Gowing Bros. Limited Annual Report 2022

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FY2022 Annual Report · Gowing Bros. Limited

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Gowings goes North

Gowings 154th ANNUAL REPORT
31 July 2022

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Managing Director’s Review of Operations Gowings at a Glance (at Directors’ Valuation) Remuneration Report Key metrics Sustainability Programme Financial Report Financial review Strategic Investments ASX Listing Requirements Profit and Loss Statement Directors’ Report 0214062504180726052208ContentsProfessor Jonathan West (Chairman) Mr. John Gowing (Managing Director) Mr. Sean Clancy (Non-executive Director) Mr. John Parker (Non-executive Director)Mr. James Gowing Mr. Ellis Gowing Mr. Ian Morgan The Australian Securities Exchange Ticker Code: GOWThe Gowings Building 303 / 35-61 Harbour Drive Coffs Harbour, NSW, 2450 Australia T +61 2 9264 6321 Email: info@gowings.com Computershare Investor Services Pty Limited Level 3, 60 Carrington Street Sydney NSW 2000 Phone: 1300 855 080 Fax: 61 2 8234 5050 William Buck Level 29, 66 Goulburn Street Sydney NSW 2000 Phone: 61 2 8263 400068 000 010 471000 010 471GOWINGS GOES NORTHGowings is a fair dinkum, fair dealing family Company that cares, that is run by "Real People" (not an anonymous corporation). Gowings identifies as Pioneering alongside our fellow countrymen, our diggers and the Aussie battler. Our objective is to connect Gowings to Australia and the world through history, sharing our pioneering spirit, Australian culture, real achievements and positive identity.Gowings is honest, hardworking, and traditional, our philosophy, goals and purpose —acknowledges that we are all connected and should care for one-another.The ocean is a real demonstration of our commitment to our environment through Gowings Whale Trusts’ 1% for The Oceans pledge.We are committed to rural Australia, Gowings moved to the magnificent mid-North Coast of NSW. ‘Go North ‘leaving Sydney after 152 years to Coffs Harbour, was about us walking the talk, investing in Australia— recording where we have been, to chart the course of where we want to go, 'Go North', is the modern 'Gone To Gowings' re-envisaged.From history to the events of today, and our portfolio of investments. Building on our pillars of “community, innovation and environment," our objective is to celebrate our indomitable pioneering spirit, generate awareness of the Gowings brand, and continue to bring focus to Australian and global investment opportunities.Best John Gowing Great Grandson of The FounderManaging Director’s Review of Operations

provided approx. $450,000 support to our
qualifying retailers. This rental abatement
has been offset against the prudent $2 million
provision we made for ongoing pandemic
relief in last year’s annual accounts.

A highlight of the year’s results was the
realisation of several investments in our
private equity portfolio. Notably the sale
of our investment in EFT Sure held both
directly by Gowings and in Our Innovation
Fund, which netted Gowings a profit of $2.4
million. Other realised gains during the year
amounted to $5.1 million.

Just prior to the year end, a binding contract
was entered into by Murray Darling Ltd, to sell
our farm Burrawang Station, and associated
assets, including our very famous Burrawang
Dorper Sheep Stud. For which we received a
handsome return.

As reported in last year’s annual report, two
of our long-term unlisted investments went
through an IPO process during the first half
and listed on their respective local stock
exchanges. The companies were Cobram
Estate Ltd listed on the ASX, and Dice
Molecules on the NASDAQ.

Post year end we entered into an agreement
with our partner in our Bowral City Centre
Arcade to sell our half share to them. The
proceeds of this sale have since been
received, I believe the timing of this sale was
opportune and the return to Gowings has
been solid.

On the negative side of the ledger, we took
the difficult decision to sell our long-term
position in Hexima at a loss, prior to the year
end, because of the surprise very poor results
received on their most recent clinical trials.

Gowings surf hardware
international

Our wholly owned subsidiary Surf Hardware
International (SHI) had a strong first half
year, contributing approx. $2 million to
continuing Gowings Group earnings however
although sales for the year were quite strong
underlying gross and net profit for the

full year was impacted by wildly swinging
exchange rate fluctuations in Japan and
Europe, as the BOJ and EU did not keep up
with the US Fed Reserve interest rate hikes,
leading to significant devaluations in yen and
the euro vs the US Dollar.

Sawtell commons

Stage 3 at Sawtell Commons is all but
complete. There have been some continuing
unavoidable delays due to consistent wet
weather and some of the contracting team
isolating due to Covid. We are in the process
of releasing and reselling part of this next
stage. The market in Coffs Harbour for
residential land is quite strong, as there is
virtually no land available apart from ours.
It will be interesting to see how the market
pans out, post change in Federal Govt, three
interest rate rises and the commencement of
construction of the Coffs Harbour Bypass.

Dividends

The Group will be declaring an interim 3c fully
franked dividend, and a 1c special dividend
supported by our private equity realisations
during the year.

The Company believes in maintaining a
prudent approach to dividends given the
capital requirements of the Company across
various developments and investment
opportunities either underway or under
consideration.

Outlook

May you live in interesting times’ is a Chinese
curse that seems currently very pertinent.
Uncertainty continues to prevail. We are
fortunately in a relatively good space on
the Mid North Coast of NSW, which has and
continues to be a net beneficiary of the times.

