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Senvest Capital Inc.Annual Report
30 June 2016
FINANCIAL YEAR END
30 June 2016
ANNUAL GENERAL MEETING
The Annual General Meeting of
Global Masters Fund Limited:
WILL BE HELD AT:
The office of
Rothsay Chartered Accountants
Level 1
12 O’Connell Street
Sydney NSW 2000
TIME:
2.00pm (NSW Time)
DATE:
Friday 18 November 2016
INVESTING IN GLOBAL
MASTERS FUND LIMITED
Investors can purchase shares in
Global Masters Fund Limited through
the Australian Securities Exchange.
ASX code: GFL
Global Masters Fund Limited
ABN 84 109 047 618
Registered in NSW
12 May 2004
GLOBAL MASTERS FUND LIMITED DIRECTORS (from left to right)
Dr Manny Pohl, Jonathan Addison and Patrick Corrigan AM
5
6
11
12
16
30
31
32
32
35
TABLE OF CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Report
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Investments
Corporate Directory
Global Masters Fund
HIGHLIGHTS FOR 2016
Highlights for
the year ending
June 2016
The Net Tangible Assets (NTA) Value of the Company increased by 5%
after recognising the deferred tax liability on unrealised gains, whilst
the All Ordinaries Index of ASX decreased by 2.6% over the twelve
months ended 30 June 2016.
In April 2016 the Company acquired 21,850 shares in Athelney Trust
PLC (ATH) for $97,634.
Major
June 2016
Investments
BRK.A
FSI
ATY.LSE
OVERIVEW
COMPANY PROFILE
Global Masters Fund Limited (the “Company”) was listed on the ASX in 2006 with the strategy to provide a vehicle for
Australian investors, seeking long-term capital growth through investing in Berkshire Hathaway Inc listed on the New York
Stock Exchange (NYSE) and other global investments. The Company’s policy is not to hedge the underlying currencies of its
portfolio of global investments.
The portfolio is managed by EC Pohl & Co Pty Ltd which has a strong funds management investment team. The
composition and performance of the investment portfolio is monitored by the Board of Directors, which comprises business
people with many years of experience in the business, investment and funds management.
There is no fixed management fee and no performance fee payable to the Manager.
OBJECTIVES
The investment objectives of Global Masters Fund Limited are:
To achieve medium to long-term capital growth and income through investing in listed international companies,
including Berkshire Hathaway Inc (NYSE), Athelney Unit Trust Plc (LSE) and Flagship Investments Limited (ASX); and
To preserve and enhance the NTA backing per share after allowing for inflation.
INVESTOR BENEFITS
The benefits for investors in Global Masters Fund Limited are:
Reduced share investment risk through a diversified investment portfolio;
Professional and disciplined management of an investment portfolio;
No fixed management fees or performance fee;
No entry or exit charges made by the Company; and
Easy access to information via the Company’s website www.globalmastersfund.com.au.
INVESTMENT MANAGER
The management of the Company’s investment portfolio is undertaken by EC Pohl & Co Pty Ltd which provides
administration support.
Dr Manny Pohl is the Managing Director and major shareholder of EC Pohl & Co Pty Ltd. Information on the Investment
Manager is available from www.ecpohl.com.
Global Masters Fund Limited
4
With very low and sometimes negative interest rates, there
has been a renewed interest in income producing shares and
investors generally are looking more carefully at companies
with good balance sheets and a profitable business. At a
corporate level companies are finding debt cheaper than new
equity to meet their capital requirements.
The underlying Global Masters
through
Berkshire Hathaway, Athelney and Flagship’s, are well placed
to continue to add value through their strategies.
investments
The Board
I particularly want to thank my fellow Board members for
their support and input in the past year. Special thanks must
go to Dr Manny Pohl and his small but brilliant team of
investment professionals at E C Pohl &Co. Our success would
not be possible without the outstanding contribution of these
very committed individuals.
I thank Shareholders for their on-going support and look
forward to another good year ahead.
Yours sincerely
Jonathan Addison
Chairman
CHAIRMAN’S REPORT
Dear Shareholder,
I am pleased to present the 11th Annual Chairman’s Report of
Global Masters Fund Limited for the 2015/16 financial year.
The Year in Review:
During the past twelve months, global markets have been
subjected to heightened uncertainty and increasing volatility,
due to a number of concerns:
Continued economic slowdown in Europe
China’s increasing debt burden
Historically low interest rates and the impact of negative
interest rates.
Immediately following the UK referendum to leave the
European Union (EU), global markets initially reacted badly,
but quickly recovered, have largely been resilient across
most regions - “Brexit” was not seen as causing a global
financial crisis. The longer term impact of Brexit may not be
known for some time, possibly years.
Sterling did fall in value, which affects the value of your
investment through Athelney. The companies that they
invest in have, in the past, proved to be reasonably recession
proof.
As a matter of policy, the overseas assets have not been
hedged on the basis that most investors seeking off-shore
assets seek both company and currency exposures. This
policy is reviewed from time to time.
The Australian share market, as represented by the All
Ordinaries Index, decreased by 2.6% over the year ended 30
June 2016.
The Net Tangible Asset per share (NTA) of the Company
increased by 5% in 2015/16 compared with an increase of
13% in the prior year.
The Market Outlook
We remain cautiously positive about the outlook for markets
generally but it is not without risks. The Australian economy
is still dealing with a depressed commodity market but should
see some benefits from the lower dollar and low interest
rates.
In our view, companies with strong market positions, strong
balance sheets and good management, will continue to
perform well and reward patient investors, although we
expect market returns to be modest again in the coming year.
Global Masters Fund Limited
5
DIRECTORS' REPORT
Your Directors present their report on Global Masters Fund Limited for the financial year ended 30 June 2016.
1. DIRECTORS
The following persons were Directors of Global Masters Fund Limited from the beginning of the financial year until the date of this
report, unless otherwise stated: J Addison, Dr E Pohl, P Corrigan AM. Jason Pohl was appointed an Alternate Director to Dr Manny
Pohl on 16 June 2016.
2.
INFORMATION ON DIRECTORS
Jonathan L Addison
B Ec, ASIS, CFTP (Snr), MAICD
Non-Executive Chairman
Member of Audit and Risk Committee
Experience and expertise
Non-Executive Chairman since 19 April 2005
Over 32 years experience in the investment management
industry. Investment consultant and former CEO of the
Meat Industry Employees Superannuation Fund. Previous
experience includes Director and Asset consultant with
the Corporate Finance Section of Pricewaterhouse
Coopers and Manager at Sedgwick Noble Lowndes.
Other Current directorships
Chairman of Investment Committee of Centaur Property
Funds Management
Hawkesbridge Private Equity Ltd
Gardior Ltd
Athelney trust PLC (Alternate to Dr E C Pohl)
Diversa Trustees Ltd Investment Committee Member
Former Listed Company directorships in last 3 years
None
Interest in Shares
NIL
Dr Emmanuel (Manny) C Pohl
Pr Eng, B.Sc (Eng), MBA, DBA, FAICD, MSAA, F Fin
Managing Director
Member of Audit and Risk Committee
Experience and expertise
Managing Director since the inception of the Company
in April 2005.
