing Directors’ Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
11
FINANCIAL REPORT
FOR THE PERIOD ENDED 30 JUNE 2021
Contango Asset Management Limited
and Controlled Entities
ACN: 080 277 998
12
Financial Report For the Year Ended 30 June 2021
Contents
Corporate Information
12
Corporate Governance Statement
13
Directors’ Report
14
Remuneration Report (Audited)
21
Auditor’s Independence Declaration
27
Financial Statements
28
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
28
Consolidated Statement of Financial Position
29
Consolidated Statement of Changes in Equity
30
Consolidated Statement of Cash Flows
31
Notes to the Consolidated Financial Statements
32
Directors’ Declaration
60
Independent Auditor’s Report
61
Additional Information for Listed Public Companies
66
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
13
Contents For the Year Ended 30 June 2021
Company Secretaries
Anthony Rule
Kristy Do (Appointed 1 July 2021)
Principal Place of Business
Level 6
10 Spring Street
Sydney NSW 2000
Telephone: +61 2 9048 7888
Share Register
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Ph: +61 2 8280 7111
Corporate Information
This financial report covers the consolidated entity comprising Contango Asset Management
Limited and its controlled entities (the Group) for the financial year ended 30 June 2021.
The functional and presentation currency of the Group is Australian Dollars ($).
Directors
Roger Amos (Chairman)
Martin Switzer (Managing Director)
Nerida Campbell
Ken Poutakidis
Registered Office
Level 6
10 Spring Street
Sydney NSW 2000
Telephone: +61 2 9048 7888
Auditors
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000
Stock Exchange Listings
The Company is listed on the
Australian Securities Exchange
ASX Code – CGA
Corporate Information For the Year Ended 30 June 2021
12
The Board and management of Contango Asset Management
Limited (the Company) are committed to conducting the Group’s
business in an ethical manner and in accordance with the highest
standards of corporate governance. The Company has adopted
and has complied with the ASX Corporate Governance Principles
and Recommendations (Fourth Edition) (Recommendations)
to the extent appropriate to the size and nature of the Group’s
operations.
The Company has prepared a statement which sets out
the corporate governance practices that were in operation
throughout the financial year for the Company, identifies any
Recommendations that have not been followed and provides
reasons for not following such Recommendations (the Corporate
Governance Statement).
The Corporate Governance Statement is accurate and up to date
as at 16 August 2021 and has been approved by the Board.
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the
Corporate Governance Statement is available for review on
the Company’s website (www.contango.com.au) and will be
lodged together with an Appendix 4G at the same time that the
Company’s Annual Report is lodged with ASX.
The Appendix 4G will identify each Recommendation that needs to
be reported against by the Company and will provide shareholders
with information as to where relevant governance disclosures can
be found.
The Company’s corporate governance policies and charters are all
available on the Company’s website (www.contango.com.au)
Corporate Governance
Statement
Corporate Governance Statement For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
13
The Directors of Contango Asset Management Limited (the
Company) present the financial report for the Company and
its controlled entities (the Consolidated Entity or the Group)
for the financial year ended 30 June 2021.
1. General Information
Directors
The names of the Directors in office at any time during, or
since the end of, the financial year are:
ROGER AMOS
Non-Executive Chairman
MARTIN SWITZER
Managing Director and Chief Executive Officer
NERIDA CAMPBELL
Non-Executive Director
KEN POUTAKIDIS
Non-Executive Director
Directors have been in office since the start of the financial
year to the date of this report unless otherwise stated.
Directors’ Report
Directors' Report For the Year Ended 30 June 2021
14
Roger Amos
FCA, FAICD
Non-Executive Chairman
Roger was appointed to the Board of Contango Asset
Management Limited in June 2007 and became
Chairman six months later. He was a former director of
Austar United Communications Limited, Enero Group
Limited and REA Group Limited. He was also a director
of 3P Learning Limited. Roger previously had a long and
distinguished career with the international accounting
firm KPMG, retiring in June 2006 after 25 years as a
partner.
SPECIAL RESPONSIBILITIES:
Chairman
OTHER CURRENT DIRECTORSHIPS:
Roger is an independent director of HT & E Limited.
Information on Directors
The skills, experience and expertise of each person who is a Director of the Company during
the financial year is provided below, together with details of the Company Secretaries.
Martin Switzer
B. Econ (Hons)
Executive Director
Before his appointment as Managing Director and
Chief Executive Officer, Martin was previously the Chief
Operating Officer of Switzer Financial Group, a content
and financial services business. He has been a host on
the Sky News Business channel, as well as a consultant
to the Australian Defence Force Financial Services
Consumer Centre.
SPECIAL RESPONSIBILITIES:
Managing Director and Chief Executive Officer
OTHER CURRENT DIRECTORSHIPS:
Martin is currently a director of WCM Global Growth
Limited and WCM Global Long Short Limited.
Directors' Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
15
Nerida Campbell
B.Bus, CA, FINSIA, GAICD
Non-Executive Director
Nerida was appointed to the board on 17 August 2018
following a 25-year career in the financial services
industry. Most recently she acted as the Chief Operating
Officer of Magellan Financial Group Limited, having also
held the roles of Chief Financial Officer and Company
Secretary. Prior to this, Nerida was the CFO of UBS AG
Australia, and had roles at ABN Amro Australia Limited,
Bankers Trust Australia Limited and Ernst and Whinney.
She was also a member of the ASX Disciplinary Tribunal
Panel.
SPECIAL RESPONSIBILITIES:
Chair of Audit and Risk Committee
OTHER CURRENT DIRECTORSHIPS:
None
Ken Poutakidis
B.Bus
Non-Executive Director
Ken is a corporate advisor and corporate finance
executive with over 20 years of finance experience. He
is Managing Director and Founder of Avenue Advisory,
a boutique advisory firm providing corporate finance
and capital markets advice to emerging companies. He
has previously served as Chairman of the Board and
Non-Executive Director for numerous publicly listed ASX
companies including NAOS Small Cap Opportunities
Company Limited, Mach7 Technologies Limited and
Top Shelf International Limited and Wellness and
Beauty Solutions Limited.
SPECIAL RESPONSIBILITIES:
Chair of Remuneration and Nomination Committee
OTHER CURRENT DIRECTORSHIPS:
None
Directors' Report For the Year Ended 30 June 2021
16
Anthony Rule
(Chief Financial Officer)
Anthony has over 17 years’ experience in the financial
services industry. During this time, he has held senior
finance roles across both the publicly listed and private
sectors including the Commonwealth Bank of Australia
and most recently at Hunter Hall International where
he held the role of Head of Finance and Operations.
Anthony is also Company Secretary of ASX listed
entities WCM Global Growth Limited and WCM Global
Long Short Limited.
Anthony holds a Bachelor of Business, is a member of
CPA Australia and a fellow of the Governance Institute
of Australia.
Kristy Do
(General Counsel and Company Secretary)
(Appointed 1 July 2021)
Kristy Do has over 23 years’ experience as a legal
practitioner with over 19 years in the financial
services industry. Prior to joining Contango Asset
Management Limited, Kristy was General Counsel
& Company Secretary for Nikko Asset Management,
Company Secretary for Mirvac Group, Senior Lawyer
for ANZ Wealth and a legal practitioner for Colins
Biggers and Paisley. Kristy also spent 6 years with the
Australian Securities and Investments Commission in
enforcement litigation and compliance roles ending
her service there as Manager of the Compliance
Directorate for Financial Services responsible for
ensuring compliance with Australian financial services
law by large entities regulated by ASIC. Kristy is a co-
opted member of the Board Governance Committee
for Lifeline Australia. Kristy is also Company Secretary
of ASX listed entities WCM Global Growth Limited and
WCM Global Long Short Limited.
Kristy holds a Bachelor of Laws and Bachelor of
Science (Architecture) degrees from the University of
Sydney.
Company Secretary
The following persons held the position of Company Secretary during the financial year:
Directors' Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
17
2. Principal Activities
The principal activity of the Group was the provision of funds management services to retail and wholesale
clients.
3. Review of financial results and operations
The Group’s total revenue for the year was $5,720,000 (30 June 2020: $4,933,000). The Group’s net loss after
tax for the year was $800,000 (30 June 2020: net loss after tax $1,163,000). Refer to the Managing Director’s
Report on page 3 for further information, including details on the Group’s results, strategy and future outlook.
4. Significant changes in state of affairs
Other than stated above in the Review of Financial Results and Operations there were no other significant
changes in the state of affairs of the Group during the financial year.
5. Events after the reporting date
On 2 July 2021, 172,500 options in the Company were exercised at a price of $0.60 per option. Following the
exercise of these options, the Company has no options on issue.
On 14 July 2021, Contango Income Generator Limited, a listed investment company managed by the
Group, held an Extraordinary General Meeting where its shareholders approved its change of name to WCM
Global Long Short Limited, and a selective buy-back of shares of approximately $67 million. This reduced
the Group’s funds under management by approximately $67 million. In addition, the funds managed by the
Company paid approximately $22 million in cash distributions (net of distribution reinvestment) to their
respective investors in July 2021.
The Directors are not aware of any other matters or circumstances that have arisen since the end of the
financial year which significantly affect or could significantly affect the operations of the Group, the results of
those operations or the state of affairs of the Group in future financial years.
6. Dividends paid or recommended
No dividends were paid or provided for during the financial year and no dividend is recommended in respect
of the year (2020: $nil).
7. Future developments and results
Refer to the Managing Director’s Report on page 3 for information on future developments and results.
8. Environmental issues
The Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or territory of Australia.