Thank you to all our team members and
the wider Gowings community for their
continuing support.

As we have come to the end of our 154th year
of trading and enter our 155th year, so much
has changed, yet every little piece of certainty
is replaced by a new challenge. Yesterday it
was the Pandemic, mandates and lockdowns.
Today sabre rattling, war on the continent,
a return of systematic inflation and zealous
central banks yielding their blunt higher
interest rate weapon.

Hopefully we have seen the backend of the
pandemic restrictions and most elements of
everyday life are getting back to normal. How
quickly inflation has taken hold, particularly
with petrol and energy prices. Let us hope
that wise Reserve Bank and Treasury Dept
officials understand that inflation is caused
by an excess of demand over supply. There
are many intelligent fiscal actions that could
be taken to free up supply and take the
pressure off the Reserve Banks higher interest
rate fixation.

Since the impact of the pandemic has begun
to wane, especially the high level of enforced
isolations and their associated record level
of absenteeism. We have seen a rebound
in foot traffic and trading, to pretty much
pre-pandemic levels. Most of our retail leases
have a percentage of turnover provision or an
annual CPI uplift which to some extent should
protect the underlying value of our shopping
centres during the new period of inflation.

As advised in our interim report, in response
to NSW Government’s legislated retailer
support package, Gowings as landlord

Sustainability programme

Gowings has continued investigating and implementing sustainability initiatives
across all areas of our business operations. Our goal is to have as light an impact
on the environment as is realistically possible. Initiatives either commenced, under
investigation or completed include;

• Kempsey Central rooftop solar system; completed.
• Coffs Central green waste composting system; completed.
• Port Central green waste composting system; completed.
• Comprehensive independent review of Gowings Mid North Coast operations
with the goal of installing substantial solar and renewable energy micro grid;
draft report received and being reviewed.

• Preliminary investigation for feasibility of installing a community geothermal
system at Sawtell Commons which could provide up to 20% continuing energy
savings annually for residents; investigative drilling completed.

•

Independent report on best sustainable practices for packaging & product
development at Gowings SHI; underway.

J. E. Gowing
Director

Kerikeri, New Zealand

154st ANNUAL REPORT 2022 I Year ended 31 July 2022GOWING BROS. LIMITED154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREManaging Director’s Review of Operations

On behalf of the Board of Directors, I am pleased to comment on the results for the year ended 31 July 2022.

Financial Review

Net Assets per Share

Dividends Declared per Share

$5.00

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

$4.52

$3.83

$3.64

$3.89

$4.03

$0.12

$0.10

$0.08

$0.14

$0.12

$0.10

$0.08

$0.06

$0.04

$0.02

$0.00

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

Net assets per share before tax on unrealised gains on equities, investment properties and private equities increase to $4.03 as at 31 July
2022. Total shareholder return was 5.7% including the increase in net assets per share and the 8.0c paid to Shareholders during the year.

The Company declared a total dividend of 8.0c in fully franked dividends for the 2022 year. The directors have suspended the dividend
reinvestment plan for the final dividend declared to be paid on 28 October 2022.

The Company has maintained a prudent approach to dividends given the capital requirements of the company having various development and
investments opportunities currently either underway or under consideration.

Operational Profit ($million)

Key Metrics

11.3

7.7

6.5

4.5

3.3

12.0

10.0

8.0

6.0

4.0

2.0

0.0

2018

2019

2020

2021

2022

The year ended 31 July 2022 resulted in operational profit of 7.7 million, which excludes revaluations of equities and properties which
are non-cash items. The stable driver of profits were from the investment properties and Surf Hardware although down on last years
record profits.

For the year ended

31 July 2022

Net Assets¹

Net Assets per Share²

Net profit after tax

Earnings per Share

Dividends paid per Share

Total Shareholder Return

$215.5m

$4.03

$10.9m

20.42c

8.0c

5.7%

31 July
2021

$208.6m

$3.89

$10.4m

19.35c

7.0c

8.8%

31 July 2020

$195.5m

$3.64

$4.7m

8.82c

10.0c

(2.3%)

31 July
2019

$206.8m

$3.83

($19.4)m

(36.07)c

11.0c

(12.8%)

31 July
2018

$242.7m

$4.52

$6.5m

12.18c

12.0c

4.7%

¹Net Assets before tax on unrealised gains on equities, investment properties, and freehold properties.
²Net Assets per share before tax on unrealised gains on equities, investment properties, and freehold properties.