Extensive experience in the funds management industry.
Other current directorships
Managing Director of Flagship Investments Limited
Executive Director of Barrack Street Investments Limited
Chair of Athelney Trust Plc
Chairman of EC Pohl & Co Pty Ltd and its subsidiaries
Director of Bond University Limited
Director of Huysamer International Holdings (Pty) Ltd
Trustee of Currumbin Wildlife Hospital Foundation
Former Listed Company directorships in last 3 years
None.
Interest in Shares
Directly Held: 5,000
4,639,049 ordinary shares
Has a relevant interest in shares in the Company over
which he holds a Power of Attorney arrangement with a
number of Shareholders.
Global Masters Fund Limited
6
Patrick Corrigan AM
HonD (Bond University)
Non-Executive Director
Chairman of Audit and Risk Committee
Experience and expertise
Appointed a Non-Executive Director on 29 November
2006
Extensive experience in accounting, financial management
and other commercial acumen, including investments.
Chairman of an international freight forwarding company
for numerous years.
Other current directorships
Non-Executive Chairman of UBI Logistics (Australia) Pty Ltd
Chairman of Qantas Art Scholarship Committee
Emeritus Chairman of Gold Coast Regional Art Gallery
Deputy Chair of Air Freight Export Council of NSW Inc
Director of Better Read Pty Ltd
Director of Aboriginal Benefits Foundation Limited
Director of National Portrait Gallery
Former Listed Company directorships in last 3 years
Director Flagship Investments Limited (Retired 6/11/15)
Interest in Shares
Nil ordinary shares
Global Masters Fund Limited
7
Jason Pohl
B.Com, LLB
Alternate Director
Experience and expertise
Appointed an Alternate Director to Dr Manny Pohl on
20 June 2016.
Jason has five years of professional experience in
fundamental bottom-up investment research at
ECP Asset Management Pty Ltd.
Originally pursuing a legal career, Jason spent his initial
stages of his professional career working for Ashurst
(previously Blake Dawson) before being admitted as a
Legal Practitioner in the NSW Supreme Court.
Other current directorships
Director of The Tabu Vodka Co Pty Ltd
Former Listed Company directorships in last 3 years
Interest in Shares
Nil ordinary shares
DIRECTORS’ REPORT (Continued)
3. PRINCIPAL ACTIVITIES
The principal activity of the Company is investing in Berkshire
Hathaway Inc on NYSE, Athelney Unit Trust Plc on LSE and Flagship
Investments Limited on the ASX. There have been no significant
changes in the nature of this activity during the year.
4. REVIEW OF OPERATIONS
Our portfolio outperformed the market with the NTA increasing by
5% over the past twelve months, as compared to the ASX All
Ordinaries Index, which declined by 2.6%.
During the past twelve months global markets have been subject to
a period of heightened uncertainty and increasing volatility due to
the fear of economic slowdowns in the US and Europe; undesirable
side-effects of negative interest rates; lagging corporate investment
in the US; and, China’s increasing debt burden. Commodities have
rebounded slightly but remained subdued for most of fiscal 2016. In
June the world watched as Britain voted to exit (“Brexit”) the
European Union (EU), leaving a political crisis with some adverse
economic consequences.
Despite Britain's vote to leave the EU, global markets have largely
been resilient across most regions - supporting the notion that this
was not a global financial crisis. In the US, the Federal Reserve
raised interest rates in December causing global equity markets to
come under pressure with bond markets declining significantly. The
US economy is faced with the combined generational issue of
retiring baby-boomers and weak gains in labour productivity. This
has lead to supply constraints in the labour market and it is likely
that this should soon be evident in goods and services. However,
despite declining energy and commodity prices and cheaper imports
due to the strong dollar, the current inflation environment is close
to the Fed's two percent target.
In Europe, we have seen another year of friction amongst regional
countries with risks more
likely to come from politics than
economics. Brexit is expected to have an adverse effect across
Europe and, to a much lesser extent, the world at both an economic
and political level. The UK and the Eurozone account for 6% and
28% respectively of global GDP and scepticism toward the EU and
the euro has been increasing in EU electorates and will be
heightened by the Brexit vote.
This financial year has proved to be another turbulent one for the
Australian share market. While the ASX is likely to experience some
increased volatility from global uncertainty, it's important to note
that only around 5% of aggregate earnings are derived from the UK
and Europe. Weakness in the economy was partly driven by the
miners and energy stocks in the first half and a shift in sentiment
toward the banks in the second half. The All Ordinaries Index
posted gains over the quarter of 3.1% although posting a decline of
2.6% for the year. The AUD/USD exchange rate has fallen 3.3% over
the year closing at 0.745 US cents.
5. SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
Significant changes in the state of affairs of the Company during the
financial year were as follows:
The value of the portfolio before fees and taxes increased by
5.9%.
Jason Pohl as appointed Alternate Director to Dr Manny Pohl.
Global Masters Fund owns 13.78% of Athelney Trust Plc.
Global Masters Fund Limited
8
6. MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
No other matter or circumstance not otherwise dealt with in the
Director’s Report or Financial Report, which has arisen since the end
of the year that has significantly affected, or may significantly affect
the operations of the Company, the results of those operations or
the state of affairs of the Company in future financial years.
7. LIKELY DEVELOPMENTS AND EXPECTED
RESULTS OF OPERATIONS
There are no planned changes to principal activities. Any general
decline in equity markets may have an adverse effect on results in
future years.
8. ENVIRONMENTAL ISSUES
The Company’s operations are not regulated by any significant
environmental regulation under a law of the Commonwealth or of a
State or Territory.
9. EARNINGS PER SHARE
Based on profit after income tax.
Basic earnings per share
Diluted earnings per share
2016
Cents
0.01
0.01
2015
Cents
0.18
0.18
As a result of moving to AASB 9 Total Comprehensive Income is a
more appropriate base for detailing earnings per share.
Basic earnings per share
Diluted earnings per share
See Note 16 of the Financial Report.
2016
Cents
7.50
7.50
2015
Cents
17.59
17.59
10. COMPANY SECRETARY
Brian Jones B.Com, FCA
Brian Jones is a Chartered Accountant and a partner of Rothsay
Chartered Accountants in Sydney. He is a member of the Institute
of Chartered Accountants and is a registered tax agent. He has been
Company Secretary of Global Masters Fund Limited since 1 March
2007. He has over 35 years’ experience in the accounting and
finance industries and is currently Company Secretary of two other
listed Companies.
11. MEETINGS OF DIRECTORS
The number of Directors’ meetings attended by each of the
Directors of the Company during the financial year are:
Board
Audit and
Risk Committee
Director
J L Addison
Dr E C Pohl
P Corrigan AM
J C Pohl
Eligible to
attend
4
Attend
4
Eligible to
attend
4
Attend
4
4
4
-
4
4
-
4
4
-
4
4
-
12. REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main
headings:
(A) Principles used to determine the nature and amount of
No remuneration consultants were engaged during the year.