Directors' Report For the Year Ended 30 June 2021
18
9. Meetings of Directors
The number of meetings of the Company’s Board of Directors and its committees held during the year
ended 30 June 2021, and the number of meetings attended by each Director are:
Directors’ Meetings
Audit and Risk Committee
Remuneration and
Nomination Committee
Attended
Held
Attended
Held
Attended
Held
Roger Amos
16
16
4
4
3
3
Martin Switzer
15
15
N/A
N/A
N/A
N/A
Nerida Campbell
16
16
4
4
3
3
Ken Poutakidis
15
16
4
4
3
3
Held:
represents the number of meetings held during the time the Director held office and which the Director was
eligible to attend.
10. Indemnification and insurance of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the Directors,
the company secretaries, and all executive officers of the Company and of any related body corporate
against a liability incurred as such by a Director, secretary or executive officer to the extent permitted by
the Corporations Act 2001.
The Directors have not included details of the nature of the liabilities covered or the amount of the
premium paid in respect of the Directors’ and officers’ liability, costs and charges, as such disclosure
is prohibited under the terms of the contract. To the extent permitted by law and professional
regulations, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of
their engagement against claims by third parties arising from the audit (for an unspecified amount). No
payment has been made by the Company to Ernst & Young in this respect during or since the financial
year ended 30 June 2021.
The Company has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any
related body corporate against a liability incurred as such by an officer or auditor.
11. Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party for the purpose of taking responsibility on behalf of the Company for all of those proceedings.
Directors' Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
19
12. Non-audit services
Details of the amounts paid or payable to the auditor for non audit services provided during the
financial year by the auditor are outlined in Note 28 to the consolidated financial statements.
The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied
that the provision of non audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
services disclosed in Note 28 did not compromise the external auditor’s independence for the following
reasons:
•
all non audit services are reviewed and approved to ensure they do not adversely affect the integrity
and objectivity of the auditor; and
•
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s
own work, acting in a management or decision making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks and rewards.
13. Auditor’s independence declaration
The auditor’s independence declaration in accordance with section 307C the Corporations Act 2001 for
the year ended 30 June 2021 has been received and can be found on page 22 of the financial report.
14. Rounding of amounts
The Company has applied the relief available to it under ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191. Accordingly, amounts in the financial statements have been
rounded to the nearest thousand dollars (unless otherwise stated).
15. Options
The number of options on issue at year end is 172,500 (2020: 345,000). Details of the options are set
out at Note 20(a) to the consolidated financial statements.
Directors' Report For the Year Ended 30 June 2021
20
Remuneration Report
(Audited)
The Remuneration Report for the year ended 30 June 2021 outlines the Director and executive remuneration
arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its
regulations. For the purposes of this Report, key management personnel (KMP) of the Group are defined as
those persons having authority and responsibility for planning, directing and controlling the major activities
of the Group, directly or indirectly, including any Director of the parent company.
Remuneration policy
The Remuneration and Nomination Committee of the Board of Directors assists the Board to ensure that the
Group:
• has a Board of Directors with the appropriate skills and experience to undertake its duties and
responsibilities; and
• adopts appropriate remuneration policies and procedures which are designed to meet the needs of the
Group and to enhance individual employee and corporate performance.
Non-Executive Directors’ remuneration
On appointment to the Board, all Non Executive Directors enter into a service agreement with the Company
in the form of a letter of appointment. The letter summarises the Board policies and terms, including
remuneration, relevant to the office of Director. The terms of service for all Non-Executive Directors is 3 years.
The Remuneration and Nomination Committee sets the framework for Non-Executive Director remuneration.
Non-Executive Directors receive a fixed annual fee and compulsory superannuation contributions. They do
not receive bonuses or incentive payments. The maximum annual aggregate total remuneration for Non-
Executive Directors is $350,000 which was approved by shareholders at the annual general meeting of the
Company held on 29 November 2004.
Executive remuneration
The Remuneration and Nomination Committee reviews and makes recommendations to the Board on
the Group’s executive and employee remuneration and incentive policies. The Group aims to reward its
executives and employees based on their position and responsibility through a combination of fixed and
variable components of remuneration.
• All executives and employees receive a salary package comprising a base salary (which is based on
factors such as length of service and experience), superannuation, fringe benefits, and they may also be
eligible to receive performance incentives.
• Short term incentives may be paid each year to executives and employees as a reward for the
achievement of annual performance objectives.
• Performance incentives paid as share-based payments in the form of options or rights are intended to
align the interests of executives with those of the Group’s shareholders.
The Remuneration and Nomination Committee reviews executive salary packages annually by reference
to the Group’s performance, the individual executive’s performance and comparable industry sector
remuneration information.
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
21
Remuneration report (Audited) For the Year Ended 30 June 2021
The Group entered into an employment agreement with Martin Switzer as Managing Director on
22 August 2018 for no fixed term. With effect from 1 July 2018, Martin’s total fixed remuneration is
$430,000 per annum plus superannuation.
Under his employment agreement, Mr Switzer is entitled to incentive awards calculated by
reference to his total fixed remuneration. Mr Switzer’s incentive award maybe up to a maximum of
100% of his base salary comprising up to $150,500 in cash (35%) and up to $279,500 in rights over
new shares in the Company (65%). 75% of the incentive award is dependent on achieving specified
funds under management net inflows targets, and the remaining 25% of the incentive award is
dependent on achieving other financial and non-financial metrics that have been set by the Board.
Termination of Mr Switzer’s employment agreement can be made by either party with 6 months’
notice (or payment in lieu), other than where employment is terminated for cause, in which case
the Company can terminate with no notice period.
Remuneration changes in 2020/2021
In April 2020, Contango provided an update to the ASX on the impact of COVID-19 on its business,
including that with effect from 1 April 2020 the Board had:
• reduced the CEO and Managing Director’s base salary (inclusive of superannuation) by
approximately 16%; and
• reduced non-executive directors’ fees by 10%.
On 16 October 2020, Contango provided a further update to the ASX on its business, including
that as a result of the resilience of the business the Board had restored the CEO and Managing
Director’s base salary to a level 8% below its pre-COVID-19 level. The Board further proposed the
issuance of 60,303 new shares with a total value of $43,750 to the Managing Director and CEO
in recognition of base salary forgone. The issuance of these shares is subject to shareholder
approval at the Company’s 2021 AGM.
The Non-Executive Directors’ fees were fully reinstated from 1 January 2021.
Renumeration Report (Audited) For the Year Ended 30 June 2021
22
The following table of benefits and payment details represents the components of the current year and comparative year
remuneration expense for each member of the KMP of the Group. Such amounts have been calculated in accordance
with Australian Accounting Standards.
Table of benefits and payments
Member
Year
Short-term benefits
Post-employment
Long-term
benefits
Share
based
payments
$
Total
Remuneration
$
Cash
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Superannuation
$
Other
$
Long
Service
Leave
$
Directors
Roger
Amos
2021
85,500
-
-
8,123
-
-
-
93,633
2020
87,750
-
-
8,336
-
-
-
96,086
Martin
Switzer1
2021
384,517
100,000
-
21,694
-
10,462
67,3503
584,023
2020
412,497
-
-
21,003
-
5,440
8,600
447,540
Nerida
Campbell
2021
47,500
-
-
4,513
-
-
-
52,013
2020
48,750
-
-
4,631
-
-
-
53,381
Ken
Poutakidis
2021
47,500
-
-
4,513
-
-
-
52,013
2020
25,865
-
-
2,457
-
-
-
28,322
Charles
Aitken2
2021
-
-
-
-
-
-
-
-
2020
25,000
-
-
2,375
-
-
-
27,375
Total
2021
565,017
100,000
-
38,843
-
10,462
67,350
781,672
2020
599,862
-
-
38,802
-
5,440
8,600
652,704
1 Cash bonus was granted on 30 June 2021, which represents 24% of Mr Switzer’s total base salary. This amount is yet to be paid at
signing of the financial statements.
2 Resigned on 17 December 2019
3 The share-based payment amount in 2021 includes: 70,000 performance rights issued in December 2019 which vested in June 2021
($23,600); and 60,303 shares ($43,750 using a VWAP of $0.7255) which will be issued subject to shareholder approval at the 2021
AGM.
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
23
Remuneration Report (Audited) For the Year Ended 30 June 2021
Securities received that are not performance related
No KMP of the Group are entitled to receive securities which are not performance based linked as part of their
remuneration package.
Description of shares issued as remuneration
On 17 December 2019, the Company issued 70,000 performance rights to the Managing Director. The
issuance of these performance rights had been approved by shareholders at the Company’s Annual General
Meeting in November 2020. These performance rights vested and were exercised on 16 June 2021.
During the year 60,303 ordinary shares were approved by the Directors for issuance as remuneration to the
Managing Director. The issuance is subject to shareholder approval at the Company’s Annual General Meeting
in November 2021.
All performance rights that were issued by the Company, entitle the holder to ordinary shares in Contango
Asset Management Limited once exercised.
There were no loans advanced to KMP during the current or prior year.
KMP shareholdings
The number of ordinary shares in the Company held by each KMP of the Group during the financial year is as
follows:
Opening Balance
1 July 2020
Net Acquisitions/
(Disposals)
Closing Balance
30 June 2021
Directors
Roger Amos
203,624
-
203,624
Martin Switzer
7,058,137
70,000
7,128,137
Nerida Campbell
95,000
-
95,000
Ken Poutakidis
566,666
-
566,666
7,923,427
70,000
7,993,427
Remuneration Report (Audited) For the Year Ended 30 June 2021
24
The number of shares or units held by each KMP and their related parties in the Group’s listed investment
companies or funds is as follows:
Opening Balance
1 July 2020
Net Acquisitions/
(Disposals)
Closing Balance
30 June 2021
WCM Global Growth
Martin Switzer
20,000
299
20,299
Roger Amos
61,658
1,838
63,496
Ken Poutakidis
36,363
1,084
37,447
WCM Quality Global Growth Fund
Nerida Campbell
20,000
-
20,000
Martin Switzer
17,300
-
17,300
WCM Global Long Short
-
-
Martin Switzer
72,000
48,000
120,000
Roger Amos
-
39,000
39,000
Switzer Dividend Growth Fund
Martin Switzer
60,738
1,712
62,450
Switzer Higher Yield Fund
Nerida Campbell
-
755
755
WCM International Small Cap Growth Fund
Nerida Campbell
-
9,987
9,987
288,059
102,675
390,734
Performance Rights Granted as Remuneration
1 July 2020
Balance at
Beginning
of Year
Grant Details
Vested
Lapsed
30 June
2021
Balance at
End of Year
Issue Date
No.