The Company meets the definition of a Listed Investment Company (“LIC”) for taxation purposes. Certain shareholders of the Company,
including individuals, trusts, partnerships and complying superannuation entities may benefit from the Company’s LIC status by being able to
claim a tax deduction for the part of the dividend that is attributable to LIC capital gains made by the Company. The amount that shareholders
can claim as a tax deduction depends on their individual situation. As an example, an individual, trust (except a trust that is a complying
superannuation entity) or partnership who is an Australian resident taxpayer at the date a dividend is paid would be entitled to a tax deduction
equal to 50% of the amount attributable to LIC capital gains included in the dividend.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED
Managing Director’s Review of Operations

Managing Director’s Review of Operations

Profit and Loss Statement

Gowings at a Glance (at Directors' Valuation)

Strategic Investments
Surf Hardware International (at cost)

Cobram Estates Olives

Carlton Investments

Murray Darling Food Company

Dice Molecules

Power Pollen Accelerated Ag Technologies

Three Valley Meats
NSX Limited

SYMBYX

EFTsure

Eratos

Australian Foundation Investments

Washington H Soul Pattison & Company Limited

Other Investments – Australia
Other Investments – International

Total

Private Equity Funds
Our Innovation Fund I ²
OurCrowd Australia

Our Innovation Fund II

Skalata Fund II
Other Private Equity Funds

Total

Pacific Coast Shopping Centre Portfolio
Sub-regional and Neighbourhood Shopping Centres
Borrowings

Total

Other Direct Properties
Sawtell Commons - residential subdivision

Solitary 30 - Coffs Harbour development land

Other properties
Borrowings

Total

Cash and Other
Cash (AUD)

Cash (USD)

Tax Liabilities
Surf Hardware International Consolidation Impact¹
Other Assets and Liabilities

Total

Net assets before tax on unrealised gains, equities, investment and direct properties

Provision for tax on unrealised gains on equities, investment and direct properties

Net assets after tax on unrealised gains on equities, investment and direct properties

31 July 2022 $’000

31 July 2021
$’000

16,000

14,293
6,187
3,500

2,882

1,621
950
600
600

599

500

464

439

12,119
1,978

62,732

2,265

1,181

435

300
465

4,646

198,575
(94,310)

104,265

17,809

3,864

15,282
(1,000)

35,955

7,673

4,388

(13,304)

(4,517)
13,618

7,858

215,456

(13,513)

201,943

16,000

14,834
6,484
2,304

2,157

1,822
1,331
1,250
950

885

681

600

403

8,532
1,704

59,937

3,740

1,424

2,544

175
120

8,003

198,069
(94,309)

103,760

12,480

3,864

8,132
(1,101)

23,375

21,919

7,087

(14,021)

(1,310)
(103)

13,572

208,647

(13,497)

195,150

Net Investment Property income of $7.9 million represents a good result for the shopping centres and Is underpinned by retailers performing
and trading well over the period as well as the maintenance of our tenant base. Other income includes the reversal of the rent relief provision
and is the driver of the increase.

Surf Hardware International net income of $3.1 million is a 41% decrease on the previous year but it still should be noted that it is the Company’s
second-best year on record. Towards the end of 2022 significant headwinds relating to the global economy have impacted their results, further
detailed in the commentary below.

Overall Total Net Income from Ordinary Activities of $12.2 million represents a 14% decrease on the prior year primarily driven by Surf hardware
International.

The unrealised gain on Investment Properties of $1.25 million relates to the revaluation of Bong Bong to reflect the agreed sales price.

Private equity realisations during the period were significantly higher than the prior period, refer to page 10 for further detailed commentary.

Overall, the profit after tax was $10.9 million compared to the previous year which was $10.4 million.

¹ Difference between the investment in Surf Hardware International (at cost) and net assets attributable to the group on consolidation.
² During the year $5.5 million dollars was realised in relation to private equities.

For the year ended31 July 2022 $’00031 July 2021 $’000 Net Income from Ordinary ActivitiesInterest Income132186Investment Properties7,9267,094Development Properties-648Equities – Dividend Income894437Managed Private Equities100449Surf Hardware International3,1105,304Total Net Income from Ordinary Activities12,16214,118Head Office Expenses Administration, public company and other4,4812,786Operational Profit7,68111,332Gains / (losses) on sale or revaluationInvestment Properties – Unrealised 1,250156Investment Properties – Realised 154-Freehold Properties – Realised-946Managed Private Equity – Unrealised(1,018)2,515Managed Private Equity - Realised3,769-Derivatives (Fixed Interest Rate Hedge) - Realised-587OtherOther Costs(23)(2,456)Other Income2,051543Profit Before Tax13,86413,623Income expense(2,944)(3,241)Profit After Tax10,92010,382154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDManaging Director’s Review of Operations
Strategic Investments

Surf Hardware International ($16 M)

Cobram Estate Olives ($14.3 M)

Carlton Investments ($6.1 M)

Dice Therapeutics ($2.8 M)

Power Pollen ($1.6 M)

Gowings Surf Hardware International (GSHI)
delivered a strong result in FY22 generating
sales of $55.5 million, a 10% increase on the
prior corresponding period. GSHI benefited
from continued strong demand in all global
markets but has been challenged from
worldwide macro-economic factors, which
have had an adverse impact on gross margins
resulting in a lower profit for the year.

The business continues to have a key focus
on driving the direct-to-consumer (DTC)
ecommerce sales with a new community
initiative, additional websites, and investment
in resources. Ecommerce sales grew by 20%
compared to the previous period.

During the period the business continued its
contribution of 1% of sales to the Gowings
Whale Trust to support ocean conservation
and the preservation and restoration of our
natural environment. The business also
launched a new range of eco-blend products
featuring plastic-free, bio-based materials

Australian Foundation
Investments ($0.4 M)

Australian Foundation Investments (AFI) is
one of the largest and oldest listed investment
companies in Australia. Founded in Melbourne
in 1928 they specialise in managing a portfolio
of Australian equities and take a long term,
conservative approach to investing which closely
aligns with Gowings’ own values. This minimises
dealing costs and has historically provided
investors with sound, tax-efficient, long-term
returns. Their diversified portfolio ensures they
are not overexposed in any one particular sector.
www.woodside.com

and recycled packaging. These initiatives will
continue across many product categories as
those products are updated.