The per annum remuneration of the Directors increased from
previous year:
remuneration
(B) Details of remuneration
(C)
Service agreements
(D) Share-based compensation
(E) Related Party Transactions
(F) Equity Instrument Disclosure relating to Key Management
Personnel
$46,125
Chairman
Other Directors
Remuneration of Directors is determined by the Board within the
maximum amount of $150,000 previously approved by the
Shareholders.
$41,000
There is no performance based remuneration for Directors.
(A) Principles used to determine the nature and
amount of remuneration
Fees and payments to Directors reflect the demands which are
made on, and the responsibilities of, the Directors.
(B) Details of remuneration
Details of the remuneration of each Director of Global Masters Fund
Limited and the executives of the Company are set out in the
following table.
DETAILS OF REMUNERATION
Short-term Benefits
Director
Year
Fees
Performance
Fees
J L Addison
Non-executive Chairman
Dr E C Pohl
Managing Director
P Corrigan AM
Non-executive Director
Total Directors Remuneration
2016
2015
2016
2015
2016
2015
2016
2015
$
-
-
-
-
-
-
$
46,125
30,750
41,000
20,500
41,000
20,500
128,125
71,750
Non-
monetary
Benefits
$
-
-
-
-
-
-
Post-
Employment
Super
Equity
Shares
Options
Total
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
46,125
30,750
41,000
20,500
41,000
20,500
128,125
71,750
(C) Service agreements
As the Company does not employ any staff, there are no employment service agreements entered into by the Company. The Company Secretary is
employed by Rothsay Chartered Accountants and the Managing Director is employed by the Investment Manager – EC Pohl & Co Pty Ltd.
(D) Share-based compensation
No share-based compensation exists.
(E) Related Party Transactions
The Investment Manager of Global Masters Fund Limited is EC Pohl & Co Pty Ltd, of which Dr Manny Pohl is a Director. Dr Pohl is also Managing
Director of Global Masters Fund Limited. The remuneration he received from the company (GFL) is in respect of his services as Managing Director.
There have been no related party transactions during the year.
Global Masters Fund Limited
9
DIRECTORS’ REPORT (Continued)
(F) Equity Instrument Disclosure relating to Key Management Personnel
The number of shares in the Company held during the financial year by each Director of Global Masters Fund Limited, including their
related parties is set out below. There were no shares granted during the year as compensation.
2016
Balance At The Start Of
The Year
Received During The Year By
Exercise Of Rights
Other Changes During
The Year
Balance At the
End Of The Year
J L Addison
Dr E C Pohl *
P Corrigan AM
NIL
5,000
NIL
-
-
-
-
-
-
NIL
5,000
NIL
In addition to the securities owned directly by Dr EC Pohl, there are 4,639,049 shares registered in
entities associated with EC Pohl & Co Pty Ltd, of which he is a Director and Shareholder.
END OF REMUNERATION REPORT (AUDITED)
13. GENERAL TRANSACTIONS
18. NON-AUDIT SERVICES
Other than the Director’s remuneration, the Company does not
directly contract with any of the Directors.
14. LOANS
There are no loans issued to any of the Directors (30 June 2015 –
Nil).
15. OPTIONS
No options have been issued during or since the financial year (30
June 2015 – Nil).
16. INSURANCE OF OFFICERS AND/OR AUDITORS
During the financial year the Company insured the Directors and
Officers against certain liabilities as permitted by the Corporations
Act 2001. The insurance policy prohibits disclosure of the nature of
the cover, the amount of the premium, the limit of liability and
other terms.
The Company has entered into an agreement for the purpose of
indemnifying Directors and Officers, to the extent permitted by law,
against any liability (including the costs and expenses of defending
actions for an actual or alleged liability) incurred in their capacity as
a Director and Officer of the Company.
The Company has not during or since the financial year
indemnified or paid any insurance premiums to indemnify the
auditors.
17. 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 proceeding to which the
Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the
Company with leave of the Court under Section 237 of the
Corporations Act 2001.
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Company are important.
There have been no amounts paid or payable to the auditors for
non-audit services provided during the year.
The Directors have considered the position and are satisfied that the
provision of any non-audit services (if necessary in future) is
compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Audit and Risk
Committee is satisfied that the provision of any non-audit services
by the auditor, would not compromise the auditor independence
requirements of the Corporations Act 2001 for the following
reasons:
All non-audit services would be reviewed by the Audit and Risk
Committee to ensure they do not impact the impartiality and
objectivity of the auditor; and
None of the services undermine the general principles relating
to auditor independence as set out in APES 110, including
reviewing or auditing the auditor’s own work, acting in a
management or a decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic
risk and rewards.
A copy of the Auditors’ Independence Declaration as required under
section 307C of the Corporation Act 2001 is set out on page 11.
Dr Emmanuel (Manny) C Pohl
Managing Director
29 August 2016
Global Masters Fund Limited
10
CORPORATE GOVERNANCE STATEMENT: FOR THE YEAR ENDED 30 June 2016
Recommendation 1.3:
Written agreement with each
Director and senior executive setting out the terms of their
appointment
Compliant
Upon appointment, each Director receives a letter of appointment
which sets out the formal terms of their appointment, along with a
deed of indemnity, insurance and access.
Recommendation 1.4: The Company Secretary of a listed
entity should be accountable directly to the Board, through
the Chair, on all matters to do with the proper functioning
of the Board
Compliant
The Company Secretary is employed by a third party as disclosed in
the Directors’ Report and is directly accountable to the Board on
matters relating to the proper functioning of the Board.
Details regarding the Company Secretary, including experience and
qualifications, are set out in the Directors’ Report.
Recommendation 1.5: Gender Diversity
Not Compliant
In respect of diversity, the Board considers that diversity includes
differences that relate to gender, age, ethnicity and cultural
background. It also includes differences in background and life
experience, communication styles, interpersonal skills, education
and problem solving skills.
The Board seeks to develop a culture of diversity whereby a mix of
skills and diverse backgrounds are employed by the Company at all
levels, through structuring the recruitment processes at all levels, so
that a diverse range of candidates are considered and there are no
excuses or unconscious biases that might discriminate against
certain candidates. However, as the Company is an externally
managed entity, this recommendation is not applicable.
Recommendations 1.6 and 1.7: Board and Senior Executive
Evaluation
Compliant
The Board is committed to formally evaluating its performance and
the performance of the Audit and Risk Committee and individual
Directors, as well as the governance processes supporting the
Board. The Board does this through an annual assessment process.
Any issues identified are addressed at subsequent Board meetings.
PRINCIPLE 2:
Structure the Board to add value
Recommendation 2.1: Establish a Nomination Committee
Non-Compliant
The Company has not established a formal Nomination Committee,
as the Board considers that, due to the scope and nature of the
Company’s activities, the whole Board should undertake the
responsibility.