Value
$
(Note 1)
Exercisable
No.
Value
$
No.
KMP
Martin Switzer
70,000
17/12/2019
70,000
32,200
70,000
32,200
-
-
70,000
70,000
32,200
70,000
32,200
-
-
Note 1 The fair value of performance rights granted as remuneration as shown in the above table has been determined in
accordance with Australian Accounting Standards and will be recognised as an expense over the relevant vesting period to
the extent that conditions necessary for vesting are satisfied.
Remuneration Report (Audited) For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
25
Description of Performance Rights Issued as Remuneration
Details of the performance rights granted as remuneration to those KMP listed in the previous table are as
follows:
Grant Date
Issuer
Entitlement
on Exercise
Dates
Exercisable
Exercise
Price
$
Value per
Rights at
Grant Date
$
Amount Paid/
Payable by
Recipient
$
17/12/2019
CGA
1:1 ordinary
shares in CGA
16 June 2021
0.00
0.460
0.00
The value of performance rights at grant date were determined using the Black-Scholes method.
The performance rights vested and were also exercised on 16 June 2021.
End of Audited Remuneration Report
This Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution
of the Board of Directors.
Director:
Roger Amos
Chairman
Dated this 16 day of August 2021
Remuneration Report (Audited) For the Year Ended 30 June 2021
26
Auditor’s Independence Declaration to the Directors of Contango
Asset Management Limited
As lead auditor for the audit of the financial report of Contango Asset Management Limited for the
financial year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Contango Asset Management Limited and the entities it controlled
during the financial year.
Ernst & Young
Luke Slater
Partner
16 August 2021
Auditor’s Independence Declaration
Auditor's Independence Declaration For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
27
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2021
Note
2021
000’s
$
2020
000’s
$
Revenue
Investment management fees
2(a)
4,776
3,743
Performance fees
2(a)
128
165
Service fees
2(a)
414
500
Interest income
-
6
Effective interest income on NAML receivable
210
305
Government grant income
183
207
Other income
9
7
Total revenue
5,720
4,933
Expenses
Employee benefits expense
2,940
2,892
Corporate and administrative expenses
3(a)
1,868
1,515
Direct Fund expenses
1,122
1,154
Professional services expense
364
437
Finance costs
3(b)
114
88
Depreciation and amortisation expense
3(c)
112
10
Total expenses
6,520
6,096
Net loss before income tax
(800)
(1,163)
Income tax credit
4
-
-
Net loss after income tax
(800)
(1,163)
Other comprehensive loss, net of income tax
Other comprehensive loss
-
-
Total comprehensive loss attributable to members of the Company
(800)
(1,163)
Loss per share attributable to the ordinary equity holders of the Company:
Basic loss per share
19
(1.69)
(2.46)
Diluted loss per share
19
(1.69)
(2.46)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the
accompanying Notes to the Consolidated Financial Statements.
Financial Statements
Financial Statements For the Year Ended 30 June 2021
28
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Note
2021
000’s
$
2020
000’s
$
ASSETS
Current Assets
Cash and cash equivalents
5
5,525
3,941
Trade and other receivables
6
2,878
2,737
Other assets
7
220
188
Total current assets
8,623
6,866
Non-Current assets
Trade and other receivables
6
-
1,576
Other financial assets
8
96
74
Property, plant and equipment
19
22
Right-of-use asset
9
312
-
Goodwill
10
4,806
4,806
Total non-current assets
5,233
6,478
Totals Assets
13,856
13,344
LIABILITIES
Current Liabilities
Trade and other payables
11
2,644
1,976
Provisions
12
143
267
Lease liabilities
13
98
-
Total current liabilities
2,885
2,243
Non-Current Liabilities
Provisions
12
52
64
Lease liabilities
13
293
-
Borrowings
14
1,252
1,252
Total non-current liabilities
1,597
1,316
Total Liabilities
4,482
3,559
NET ASSETS
9,374
9,785
EQUITY
Issued capital
15
150,193
149,839
Reserves
16
78
43
Accumulated losses
17
(140,897)
(140,097)
Total Equity
9,374
9,785
The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying Notes to the
Consolidated Financial Statements.
Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2021
2020
Note
Issued Capital
000’s
$
Share-based
Payment
Reserve
000’s
$
Accumulated
Losses
000’s
$
Total
000’s
$
Balance at 1 July 2019
149,839
-
(138,934)
10,905
Loss for the year
-
-
(1,163)
(1,163)
Total comprehensive loss for the year
-
-
(1,163)
9,742
Transactions with owners in their capacity as owners
Issue of share capital, net
of transaction costs
-
-
-
-
Share-based payments
16
-
43
-
43
Balance at 30 June 2020
149,839
43
(140,097)
9,785
2021
Note
Issued Capital
000’s
$
Share-based
Payment
Reserve
000’s
$
Accumulated
Losses
000’s
$
Total
000’s
$
Balance at 1 July 2020
149,839
43
(140,097)
9,785
Loss for the year
-
-
(800)
(800)
Total comprehensive loss for the year
-
-
(800)
(800)
Transactions with owners in their capacity as owners
-
-
-
-
Issue of share capital, net
of transaction costs
15
354
-
-
354
Share-based payments
16
-
35
-
35
Balance at 30 June 2021
150,193
78
(140,897)
9,374
The Statement of Changes in Equity is to be read in conjunction with the accompanying Notes to the Consolidated
Financial Statements.
Financial Statements For the Year Ended 30 June 2021
30
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2021
Note
2021
000’s
$
2020
000’s
$
Cash flows from operating activities:
Receipts from customers
7,805
4,872
Receipts from governments and others
183
137
Payments to suppliers and employees
(8,204)
(6,810)
Underwriting fee paid
-
(1,212)
Interest received
9
13
Finance costs paid
(100)
(60)
Net cash outflow from operating activities
29(a)
(307)
(3,060)
Cash flows from investing activities:
Purchase of property, plant and equipment
(5)
(17)
Proceeds from NAOS Asset Management Limited
1,826
1,826
Net cash inflow from investing activities
1,821
1,809
Cash flows from financing activities:
Proceeds from borrowings
29(b)
-
750
Repayment of lease liabilities
29(b)
(33)
-
Proceeds from issue of share capital
103
-
Net cash inflow from financing activities
70
750
Net decrease in cash and cash equivalents held
1,584
(501)
Cash and cash equivalents at beginning of year
3,941
4,442
Cash and cash equivalents at end of financial year
5
5,525
3,941
The Consolidated Statement of Cash Flows is to the read in conjunction with the accompanying Notes to the
Consolidated Financial Statements.
Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
31
Note 1 Statement of Significant
Accounting Policies
General Information
The consolidated financial statements and notes
represent those of Contango Asset Management Limited
as a group consisting of Contango Asset Management
Limited (the Company) and the entities it controlled at
the end of, or during, the year (the Group). The financial
statements are presented in Australian dollars, which is
the Group’s functional and presentation currency.
Contango Asset Management Limited is a listed public
company limited by shares, incorporated and domiciled
in Australia.
The consolidated financial statements were authorised
for issue, in accordance with a resolution of Directors,
and signed on the same date as the Directors’ Declaration.
Basis of Preparation
These general purpose financial statements have been
prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations
of the Australian Accounting Standards Board and
International Financial Reporting Standards as issued by
the International Accounting Standards Board. The Group
is a for profit entity for financial reporting purposes under
Australian Accounting Standards.
The financial statements have been prepared on a going
concern basis and under the historical cost convention
except for the measurement at fair value of selected non
current assets, financial assets and financial liabilities.
New Standards adopted as at 1 July 2020
The Group has adopted all of the new and revised
Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant
to its operations and effective for the current year. New
and revised Standards and amendments thereof and
Interpretations effective for the current year that are
relevant to the Group are:
•
AASB 2018-6 Amendments to Australian Accounting
Standards – Definition of a Business
•
AASB 2018-7 Amendments to Australian Accounting
Standards – Definition of Material
•
AASB 2019-1 Amendments to Australian Accounting
Standards – References to the Conceptual
Framework
The accounting policies have been consistently applied,
unless otherwise stated.
(a) Current vs non-current classification
The Group presents assets and liabilities in the
Consolidated Statement of Financial Position based on
a current/non-current classification. An asset is current
when it is:
•
Expected to be realised or intended to be sold or
consumed in the normal operating cycle
•
Held primarily for the purpose of trading
•
Expected to be realised within 12 months after the
reporting period
Or
•
Cash or cash equivalent except if it is restricted from
being exchanged or used to settle a liability for at
least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is:
•
Expected to be settled in the normal operating cycle
•
Held primarily for the purpose of trading
•
Due to be settled within twelve months after the
reporting period
Or
Notes to the Consolidated
Financial Statements
For the Year Ended 30 June 2020
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
32
•
There is no unconditional right to defer the settlement
of the liability for at least 12 months after the
reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
(b) Principles of consolidation
The consolidated financial statements incorporate
all of the assets, liabilities and results of the parent
company, Contango Asset Management Limited, and
all of its subsidiaries (including any structured entities).
Subsidiaries are entities the parent controls. The parent
controls an entity when it 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
over the entity. A list of the subsidiaries is provided in
Note 23.