Many other product initiatives commenced
in FY22 including the investment in the
Sovereign Manufacturing Automation for
Composites CRC (SoMAC CRC), to build our
manufacturing knowledge and capabilities,
the commencement of fin production locally
in both NZ and Australia and continued work
with Auckland University of Technology.

Subsequent to year end, we are pleased to
announce that the business successfully
recruited a new CEO, Mr Tony Emerton, who
brings his success and experience in the surf
industry to the business.

Looking forward, we expect the global
challenges to continue, although we are
now well placed to benefit from the recently
implemented price increases, improved
international freight costs, inventory
availability and a strong range of products.

Surf Lakes ($0.3 M)

Surf Lakes is exactly what it sounds like, a lake
you can surf on. With a prototype surf park
in Yeppoon, Australia consistently producing
multiple surfable waves using a contoured
lakebed. The swell is created using a hydraulic
plunge wave machine in the lake centre and in
this respect differs from traditional surf parks
where, usually, only a single wave is produced.
The team envisage accommodation, restaurants
and bars surrounding the surf lake providing a full
immersion experience for visitors and locals alike.
www.surf-lakes.com

Cobram Estate (CBO) commenced operations
in 1998 as a family affair and has matured into
a large undertaking with some 6,500 hectares
of olive groves in production in Victoria and 100
staff. With olive farm and milling operations in
both Australia and the USA, CBO is a leader in
the Australian olive industry and an innovator
is sustainable olive farming. Premium brands
include Cobram Estate and Red Island.
www.cobramestate.com.au

ARGO Investments ($0.4 M)

Argo Investments (ARG) is an Australian listed
investment company which trades its shares on
the Australian Stock Exchange. They take their
name from the ship that carried Jason and the
Argonauts on their quest to capture the golden
fleece and maintain a diversified conservative
exposure to 90 plus Australian listed companies.
Argo take a long-term investment approach and
their straightforward business model has proven
resilient since their founding in 1946. Overall the
Argo approach is conservative, long term, blue
chip and dividend focussed.
www.argoinvestments.com.au

Woodside ($0.4 M)

Woodside Energy (WDS) Is an Australian energy
exploration and production company. Founded
in 1954 and based in Perth they were the biggest
independent company of their type in Australia.
In 2021 Woodside merged with BHP Petroleum
and their operational theatre is now global in
nature. Along with a suite of quality gas and
oil assets, good progress is being made on the
hydrogen initiatives H2Perth and H2TAS in
Australia and H20K in North America.
www.woodside.com

Carlton Investments (CIN) was incorporated
in 1928 and has a long-standing and expert
interest in the hotel business and cinema
industries. Founded by Sir Norman Rydge
and currently Chaired by his son Alan Rydge
AM, their primary business is the purchase
and retention of carefully selected shares that
provide attractive levels of sustainable income
and the potential for long term capital growth.
Carlton Investments carries no debt and has
the objective of consistently generating fully
franked dividends with a minimal risk profile.
www.carltoninvestments.com.au

Wholesale Investor ($0.4 M)

Wholesale Investor, based in Sydney, is a global
venture investment platform. They connect
emerging innovative companies seeking capital
with investors. With a growing ecosystem of
30,000 high net worth investors, family offices,
venture capital and private equity firms,
government bodies and industry participants,
their platform allows convenient and simple
access to investment opportunities from a broad
range of emerging business opportunities.
www.wholesaleinvestor.com.au

SYMBYX ($0.6 M)

SYMBYX is a Sydney based medical
technology company. Founded in 2019 they
are developing device based light therapies
(photobiomodulation) to treat and provide
symptomatic relief from pain and discomfort
for people living with chronic diseases such as
Parkinson’s, dementia, Crohn’s Disease and
diabetes. They work with research partners and
clinicians in Australia, Portugal, Germany and
the United Kingdom and clinical trials are well
advanced in a number of key geographies.
www.symbyxbiome.com

Dice Therapeutics (DICE NASDAQ) is an American
biopharmaceutical company based in San
Francisco. They are undertaking clinical-phase
testing of oral agents to combat autoimmune
disorders and inflammatory diseases. Their aim
is to produce orally digestible medicines in an
area of that has traditionally been dominated
by injectable treatments. Combining innovative
chemistry with well validated biology, their aim
is to reduce the invasiveness of current methods
and improve access to treatment.
www.dicetherapeutics.com

Treasury Wine Estates ($0.4 M)

Treasury Wine Estate (TWE) was established out
of the Foster’s Group’s wine division in 2011 and
is one of the world’s largest wine companies.
Although a relatively new company, it owns
and manages some of the New World’s oldest
and most prestigious wineries such as Penfolds
(Australia) founded in 1844, and Beringer
Vineyards (United State) founded in 1876. As
their name suggests their main business is the
production and sale of a large variety of wines
across the globe.
www.tweglobal.com

Washington H Soul Pattinson
($0.4 M)