This statement outlines the main corporate governance practices
that were in place for the year ended 30 June 2016. The statement
explains the extent to which the Company complies with the ASX
Corporate Governance Principles and Recommendations, including
explanations of why certain recommendations have not been
For ease of comparison with the Principles and
followed.
Recommendations,
the Company’s
compliance with each of the specific recommendations as follows.
this section summarises
PRINCIPLE 1:
Lay solid foundations for management and oversight
Recommendation 1.1: Respective roles and responsibilities
of its Board and Management
Compliant
The Board is responsible for the overall corporate governance of the
entity and its overriding objective is to protect and increase
Shareholder value. The Board guides and monitors the business to
ensure that the Company is properly managed in the best interest of
Shareholders. The Board is accountable to its Shareholders.
It is responsible for a broad range of matters including:
monitoring the Investment Manager and the composition and
performance of the investment portfolio;
monitoring and assessing the performance of the Managing
Director;
undertaking Director nomination matters including succession
planning for the Board to ensure an appropriate mix of skills,
experience, expertise and diversity is maintained;
approving and maintaining appropriate risk management and
internal control systems to identify, assess, monitor and
manage the Company’s business risks on an ongoing basis;
overseeing the Company’s process
communications; and
for disclosure and
developing and approving appropriate Company policies,
procedures and codes of behaviour as required to maintain a
culture of integrity and a strong framework of corporate
governance.
The Board has adopted a formal Board Charter that details the
and
Board’s
operations, and
the Company’s website
www.globalmastersfund.com.au
responsibilities, membership
is available on
authority,
role,
The Charter sets out the matters specifically reserved for the Board
and the powers delegated to its Committees.
Recommendation 1.2:
election/re-election
Compliant
Information prior to Director
Before the Board appoints a new Director or puts forward a
candidate for election, the Board will ensure that appropriate
background checks are undertaken. Shareholders are provided with
all material information in our possession that is relevant to their
decision on whether or not to elect or re-elect a Director through a
number of channels, including via the Notice of Meeting, the
Director Résumés and other information contained in the Annual
Report.
Global Masters Fund Limited
12
Recommendation 2.2: Have and disclose a Board skills
matrix
Compliant
The Company’s objective is to have an appropriate mix of expertise
and experience on our Board and its Committees so that the Board
can effectively discharge its corporate governance and oversight
responsibilities. This mix is described in the Board skills matrix
below.
Expertise
Financial knowledge and
experience
Legal, governance and
compliance
Commercial acumen
Risk management
Experience
Industry
Finance
Superannuation
Market
Australian Listed Securities
Geographic
Australia
Recommendation 2.3: Independent Directors
Compliant
The Board has accepted that an Independent Director is as defined
in Box 2.3 of the ASX Corporate Governance Principles and
Recommendations (3rd Edition).
Of the current Board members, Mr Jonathan Addison and Mr Patrick
Corrigan AM are considered to be independent Directors.
The length of service of each director is set out in the Directors
Report.
Recommendation 2.4: A majority of the Board of a listed
entity should be independent Directors
Compliant
The structure of the Board does comply with this recommendation
independent (refer
in that a majority of the Directors are
recommendation 2.3).
Recommendation 2.5: The Chair of the Board of a listed
entity should be an independent Director and, in particular,
should not be the same person as the CEO of the entity
Complaint
The Company’s Chairman is Mr Jonathan Addison an independent
Director.
Recommendation 2.6: Director induction and professional
development
Compliant
New Directors are inducted into the Company’s processes and
policies in a suite of ways, including the provision of a ‘Board
manual’, interviews with senior management of the Investment
Manager and out of session meetings with other Directors. All
Directors are encouraged to undertake ongoing professional
development both in their area of technical expertise and in the
skills required to effectively execute the role of Director.
PRINCIPLE 3:
Act ethically and responsibly
Recommendation 3.1: Code of Conduct
Compliant
The Company has developed a Code of Conduct (the Code) which
has been fully endorsed by the Board and applies to all Directors
and officers. The Code is reviewed annually and updated as
necessary to ensure it reflects the highest standards of behaviour
and professionalism and the practices necessary to maintain
confidence in the Company’s integrity. A summary of the Code is
available on the Company’s website:
www.globalmastersfund.com.au
The Code sets out the Company’s commitment to conducting its
business in accordance with all applicable laws and regulations while
demonstrating and promoting the highest ethical standards.
PRINCIPLE 4:
Safeguard integrity in corporate reporting
Recommendation 4.1: Audit Committee
Compliant
The Company has an Audit and Risk Committee which comprises
three independent Directors.
The composition of the Committee, a record of its meetings, and the
relevant experience of each member of the Committee is set out in
the Directors Report.
The Audit and Risk Committee charter is available on the Company’s
website: www.globalmastersfund.com.au
Recommendation 4.2: CEO and CFO declaration on the
financial records
Compliant
The Board has received a declaration from the CEO and CFO that the
Company’s financial records have been properly maintained and
that the
financial statements comply with the appropriate
accounting standards and give a true and fair view of the financial
position and performance of the Company and that the opinion has
been formed on the basis of a sound system of risk management
and internal control which is operating effectively.
A summary of the Code is available on the Company’s website:
www.globalmastersfund.com.au
Recommendation 4.3: The external auditor should attend
the AGM and be available to answer questions from
security holders relevant to the audit
Compliant
A partner of Joe Pien Chartered Accountants, the Company’s
auditor, was available at the most recent AGM and will be available
at the next AGM to answer questions from Shareholders. It is the
policy of the Board to always request auditor presence at AGMs.
Global Masters Fund Limited
13
CORPORATE GOVERNANCE STATEMENT: FOR THE YEAR ENDED 30 June 2016 (Continued)
PRINCIPLE 5:
Make timely and balanced disclosure
Recommendation 5.1: Continuous Disclosure Policy
Compliant
The Company has a Continuous Disclosure Policy which sets out the
obligations of the Company’s Directors and officers in relation to
continuous disclosure as well as the Company’s obligations under
the Corporations Act and the ASX Listing Rules. The policy also
contains procedures for internal notification and external disclosure,
as well as procedures for promoting understanding of compliance
with the disclosure requirements and for the monitoring of
Company compliance.
The Disclosure Policy is available on the Company’s website:
www.globalmastersfund.com.au
PRINCIPLE 6:
Respect the rights of security holders
Recommendation 6.1:
A listed entity should provide
information about itself and its governance to investors via
its website
Compliant
Investors and other stakeholders can find information about the
Company on its website: www.globalmastersfund.com.au
Information on the Company’s corporate governance practices can
also be found at www.globalmastersfund.com.au
Recommendation 6.2: A listed entity should design and
investor relations program to facilitate
implement an
effective two-way communication with investors
Compliant
The Company’s Communications Policy sets out how the Company
will communicate with Shareholders.
Information is communicated to Shareholders through the
distribution of a quarterly report, annual and half yearly financial
reports, announcements through the ASX and the media, on the
Company’s website and through the Chairman’s address at the
Annual General Meeting.