The assets, liabilities and results of all subsidiaries are
fully consolidated into the financial statements of the
Group from the date on which control is obtained by the
Group. The consolidation of a subsidiary is discontinued
from the date that control ceases. Intercompany
transactions, balances and unrealised gains or losses on
transactions between group entities are fully eliminated
on consolidation. Accounting policies of subsidiaries
have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies
adopted by the Group.
(c) Business combinations
Business combinations occur where an acquirer obtains
control over one or more businesses.
A business combination is accounted for by applying the
acquisition method, unless it is a combination involving
entities or businesses under common control. The
business combination will be accounted for from the
date that control is obtained, whereby the fair value of
the identifiable assets acquired, and liabilities (including
contingent liabilities) assumed is recognised (subject to
certain limited exemptions).
When measuring the consideration transferred in the
business combination, any asset or liability resulting
from a contingent consideration arrangement is also
included. Subsequent to initial recognition, contingent
consideration classified as equity is not re-measured and
its subsequent settlement is accounted for within equity.
Contingent consideration classified as an asset or liability
is re-measured in each reporting period to fair value,
recognising any change to fair value in profit or loss,
unless the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to business
combinations, other than those associated with the issue
of a financial instrument, are recognised as expenses in
profit or loss when incurred.
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain purchase.
(d) Goodwill
Goodwill is carried at cost less accumulated impairment
losses. Goodwill is calculated as the excess of the sum
of:
i. the consideration transferred
ii. any non controlling interest (determined under either
the full goodwill or proportionate interest method),
and
iii. the acquisition date fair value of any previously held
equity interest
over the acquisition date fair value of net identifiable
assets acquired.
The acquisition date fair value of the consideration
transferred for a business combination plus the
acquisition date fair value of any previously held equity
interest shall form the cost of the investment in the
separate financial statements.
Fair value measurements in any pre existing equity
holdings are recognised in profit or loss in the period in
which they arise. Where changes in the value of such
equity holdings had previously been recognised in other
comprehensive income, such amounts are recycled to
profit or loss.
Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill on acquisition of associates is
included in investments in associates.
Goodwill is tested for impairment annually and is
allocated to the Group’s cash generating units or groups
of cash generating units, representing the lowest level
at which goodwill is monitored and not larger than an
operating segment. Gains and losses on the disposal of
an entity include the carrying amount of goodwill related
to the entity disposed of.
Changes in the ownership interests in a subsidiary
that do not result in a loss of control are accounted for
as equity transactions and do not affect the carrying
amounts of goodwill.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
33
(e) Tax consolidation
Contango Asset Management Limited and its wholly
owned subsidiaries are consolidated for tax purposes.
The Company and its wholly owned Australian
subsidiaries have formed a tax-consolidated group with
effect from 1 July 2003. The head entity within the group
is Contango Asset Management Limited.
The members of the tax-consolidated group are identified
in Note 23. Tax expense/credit, deferred tax liabilities and
deferred tax assets arising from temporary differences
of the members of the tax-consolidated group are
recognised in the separate financial statements of
the members of the tax-consolidated group using the
“separate taxpayer within group” approach by reference to
the carrying amounts in the separate financial statements
of each entity and the tax values applying under tax
consolidation.
Current tax liabilities and assets and deferred tax
assets arising from unused tax losses and relevant tax
credits of the members of the tax-consolidated group
are recognised by the Company (as head entity in the
tax-consolidated group). Due to the existence of a tax
funding arrangement between the entities in the tax-
consolidated group, amounts are recognised as payable
to or receivable by the Company and each member of
the group in relation to the tax contribution amounts
paid or payable between the parent entity and the other
members of the tax-consolidated group in accordance
with the arrangement.
(f)
Income tax
The income tax expense (credit) for the year comprises
current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to profit or loss
is the tax payable on taxable income for the current
period. Current tax liabilities (assets) are measured at
the amounts expected to be paid to (recovered from) the
relevant taxation authority using tax rates (and tax laws)
that have been enacted or substantively enacted by the
end of the reporting period.
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense (income) is
charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or
loss or arising from a business combination. Except
for business combinations, no deferred income tax is
recognised from the initial recognition of an asset or
liability, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and
their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available
against which the benefits of the deferred tax asset can
be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are
not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally
enforceable right of set off exists and it is intended
that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where: (i)
a legally enforceable right of set off exists; and (ii) the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will
occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be
recovered or settled.
(g) Property, plant and equipment
All classes of property, plant and equipment are stated at
cost less accumulated depreciation and any accumulated
impairment losses. In the event the carrying amount
of property, plant and equipment is greater than the
estimated recoverable amount, the carrying amount is
written down immediately to the estimated recoverable
amount and impairment losses are recognised in profit
or loss. A formal assessment of recoverable amount is
made when impairment indicators are present.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
34
Depreciation
The depreciable amounts of all fixed assets are
calculated using the diminishing balance method over
their estimated useful lives commencing from the time
the asset is held ready for use.
Class of Fixed Asset
Depreciation Rate
Furniture & Fittings
20%
Office Computers and Machines
40%
(h) Financial instruments
Initial recognition and measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets
and financial liabilities are recognised when the Group
becomes party to the contractual provisions to the
instrument.
Financial instruments (except trade and other
receivables) are initially recognised at fair value plus
transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which
case transaction costs are expensed to profit or loss
immediately. Where available, quoted prices in active
market are used to determine fair value. In other
circumstances, valuation techniques are adopted.
Trade receivables are initially measured at the
transaction price if the trade receivables do not contain
any significant financing component or if the practical
expedient was applied as specified in AASB 15 Revenue
from Contracts with Customers para 63.
All financial assets and financial liabilities of the Group
are subsequently measured at amortised cost.
i.
Financial assets at amortised cost
All financial assets are subsequently classified and
measured at amortised cost when both of the following
criteria are met:
•
the business model’s objective is to hold the financial
asset to collect contractual cash flows; and
•
the contractual cash flows consist solely of payments
of principal and interest.
Trade and other receivables with maturities of less than
12 months are initially recognised at their transaction
price less lifetime expected losses and subsequently
measured at amortised cost.
ii.
Financial liabilities at amortised cost
A financial liability is subsequently measured at amortised
cost or fair value through profit and loss. The Group
has only financial liabilities at amortised cost using the
effective interest rate method.
iii.
Impairment of financial assets
Impairment of financial assets is recognised based on the
lifetime expected credit loss which is determined when the
credit risk on a financial asset has increased significantly
since initial recognition. In order to determine whether
there has been a significant increase in credit risk since
initial recognition, the entity compares the risk of default
as at the reporting date with risk of default as at initial
recognition using reasonable and supportable data, unless
the financial asset is determined to have a low credit risk at
the reporting date.
For trade and other receivables, the simplified approach
is used, which requires recognition of a loss allowance
based on the lifetime expected credit losses. As a practical
expedient, the Group uses a provision matrix based on
historical information and adjusted for forward looking
estimates in order to determine the lifetime expected credit
losses.
A financial asset (or a group of financial assets) is deemed
to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events (a “loss
event”) having occurred, which has an impact on the
estimated future cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost,
loss events may include: indications that the debtors or
a group of debtors are experiencing significant financial
difficulty, default or delinquency in interest or principal
payments; indications that they will enter bankruptcy or
other financial reorganisation; and changes in arrears or
economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including
loans and receivables), a separate allowance account is
used to reduce the carrying amount of financial assets
impaired by credit losses. After having taken all possible
measures of recovery, if management establishes that the
carrying amount cannot be recovered by any means, at that
point the written off amounts are charged to the allowance
account or the carrying amount of impaired financial
assets is reduced directly if no impairment amount was
previously recognised in the allowance account.
When the terms of financial assets that would otherwise
have been past due or impaired have been renegotiated,
the Group recognises the impairment for such financial
assets by taking into account the original terms as if the
terms have not been renegotiated so that the loss events
that have occurred are duly considered.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
35
iv.
Derecognition
Financial assets are derecognised when the contractual
rights to receipt of cash flows expire or the asset is
transferred to another party whereby the entity no
longer has any significant continuing involvement in the
risks and benefits associated with the asset. Financial
liabilities are derecognised when the related obligations
are discharged, cancelled or have expired. The difference
between the carrying amount of the financial liability
extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-
cash assets or liabilities assumed, is recognised in profit
or loss.
(i)
Cash and cash equivalents
Cash and cash equivalents include cash on hand and
at banks and short-term deposits with an original
maturity of three months or less held at call with financial
institutions.
(j)
Impairment of assets
Goodwill and other assets that have an indefinite
useful life are not amortised but are tested annually for
impairment in accordance with AASB 136 Impairment of
Assets. The depreciable amount of intangible assets with
a finite life is amortised over its useful life. Assets subject
to annual depreciation or amortisation are reviewed for
impairment whenever events or circumstances arise that
indicate that the carrying amount of the asset may be
impaired.
An impairment loss is recognised where the carrying
amount of the asset exceeds its recoverable amount. The
recoverable amount of an asset is defined as the higher
of its fair value less costs to sell and value in use.
For the purposes of impairment, assets are grouped at
the lowest level for which there are separately identifiable
cash flows (cash generating units).
(k) Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised so
as to depict the transfer of promised goods or services to
customers at an amount that reflects the consideration
to which the entity expects to be entitled, in exchange for
those goods or services.
Revenue is recognised in accordance with the following
five-step process:
1. Identifying the contract with the customer.
2. Identifying the performance obligations in the contract.
3. Determining the transaction price.
4. Allocating the transaction price to the performance
obligations in the contract.
5. Recognising revenue as and when the performance
obligations are satisfied.
Investment management fees and service fees represent
revenue from contracts with customers. Revenue arising
from investment management contracts relates to
performance obligations satisfied over time and as such
revenue is recognised on a progressive basis. An output
method is used to recognise revenue from such contracts
which involves reference to the amounts invoiced to the
customer for the services rendered during the period.
