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Augmentum Fintech plcGlobal Masters Fund Limited
ABN 84 109 047 618
Level 12,
Corporate Centre One
2 Corporate Court
BUNDALL QLD 4217
www.globalmastersfund.com.au
Annual Report
30 June 2019
FINANCIAL YEAR END
30 June 2019
ANNUAL GENERAL MEETING
The Annual General Meeting of
Global Masters Fund Limited:
WILL BE HELD AT:
The office of
Bentleys NSW Pty Ltd
Level 14
60 Margaret Street
Sydney NSW 2000
TIME:
2.00pm (NSW Time)
DATE:
Friday 15 November 2019
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 Emmanuel (Manny) Pohl AM, Murray d’Almeida, Jonathan Addison and Patrick Corrigan AM
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6
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12
14
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30
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35
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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 2019
Highlights for
the year ending
June 2019
Revenue from dividends and interest increased $73,558 (32.0%) compared to
the previous financial year.
The Net Tangible Assets (NTA) value of the Company per share increased by
10.5% before recognising the net deferred tax liability, whilst the All Ordinaries
Index of ASX increased by 6.5% over the twelve months ended 30 June 2019.
Major Investments
June 2019
BRK
FSI
ATY
Other UK
Cash
OVERVIEW
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 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 business, investment and funds management.
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 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 also provides administration support.
Dr Manny Pohl AM is the Managing Director and major Shareholder of EC Pohl & Co Pty Ltd. Information on the Investment Manager is
available from www.ecpohl.com.
ENVIRONMENT, SOCIAL, GOVERNANCE
A business can only maintain a sustainable competitive advantage if it adequately respects all stakeholders in the business and environment
in which it operates. Companies who are not engaged in sustainable practices, will not be able to generate above average economic returns
throughout their life cycle. To this end, the Manager’s investment process scrutinises companies to see if they have the appropriate, and
sensible Governance structures in place as well as incorporating sustainable practices into their day to day operations. Companies that don’t
meet standards of respect and integrity with regard to compensation structures, internal controls, accounting treatment, rules, relationships,
systems and process throughout the organisation are not included in the portfolio.
Global Masters Fund Limited
4
THE INVESTMENT MANAGEMENT TEAM
As noted above, the disciplined execution of the investment process
is fundamental to our business. To that end, I want to record my
personal appreciation and that of the Board as a whole, to our
Investment Manager led by Dr Manny Pohl and his team of
professionals at EC Pohl & Co (ECP). Our continuing success could
not have been achieved without the outstanding contribution of
these very committed individuals.
THE BOARD
industry
revolves
In a climate of increased focus on Corporate Governance, I am
confident that the rigour and commitment from our Board ensures
the best interests of Shareholders and other stakeholders are
managed and protected. As an example, a particular topic within the
investment
ESG
into the
(Environmental, Social and Governance) principles
investment process, this is in fact the case with ECP. The Annual
Report summarises the Investment Manager’s implementation of
the Principles of Responsible Investing (which incorporates an ESG
framework). Importantly, at a Board level, we will continue to
consider ESG principles to continue to enhance our social licence to
operate.
incorporating
around
It was very pleasing to see Dr Manny Pohl’s contribution to the
finance sector and community recognised with an Order of Australia
in the 2019 Queen’s Birthday Honours. It is a fitting distinction for a
very deserving and humble recipient and the Board passes on its
congratulations to Manny.
In conclusion, I wish to record my appreciation for my fellow Board
members and our Company Secretary for their support, hard work
and engagement throughout the year and I also thank you as
Shareholders for your support and loyalty for many years.
Yours sincerely
Murray d’Almeida
Chairman
CHAIRMAN’S REPORT
Dear Shareholder,
I am pleased to present the 14th Annual Chairman’s Report of Global
Masters Fund Limited for the 2018/19 financial year.
THE YEAR IN REVIEW
The Company has enjoyed a good performance this year. The Net
Tangible Asset (NTA) value per share increased by 10.5%, before
recognising the net deferred tax liability. Contributing to this was an
increase in value of its major investment, Berkshire Hathaway, listed
on the New York Stock Exchange (up 19.4%). The increase in NTA
was also supported by a fall in the Australian dollar compared to the
US and UK currencies. As mentioned in previous years, your Board
does not hedge the currency. Berkshire Hathaway represents
approximately 65% of the portfolio (investments plus cash) and
continues its long-term upward trend.
During the year, the UK investments which comprise 16.6% of the
portfolio performed well. With the resignation of Prime Minister
Theresa May and the unresolved Brexit issue, there is still an
inherent risk for the London Financial markets. Your Board, as well
as the management of Athelney Trust Plc and EC Pohl & Co Pty Ltd
(the Manager) are continually monitoring events so as to be in a
position to react if necessary.
Despite ongoing global uncertainty, the United States economy
continues to show good growth. The gains in equities appear to be
driven by the Federal Reserve’s stance and expectations of progress
on trade, underpinned by tax cuts, strong corporate earnings and a
strong job market.