If requested, the Company will provide general information by
email, facsimile or post.
Through the Company’s information email address and phone
number, and at AGMs, the Company encourages two-way
communication with Shareholders.
The Communication Policy is available on the Company’s website:
www.globalmastersfund.com.au
Recommendation 6.3: Disclose the policies and processes it
has in place to facilitate and encourage participation at
meetings of security holders
Compliant
The Company facilitates and encourages participation at meetings of
security holders by having sections of each meeting dedicated to
questions from the floor. Shareholders are given at least 30 days’
notice of security holder meetings and those that are unable to
attend in person may email or fax questions they would like
answered. The Company provides a direct voting facility to allow
security holders to vote ahead of AGMs without having to attend or
appoint a proxy.
Recommendation 6.4: Give security holders the option to
receive communications from, and send communications to,
the entity and its security registry electronically
Compliant
Quarterly reports and other information required to be sent to
Shareholders are sent by email to all persons who have requested
their name to be added to the Company’s email list. If requested,
the Company will provide general information by email, facsimile or
post.
PRINCIPLE 7:
Recognise and manage risk
Recommendation 7.1: Risk Committee
Compliant
The Audit and Risk Committee monitors the Company’s business
risks.
The composition of the Committee and a record of its meetings is
set out in the Directors Report.
The Audit and Risk Committee charter is available on the Company’s
website: www.globalmastersfund.com.au
Recommendation 7.2: Annual risk management framework
review
Compliant
Each year, the Audit and Risk Committee, reviews the Company’s
Ad hoc reviews may also be
risk management framework.
conducted when the Board perceives that the risk environment has
shifted significantly. A review was conducted during the year.
Recommendation 7.3: Internal audit function
Non-Compliant
The Company does not have an internal audit function as the Board
has deemed it is not necessary giving consideration to the size and
nature of the Company. Instead, the full Board through the Audit
and Risk Committee liaises closely with the Company’s external
auditor to identify potential improvements to the risk management
and internal control processes.
Global Masters Fund Limited
14
Recommendation 7.4: Exposure to economic,
environmental and social sustainability risks
Compliant
The Board monitors the business risk and guides the affairs of the
Company in the discharge of its stewardship responsibilities.
The Board meeting agendas and reports advise the Board of current
and forthcoming issues relevant to the Company’s operations and
performance. The Board reviews the investment portfolio at their
regular meetings.
Management has designed and implemented a risk management
and internal control system through a Risk Management Framework.
The Framework is monitored by the Audit & Risk Committee with
regular reporting to Committee meetings. The Framework is
reviewed yearly by the Committee.
The identified risks are grouped within the Framework under the
following headings:
Strategic
Operational
External Macro
Environmental
PRINCIPLE 8:
Remunerate fairly and responsibly
Recommendation 8.1: Remuneration Committee
Non-Compliant
Given the size of the Company and the nature of its activities, these
functions are undertaken by the Board.
Recommendation 8.2: Disclose its policies and practices
regarding the remuneration of non-executive Directors and
the remuneration of executive Directors and other senior
executives
Compliant
The maximum amount of Directors’ fees is fixed by Shareholders at
the Annual General Meeting and can only be varied by Shareholders
in a similar manner. In determining the allocation of fees, the Board
takes into account the time demands on each Director, together
with the responsibilities undertaken by them and market practices
of similar sized businesses in the Listed Investment Company sector.
It is the policy of the Board not to issue Directors incentive shares or
options.
The details of the remuneration received by Directors in the
2015/2016 year are included in the Remuneration Report contained
within the Directors’ Report.
Recommendation 8.3: Equity-based remuneration
Non-Compliant
As the Company does not have an equity-based remuneration
scheme, Recommendation 8.3 is not applicable.
Global Masters Fund Limited
15
FINANCIAL REPORT
CONTENTS OF FINANCIAL REPORT
Page
Financial Report
Statement of Profit or Loss and Other Comprehensive
Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Investments
Corporate Directory
17
18
19
20
21
30
31
32
32
35
This financial report covers Global Masters Fund Limited as an individual entity.
There are no controlled entities.
Global Masters Fund Limited is a company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business is:
Global Masters Fund Limited
Level 1
12 O’Connell Street
SYDNEY NSW 2000
The financial report was authorised for issue by the Directors on 29 August 2016.
A description of the nature of the entity’s operations and its principal activities is
included in the Operating and Financial Review.
Through the use of the internet, we have ensured that our corporate reporting is
timely, complete and available globally at minimum cost to the Company. All
media releases, financial reports and other information are available from the
Company at the above address or from our website:
www.globalmastersfund.com.au
Global Masters Fund Limited
16
GLOBAL MASTERS FUND LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Notes
2016
$
2015
$
5
6
7
250,384
200,274
(249,339)
(185,081)
1,045
15,193
-
-
1,045
15,193
Other Comprehensive Income, net of income tax
Items that will not be reclassified subsequently to profit & loss when specific conditions are met
Changes in fair value of available-for-sale Financial Assets
Other Comprehensive Income for the year, net of tax
Total Comprehensive Income for the year
642,079
1,493,997
642,079
1,493,997
643,124
1,509,190
Earnings per share:
Basic earnings per share
Diluted earnings per share
Comprehensive Income:
Earnings per share
Cents
Cents
0.01
0.01
0.18
0.18
16
16
16
7.50
17.59
The accompanying notes form part of these financial statements.
Global Masters Fund Limited
17
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents
Trade and Other Receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial Assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and Other Payables
TOTAL CURRENT LIABILIITES
NON-CURRENT LIABILITIES
Deferred Tax Liabilities
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated losses
TOTAL EQUITY
.
Notes
2016
$
2015
$
8
9
11
10
12
13
14
15
56,302
1,787
6,575
64,664
53,766
1,321
7,824
62,911
15,078,717
15,078,717
15,143,381
14,233,144
14,233,144
14,296,055
13,407
13,407
12,475
12,475
1,623,812
1,623,812
1,637,219
1,420,542
1,420,542
1,433,017
13,506,162
12,863,038
8,609,085
5,463,876
(566,799)
8,609,085
4,821,797
(567,844)
13,506,162
12,863,038
The accompanying notes form part of these financial statements.
Global Masters Fund Limited
18
GLOBAL MASTERS FUND LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
2015
Balance at 1 July 2014
Profit for the Year
Other comprehensive income
- Changes in fair value of available-for-sale
financial assets
Total comprehensive income for the year
Note
Issued
Securities
$
8,609,085
-
-
-
Accumulated
Losses
$
Reserves
Total
$
$
(583,037)
3,327,800
11,353,848
15,193
-
15,193
-
15,193
1,493,997
1,493,997
1,493,997
1,509,190
Balance at 30 June 2015
8,609,085
(567,844)
4,821,797
12,863,038
2016
Balance at 1 July 2015
Profit for the Year
Other comprehensive income
- Changes in fair value of available-for-sale
financial assets
Total comprehensive income for the year
Note
Issued
Securities
$
8,609,085
-
-
-
Accumulated
Losses
$
Reserves
Total
$
$
(567,844)
4,821,797
12,863,038
1,045
-
1,045
-
1,045
642,079
642,079
642,079
643,124
Balance at 30 June 2016
8,609,085
(566,799)
5,463,876
13,506,162
The accompanying notes form part of these financial statements.