Washington H Soul Pattinson (WHSP) was
incorporated in 1903 as a merger between
Washington H Soul and Co and Pattinson and
Co. The company began with the ownership
and operation of pharmacies, but has evolved
into a diversified investment company with
uncorrelated investments and holdings in
mining, agriculture, retail, property and listed
equities. Listed for 116 years it is still governed by
descendants of the founding family..
www.whsp.com.au

Power Pollen is an American company
based in Ames, Iowa who have developed
a pollination capability that increases crop
yields, specifically in corn and wheat. The
process allows the producer to time their
crop pollination, rather than rely on the
variability of nature and to develop specific
crop attributes to increase cropping yields. The
technology can increase the ratio of female
to male corn plants 3 fold and as the females
are fruit bearing, crop yield is significantly
increased. The company has received strong
support from the local United States market
with the Iowa Corn Growers Association an
early equity investor. The technology has now
been extended to corn grain production with
market availability expected in 2026.
www.powerpollen.com

EFTSure ($0.6 M)

EFTSure provides a bank detail verification
service that minimises the risk of fraudulent
invoices being paid. It matches the account
details for suppliers of goods and services in a
business’ payment system, (generally a banking
portal), by verifying the creditor’s account name,
BSB and account number and matching it with
the Australian Business Registry data. Gowings
use the system for their online payments as
a safeguard against payment fraud and the
automated nature of the system provides
material operational efficiencies.

Early in 2022 the majority of EFTSure shares
were sold to private equity group Level Equity.
Gowings sold 80% of its shareholding for $2.1
million dollars with the remaining 20% revalued
upwards to reflect the pricing of the sale.
www.get.eftsure.com.au

Private Equities

Convertible Notes

Murray Darling Food Company OurCrowd Australia ($1.18 M)

Tasmanian Oyster Company

Kempsey Central

External car park mural for the
Gowings Whale Trust.

400,000 shares purchased for
$400,000, value at year end
$400,000

The Tasmanian Oyster Company was founded in
1979 and has more than 220 hectares of pristine
Tasmanian waters. They are the largest vertically
integrated oyster business in Australia with
hatcheries, growing farms, harvest, sales and
distribution. The company has a strong focus
on sustainability and is certified organic by the
National Association for Sustainable Agriculture
Australia. Their oysters are among the highest
quality produced in Australia and are sold
both as spat and as mature oysters in both the
domestic and international markets with strong
interest from countries such as Japan, Singapore
and Vietnam.
www.tasmanianoysterco.com.au

2,050,000 shares purchased for
$2,045,000, sold at year end
for an estimated $3,500,000
(subject to winding down
costs) $1,850,000 received.

The Murray Darling Food Company based near
Condobolin, NSW, has a focus on producing
world class lambs, ewes, and rams for
meat production. Their signature breed the
‘Burrawang Dorper’ has been well received with
the sale of a single prime ram for $62,000.00,
a record in sheep sale terms. Whilst Australian
based the business sells and distributes semen
and stock internationally.

At year end, the Murray Darling Food Company
had entered into a scheme to sell all business
assets and property as a going concern. To
date Gowings have received initial proceeds
of $1,850,000 with an estimated additional
$1,650,000 to be received on transaction
finalisation.

TPG Telecom Ltd ($0.4 M)

TPG (TPG) is a multi-award winning telecoms
service provider founded by David Teoh in
1986. With a core business revolving around
facilitating communications service access for
retail, businesses, government, TPG merged
with Vodafone Hutchison Australia in 2020.
They are among Australia’s most recognisable
communications service providers and own
extensive end to end network infrastructure and
fibre optic networks including the PPC-1 cable
from Sydney to Guam that links Australia to Asia
and America. Further to their Australian interests
they also operate in New Zealand and Singapore.
www.tpg.com.au

OurCrowd was founded in 2013 in Jerusalem,
Israel by Jonathan Medved with the aim to build
a pool of venture capital for investing in start-ups
worldwide. They have offices in the United States,
United Kingdom, Spain, Canada, Australia, Brazil,
and Singapore and are democratising access to
private equity investing via an easily accessible
and user friendly online platform. OurCrowd also
invest in many of the start-ups and open the door
for retail investors to invest on the same terms. Their
approach has garnered significant support with $1.8
billion in commitments received as of April 2022.
www.ourcrowd.com

Our Innovation Fund I, II & III
($2.8M)

Our Innovation Fund and its successors were
both launched by OurCrowd with a specific focus
on Australian tech start-ups. Based in Sydney
they target high net worth investors only and
manage a pool of capital that is carefully invested
into technology focused start-ups with. Key
highlights for the year include total distributions
of $3,114,000 from Assignar, EFTSure, XM Cyber
and Instaclustr which represents a significant
return on investment. The portfolio also includes
GO1, Enboarder and Advanced Navigation.
www.oifventures.com.au

Five V Capital ($0.2M)

Although generally fully realised the Five V
Fund deserves an honourable mention for
contributions in the current year. In total the
Group received $3,514,000 as a result of the
crystallisation of Universal Store, Education
perfect and Probe. The investment in the Fund
was a great success and holdings remaining
include Plenti and Madman.
www.fivevcapital.com

Pacific Coast Shopping Centre Portfolio

Pandemic Recovery and the
Underlying Resilience of Retail
Sales

We are pleased to report that since the
Omicron outbreak and lockdowns in late 2021
we have experienced a strong and steady
rebound in retail sales and foot traffic across
our three shopping centres for the remainder
of the year and we expect this momentum to
continue.