In Australia, after a drop in the All Ordinaries Index in the first and
second quarters of the year, the equities market was delicately
poised as the Federal Election loomed. The surprise election victory
of the Coalition Party led by Scott Morrison, was viewed positively
by the market and business confidence improved. The All Ordinaries
Index recovered. With a cut in tax rates, the Reserve Bank of
Australia cutting the cash rate to 1.25 % and the renewed sense of
political stability, the outlook seems positive compared to the start
of the financial year.
THE MARKET OUTLOOK
Nevertheless, the opportunities in the new financial year remain
uncertain. Domestic monetary policy and government tax cuts could
fuel the local economy, while the New York Fed’s indicator on
potential recession at 33% is at its highest since the GFC. The
optimism or otherwise towards the economic outlook is as long
lasting as the latest survey inputs. As business, consumers and
markets react to threats - real or imagined - the task at hand requires
a disciplined and patient commitment to the investment process.
Global Masters Fund Limited
5
DIRECTORS' REPORT
Your Directors present their report on Global Masters Fund Limited for the financial year ended 30 June 2019.
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: M d’Almeida, Dr E Pohl AM, J Addison, P Corrigan AM and Jason Pohl is an Alternate Director
to Dr Manny Pohl.
2.
INFORMATION ON DIRECTORS
Murray H d’Almeida
FAICD
Non-Executive Chairman
Experience and expertise
Director since 3 November 2016
Chairman since 9 November 2018.
Over 37 years of diverse national and international
business experience. Founded the Retail Food Group
and developed a presence in seven overseas
countries. Subsequently has maintained operating
and board positions within a range of financial
services, mining, commercial, academic, government
and sporting businesses and organisations.
Other Current directorships
Chairman of Barrack St Investments Limited
Chairman of Interhealthcare Pty Ltd
Director Triple Energy Limited
Deputy Chancellor Southern Cross University
Trustee of Currumbin Wildlife Foundation
Member of Gold Coast Light Rail Business Advisory
Board
Former Listed Company directorships
in last 3 years
Chairman IncentiaPay Limited
Chairman EnviroSuite Limited
Chairman of Management Resource Solutions PLC
Interest in Shares
2,578 indirect
Dr Emmanuel (Manny) C Pohl AM
B.Sc (Eng), MBA, DBA, FAICD, MSAFAA, F Fin
Managing Director
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
Managing Director of Athelney Trust Plc
Chairman of EC Pohl & Co Pty Ltd
Chairman of ECP Asset Management Pty Ltd
Chairman and President of Bond University Rugby Club
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
Executive Director of Barrack St Investments Limited
(retired June 2017)
Interest in Shares
Directly Held: 6,250
5,755,061 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
Jonathan L Addison
B Ec, CFTP (Snr), FGIA, FCIS, MAICD
Non-Executive Director
Patrick Corrigan AM
HonD (Bond University)
Non-Executive Director
Jason C Pohl
B.Com, LLB, MBA
Alternate Director
Experience and expertise
Non-Executive Chairman from 19 April
2005 to 9 November 2018.
Over 33 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 Gardior Pty Ltd
Chairman of Investment Committee of
Centaur Property Funds Management Ltd
Member of Investment Committee for
Diversa Trustees Ltd
Former Listed Company directorships
in last 3 years
Retired International Chairman of African
Enterprise International (July 2016)
Interest in Shares
Nil
Experience and expertise
Director since 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
Emeritus Chairman of Gold Coast Regional
Art Gallery
Chairman of Qantas Art Scholarship
Committee
Director of Aboriginal Benefits Foundation
Limited
Director of National Portrait Gallery in
Canberra
Experience and expertise
Appointed an Alternate Director to
Dr Manny Pohl on 20 June 2016.
Jason has seven 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
Deputy Chair of Air Freight Export Council
of NSW Inc
Former Listed Company directorships
in last 3 years
None
Interest in Shares
1,000
Interest in Shares
1,000
Global Masters Fund Limited
7
9. EARNINGS PER SHARE
Based on profit after income tax.
Basic earnings per share
Diluted earnings per share
2019
Cents
(0.00)
(0.00)
2018
Cents
(1.26)
(1.26)
its
The Company records fair value movement for some of
investments
in Other Comprehensive Income, therefore Total
Comprehensive Income is a more appropriate base for detailing
earnings per share.
2019
Cents
14.32
14.32
2018
Cents
18.08
18.08
Basic earnings per share
Diluted earnings per share
See Note 16 of the Financial Report.
10. COMPANY SECRETARY
Brian Jones B.Com, FCA
Brian Jones 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 37
years’ experience in the accounting and finance industries and is
currently Company Secretary of one other Listed Investment
Company.
11. MEETINGS OF DIRECTORS
The number of Directors’ meetings attended by each of the Directors
of the Company during the financial year were:
Board
Audit and
Risk Committee
Director
Eligible
to attend
Attend
Eligible
to attend
Attend
M H d’Almeida
Dr E C Pohl AM
P Corrigan AM
J L Addison
4
4
4
4
4
4
4
4
1
1
1
1
1
1
1
1
The Board resolved to disband the Audit and Risk Committee (‘ARC’)
after the August 2018 meeting. All matters addressed in the past by
the ARC, are now incorporated into the Board agenda.