Global Masters Fund Limited
19
Notes
2016
$
2015
$
194,918)
(247,622)
(52,704)
23
56,926
93,799
2,149
(97,634)
55,240
2,536
53,766
56,302
(197,441)
(184,751)
12,690
52685
-
-
(150,078)
(97.393)
(84,703)
138,469
53,766
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Interest, distributions and dividends received
Payments to suppliers and employees
Net cash provided by/(used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of FSI
Proceeds from sale of Berkshire Hathaway
Proceeds from sale of Colonial First State Units
Purchase of shares in Athelney Trust Plc
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of year
8
The accompanying notes form part of these financial statements.
Global Masters Fund Limited
20
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply to the period when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax assets are recognised for all deductible temporary
differences and unused tax losses to the extent that it is probable
that taxable profit will be available against which the deductible
temporary differences and losses can be utilised.
Current and deferred tax is recognised as income or an expense and
included in profit or loss for the period except where the tax arises
from a transaction which is recognised in other comprehensive
income or equity, in which case the tax is recognised in other
comprehensive income or equity respectively.
(c) 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
(ATO).
Receivables and payable are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is
included as part of receivables or payables in the statement of
financial position.
Cash flows in the statement of cash flows are included on a gross
basis and the GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to, the
taxation authority is classified as operating cash flows.
(d) Cash and Cash Equivalents
Cash and cash equivalents comprises cash on hand, demand
deposits and short-term investments which are readily convertible
to known amounts of cash and which are subject to an insignificant
risk of change in value.
(e) Financial Instruments
Financial Assets At Fair Value Through Profit Or Loss
Financial assets at fair value through Profit or Loss are Financial
Instruments convertible in to Equity Instruments. A financial asset is
classified in this category if it is so designated by management and
within the requirement of AASB 9 Financial Instruments. Realised
and unrealised gains and losses arising from changes in the fair value
of these assets are included in the profit or loss in the period in
which they arise.
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
The functional and presentation currency of Global Masters Fund
Limited is Australian dollars. Its shares are publicly traded on the
Australian Stock Exchange (“ASX”).
1. BASIS OF PREPARATION
The financial statements are general purpose financial statements
that have been prepared
in accordance with the Australian
Accounting Standards and the Corporations Act 2001.
These financial statements and associated notes comply with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The financial statements have been prepared on an accruals basis
and are based on historical costs modified, where applicable, by the
measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
Significant accounting policies adopted in the preparation of these
financial statements are presented below and are consistent with
prior reporting periods unless otherwise stated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Revenue and Other Income
Revenue is recognised when the amount of the revenue can be
measured reliably, it is probable that economic benefits associated
with the transaction will flow to the Company and specific criteria
relating to the type of revenue as noted below, has been satisfied.
Revenue is measured at the fair value of the consideration received
or receivable and is presented net of returns, discounts and rebates.
All revenue is stated net of the amount of goods and services tax
(GST).
Interest Revenue
Interest is recognised using the effective interest method
Dividend Revenue
Dividends are recognised when the entity’s right to receive
payment is established.
(b)
Income Tax
The income tax expense recognised in the statement of profit or loss
and other comprehensive income comprises of current income tax
expense plus deferred tax expense.
Current tax is the amount of income taxes payable (recoverable) in
respect of the taxable profit (loss) for the year and is measured at
the amount expected to be paid to (recovered from) the taxation
authorities, using the tax rates and laws that have been enacted or
substantively enacted by the end of the reporting period. Current
tax liabilities (assets) are measured at the amounts expected to be
paid to (recovered from) the relevant taxation authority.
Global Masters Fund Limited
21
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(e) Financial Instruments (continued)
Financial Assets At Fair Value Through Other Comprehensive
Income
The Company is a long-term investor in equity instruments. Under
AASB 9, these investments are classified as fair value through Other
Comprehensive Income. After initial recognition at fair value (being
cost), the Company has elected to present in Other Comprehensive
Income changes in fair value of equity instruments investments.
Unrealised gains and losses on investments are recognised in the
Asset Revaluation Reserve until the investment is sold or otherwise
disposed of, at which time the cumulative gain or loss is transferred
to the Profit and Loss Statement.
The Company derecognises an investment when it is sold or it
transfers the investment and the transfer qualifies for derecognition
in accordance with AASB 9. Upon derecognition, unrealised
gains/losses net of tax relating to the investment are transferred
from the revaluation reserve to the realisation reserve.
Available-For-Sale Financial Assets
These investments are measured at fair value.
Unrealised gains and losses arising from changes in the fair value of
these assets are taken directly to Other Comprehensive Income and
accumulated in Equity.
When these financial Assets are sold, the accumulated fair value
adjustments are reclassified from Equity to the profit or loss as gains
and losses on sale.
Available-For-Sale Financial assets are assessed at each reporting
date to determine whether there is an objective evidence that it is
impaired. In the case of Available-For-Sale Financial Instruments, a
significant or prolonged decline in the value of the instruments
below cost is considered to be evidence of whether or not
impairment has arisen.
Any cumulative impairment loss in respect of an Available-For-Sale
Financial Asset previously recognised in equity is reclassified to profit
or loss.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For Available-For-Sale Financial Assets that are debt
securities, the reversal is recognised in profit or loss. For equity
is recognised in Other Comprehensive
securities, the reversal
Income.
Loans and Receivables
Loans and receivables are recognised initially at fair value and
less provision for
subsequently measured at amortised cost,
doubtful debts. Trades receivables are due for settlement no more
than 30 days from the date of recognition.
Collectability of loans and receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written off. A
provision for impairment of trade receivables is established when
there is objective evidence that the Company will not be able to
collect all amounts due according to the original terms of the
receivables.
Global Masters Fund Limited
22
Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired.
The amount of the provision is the different between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of
discounting is immaterial. The amount of the provision is recognised
in the profit or loss in other expenses.
Fair Value Estimation
The fair value of financial instruments traded in active markets (such
as publicly traded derivatives and securities) is based on quoted
market prices at the Statement of Financial Position date. The
quoted market price used for financial assets held by the Company is
the current bid price. The appropriate quoted market price for
financial liabilities is the current bid price.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Company for
similar financial instruments.
(f) Trade And Other Payables
Liabilities for trade payables and other amounts are carried at cost
which is the fair value of the consideration to be paid in the future
for goods and services received, whether or not billed to the
Company.
(g) Provisions
Provisions are recognised when the Company 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.
Provisions for Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the
entity, on or before the end of the reporting period but not
distributed at the end of the reporting period.