Retailer confidence continues to improve
consistently across all retail categories and
it is pleasing to see the steady rebound in
the travel, health & beauty and the food &
hospitality sectors that were hit particularly
hard by the pandemic.

Despite a rising inflationary and interest
rate environment, as well as international
geopolitical tensions, we remain cautiously
optimistic that the fundamentals of the
Australian economy and retail sales will
remain relatively strong over the foreseeable
future.

Focus on Growing the Retail
Portfolio

Despite the challenges we have faced
during the pandemic, the Gowings centre
management and leasing teams have been
focussed on providing retailer support and
growing the core retail portfolio through a
strategic leasing and renewals programme
focus which continues to gain momentum on
a monthly basis.

Given the strong population growth and
continued Govt infrastructure investment
in the mid north coast region, our shopping
centre portfolio is ideally placed to
capitalise on this momentum. There has
been a corresponding increase in leasing
interest from national retailer groups
looking for a foothold in our centres
as they seek to benefit from these new
opportunities.

During this retail recovery period we have
been successful in securing a number of new
high-quality operators as well as a number
of strategic tenancy renewals.

Coffs Central

Port Central

We are pleased to welcome The Sunglass Hut
& Mister Minit to the centre and Port Central
overall continues to trade relatively strongly.
The leasing pipeline and enquiry levels are
healthy with four new lease deals currently
being negotiated, three retailers leases finalised
and six retailer group renewals currently in
progress at varying levels of finalisation.

We have made good progress on the design
and feasibility of various capital upgrade
initiatives to the centre during the year and
we continue to focus on the redevelopment
and retail mix and relocation opportunities to
enhance the centre experience for our retailers
and shoppers.

We are pleased to report that we have made
good progress on the potential development
options relating to our adjoining block of land
site at 99 William St. into a vibrant mixed-
use development connected to Port Central.
Planning and feasibility work remains ongoing.

We are very proud to welcome the iconic
Drifta Stockton Supastore into Coffs Central
which is an exciting and innovative Australian
owned 4wd, outdoors and camping retailer.

The leasing pipeline and enquiry levels are
strong with three new lease deals currently
being negotiated. Six retailers renewed
during the year and over ten renewals are
currently in progress and at varying levels of
finalisation. The leasing team continues to
take a highly selective approach to tenant mix
with a focus on high quality operators with
vibrant and experiential offers.

We are very excited to report that construction
has now commenced on our innovative
Gowings Shared Workspace facility which will
further activate and support centre sales when
it opens in the first half of 2023.

On the development side we were successful
in achieving a number of important milestones
during the year including approval for a
separate strata title for the Gowings commercial
tower as well as DA approval for a liquor license
& bottle shop. We also continue to explore
further development opportunities at Coffs
Central including the DA approved hotel,
rooftop apartments and office tower expansion.

Other Properties

Sawtell Commons

Sawtell Commons Stage 3 is nearing
completion and registration of the 56
individual lots is scheduled for the middle of
October. Sales pricing has been set and 14
lots have already exchanged. A sales plan is in
the process of being enacted as the lots come
closer to completion. Work is underway to
progress the 36 lots associated with Stage 4
with a forecast availability next financial year.

Solitary 30

Solitary 30 (Coffs Harbour Jetty Precinct) has
a range of staged and un-staged architectural
plans currently under consideration but
with the current NSW government Jetty
Foreshores development project struggling to
gain community acceptance, we are taking a
cautious approach with our planning.

Logie Farm and Pipers Brook

During the year, the Company purchased
two properties in Tasmania with the view
that agriculture in Tasmania is a viable long-
term industry with demand for boutique
and artisan Australian produce growing
internationally and locally.
The two properties are strategically located
in the South and North of Tasmania
respectively and present both agricultural and
development opportunities. Updates will be
provided as strategy and future plans develop.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022GOWING BROS. LIMITED154st ANNUAL REPORT 2022 I Year ended 31 July 2022GOWING BROS. LIMITEDManaging Director’s Review of Operations
Sustainability Programme

UPDATE

As the world population continues to grow,
the human race has a greater and more
pronounced effect on our environment
and climate. With the increase in extreme
weather events such as droughts, fires and
floods across the globe, along with predicted
sea level rises, it is clear we need to respect
nature and minimise our impact on the

environment. In Australia we are fortunate
enough to be in a position to start the shift
towards a zero emissions future with strong
uptake in alternative energy sources and
technologies.

goal is to become a net zero company as
soon as feasibly possible. Gowings has a long
history of being environmentally proactive
with a range of initiatives including the
Gowings Whale Trust established in 2001.

Gowings continues to be committed to
minimising our environmental impact. Our

GOWINGS SURF HARDWARE INTERNATIONAL

INVESTMENTS

GOWINGS WHALE TRUST

Completed Initiatives

Future Plans

Completed Initiatives

Future Plans

GSHI manufactures a range of globally
recognised surf sport related brand including
FCS, Gorilla Grip, Softech, Kanulock, and
Hydro. Currently 1% of all sales generated
goes to the Gowings Whale Trust helping to
fund initiatives safeguarding our seas and
reducing waste in the ocean.
This equates to approximately 10-20%
of all GSHI profit generated. A report into
eliminating single use plastics in packaging
has been completed with the finding
currently being implemented.