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. Since the capital raising in
November 2017, the Company has expanded its investments to
include a selection of UK investments.
4. REVIEW OF OPERATIONS
International politics has generated a volatile twelve months in the
equities market in FY19. Pleasingly for the full year, our portfolio
performance remained resilient returning 12.4%. This result was
supported strongly by the performance of Berkshire Hathaway and
the favourable USD exchange rate.
NTA per share, before recognising the net deferred tax liability,
increased by 10.5% over the past twelve months. When compared to
the ASX benchmark, the All Ordinaries Index which increased by 6.5%,
our Company has continued to achieve our objective of enhancing
the NTA backing per share.
During the year, revenue from dividends and interest has increased
$73,558 (32.0%) compared to FY18 and revenue from realised gains
increased $75,913 (98.1%). After a full twelve months of executing
the UK investment strategy the Company is seeing tangible benefits
of a diversified portfolio which will continue to develop over time.
Excluding Management and Performance Fees, expenses decreased
on prior year by $65,316, which was primarily due to the one-off costs
incurred in FY18 for the Rights offer which cost $41,000.
5. SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
There were no significant changes in the state of affairs of the
Company during the financial year.
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.
Global Masters Fund Limited
8
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
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
(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.
DETAILS OF REMUNERATION
No remuneration consultants were engaged during the year.
The per annum remuneration of the Directors remains unchanged
from the previous year:
Chairman
Other Directors
$45,000
$40,000
There is no performance based remuneration for 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.
Short-term Benefits
Director
Year
Fees
Performance
Fees
M d’Almeida *
Non-executive Chairman **
Dr E C Pohl AM
Managing Director
J L Addison*
Non-executive Director**
P Corrigan AM *
Non-executive Director
Total Directors Remuneration
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
$
43,563
41,000
40,000
50,500
43,562
46,125
41,000
41,000
168,125
178,625
$
-
-
-
-
-
-
-
-
Non-
monetary
Benefits
$
-
-
-
-
-
-
-
-
Post-
Employment
Super
Equity
Shares
Option
s
Total
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
43,563
41,000
40,000
50,500
43,562
46,125
41,000
41,000
168,125
178,625
* Inclusive of non-claimable GST amount
** The appointed Chairman changed at the close of the AGM on Friday 9 November 2018 - from J L Addison to M d’Almeida.
(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 a self-employed Contractor 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 following transactions occurred with other related parties:
Expenses paid or payable by the Company to:
–
A Performance Fee and Management Fee was payable in accordance with the Management
Services Agreement as detailed in Note 22.
– Dr E C Pohl has an interest in the transaction as during the year Dr E C Pohl was a Director of
EC Pohl & Co Pty Ltd
–
–
EC Pohl & Co Pty Ltd for Performance Fee
EC Pohl & Co Pty Ltd for Management Fee.
All related party transactions are made on an arm’s length basis using the standard terms and conditions.
2019
$
2018
$
68,560
50,925
67,918
35,898
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.
DIRECTOR
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
M H d’Almeida
Dr E C Pohl AM *
P Corrigan AM
J L Addison
2,578
6250
1,000
NIL
-
-
-
-
-
-
-
-
2,578
6,250
1,000
NIL
*
In addition to the securities owned directly by Dr EC Pohl, there are 5,755,061 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 2018 –
Nil).
15. OPTIONS
No options have been issued during or since the financial year (30
June 2018 – 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 Auditor’s 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
19 August 2019
Global Masters Fund Limited
10
AUDITOR’S INDEPENDENCE DECLARATION
Global Masters Fund Limited
11
CORPORATE GOVERNANCE STATEMENT: FOR THE YEAR ENDED 30 JUNE 2019
The Directors of Global Masters Fund Ltd are committed to excellence in corporate governance. By adopting the ASX Corporate
Governance Council’s Corporate Governance Principles and incorporating industry best practice the Company has built a
framework that supports our business performance and enhances transparency and accountability which ultimately protects
the interests of Shareholders.
Below is a list of the Company’s Corporate Governance Framework documents set out against the relevant ASX Governance
Principles and Recommendations, the details of which are available on the Company’s Website. The full Corporate Governance
Statement for the year ending 30 June 2019 is also available on the website, at
http://www.globalmastersfund.com.au/corporategovernance/.
ASX GOVERNANCE PRINCIPLES
RELEVANT DOCUMENT/INFORMATION
Principle 1:
Lay solid foundation for management oversight
Principle 2:
Structure the Board to add value
Principle 3:
Act ethically and responsibly
Principle 4:
Safeguard integrity in corporate reporting
Principle 5:
Make timely and balanced disclosure
Board Charter
Board Charter
Code of Conduct
Share Trading Policy
Board Charter
Code of Conduct
Disclosure Policy
Principle 6:
Respecting the rights of security holders
Communications Policy
Privacy Policy
Principle 7:
Recognise and manage risk
Principle 8:
Remunerate fairly and responsibly
Board Charter
Board Charter
Global Masters Fund Limited
12
The Corporate Governance Statement explains the extent to which the Company complies with the ASX Corporate Governance
Principles and Recommendations including how the policies above support Corporate Governance in the Company. Under the “if not,
why not” approach the Board provide explanations as to why a particular recommendation is not appropriate to its circumstances.