(h) Share Capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options which
vest immediately are recognised as a deduction from equity, net of
any tax effects
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(i) New Accounting Standards and Interpretations
4. OPERATING SEGMENTS
Segment Information
The Company operates in the investment industry. Its core business
focuses on investing in Australian equities to achieve medium to
long-term capital growth and income.
Operating segments have been determined on the basis of reports
reviewed by the Managing Director. The Managing Director is
considered to be the chief operating decision maker of the
Company. The Managing Director considers the business from both
a product and geographic perspective and assesses performance and
allocates resources on this basis. The Managing Director considers
the business to consist of just one reportable segment.
The AASB has issued new and amended Accounting Standards and
Interpretations that have mandatory application dates for future
reporting periods. The Company has decided not to early adopt
these Standards. The following table summarises those future
requirements, and their impact on the Company where the standard
is relevant:
AASB 9 Financial Instruments and amending standards
AASB 2010-7 / AASB 2012-6
Effective Date
31 July 2016
Changes to the classification and measurement
requirements for financial assets and financial
liabilities
The impact of AASB 9 did not have a material
impact on the Company
3. CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
(a) Key Estimates
There are no key assumptions or sources of estimation uncertainty
that have a risk of causing material adjustment to the carrying
amounts of certain assets and liabilities within the next annual
reporting period as investments are carried at their market value.
(b) Key Judgements
The preparation of financial reports in conformity with Australian
Account Standards require the use of certain critical accounting
estimates. This requires the Board to exercise their judgement in
the process of applying the Company's accounting policies.
The carrying amount of certain assets and liabilities are often
determined based on estimates and assumptions of future events. In
accordance with AASB 112 Income Taxes, deferred tax liabilities and
deferred tax assets have been recognised for Capital Gains Tax (CGT)
on the unrealised gains/losses in the investment portfolio at current
tax rates.
As the Directors do not intend to dispose of the portfolio, the tax
liability/benefit may not be crystallised at the amount disclosed in
Note: 13. In addition, the tax liability/benefit that arises on the
disposal of these securities may be impacted by changes in tax
legislation relating to treatment of capital gains and the rate of
taxation applicable to such gains/losses at the time of disposal.
The Company has an investment process which is anticipated will
deliver medium to long-term capital growth - minimum investment
period is three to five years.
The deferred tax asset has been carried forward as it believed that
this process will deliver growth over this period to utilise the
deferred tax asset.
The Company does not hold any securities for short term trading
purposes. Therefore the investment portfolio is classified as
Financial Assets at fair value through Other Comprehensive Income.
Global Masters Fund Limited
23
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
5. REVENUE AND OTHER INCOME
Dividends Received
Distributions Received
Interest Received
Gain on sale of Flagship Investments
Gain on Sale of Berkshire Hathaway
Realised Foreign Exchange Loss
Gain on Sale of Colonial Units
6. OTHER EXPENSES
ASX and Share Registry costs
Administration Costs
7.
INCOME TAX EXPENSE
Notes
2016
$
194,749
74
95
2,510
55,398
(3,178)
736
2015
$
197,237
4
200
2,833
-
-
-
250,384
200,274
17,695
231,645
249,340
18,380
166,700
185,080
1,045
313
313
(313)
-
55,684
618
56,302
15,193
4,558
4,558
(4,558)
-
51,028
2,738
53,766
(a) Reconciliation of income tax to accounting profit
Accounting profit before tax
Prima facie tax payable on ordinary activities before income tax rate at 30% (2015 - 30%)
Income tax expense
Tax losses not recognised
Tax expense shown in profit and loss statement
8. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
Balance as per Statement of Cash Flows
Reconciliation of cash
Cash and Cash Equivalents reported in the Statement of Cash Flows are reconciled
to the equivalent items in the Statement of Financial Position as follows:
Cash and Cash Equivalents
56,302
53,766
9. TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Total current trade and other receivables
Global Masters Fund Limited
24
1,787
1,787
1,321
1,321
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
10. OTHER FINANCIAL ASSETS
(a) Available-for-sale Financial Assets comprise
Listed investments, at fair value
Shares in other Corporations
Unlisted investments, at fair value
Total Available-for-sale Financial Assets
11. OTHER ASSETS
CURRENT
Prepayments
12. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accrued expenses
2016
$
2015
$
15,078,174
15,078,174
14,230,352
14,230,352
543
543
2,892
2,892
15,078,717
14,233,144
6,575
6,575
7,824
7,824
1,931
11,476
13,407
-
12,475
12,475
13. NON CURRENT LIABILITIES
Deferred tax liabilities
Comprises tax on unrealised gains on currency exchange and market fluctuations of
listed investments.
1,623,812
1,420,542
14. ISSUED CAPITAL
8,578,596 (2015: 8,578,596 ) Ordinary Shares
8,609,085
8,609,085
15. RESERVES
(a) Revaluation Reserve
The investment revaluation reserve is used to accumulate unrealised capital profits
and losses. The reserve can only be used in limited circumstances for payment of
dividends.
Global Masters Fund Limited
25
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
2015
$
2015
$
16. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to owners of the company by
the weighted average number of ordinary shares outstanding during the year.
Basic earnings per share is calculated by dividing the profit attributable to owners of the company by the
weighted average number of ordinary shares outstanding during the year.
Net gain (loss) used in calculating basic and diluted earnings per share
Total comprehensive income used in calculating total comprehensive income per share
Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share
Total ordinary shares on issue
1,045
643,124
8,578,596
8,578,596
15,193
1,509,190
8,578,596
8,578,596
(a) Weighted average number of ordinary shares outstanding during the year used in
calculating basic EPS
8,578,596
8,578,596
Basis earnings per share (cents per share)
Diluted earnings per share (cents per share)
Total Comprehensive Income per share (cents per share)
Cents
0.01
0.01
7.50
Cents
0.18
0.18
17.59
17. FINANCIAL RISK MANAGEMENT
The Company is exposed to a variety of financial risks through its use of financial instruments.
The Company‘s overall risk management plan seeks to minimise potential adverse effects due to
the unpredictability of financial markets.
The Company does not speculate in financial assets.
The most significant financial risks to which the Company is exposed to are described below:
Specific risks
Liquidity risk
Credit risk
Market risk - currency risk, interest rate risk and price risk
Financial instruments used
The principal categories of financial instrument used by the Company are:
Trade receivables
Cash at bank
Investments in listed shares
Trade and other payables
Global Masters Fund Limited
26
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
17. FINANCIAL RISK MANAGEMENT (continued)
(a)
Interest Rate Risk
The Company's exposure to interest rate risk, which is the risk that a
financial instruments value will fluctuate as a result of changes in
market interest rates and the effective weighted average interest
rates on classes of financial assets and financial liabilities, is as
follows:
Effective Interest Rate
Financial Assets
Cash and cash equivalents
6 Months or less
Financial Assets
Cash and cash equivalents
Total Financial Assets
2016
%
2015
%
0.17
3.05
2016
$
2015
$
56,302
53,766
56,302
53,766
All other financial assets and liabilities are non-interest bearing -
apart from investment in Colonial Wholesale Funds which on
average earned 2.5%
(b) Currency Risk
The Company‘s investment portfolio includes investments in USA
and UK, cash on deposit and interest receivable denominated in US
dollars and Pounds Sterling. As such, the Company's balance sheet
can be affected significantly by movements in exchange rates. The
Company's current policy is not to hedge its investment portfolio.