This is because management believes that the amounts
invoiced directly reflect the value of output transferred to
the customer. In the case of amounts received in advance
for services to be performed these are recognised as
contract liabilities and are not reclassified to revenue until
the performance obligation is satisfied.
Variable consideration may arise in some fund
management contracts from performance fees.
Performance fees may be earned where a fund’s
investment return after management fees exceeds the
applicable benchmark. Performance fees are subject to
a high-water mark, and a cap for each calculation period,
with the exception of WCM International Small Cap
Growth Fund (Managed Fund) which does not have a cap.
An amount of the performance fees received are payable
to the fund’s investment manager. Variable consideration
is estimated using either the expected value method
or most likely amount method, as appropriate to the
circumstances and recognised as revenue at the end of
each reporting period until the contracts are settled.
Government grant income
Government grant income is recognised in profit or loss
on a systematic basis over the periods in which the entity
recognises as expenses the related costs for which the
grants are intended to compensate. The Group presents
government grant income in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income on a
gross basis and as “Government income.”
Interest income
Interest income is recognised using the effective interest
method.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
36
(l)
Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the
amount of goods and services tax (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 acquisition of the asset
or as part of an item of expense.
Receivables and payables in the Consolidated Statement
of Financial Position are shown inclusive of GST.
Cash flows are presented in the Consolidated Statement
of Cash Flows on a gross basis, except for the GST
component of investing and financing activities, which
are disclosed as operating cash flows.
(m) Employee benefits
i.
Short-term employee benefit obligations
Short-term employee benefits are benefits, other than
termination benefits, that are expected to be settled
wholly within 12 months after the end of the period
in which the employee renders the related service.
Examples of such benefits include wages and salaries,
non-monetary benefits and accumulating sick leave.
Short-term employee benefits are measured at the
undiscounted amounts expected to be paid when the
liabilities are settled.
ii.
Long-term employee benefit obligations
The Group’s liabilities for long service leave are included
in other long-term benefits as they are not expected to
be settled wholly within 12 months after the end of the
period in which the employee renders the related service.
They are measured at the present value of the expected
future payments to be made to employees. The expected
future payments incorporate anticipated future wage
and salary levels, periods of service and are discounted
at rates determined by reference to market yields at the
end of the reporting period on high quality corporate
bonds that have maturity dates that approximate the
timing of the estimated future cash outflows. Any re-
measurements arising from changes in assumptions are
recognised in profit or loss in the periods in which the
changes occur.
The Group presents long-term employee benefit
obligations as non-current liabilities in the Consolidated
Statement of Financial Position, except where the Group
does not have an unconditional right to defer settlement
for at least 12 months after the reporting period, in which
case the obligations are presented as current provisions.
(n) Trade and other payables
Trade payables and other payables represent liabilities for
goods and services provided to the Group prior to the end
of the period that are unpaid and arise when the Group
becomes obliged to make future payments in respect of
the purchase of these goods and services. The amounts
are unsecured and are usually paid within 7–60 days of
recognition.
(o) 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.
(p) Borrowings
All loans and borrowings are initially recognised at the
fair value of the consideration received less directly
attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently
measured at amortised cost using effective interest
method. Borrowings are classified as current liabilities
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
Consolidated Statement of Financial Position date.
(q) Leases
At inception of a contract, the Group assesses if the
contract contains or is a lease. If there is a lease present,
a right-of-use asset and a corresponding lease liability are
recognised by the Group where the Group is a lessee. All
contracts that are classified as short-term leases (i.e. a
lease with a remaining lease term of 12 months or less)
and leases of low-value assets are recognised as an
operating expense on a straight-line basis over the term
of the lease.
Initially the lease liability is measured at the present
value of the lease payments still to be paid at the
commencement date. The lease payments are
discounted at the interest rate implicit in the lease. If this
rate cannot be readily determined, the Group uses the
incremental borrowing rate.
Lease payments included in the measurement of the
lease liability are as follows:
•
fixed lease payments less any lease incentives;
•
variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
37
•
the amount expected to be payable by the lessee
under residual value guarantees;
•
the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options;
•
lease payments under extension options, if the lessee
is reasonably certain to exercise the options; and
•
payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by
reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use
asset) whenever:
•
The lease term has changed or there is a significant
event or change in circumstances resulting in a
change in the assessment of exercise of a purchase
option, in which case the lease liability is re-measured
by discounting the revised lease payments using a
revised discount rate.
•
The lease payments change due to changes in an
index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease
liability is re-measured by discounting the revised
lease payments using an unchanged discount rate
(unless the lease payments change is due to a change
in a floating interest rate, in which case a revised
discount rate is used).
•
A lease contract is modified and the lease
modification is not accounted for as a separate lease,
in which case the lease liability is re-measured based
on the lease term of the modified lease by discounting
the revised lease payments using a revised discount
rate at the effective date of the modification.
The Group did not make any such adjustments during the
periods presented.
The right-of-use assets comprise the initial measurement
of the corresponding lease liability, lease payments made
at or before the commencement day, less any lease
incentives received and any initial direct costs. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to
dismantle and remove a leased asset, restore the site
on which it is located or restore the underlying asset to
the condition required by the terms and conditions of
the lease, a provision is recognised and measured under
AASB 137 Provisions, Contingent Assets and Contingent
Liabilities. To the extent that the costs relate to a right-of-
use asset, the costs are included in the related right-of-
use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter
period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that
the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The Group applies AASB 136 to determine whether a
right-of-use asset is impaired and accounts for any
identified impairment loss as described in the ‘Property,
plant and equipment’ policy (as outlined in Note 1(g)).
Variable rents that do not depend on an index or rate are
not included in the measurement of the lease liability
and the right-of-use asset. The related payments are
recognised as an expense in the period in which the event
or condition that triggers those payments occurs and
are included in the line “Corporate and administrative
expense” in the profit or loss.
(r)
Share-based payments
The Group provides benefits to its employees in the
form of share based payments, whereby employees
render services in exchange for shares or rights over
shares (equity settled transactions). The cost of these
equity settled transactions with employees is measured
by reference to the fair value of the equity instrument
at the date on which they are granted. The fair value
of the equity to which employees become entitled is
measured at grant date and recognised as an expense
over the vesting period, with a corresponding increase to
an equity account. The fair value of shares is measured
at the market bid price at grant date. The fair value of
shares issued where the shares are treated as an option
is determined using the Black-Scholes valuation model.
In respect of share based payments that are dependent
on the satisfaction of service conditions, the number of
shares expected to vest is reviewed and adjusted at each
reporting date.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over the
period in which the service conditions are fulfilled (the
vesting period), ending on the date on which the relevant
employees become fully entitled to the award (the vesting
date). The amount recognised for services received as
consideration for these equity instruments granted is
adjusted to reflect the best estimate of the number of
equity instruments that eventually vest.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
38
(s) Share capital
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.
(t)
Critical accounting estimates and
judgements
The Directors evaluate estimates and judgements
incorporated into the financial statements based
on historical knowledge and best available current
information. Estimates assume a reasonable expectation
of future events and are based on current trends and
economic data, obtained both externally and within the
Group:
i.
Impairment of goodwill
Goodwill acquired in a business combination is tested
for impairment at least annually and when there is
an indication that there may be impairment. For the
purposes of impairment testing, goodwill arising from the
acquisition of Switzer Asset Management Limited (SAM)
has been allocated to the Group’s sole cash generating
unit, being its investment management business.
In assessing whether there may be an indication of
impairment, the Directors have compared at 30 June
2021 the Group’s carrying value of the cash generating
unit with the recoverable amount, being the cash
generating unit’s fair value less costs to sell, using a
percentage of funds under management (FUM) approach
using a multiple of between 1.3% to 1.8%. (2020: 1.6%
– 2.0%) The FUM multiple was derived from trading
multiples of comparable companies and transaction
multiples of recent comparable company acquisitions
that have occurred in the market.
(u) Comparative figures
When necessary, comparative information has been
reclassified and repositioned for consistency with current
year disclosures.
(v) Rounding of amounts
The amounts in the consolidated financial statements
and Directors’ Report have been rounded to the nearest
$1,000 (where rounding is applicable) where noted
($’000) under the option available to the Company under
ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. The Company is an entity
to which this legislative instrument applies.