For clarity the Board would like to highlight below the recommendations that have not been adopted and the reasons behind the
decision:
ASX GOVERNANCE PRINCIPLES
COMPLIANCE STATEMENT
Principle 1:
Lay solid foundations for management and
oversight
Recommendation 1.5:
Gender Diversity
Compliant except for 1.5:
Non-Compliant
The Board seeks to develop a culture of diversity whereby a mix of skills and diverse
backgrounds are employed maximizing the benefits of a collection of view-points. At this
point in time and through previous recruitment processes gender diversity has not been
achieved, however there is complete commitment to creating further diversity at the next
opportunity.
Principle 2:
Structure the Board to add value
Recommendation 2.1:
Establish a Nomination Committee
Principle 3:
Act ethically and responsibly
Principle 4:
Safeguard integrity in corporate reporting
Principle 5:
Make timely and balanced disclosure
Principle 6:
Respect the rights of security-holders
Principle 7: Recognise and manage risk
Recommendation 7.1:
Risk Committee
Recommendation 7.3:
Internal audit function
Principle 8: Remunerate fairly and
responsibly
Recommendation 8.1 :
Remuneration Committee
Recommendation 8.3:
Equity-based remuneration
Compliant except for 2.1:
Non-Compliant
The Company has not established a formal Nomination Committee, as the Board considers
that, due to the specific scope and nature of the Company’s activities, the whole Board
should undertake the responsibility.
Compliant
Compliant
Compliant
Compliant
Compliant except for 7.1 and 7.3:
Non-Compliant
The Board recently dissolved the Audit & Risk Committee, citing that the benefits of a
separate committee were not being realised due to the composition of the committee and
overlap with the Board. The Board has reviewed the Board Charter and its processes to
ensure risk management is thoroughly managed.
Non-Compliant
The Company does not have an internal audit function given the size and nature of the
Company. Instead, the Board liaises closely with the Company’s external auditor to
identify potential improvements to the financial risk management and internal control
process. The Board also interrogates the internal compliance and external audit of the
Manager.
Compliant except for 8.1 and 8.3:
Non-Compliant
The Company does not have a Remuneration and Nomination Committee, instead the full
Board develops the remuneration policy balancing the need to attract high quality
Directors, establishing appropriate incentives and commercial control of expenses. The
establishment of a committee would not provide further efficiency to the operation of the
Board given the Board size.
Non-Compliant
The Company does not have an equity-based remuneration scheme and does not intend to
establish one. Recommendation 8.3 is not applicable.
Global Masters Fund Limited
13
FINANCIAL REPORT
CONTENTS OF FINANCIAL REPORT
Page
15
16
17
18
19
29
30
34
35
39
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.
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 12
Corporate Centre One
2 Corporate Court
BUNDALL QLD 4217
The financial report was authorised for issue by the Directors on 19 August 2019.
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
14
GLOBAL MASTERS FUND LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Revenue
Net unrealised gains/(losses) on investments through profit or loss
Other expenses
Profit /(Loss) before income tax
Income tax benefit/(expense)
Net Profit for the year
Other Comprehensive Income
Notes
2019
$
2018
$
5
6
7
456,675
307,204
(6,656)
-
(471,457)
(521,104)
(21,438)
(213,900)
21,092
88,194
(346)
(125,706)
Realised and Unrealised gains on Financial Assets taken to equity, net of tax
7c
1,535,565
1,931,591
Total Comprehensive Income for the year
1,535,219
1,805,885
Earnings per share:
Basic earnings per share
Diluted earnings per share
Comprehensive Income:
Comprehensive earnings per share
Cents
(0.00)
(0.00)
Cents
(1.26)
(1.26)
16
16
16
14.32
18.08
The accompanying Notes form part of these Financial Statements.
Global Masters Fund Limited
15
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
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
2019
$
2018
$
8
9
10
11
12
13
14
15
632,741
21,255
19,652
673,648
497,002
25,404
17,530
539,936
25,360,011
25,360,011
23,025,341
23,025,341
26,033,659
23,565,277
90,525
90,525
91,122
91,122
3,414,164
3,414,164
3,504,689
2,480,404
2,480,404
2,571,526
22,528,970
20,993,751
12,871,873
9,788,334
(131,237)
22,528,970
12,871,873
8,626,576
(504,698)
20,993,751
The accompanying Notes form part of these Financial Statements.