The carrying value of these foreign currency denominated assets at
balance date was as follows:
Carrying Amount
Cash and cash equivalents
Investments
Total
(c) Credit risk
2016
AUD $
2015
AUD $
563
11,943,844
2,682
11,256,816
11,944,407
11,259,498
The Company is not a trading entity. The maximum exposure to
credit risk at balance date in relation to each class of financial assets
(excluding investments) is the carrying amount of those assets as
indicated in the balance sheet. The Company has no commercial
debtors and receivables are due from reputable companies listed on
the world's stock exchange or major financial banking institutions.
With respect to credit risk on cash and investment, the Company's
exposure to credit risk arises from default of the counter party, with
a maximum exposure equal to the carrying amount of those
investments. The Company's business activities do not necessitate
the requirement for collateral.
.
Global Masters Fund Limited
27
(d) Net Fair Value
The following methods and assumptions are used to determine the
net fair values of financial assets and liabilities:
Cash, cash equivalents and short-term investments:
The carrying amount approximates fair value because of their short
term to maturity.
Trade receivables and payables:
The carrying amount approximates fair value as the time to receipt
or payment is usually less than 30 days.
Listed shares:
The current quoted market bid price approximates fair value and
the carrying amount.
The carrying value of all the financial assets and liabilities of the
Company as disclosed in the balance sheet and notes to the financial
statements is the same as the net fair value.
(e) Sensitivity Analysis
in
illustrates sensitivities to the Company’s
The following table
exposures to changes
interest rates, exchange rates and
commodity and equity process. The table indicates the impact on
how profit and equity values reported at balance date would have
in the relevant risk variable that
been affected by changes
management considers
These
sensitivities assume that the movement in a particular variable is
independent of other variables.
to be reasonably possible.
At 30 June 2016, the effect on profit and equity as a result of
changes in the interest rate, with all other variables remaining
constant would be as follows:
6 Months or less
Change in profit
+/- 2% in interest rates
Change in equity
+/- 5% in $A/US$
+/- 10% in listed investments
2016
$
2015
$
+/- 1,000
+/- 675,308
+/- 1,507,871
18. SEGMENT INFORMATION
Company is domiciled and incorporated in Australia.
The Company's principal activity is investment in quoted equities,
Berkshire Hathaway Inc listed on the New York Stock Exchange,
Athelney Trust Plc listed on the London Stock Exchange and Flagship
Investments Limited listed on the Australian Securities Exchange.
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
19. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of Key Management Personnel (KMP) for all of the financial year unless otherwise shown were
Directors
JL Addison
Dr EC Pohl
Chairman (Non-executive), appointed 19 April 2005
Managing Director (Executive), appointed 19 April 2005
P Corrigan AM
Director (Non-executive), appointed 29 November 2006
(b) Other Key Management Personnel Transactions
Compensation Policy
The Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the key
management personnel. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder
benefit.
Executive Personnel
The Managing Director Dr Manny Pohl is an Executive Director but only gets remunerated as a Director as has been the case in
prior years. The Company’s Non-executive Directors are Jon Addison and Pat Corrigan.
Non-Executive Director Compensation
In accordance with the Company’s Constitution and the ASX Listing Rules, the aggregate amount of remuneration payable to the
Non-executive Directors (including the Managing Director) in any year is determined from time to time by Shareholders in a
General Meeting. The last determination was at a General Meeting on 10 May 2006 when Shareholders fixed an aggregate amount
not exceeding $150,000.
Within the limit of aggregate amount determined by the Shareholders, the Board determines the remuneration for Non-executive
Directors. The remuneration arrangements for the Non-executive Directors are reviewed annually by the Board.
The Board assess the appropriateness of the remuneration for Non-executive Directors, having regard to market practice, the
duties and accountability of the Non-executive Directors and the objective of maintaining a balanced Board which has appropriate
expertise and experience, at a reasonable cost to the Company.
The compensation of Non-executive Directors (including the Managing Director) for the year ending 30 June 2016 is shown in the
table of detailed remuneration disclosures, provided in section 12 (A) to (F) of the Remuneration Report on pages 9 and 10.
2016
$
2015
$
11,275
11,275
11,275
11,275
20. AUDITORS REMUNERATION
Remuneration of the auditor of the company, Joseph Pien
- audit of the half year and annual financial report of the Company
Total
21. CONTINGENCIES
In the opinion of the Directors, the Company did not have any contingencies at 30 June 2016
(30 June 2015: None).
22. RELATED PARTIES
There were no related party transactions during the year, other than shown below:
Brian Jones (Company Secretary) is a partner of Rothsay Chartered Accountants, which provides
company secretarial, accounting and taxation services to the Company at normal commercial
rates.
Fees Charged
Total
64,332
64,332
56,375
56,375
Global Masters Fund Limited
28
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
23. CASH FLOW INFORMATION
(a) Reconciliation of result for the year to cash flows from operating activities
Profit for the year
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit
- net (gain)/loss on disposal of investments
- losses on foreign exchange
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
- (increase)/decrease in prepayments
- (increase)/decrease in other assets
- increase/(decrease) in trade and other payables
Cash flow from operations
24. EVENTS OCCURRING AFTER THE REPORTING DATE
No matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Company, the results of those
operations, or the state of affairs of the Company in future financial years.
2016
$
2015
$
1,045
15,193
(58,644)
3,178
(2,833)
-
1,252
(466)
931
-
327
3
(52,704)
12,690
Global Masters Fund Limited
29
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
(a)
the Financial Statements and Notes set out on pages 16 to 29 are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards (IFRS); and
(ii)
give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on
that date; and
in the Directors’ opinion,
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
the remuneration disclosures set out on pages 9 and 10 of the Directors’ Report (as part of the audited remuneration
report) for the year ended 30 June 2016 comply with section 300A of the Corporations Act 2001.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors by:
Dr Emmanuel (Manny) C Pohl
Managing Director
29 August 2016
Global Masters Fund Limited
30
SHAREHOLDER INFORMATION
The Shareholder information set out below was applicable as at 22 August 2016.
1. DISTRIBUTION OF SECURITIES:
3. SUBSTANTIAL SHAREHOLDINGS
Distributions
1
1,001
5,001
10,001
100,001
to
to
to
to
1,000
5,000
10,000
100,000
and over
Total
No. of
Shareholders
85
129
67
56
9
346
11
Holdings of less than a marketable parcel
2. TWENTY LARGEST SHAREHOLDERS
Shareholders
Ordinary
Shares
%
CITICORP NOMINEES PTY LIMITED
4,639,049
54.1%
MARA SUPER PTY LTD
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