(W) Reclassification in prior year
Consolidated Statement of Cash Flows
The Company reclassified the cash flows associated with
receipt of the NAOS receivable from operating to investing
activities of $1,826,000 in the prior year, which decreased
cash flows from operating activities and increased cash
flows from investing activities by this amount. There
was no net impact on the Consolidated Statement of
Profit or Loss and Other Comprehensive Income or the
Consolidated Statement of Cash Flows.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
39
Note 2 Revenue
(a) Revenue from customer contracts
2021
000’s
$
2020
000’s
$
Investment management fees
4,776
3,743
Performance fees
128
165
Service fees
414
500
Total revenue from customer contracts
5,318
4,408
Note 3 Expenses
(a) Corporate and administrative expenses
2021
000’s
$
2020
000’s
$
Marketing and distribution expense
219
224
Audit fees
162
211
Directors’ fees
208
215
Occupancy expense
40
154
Legal expenses
165
91
Listing and Registry expense
102
99
IT, office and communication expense
73
55
Share-based payment expense
285
43
Other expenses
614
423
Total corporate & administrative expenses
1,868
1,515
(b) Finance costs
2021
000’s
$
2020
000’s
$
Interest expense
105
88
Interest expense on lease liability
9
-
Total finance costs
114
88
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
40
(c) Depreciation and amortisation
2021
000’s
$
2020
000’s
$
Depreciation – plant and equipment
8
10
Amortisation – right-of-use asset
104
-
Total depreciation and amortisation
112
10
Note 4 Income Tax Expense
2021
000’s
$
2020
000’s
$
(a) The major components of tax expense comprise:
Current tax
-
-
-
-
2021
000’s
$
2020
000’s
$
(b) Numerical reconciliation of income tax expense to prima facie tax payable:
Loss before income tax expense
(800)
(1,163)
Prima facie income tax (expense)/ benefit at the statutory rate of 26% (2020: 27.5%)
208
320
Effect of amounts which are non-deductible/assessable in calculating taxable income
-
Tax losses not recognised as deferred tax assets
(208)
(320)
Income (expense)/benefit reported in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income
-
-
(c) Unrecognised deferred tax asset
The amount of deductable temporary differences and unused tax losses for which no deferred tax asset has been
recognised:
2021
000’s
$
2020
000’s
$
Potential tax benefit at 25% (2020: 26%)
3,001
3,165
Deferred tax assets have not been recognised to the extent that it is not probable that taxable profit will be available
against which the losses can be utilised.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
41
Note 5 Cash and Cash Equivalents
2021
000’s
$
2020
000’s
$
Cash at bank
5,525
3,941
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Note 6 Trade and Other Receivables
2021
000’s
$
2020
000’s
$
Current
Trade receivables
1,320
1,140
Sundry debtors
-
45
NAML receivable1
1,552
1,552
Other receivable
6
-
Total current trade and other receivables
2,878
2,737
Non-Current
NAML receivable1
-
1,450
Other receivable
-
126
Total non-current trade and other receivables
-
1,576
Total trade and other receivables
2,878
4,313
1 The NAML receivable as at 30 June 2021 is the deferred consideration payable by NAOS Asset Management Limited (NAML) to
Contango Funds Management Limited, a controlled entity of the Group, over a one-year period in accordance with the conditions of the
arrangement. The NAML receivable has been measured at amortised cost using the effective interest method.
The ageing of trade receivables as at 30 June 2021 is less than 30 days (2020: less than 30 days). There are no trade
receivables which are past due and impaired as at 30 June 2021 (2020: nil).
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
42
Note 7 Other Assets
2021
000’s
$
2020
000’s
$
Current
Prepayments
220
188
Total Other Assets
220
188
Note 8 Other Financial Assets
2021
000’s
$
2020
000’s
$
Non-Current
Other financial assets1
96
74
Total other financial assets
96
74
1 Other financial assets are interest bearing deposits supporting bank guarantees for short term premises leases and are refunded upon
termination of the lease contract.
Note 9 Right-of-use Asset
2021
000’s
$
2020
000’s
$
Leased office space
Right-of-use asset
416
-
Accumulated amortisation
(104)
-
Total right-of-use asset
312
-
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
43
(a) Movements in carrying amounts of right-of-use assets
2021
000’s
$
2020
000’s
$
Opening balances at 1 July 2020
416
-
Additions
-
-
Accumulated amortisation
(104)
-
Net carrying amount
312
-
The Group leases an office space in Sydney, which has a lease term of 4 years and commenced on 1 July 2020.
The Group does not have any leases which contain variable lease payments.
(b) AASB 16 related amounts recognised in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income
2021
000’s
$
2020
000’s
$
Amortisation charge related to right-of-use asset
104
-
Interest expense on lease liabilities
9
-
Short-term lease expenses
4
-
117
-
Note 10 Goodwill
2021
000’s
$
2020
000’s
$
Goodwill
Goodwill at cost
8,636
8,636
Accumulated impairment loss
(3,830)
(3,830)
Total goodwill
4,806
4,806
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
44
(a) Movements in carrying amounts of goodwill
Goodwill
000’s
$
Opening value at 1 July 2019
4,806
Impairment loss
-
Closing value at 30 June 2020
4,806
Opening value at 1 July 2020
4,806
Impairment loss
-
Closing value at 30 June 2021
4,806
(b) Impairment
Goodwill acquired in a business combination is tested for impairment at least annually and when there is an indication
that there may be impairment. The Group performed its annual impairment test in June 2021.
In assessing impairment, the Directors have compared the Group’s carrying value of the cash generating unit at 30
June 2021 with the recoverable amount, being the cash generating unit’s fair value less costs to sell, using a percentage
of FUM approach using a multiple of between 1.3% to 1.8% (2020: 1.6% – 2.0%). There has been no change in the
valuation technique since prior year. The FUM multiple was derived from trading multiples of comparable companies and
transaction multiples of recent comparable company acquisitions that have occurred in the market.
Note 11 Trade and Other Payables
2021
000’s
$
2020
000’s
$
Current
Trade payables
112
286
GST payable
412
386
Accrued expenses
2,120
1,304
Total trade and other payables
2,644
1,976
Refer to Note 21 for further information on financial risk management.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
45
Note 12 Provisions
2021
000’s
$
2020
000’s
$
Current
Annual leave
143
224
Long service leave
-
43
143
267
Non-Current
Long service leave
52
64
Total provisions
195
331
Movement in carrying amounts
Employee Benefits
000’s
$
Opening balance at 1 July 2019
234
Additional provisions
281
Provisions used
(184)
Closing balance at 30 June 2020
331
Opening balance at 1 July 2020
331
Additional provisions
150
Provisions used
(286)
Closing balance at 30 June 2021
195
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
46
Note 13 Lease Liabilities
2021
000’s
$
2020
000’s
$
Maturity Analysis
Year 1
105
-
Year 2
147
-
Year 3
152
-
Total lease liabilities
404
-
Less: interest payable
(13)
-
391
-
Analysed as:
Current
98
-
Non-current
293
-
391
-
The Group does not face a significant liquidity risk with regard to its lease liabilities.
Note 14 Borrowings
2021
000’s
$
2020
000’s
$
Non-Current
Other unsecured loans
1,252
1,252
Total borrowings
1,252
1,252
Summary of borrowing arrangements
Borrowings at 30 June 2021 consisted of the following arrangements:
•
$502,000 unsecured loan repayable in seven years at a fixed interest rate of 8% per annum, with interest paid in
arrears annually; and
•
$750,000 unsecured loan repayable on 6 December 2022 at a fixed interest rate of 8% per annum, with interest paid in
arrears annually.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
47
Note 15 Issued Capital
2021
000’s
$
2020
000’s
$
47,873,085 (2020: 47,278,818) ordinary shares
150,193
149,839
Movements in ordinary shares capital
Number of shares
000’s
$
Opening balance – 1 July 2019
47,278,818
149,839
Issue of share capital, net of transactions costs
-
-
Closing balance – 30 June 2020
47,278,818
149,839
Opening balance 1 July 2020
47,278,818
149,839
Ordinary shares issued to employees
421,767
250
Pacific Point Partners Limited – options exercised
172,500
104
Closing balance – 30 June 2021
47,873,085
150,193
Note 16 Reserves
2021
000’s
$
2020
000’s
$
Share-based payment reserve
Opening balance
43
-
Transfer to issued capital
(97)
-
Performance rights forfeited
(48)
-
Recognition of share based expense relating to Managing Director & CEO
44
9
Recognition of share based expense relating to employees
136
34
Closing balance at the end of the reporting period
78
43
The share-based payment reserve is used to recognise the value of equity benefits provided to the Managing Director and
Chief Executive Officer, and employees as part of their remuneration.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
48
Note 17 Accumulated losses
2021
000’s
$
2020
000’s
$
Opening balance
(140,097)
(138,934)
Net loss attributable to shareholders
(800)
(1,163)
Accumulated losses at the end of the reporting period
(140,897)
(140,097)
Note 18 Dividends
No dividend has been declared or paid in respect to the financial year ended 30 June 2021 (2020: $nil).
Note 19 Earnings Per Share
Basic earnings per share (EPS) is calculated by dividing the profit or loss for the period attributable to ordinary equity
holders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is calculated by dividing the profit or loss attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary
shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
2021
Cents
2020
Cents
Basic loss per share
Total loss per share attributable to the ordinary equity holders of the company
(1.69)
(2.46)
Dilutive loss per share
Total loss per share attributable to the ordinary equity holders and
potential ordinary equity holders of the company
(1.69)
(2.46)
The following section reflects the income and share data used in the basic and diluted EPS computations:
(a) Earnings used to calculate basic and diluted EPS
2021
000’s
$
2020
000’s
$
Basic loss per share
Loss attributable to the ordinary equity holders of the company used in calculating basic loss per share
(800)
(1,163)
Diluted loss per share
Loss attributable to the ordinary equity holders of the company used in calculating diluted loss per share
(800)
(1,163)
The share options and performance rights disclosed in Note 20 are anti-dilutive because the Company is in a loss position
and are therefore not included in the calculation of the diluted losses per share.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
49
(b) Weighted average number of shares used as the denominator in calculation of
earnings per share
2021
No.
2020
No.
Weighted average number of ordinary shares used in calculating basic earnings per share
47,470,372
47,278,818
Weighted average number of ordinary shares adjusted for the effect of dilution
47,470,372
47,278,818
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date
and the date of authorisation of these financial statements.
Note 20 Share-based Payments
(a) Share options to Pacific Point Partners Limited
In September 2016 the Company issued 345,000 options to Pacific Point Partners Limited in partial consideration of it
providing a loan to assist the Company in the acquisition of the Contango funds management business. Each option
entitles the holder to subscribe for one share. The options have an exercise price of $0.60 each, were granted on 26
September 2016 and are exercisable at any time after the one-year anniversary of the grant date until the fifth-year
anniversary of the grant date. The fair value at grant date was estimated using a Black Scholes pricing model, taking
into account the terms and conditions upon which the options were granted. The fair value of the share options was
estimated on the grant date using the following assumptions:
Exercise price ($)
0.60
Dividend yield (%)
0.00
Expected Volatility (%)
25.00
Risk free interest rate (%)
1.70
Fair value per option ($)
0.15
Movements during the year
2021
2020
Number
Weighted Average
Exercise Price
$
Number
Weighted Average
Exercise Price
$
Options outstanding as at 1 July
345,000
0.60
345,000
0.60
Exercised1
(172,500)
0.60
-
-
Options outstanding as at 30 June
172,500
0.60
345,000
0.60
Options exercisable as at 30 June
172,500
345,000
1 172,500 options were exercised on 3 May 2021 at an exercise price of $0.60.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
50
(b) Performance Rights
On 17 December 2019, the Company issued 350,000 performance rights to key executives within the business. The
performance rights were independently valued using the Black-Scholes options pricing model. The expected life of the
performance rights is 18 months with the sole vesting condition being that the employee is employed by the Group on
the vesting date. The fair value of the performance rights at grant date is $161,000. The share-based payment expense
recognised in the 30 June 2021 reporting period was $53,192 (2020: $43,408).