Global Masters Fund Limited
16
GLOBAL MASTERS FUND LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
2018
Balance at 1 July 2017
Total Comprehensive Income
Profit/(Loss) for the Year
Other Comprehensive Income
Total Comprehensive Income
Issued
Share
Capital
$
Retained Profits/
(Accumulated
Losses)
$
Reserves
$
Total
Equity
$
8,609,085
(498,532)
6,814,525
14,925,078
-
-
-
(125,706)
-
(125,706)
-
1,931,591
1,931,591
(125,706)
1,931,591
1,805,885
Transactions with Owners in their capacity as owners
Shares issued as a result of Rights Issue
Less: Capital Raising costs
Total Transactions with Owners
Other
Transfer from reserves to accumulated losses
Balance at 30 June 2018
4,289,126
(26,338)
4,262,788
-
-
-
-
-
-
4,289,126
(26,338)
4,262,788
-
119,540
(119,540)
-
12,871,873
(504,698)
8,626,576
20,993,751
2019
Balance at 1 July 2018
Total Comprehensive Income
Profit/(Loss) for the Year
Other Comprehensive Income
Total Comprehensive Income
Other
Reclassify available for sale financial assets to
financial assets held at fair value through
profit or loss
2(i)
Transfer from accumulated losses to reserves
Note
Issued
Share
Capital
$
Retained Profits/
(Accumulated
Losses)
$
Reserves
$
Total
Equity
$
12,871,873
(504,698)
8,626,576
20,993,751
-
-
-
-
-
(346)
-
(346)
-
1,535,565
1,535,565
(346)
1,535,565
1,535,219
410,915
(410,915)
(37,108)
37,108
-
-
Balance at 30 June 2019
12,871,873
(131,237)
9,788,334
22,528,970
The accompanying Notes form part of these Financial Statements.
Global Masters Fund Limited
17
Net cash provided by/(used in) operating activities
24
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Distributions and Dividends received
Interest received
Payments to suppliers and employees
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of Other UK Investments
Purchase of shares in Athelney Trust Plc
Purchase of Shares in Other UK Investments
Net cash (used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Rights Issue – issue of new shares
Capital Raising Costs
Net cash provided by financing activities
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
Notes
2019
$
2018
$
306,549
897
(531,645)
(224,199)
208,077
3,157
(416,911)
(205,677)
3,340,967
(680,565)
(2,300,464)
359,938
461,978
-
(5,034,645)
(4,572,667)
-
-
-
135,739
497,002
632,741
8
4,289,126
(26,338)
4,262,788
(515,556)
1,012,558
497,002
The accompanying Notes form part of these Financial Statements.
Global Masters Fund Limited
18
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The functional and presentation currency of Global Masters Fund
Limited is Australian dollars. Its shares are publicly traded on the
Australian Securities 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
19
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
The company holds investments in listed equities as its principle
business, these investments are classified as either financial assets
at fair value through profit or loss (FVPL) or financial assets at fair
value through other comprehensive income (FVOCI). The election
is on the basis of two primary criteria:
-
-
The contractual cash flow characteristics of the financial
asset; and
The business model for managing financial assets
Investments held in the actively managed UK portfolio have been
designated as financial assets at fair value through profit or loss
while all other investments, which are held for medium to long
term capital appreciation, have been designated as financial assets
at fair value through other comprehensive income.
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(e) Financial Instruments (continued)
Financial Assets - Recognition
The Company’s investments are recognised on the date that the
company commits itself to the purchase of the asset (ie trade date
accounting is adopted).
Investments are measured at fair value, which is determined by
quoted prices in an active market.
Financial Assets - Subsequent Measurement
Securities held in the portfolio are revalued to market values at
each reporting date. For investments designated as financial assets
at fair value through profit or loss the realised and unrealised net
gains or losses on the portfolio are recognised each period in the
profit or loss. For investments designated as financial assets at fair
value through other comprehensive income the realised and
unrealised net gains or losses on the portfolio are recognised in
other comprehensive income.
Loans and Receivables
Loans and receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for doubtful
debts. Trade 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.
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.
Global Masters Fund Limited
20
(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.
(i) New and Amended Accounting Standards adopted
The Company has adopted AASB 9: Financial Instruments with an
initial application date of 1 July 2018. As a result the Company has
changed its financial instruments accounting policies as follows.
fair value
for amortised cost or
The company has elected to present in profit or loss changes in fair
value of the UK managed portfolio of equity investments (this
excludes the investment in Athelney) previously classified as
available for sale, as these investments do not fit the measurement
criteria
through other
comprehensive income. For the remaining equity investments the
Company has elected to designate equity investments as fair value
through other comprehensive income. As a result, assets with a fair
value of $5,148,280 were reclassified from available for sale financial
assets to assets at fair value through profit or loss and cumulative
unrealised gains net of tax of $410,915 were transferred from the
investment revaluation reserve to retained earnings at 1 July 2018.
Additionally, assets with a fair value of $17,877,061 were reclassified
from available for sale financial assets to assets at fair value through
other comprehensive income.
AASB 9 has been adopted without restating comparative financial
information. The reclassification adjustments arising have been
recognised in the opening balance sheet on 1 July 2018.