The 1% for the Gowings Whale Trust plan will
continue in the foreseeable future and GSHI
packaging will be shifted away from single
use plastics to cardboard wherever possible.
Longer term the aim is to shift production
to the use of recycled materials. As a surf
travel business, it is integral to Gowings Surf
Hardware International’s future that GSHI
minimise any negative impacts on the ocean
and environment generally.

The day to day running and practices of
the majority of Gowings investments are,
generally speaking, outside of our immediate
control and this applies to our share portfolio
and venture capital investments. Gowings
have, however, invested in two farming
properties in Tasmania that enable us to
sequester carbon and offset emissions
created in other areas of the company.

Established in 2001, the Gowings Whale
Trust seeks to preserve and promote whale
populations, and this extends to the adjacent
issues of sea biodiversity and cleanliness.
A watercraft has been donated to the Sea
Shepherd and their merchandise is promoted
at Gowing centres to provide additional
support.

Whilst there are a number of worthy
charities to partner with, Gowings is closely
considering the Plastic Collective and Ocean
Warriors Australia.

The Plastic Collective is a charity working
predominantly in Asia and the Pacific
and empowers local communities recycle

plastic waste. They provide the training and
equipment to enable plastic to be recycled
and reused and establish a community
supporting profit generating enterprise.

Ocean Warriors Australia is a not-for-
profit organisation comprised of marine
veterinarians and rescuers dedicated to
rescuing and recuperating injured, sick or
orphaned marine wildlife.

SHOPPING CENTRES

Completed Initiatives

Future Plans

Expert consultancy firms were engaged to
identify improvements to our three centres
with regard to waste generation, water use,
and electricity consumption. A range of
recommendations have been progressed.

Port Central and Coffs Central have
introduced recycling and coffee cup
separation bins and organic composters
have been installed with the assistance of
an EPA grant to allow us to divert food waste
from landfill. A rooftop garden has also been
commissioned at Coffs Central.

All centre lighting has been converted to LED
and plans are underway to augment existing
centre PV (solar) capacities with two 400kW
rooftop solar systems installed at both Port
and Coffs on a shade sails structure above the
carparks and a further 99kW system installed
at Kempsey. This will bring the combined
total solar system output to 1,128kw, (this
equates to the enough generated electricity
to power 112 homes per annum).

Sizing was determined by the aforementioned
independent report and should cover our

energy needs on a day-to-day basis (weather
permitting), significantly reducing our energy
consumption, carbon emissions, and reliance
on the grid.

We are also exploring the possibility of each
centre having an embedded network whereby
retailers can purchase solar electricity from
Gowings at favourable rates and we have
applied for a NSW Government grant to install
electric vehicle chargers at each centres.

LAND DEVELOPMENT
Sawtell Commons (220 lot subdivision in Bonville south of Coffs Harbour)

Completed Initiatives

Sawtell Commons is a free hold land
subdivision however we have sought to
identify the estate wide energy saving
opportunities. Opportunities include
geothermal heating and cooling, heat
pump technology, rainwater harvesting,
a community battery, and a virtual power
plant/microgrid. expanded upon in the next
section.

Some preliminary geothermal work has taken
place with 3 pilot sites drilled and thermally
tested with initial findings positive.
An independent engineer has been engaged
to design a community wide system
undertake a financial feasibility study.

Future Plans

Pending necessary government approvals
and feasibility study outcomes we hope to

establish an estate wide geothermal system.
Ideally this would be paired with resident
solar panels and a community microgrid and
battery so residents can sell energy to each
other and to the grid as a block.

Gowings plan on retaining a number of lots to
establish a build-to-rent initiative based on
passive house designs.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDDirectors’ Report

Your Directors are pleased to present their report on the Company for the year ended 31 July 2022.

Directors’ and Executives' Interests

The following persons were directors, executives or a company secretary of Gowing Bros. Limited either during or since the end of the year.

Results

For the year ended

Operating profit/(loss) for the year before income tax

Income tax benefit/(expense)

Net profit after income tax

Net profit attributable to members of Gowing Bros. Limited

Dividends

31 July 2022
$'000

31 July 2021
$'000

13,864

(2,944)

10,920

10,915

13,623

(3,241)

10,382

10,381

$2,132,445

$2,139,155

$2,141,663

$2,145,850

A final fully franked LIC
dividend of 4.0 cents
per share is payable to
shareholders on
28 October 2022.

An interim fully franked
dividend of 4.0 cents
per share was paid to
shareholders on 22
April 2022.

A final fully franked LIC
dividend of 4.0 cents
per share is payable
to shareholders on 29
October 2021.

An interim fully franked
dividend of 4.0 cents
per share was paid to
shareholders on 23
April 2021.

Review of Operations
The operations of the Company are reviewed in the Managing Director’s ‘Review of Operations’ on page 2.

Environment
The Company is committed to a policy of environmental responsibility in all its business dealings. This policy ensures that when the Company
can either directly or indirectly influence decisions that have an impact on the environment, this influence is used responsibly.