The fair value of the performance rights was estimated on the grant date using the following assumptions:
Exercise price ($)
0.00
Dividend yield (%)
0.00
Expected Volatility (%)
70.00
Risk free interest rate (%)
0.77
Fair value per option ($)
0.46
On 15 December 2020, the Company issued 150,000 performance rights to certain employees within the business. The
performance rights were independently valued using the Black-Scholes options pricing model. The expected life of the
performance rights is 18 months with the sole vesting condition being that the employee is employed by the Group on
the vesting date. The fair value of the performance rights at grant date is $126,000. The share-based payment expense
recognised in the 30 June 2021 reporting period in relation to these performance rights was $34,206.
The fair value of the performance rights was estimated on the grant date using the following assumptions:
Exercise price ($)
0.00
Dividend yield (%)
0.00
Expected Volatility (%)
70.00
Risk free interest rate (%)
0.10
Fair value per option ($)
0.84
Movements during the year
2021
2020
Number
Weighted Average
Exercise Price
$
Number
Weighted Average
Exercise Price
$
Performance rights outstanding as at 1 July
350,000
-
-
-
Granted during the year
150,000
-
350,000
-
Forfeited during the year1
(140,000)
-
-
-
Exercised during the year2
(210,000)
0.46
-
-
Performance rights outstanding as at 30 June
150,000
-
350,000
-
1 140,000 performance rights were forfeited by two employees as they did not meet the vesting condition.
2 210,000 shares vested and were converted to ordinary shares on 16 June 2021.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
51
Note 21 Financial Risk Management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The Group uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of foreign exchange risk and aging analysis for credit risk.
Risk management is the responsibility of the Board of Directors.
Market risk
Foreign currency risk
The Group was not subject to any material foreign exchange risk in the 2021 and 2020 financial years.
Interest rate risk
The Group’s main interest rate risk arises from cash and cash equivalents, the majority of which is held in various at call
deposits at variable rates and various short term deposits with interest rates fixed for the terms of the deposit. During
2020 and 2021, the Group’s cash at bank at variable rates was denominated in Australian dollars. As at the reporting date,
the Group had the following variable rate cash at bank:
2021
2020
Weighted average
interest rate
%
Balance
000’s
$
Weighted average
interest rate
%
Balance
000’s
$
Cash at bank
0.02
5,525
0.23
3,941
Net exposure to cash flow
interest rate risk
-
5,525
-
3,941
Sensitivity
The following table illustrates sensitivities to the Group’s exposure to changes in interest rates. The table indicates the
impact of how profit and equity values reported at the end of the reporting period would have been affected by changes
in the relevant risk variable that management considers to be reasonably possible.
These sensitivities assume that the movement in a particular variable is independent of other variables.
Profit
000’s
$
Equity
000’s
$
Year ended 30 June 2021
+/ 0.05% in interest rates
3
3
Year ended 30 June 2020
+/ 0.05% in interest rates
2
2
Credit risk
The Group has conducted a credit risk assessment on the NAML receivable (disclosed in Note 6) and has determined that
the credit risk is minimal given NAML has paid all previous instalments in line with the agreement terms and there have
been no liquidity issues identified that affect the recoverability of this balance.
The Group was not subject to any material credit risk in the 2021 financial year.
.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
52
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves, including the availability of funding
through committed credit facilities. The Group manages liquidity risk by regularly monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities. Due to the simple nature of the underlying
businesses, the Group aims to simplify funding by minimising credit lines and investing surplus funds in very liquid
deposits at call or short-term deposits.
Financial liability and financial asset maturity analysis
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on the remaining
period between the reporting date and the contractual maturity date. Cash flows realised from financial assets reflect
management’s expectations as to the timing of their realisation. Actual timing may differ from that disclosed. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Within 1 year
000’s
$
1 to 5 years
000’s
$
Over 5 years
000’s
$
Total
000’s
$
Group - 2020
Financial liabilities due for payment
Trade and other payables (Note 11)
1,976
-
-
1,976
Borrowings (Note 14)
-
750
502
1,252
Total expected outflows
1,976
750
502
3,228
Financial assets - cash flows realisable
Cash and cash equivalents
3,941
-
-
3,941
Trade and other receivables (Note 6)
2,737
1,576
-
4,313
Other financial assets (Note 8)
74
-
-
74
Total anticipated inflow on financial instruments
6,752
1,576
-
8,328
Net inflow / (outflow) on financial instruments
4,776
826
(502)
5,100
Group - 2021
Financial liabilities due for payment
Trade and other payables (Note 11)
2,644
-
-
2,644
Lease Liabilities (Note 13)
98
293
-
391
Borrowings (Note 14)
-
750
502
1,252
Total expected outflows
2,742
1,043
502
4,287
Financial assets - cash flows realisable
Cash and cash equivalents
5,525
-
-
5,525
Trade and other receivables (Note 6)
2,878
-
-
2,878
Other financial assets (Note 8)
-
96
-
96
Total anticipated inflow on financial instruments
8,403
-
-
8,499
Net inflow / (outflow) on financial instruments
5,661
(947)
(502)
4,212
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
53
Fair value
Fair value estimation
The fair values of the Group’s financial assets and financial liabilities are presented in the table below and can be
compared with their carrying values as presented in the Consolidated Statement of Financial Position. Fair values are
those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an
arm’s length transaction.
Fair values derived may be based on information that is estimated or subject to judgement, where changes in
assumptions may have a material impact on the amounts estimated. Areas of judgement and the assumptions have
been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with
more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are
obtained from quoted market bid prices. Where securities are unlisted, and no market quotes are available, fair value is
obtained using discounted cash flow analysis and other valuation techniques commonly used by market participants.
The net fair values of cash and cash equivalents and non interest bearing monetary financial assets and financial
liabilities of the Group approximate their carrying amounts.
The carrying values less impairment provision of trade receivables and payables are assumed to approximate their fair
values due to their short term nature.
2021
2020
Carrying Value
000’s
$
Fair value
000’s
$
Carrying Value
000’s
$
Fair value
000’s
$
Financial assets
Cash and cash equivalents
5,525
5,525
3,941
3,941
Trade and other receivables
2,878
2,878
4,313
4,313
Other financial assets
96
96
74
74
Total financial assets
8,499
8,499
8,328
8,328
Financial liabilities
Trade and other payables
2,644
2,644
1,976
1,976
Lease liabilities
391
391
-
-
Borrowings
1,252
1,332
1,252
1,396
Total financial liabilities
4,287
4,367
3,228
3,912
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
54
Capital risk management
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that the
Group can continue to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal
capital structure to reduce the cost of capital. As the Group incurs net cash outflows from operations and has large
accumulated losses, the primary method used by the Group to adjust its capital structure is the issue of new shares and
borrowings. The Group has determined that where possible it will issue ordinary shares, rather than issue hybrid forms
of securities, so as to avoid any restrictions on its use of capital or commitment to interest repayments. There are also
regulatory capital requirements of the wholly owned subsidiary SAM which the Group considers in managing its overall
capital requirements.
Note 22 Parent Entity
Set out below is the supplementary information about the parent entity.
2021
000’s
$
202
000’s
$
Statement of Financial Position
Current assets
4,930
5,043
Non current assets
3,970
3,097
Total Assets
8,027
8,140
Current liabilities
1,614
1,165
Non-current liabilities
-
-
Total Liabilities
1,614
1,165
Issued capital
150,193
149,839
Accumulated losses
(143,780)
(142,864)
Total Equity
6,413
6,975
Statement of Profit or Loss and Other Comprehensive Income
Total loss for the year
(1,308)
(1,053)
Total other comprehensive loss
-
(96)
Total comprehensive loss
(1,308)
(1,149)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 (2020: nil).
Contractual commitments
The parent entity had no commitments as at 30 June 2021 (2020: nil).
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
55
Note 23 Interests in Subsidiaries and Controlled Entities
Composition of the Group
The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the
Company. The proportion of ownership interests held equals the voting rights held by the Company. Each subsidiary’s
principal place of business is also its country of incorporation.
Principal place of
business / Country
of Incorporation
Percentage
Owned 2021
%
Percentage
Owned 2020
%
Subsidiaries:
CAM SPV Pty Limited
Australia
100
100
2735 CSM Holdings Pty Limited
Australia
100
100
Contango Funds Management Limited
Australia
100
100
Contango International Management Pty Limited
Australia
100
100
Contango Group Services Pty Limited
Australia
100
100
Switzer Asset Management Limited
Australia
100
100
Note 24 Related Parties
i. Entities exercising control over the Group:
The ultimate parent entity, which exercises control over the Group, is Contango Asset Management Limited which is
incorporated in Australia.
ii. Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly
or indirectly, including any Director (whether executive or otherwise) of that entity are considered key management
personnel.
For details of remuneration disclosures relating to key management personnel, refer to Note 25 and the Remuneration
Report in the Directors’ Report.
iii. Subsidiaries and Controlled Entities
Interests in subsidiaries and controlled entities are set out in Note 23.
iv. Related party transactions
The Group has an existing marketing and distribution agreement with Switzer Financial Group Pty Limited and paid
$150,000 (2020: $150,000) for this service during the period. There are no amounts payable outstanding at 30 June 2021.