AASB 15: Revenue from contracts with Customers has an initial
application date of 1 July 2018. The Company does not have any
revenue to which AASB 15 is applicable and accordingly had no
impact on the Company.
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.
4. OPERATING SEGMENTS
Segment Information
The Company operates in the investment industry. Its core business
focuses on investing in International 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.
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(j) New Accounting Standards and Interpretations
The AASB has issued new and amended Accounting Standards and
Interpretations that have mandatory application dates for future
reporting periods. The following table summarises those future
requirements, and their impact on the Company where the standard
is relevant:
AASB 16 Leases
Effective Date
1 January
2019
AASB 16 introduces a single lessee accounting
model by eliminating the current requirement
to distinguish leases as either operating leases
or finance leases depending on the transfer of
risks & rewards of ownership.
The impact of AASB 16 will 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.
Global Masters Fund Limited
21
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5. REVENUE AND OTHER INCOME
Dividends Received
Interest Received
Gain on Sale of Other UK Investments
Realised Foreign Exchange Gain
6. OTHER EXPENSES
Auditors Remuneration
ASX and Share Registry costs
Management Fees
Performance Fees
Director Fees
Administration Costs
7.
INCOME TAX EXPENSE
(a) Reconciliation of income tax to accounting profit
Accounting profit/(loss) before tax
Prima facie tax payable on ordinary activities before income tax rate at 30.0% (2018 – 27.5%)
Adjust for tax effect of:
-
Tax losses at 30 June 2018 converted from 27.5% to 30% tax rate
-
Timing differences of transactions
-
Fully Franked Dividends received
- Amendment to prior year return
Rebateable Fully Franked Dividends
Tax expense/(credit) shown in Profit and Loss statement
(b) The components of tax benefit comprise:
(Decrease)/increase in deferred tax asset
Decrease/(increase) in deferred tax liability
Income tax (expense)/credit
(c) Amounts recognised directly in Other Comprehensive Income
Aggregate current and deferred tax arising in the reporting period and not recognised in Profit
or Loss, but directly debited or credited in Other Comprehensive Income.
Amount before tax
Tax Expense at 30.0% (2018: 27.5%)
Adjustment for prior year deferred tax on unrealised gains converted from 27.5% to 30.0%
Adjusted for tax effect of available losses
Amount Net of Tax
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
Global Masters Fund Limited
22
2019
$
2018
$
302,460
897
21,834
131,484
456,675
15,409
48,508
50,925
68,560
168,125
119,930
471,457
(21,438)
(6,431)
(2,479)
19,234
13,483
45
(44,944)
(21,092)
35,282
(14,190)
21,092
226,642
3,157
31,839
45,566
307,204
18,593
72,385
35,898
67,918
178,625
147,685
521,104
(213,900)
(58,823)
-
1,177
11,587
-
(42,135)
(88,194)
88,194
-
88,194
2,490,416
(747,125)
(264,546)
56,820
1,535,565
2,587,388
(711,532)
-
55,735
1,931,591
42,275
590,466
632,741
168,738
328,264
497,002
632,741
497,002
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9. TRADE AND OTHER RECEIVABLES
CURRENT
Dividends Receivable
GST receivable
Total current trade and other receivables
10. OTHER ASSETS
CURRENT
Prepayments
Total Other Assets
11. FINANCIAL ASSETS
Non-Current Financial Assets
Notes
2019
$
2018
$
14,476
6,779
21,255
18,565
6,839
25,404
19,652
19,652
17,530
17,530
Listed Investments classified as available for sale at fair value
Listed Investments classified as fair value through profit or loss
Listed Investments classified as fair value through other comprehensive income
19
19
19
Total Available-for-sale Financial Assets
-
4,312,618
21,047,393
23,025,341
-
-
25,360,011
23,025,341
12. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accrued expenses
13. DEFERRED TAX
Deferred Tax Assets
Deferred Tax Liabilities
Net deferred tax liabilities adjusted for deferred tax assets
(a) Deferred Tax Assets attributable to:
- Accruals
-
Tax losses
(b) Deferred Tax Liabilities attributable to:
- Unfranked dividend receivable
- Unrealised Gain on Financial Assets
Global Masters Fund Limited
23
5,346
85,179
90,525
6,253
84,869
91,122
13(a)
13(b)
(667,401)
4,081,565
3,414,164
(575,299)
3,055,703
2,480,404
(3,705)
(663,696)
(667,401)
(3,369)
(571,930)
(575,299)
4,343
4,077,222
4,081,565
-
3,055,703
3,055,703
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
14. ISSUED CAPITAL
(a) Share Capital
10,723,159 (2018: 10,723,159) Ordinary Shares
(b) Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
Company in proportion to the number of shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one vote.
2019
$
2018
$
12,871,873
12,871,873
711
(c) Movements in ordinary share capital
Date
30 June 2017
October 2017
Details
Balance
Rights Issue
Capital Raising Costs
30 June 2018
Balance
Nil Movement in the year
30 June 2019
Balance
Number of Shares
Price
$
8,578,596
2,144,563
10,723,159
-
10,723,159
$2.00
8,609,085
4,289,126
(26,338)
12,871,873
-
12,871,873
15. RESERVES
Revaluation Reserve
The investment revaluation reserve was used to accumulate unrealised capital profits and losses on
available for sale financial assets after provision for deferred tax. As a result of the adoption of AASB
9 on 1 July 2018 the investment revaluation reserve now records the unrealised capital profits and
losses net of deferred tax, on investments classified as fair value through other comprehensive income
(refer note 2(i)). The reserve can only be used in limited circumstances for payment of dividends.
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.
Diluted earnings per share is calculated by dividing the profit attributable to owners of the company
by the weighted average number of shares outstanding during the year. Including all convertible
securities, for example convertible preferred shares, convertible debentures, stock options and
warrants.
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
Weighted number of all shares, including convertible securities
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Total Comprehensive Income per share (cents per share)
Global Masters Fund Limited
24
(346)
1,535,219
(125,706)
1,805,885
10,723,159
10,723,159
9,987,737
9,987,737
Cents
(0.00)
(0.00)
14.32
Cents
(1.26)
(1.26)
18.08
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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:
(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:
2019
AUD $
2018
AUD $
Specific risks
Carrying Amount
Liquidity risk
Credit risk
Market risk - currency risk, interest rate risk and price risk
Financial instruments used
Cash and cash equivalents
590,410
328,151
Investments
Total
23,065,985
20,849,294
23,656,395
21,177,445
The principal categories of financial instruments used by the
Company are:
(c) Credit risk
Trade receivables
Cash at bank
Investments in listed shares
Trade and other payables
(a)
Interest Rate Risk
The Company's exposure to interest rate risk, which is the risk that a
financial instrument’s 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
2019
%
2018
%
0.1
0.6
2019
$
2018
$
632,741
632,741
497,002
497,002
The Company does not rely on interest returns as a source of income,
so the interest rate risk is deemed extremely low.
All other financial assets and liabilities are non-interest bearing.
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.
(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 Statement of Financial Position and
Notes to the Financial Statements is the same as the net fair value.
Global Masters Fund Limited
25
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17. FINANCIAL RISK MANAGEMENT (continued)
19. FAIR VALUE MEASUREMENTS
(e) Sensitivity Analysis
The following table illustrates sensitivities to the Company’s exposure
to changes in interest rates, exchange rates and commodity and
equity prices. The table indicates the impact on how profit and equity
values reported at balance date 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.
At 30 June 2019, the effect on profit and equity as a result of changes
in the interest rate, exchange rate or equity prices 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 exchange rates
2019
$
+/- 7
2018
$
+/- 2,514
+/- 1,182,820
+/- 1,049,688
The Company measures the following assets and liabilities at fair
value on a recurring basis:
- Financial Assets at fair value through Other Comprehensive
Income.
- Financial Assets at fair value through Profit or Loss.
Fair value hierarchy
AASB 13 Fair Value Measurement requires all assets and
liabilities measured at fair value to be assigned to a level in the
fair value hierarchy as follows:
Level 1 Unadjusted quoted prices in active markets for identical
assets or liabilities that the entity can access at the
measurement date.
Level 2
Inputs other than quoted prices included with level 1
that are observable for the asset or liability, either
directly or indirectly.
Level 3 Unobservable inputs for the asset or liability.
+/- 10% in listed investments
+/- 2,536,001
+/- 2,302,534
The table below shows the assigned level for each asset and liability
held at fair value by the Company:
(f)
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due.
The objective of the Company is to ensure as far as possible that it
will always have sufficient liquidity to meet its liabilities when due,
under both normal and distressed conditions.
Prudent liquidity risk management implies maintaining sufficient cash
and marketable Australian listed equity securities.
The Manager controls liquidity risk by continuously monitoring the
balance between equity securities and cash or cash equivalents and
the maturity profiles of assets and liabilities to ensure this risk is
minimal.
18. CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. The capital structure of the
Company consists of equity attributable to members of the Company.
The Board monitors the return on capital, which is defined as net
operating income divided by total Shareholders’ Equity. The Board
also monitors the level of dividends to Shareholders.
The capital of the Company is invested by the Investment Manager in
accordance with the investment policy established by the Board. The
Company has no borrowings. It is not subject to any externally
imposed capital requirements.
Level
1
$
Level
2
$
Level
3
$
TOTAL
$
30 June 2019
Recurring fair value
measurements.
Financial Assets
- FVTPL
- FVTOCI
4,312,618
21,047,393
4,312,618
21,047,393
Level
1
$
Level
2
$
Level
3
$
TOTAL
$
30 June 2018
Recurring fair value
measurements.
Financial Assets
- Available for sale
23,025,341
23,025,341
Transfers between levels of hierarchy
There were no transfers between levels of the fair value
hierarchy.
Highest and best use
There were no changes in the Company’s approach to capital
management during the year.
The current use of each asset measured at fair value is
considered to be its highest and best use.