Martin Switzer (Managing Director of Contango Asset Management Limited) has a financial interest in Switzer Financial
Group.
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
56
Note 25 Key Management Personnel Disclosures
Key management personnel remuneration included within employee expenses for the year is shown below:
2021
$
2020
$
Short term employee benefits
665,017
599,862
Post-employment benefits
38,843
38,802
Other long-term benefits
10,462
5,440
Termination benefits
-
-
Share-based payments
67,350
8,600
781,672
652,704
Note 26 Contingent Liabilities
The Group has no material contingencies at 30 June 2021 (2020: nil).
Note 27 Segment Information
The Group has a sole operating segment of funds management. Revenue, profit, net assets and other financial
information reported to and monitored by the Chief Operating Decision Maker (CODM) for the single identified operating
segment are the amounts reflected in the Consolidated Statement of Profit or Loss and Other Comprehensive Income,
Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement
of Cash Flows. The CODM has been identified as the Managing Director and Chief Executive Officer.
Note 28 Auditors’ Remuneration
2021
000’s
$
2020
000’s
$
Audit and review of financial statements
Fees for auditing the statutory financial report of the group and
auditing the statutory financial reports of any controlled entities
150
193
Total audit and review of financial statements
150
193
Other statutory assurance services (AFSL)
11
10
Non-Audit Services
- Taxation compliance advice
31
26
Total non-audit services
31
26
Total services provided by Ernst & Young
192
229
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
57
Note 29 Cash Flow Information
(a) Reconciliation of result for the year to cash flows from operating activities
2021
000’s
$
2020
000’s
$
Loss for the year after income tax
(800)
(1,163)
Non cash flows in profit:
-
depreciation and amortisation
112
10
-
employee share option expense
35
43
-
effective interest on NAML receivable
(210)
(305)
-
accrued government grant income
-
(95)
-
interest expense on lease liability
9
-
-
share-based payments
252
-
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
-
increase in trade and other receivables
(183)
(536)
-
increase in other assets
(54)
(35)
-
increase/(decrease) in trade and other payables
668
(1,076)
-
(decrease)/increase in provisions
(136)
97
Outflow from operations
(307)
(3,060)
(b) Reconciliation of liabilities arising from financing activities
1 July 2020
000’s
$
Cash flows
000’s
$
Foreign
exchange
movement
000’s
$
Fair value
changes
000’s
$
Other
000’s
$
30 June
2021
000’s
$
Borrowings
1,252
-
-
-
-
1,252
Lease liability1
415
(33)
-
-
9
391
Total liabilities from
financing activities
1,667
(33)
-
-
9
1,643
1 The lease liability relates to the head office lease that commenced 1 July 2020.
1 July 2019
000’s
$
Cash flows
000’s
$
Foreign
exchange
movement
000’s
$
Fair value
changes
000’s
$
Other
000’s
$
30 June
2020
000’s
$
Borrowings
502
750
-
-
-
1,252
Total liabilities from
financing activities
502
750
-
-
-
1,252
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
58
Note 30 Events Occurring After the Reporting Date
On 2 July 2021, 172,500 options in the Company were exercised at a price of $0.60 per option. Following the exercise of
these options, the Company has no options on issue.
On 14 July 2021, Contango Income Generator Limited, a listed investment company managed by the Group, held an
Extraordinary General Meeting where its shareholders approved its change of name to WCM Global Long Short Limited,
and a selective buy-back of shares of approximately $67 million. This reduced the Group’s funds under management
by approximately $67 million. In addition, the funds managed by the Company paid approximately $22 million in cash
distributions (net of distribution reinvestment) to their respective investors in July 2021.
There are no other matters or circumstances that have arisen since the end of the financial year which significantly affect
or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group
in future financial years.
Note 31 Company Details
The registered office of the Company is:
Contango Asset Management Limited
Level 6
10 Spring Street
Sydney NSW 2000
Notes to the Consolidated Financial Statements For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
59
The Directors of the Company declare that:
1.
the financial statements and notes for the year ended 30 June 2021 are in accordance with
the Corporations Act 2001 and:
a.
comply with Accounting Standards, which, as stated in Note 1 to the consolidated
financial statements under the heading Basis of Preparation, constitutes explicit and
unreserved compliance with International Financial Reporting Standards (IFRS); and
b.
give a true and fair view of the financial position and performance of the consolidated
group;
2.
the Managing Director and Chief Financial Officer have given the declarations required by
Section 295A that:
a.
the financial records of the Company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
b.
the financial statements and notes for the financial year comply with the Accounting
Standards; and
c.
the financial statements and notes for the financial year give a true and fair view; and
3.
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable..
This declaration is made in accordance with a resolution of the Board of Directors.
Roger Amos
Chairman
Dated this 16 day of August 2021
Directors’ Declaration
Directors' Declaration For the Year Ended 30 June 2021
60
Independent Auditor’s Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of Contango Asset
Management Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Contango Asset Management Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes to the financial statements, including a summary of significant accounting policies, and
the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021
and of its consolidated financial performance for the year ended on that date; and
b)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Independent Auditor's Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
61
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Key audit matter
How our audit addressed the key audit matter
Goodwill impairment testing
On 13 September 2018 the Group acquired the
remaining 53.75% equity interest in Switzer
Asset Management Limited (SAML) which
generated a significant goodwill asset. As at 30
June 2021, the carrying value of goodwill was
$4.8m.
As described in Note 10, the Group has
performed an annual impairment test to assess
the carrying value of goodwill as at 30 June
2021.
This was a key audit matter due to the
judgements applied in the impairment testing.
Our audit procedures included the following:
Involved our valuation specialists to assess the
key assumptions used in the impairment
analysis, as well as test the mathematical
accuracy of the impairment model.
Evaluated the sensitivity analysis performed by
the Group focusing on where a reasonably
possible change in assumptions could cause the
carrying amount to exceed its recoverable
amount.
Benchmarked
the
implied
valuations
to
comparable company valuation multiples.
Assessed the adequacy of the disclosures
associated with the goodwill impairment
assessment in the financial report.
Independent Auditor's Report For the Year Ended 30 June 2021
62
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2021 Annual Report, but does not include the financial report and
our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Independent Auditor's Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
63
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 20 of the directors' report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Contango Asset Management Limited for the year ended 30
June 2021, complies with section 300A of the Corporations Act 2001.
Independent Auditor's Report For the Year Ended 30 June 2021
64
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Luke Slater
Partner
Melbourne
16 August 2021
Independent Auditor's Report For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
65
ASX Additional Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out below. This
information is effective as at 31 July 2021.
Substantial shareholders
The number of substantial shareholders and their associates are set out below:
Ordinary Shares
Number
held
% of total
shares issued
NAOS Asset Management Limited
11,803,124
24.85
Switzer Financial Group Pty Limited
7,378,251
15.03
Pacific Point Partners Limited, Robert Rankin
4,613,282
9.76
Voting rights
Ordinary Shares
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Options
No voting rights.
Distribution of equity security holders
Analysis of the number of shareholders by size of holding at 31 July 2021 is presented below
Holding
Number of
Holders
Number of
Ordinary Shares
Percentage of
Shares on Issue
%
1 – 1,000
96
21,474
0.05
1,001 – 5,000
123
341,974
0.71
5,001 – 10,000
70
554,252
1.15
10,001 – 100,000
249
9,144,975
19.03
100,001 and over
44
37,982,910
79.06
Total
582
48,045,585
100.00
Number of holders with less than a
marketable parcel of ordinary shares
77
6,281
0.01
Additional Information for
Listed Public Companies
Additional Information for Listed Public Companies For the Year Ended 30 June 2021
66
Twenty largest shareholders
The names of the 20 largest shareholders of the Company as at 31 July 2021 are listed below:
Holder Name
Number of
Ordinary Shares
Percentage of Shares
on Issue
%
NATIONAL NOMINEES LIMITED
11,826,792
24.62
SWITZER FINANCIAL GROUP PTY LTD
6,166,668
12.84
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
4,958,282
10.32
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,480,935
3.08
KEISER SHIPPING & TRANSPORT PTY LTD
1,397,728
2.91
GOLD TIGER INVESTMENTS PTY LTD
1,264,479
2.63
MR ROBERT DARIUS FRASER
1,250,000
2.60
WILLYAMA ASSET MANAGEMENT PTY LTD
620,000
1.29
TC CORPORATE P/L
600,000
1.25
MRS TRACY FRASER
579,444
1.21
MS MAUREEN ELIZABETH SWITZER + MR PETER
WILLIAM SWITZER + MR MARTIN SWITZER
576,817
1.20
HARVEY BLACKNEY SUPERANNUATION PTY LTD
541,000
1.13
BODIAM CAPITAL PTY LTD
500,000
1.04
JARHAMCHE PTY LTD
500,000
1.04
MRS TRACY FRASER
499,443
1.04
SAGRADA FAMILIA HOLDINGS PTY LTD
483,333
1.01
KEISER INVESTMENTS PTY LTD
333,333
0.69
CALAMA HOLDINGS PTY LTD
332,531
0.69
MR RICHARD PHILLIP AMLAND + MRS KIRSTY LEA AMLAND
314,308
0.65
EUCLID PTY LIMITED
312,000
0.65
Total shares held by the twenty largest shareholders
34,537,093
71.89
Total ordinary shares on issue
48,045,585
100.00
Unissued equity securities
Options issued.
Securities exchange
The Company is listed on the Australian Securities Exchange (ASX code: CGA)
Additional Information for Listed Public Companies For the Year Ended 30 June 2021
Contango Asset Management Limited and Controlled Entities | ACN 080 277 998
67
Level 6, 10 Spring Street
Sydney NSW 2000 Australia
W contango.com.au
E invest@contango.com.au
P 1300 001 750