Global Masters Fund Limited
26
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
20. AUDITORS REMUNERATION
Remuneration of the auditor of the Company for:
Audit or reviewing the financial statements
Total remuneration of auditors
21. RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
EC Pohl & Co Pty Ltd for Management Fee and Performance Fee (payable in accordance with
the Management Services Agreement as detailed in Note 22).
Management Fee
Performance Fee
Total Fees Paid
Dr E C Pohl has an interest in the transaction as during the year Dr E C Pohl was a Director,
employee and Shareholder of EC Pohl & Co Pty Ltd.
22. MANAGEMENT SERVICES AGREEMENT
2019
$
2018
$
15,409
15,409
18,593
18,593
50,925
68,560
35,898
67,918
119,485
103,816
In accordance with a Management Services Agreement which was signed in May 2017, the Company agreed to engage the
Manager to provide primary and secondary management services.
Primary services are only provided for the actively managed portion of the portfolio and include:
1) managing the investment of the Company’s portfolio, including keeping it under review;
2)
ensuring investments by the Company are only made in authorised investments;
3)
complying with the investment policy of the Company; and
4)
identifying, evaluating and implementing the acquisition and disposal of authorised investments.
Secondary management services include:
(i)
provide the Company with quarterly investment performance reporting;
(ii) promoting investment in the Company by the general investment community;
(iii) providing investor relationship services; and
(iv) provision of accounting, human resources, corporate and information technology services support.
The agreement may be terminated if:
a)
b)
c)
d)
e)
either party ceases to carry on business, or
either party enters into liquidation voluntarily or otherwise, or
either party passes any resolution for voluntary winding-up, or
a receiver of the property of either party, or any part thereof, is appointed, or
the Shareholders of the Company at an abnormal meeting called in for that purpose, resolve by binding resolution to
terminate the operations, or
if the Company provides written notice to the Manager in the event of any material and substantial breach of the agreement
by the Manager or if the Manager fails to remedy a breach of this agreement within 14 days following written notice of the
breach.
if the Manager provides written notice to the Company in the event of any material and substantial breach of the agreement
by the Company or if the Company fails to remedy a breach of this agreement within 14 days following written notice of the
breach.
f)
g)
Under the agreement the Manager will receive a management fee of 1% per annum on the actively managed portion of the portfolio.
In addition, a performance fee, payable annually in arrears, equal to 20% of the amount by which the Company’s actively managed
portfolio performance exceeds the performance of the FTSE, subject to a high-water mark. If the Company’s net performance in the
year is less than the Benchmark, then no performance fee will be payable.
Global Masters Fund Limited
27
FINANCIAL REPORT
GLOBAL MASTERS FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2019
$
2018
$
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
The Company has no staff and therefore has no Key Management Personnel other than the
Directors.
No member of Key Management Personnel held options over shares in the Company during
the year.
There have been no other transactions with Key Management Personnel or their related
entities other than those disclosed in Note 21.
The compensation of Non-executive Directors (including the Managing Director) for the year
ending 30 June 2019 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. The total remuneration
paid is as follows:
Short-term employment benefit
168,125
178,625
The Company’s Secretary, Brian Jones, was contracted directly during the financial year.
24. CASH FLOW INFORMATION
(a) Reconciliation of result for the year to cash flows from operating activities
Profit/(Loss) for the year
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit
- net (gain)/loss on disposal of investments
- net (gain)/loss on foreign exchange
- net unrealised (gain)/loss on financial assets at fair value
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
- (increase)/decrease in prepayments
- (increase)/decrease in trade and other receivables
- increase/(decrease) in trade and other payables
- increase/(decrease) in Deferred Tax
Cash flow from operations
(346)
(125,706)
(21,834)
(168,304)
(14,053)
(2,122)
4,149
(597)
(21,092)
(31,839)
(8,823)
-
9,316
(23,040)
62,609
(88,194)
(224,199)
(205,677)
25. CONTINGENCIES
In the opinion of the Directors, the Company did not have any contingencies at 30 June 2019
(30 June 2018: None).
26. 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.
Global Masters Fund Limited
28
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
(a)
the Financial Statements and Notes set out on pages 14 to 28 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
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
give a true and fair view of the financial position as at 30 June 2019 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 2019 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 AM
Managing Director
19 August 2019
Global Masters Fund Limited
29
INDEPENDENT AUDITOR’S REPORT
Global Masters Fund Limited
30
INDEPENDENT AUDITOR’S REPORT (continued)
Global Masters Fund Limited
31
INDEPENDENT AUDITOR’S REPORT (continued)
Global Masters Fund Limited
32
INDEPENDENT AUDITOR’S REPORT (continued)
Global Masters Fund Limited
33
SHAREHOLDER INFORMATION
The Shareholder information set out below was applicable as at 11 August 2019.
1. TWENTY LARGEST SHAREHOLDERS
2. DISTRIBUTION OF SECURITIES
Shareholders Last year’s figures
Ordinary
Shares
%
Distributions
No. of
Shareholders
CITICORP NOMINEES PTY LIMITED
5,757,863
53.7%
BOND STREET CUSTODIANS LIMITED
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