Principal Activities
The principal activity of the Company is investment and wealth management. The Company maintains and actively manages a diversified
portfolio of assets including long-term equity and similar securities, investment properties, managed private equity, property development
projects and cash.

Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Company other than as disclosed elsewhere in this report.

Matters Subsequent to the End of the Financial Year
No matter or circumstance has arisen since the end of the financial year which 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, except for the matters disclosed in
note 44 of the financial report.

Likely Developments and Expected Results of Operations
Further information on likely developments in the operations of the Company is included in the Managing Director’s ‘Review of Operations’ on
page 2.

Total SharesProfessor J. West Non-Executive Chairman Director since April 2016 and Member of the Audit Committee BA (Syd), PHD (Harvard)Professor West is a former Associate Professor in the Graduate School of Business at Harvard University and is an experienced global businessman. No other directorships held in listed companies over the past 3 years. 434,730J. E. Gowing Managing Director Executive Director, and Member of the Remuneration Committee Director since 1983 Bachelor of Commerce Member of Chartered Accountants Australia and New Zealand, and Member of CPA Australia.No other directorships held in listed companies over the past 3 years. 20,990,202J. E. Gowing (James) Associate Director – Finance and Joint Company SecretaryJames was appointed Associate Director in July 2019. Bachelor of Business, CA.He is a Chartered Accountant and after graduating from UTS spent five years in Audit and Assurance at William Buck. He has experience with a wide range of Australian Companies, both listed and private.64,504J. G. Parker Non-Executive DirectorDirector since 2002 Chairman of the Audit Committee Bachelor of EconomicsMr. Parker is a coach of senior executives, with over three decades as an investment professional. No other directorships held in listed companies over the past 3 years. 57,306S. J. Clancy Non-Executive Director Director since April 2016 Chairman of the Remuneration Committee and Member of the Audit Committee Diploma of Marketing.Mr. Clancy is an experienced businessman with a focus on sales and marketing and is presently a director of Metropolis Pty Ltd, Transfusion Pty Ltd and Touch To Buy Pty Ltd. 5,000I. H. Morgan Joint Company Secretary Bachelor of Business, Master of Law, Grad Dip Applied Finance and Investment Mr. Morgan was appointed company secretary on 18 April 2019 and has over 35 years’ experience as a Company Secretary and Chartered Accountant for businesses operating both in Australia and overseas. 4,000154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED
Meetings of Directors

Attendance at Board, Audit Committee & Remuneration Committee meetings by each Director of the Company during the financial year is set out
below:

Board Meetings

Audit Committee Meetings

Remuneration Committee Meetings

Meetings Eligible to
attend

Attended

Meetings Eligible
to attend

Attended Meetings Eligible to
attend

Attended

Prof J. West

J. E. Gowing

J. G. Parker

S. J. Clancy

Given the significant health concerns attributed to the COVID-19 pandemic, in addition to guidelines and restrictions issued by Australian
state and federal governments, the Company considers that it is appropriate for members of the Company’s Board and its Committees to
communicate electronically. When required, the Board has resolved matters by circular resolution.

During the year ended 31 July 2022, meetings were held in person, by telephone and by email. Where necessary, circular resolutions were also

approved.

Remuneration Report
The Company’s remuneration report, which forms a part of the Directors’ Report, is on pages 22 to 24 .

Corporate Governance
The Company’s statement on the main corporate governance practices in place during the year is set out on the Company’s website at http://
gowings.com/reports-announcements/

Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 62.

Shares Under Option
There were no unissued shares under option at the date of this report.

Indemnification and Insurance of Directors and Officers
The Company’s constitution provides an indemnity for every officer against any liability incurred in his/her capacity as an officer of the Company
to another person, except the Company or a body corporate related to the Company, unless such liability arises out of conduct involving lack
of good faith on the part of the officer. The constitution further provides for an indemnity in respect of legal costs incurred by those persons
in defending proceedings in which judgement is given in their favour, they are acquitted or the court grants them relief. During the year the
Company paid insurance premiums in respect of the aforementioned indemnities. Disclosure of the amount of the premiums and of the
liabilities covered is prohibited under the insurance contract.

Indemnification and insurance of Auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any
related entity against a liability incurred by the auditor.

•

all non-audit services have been reviewed by the Audit Committee to ensure that they do not impact the impartiality and objectivity of
the auditor;

• none of the services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for

Professional Accountants (including Independence Standards), 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.

Audit and Non-Audit Services
During the year the following fees were paid or payable for services provided by William Buck ( 2021: HLB Mann Judd) the auditor of the company.

Audit services – William Buck

Audit and review – group

Audit and review – controlled entities

Audit services – HLB Mann Judd

Audit and review – group

Audit and review – controlled entities

Other services – William Buck

Financial review

Other services – HLB Mann Judd

Tax services

31 July
2022
$

120,800

47,200

73,500

241,500

31 July
2021
$

52,600

139,600

8,500

50,200

250,900

Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in the Financial/ Directors’ Reports) Instrument 2016/191 issued by the
Australian Securities and Investments Commission relating to the “rounding off” of amounts in the Directors’ report and financial report.
Amounts in the Directors’ report and financial report have been rounded to the nearest thousand dollars in accordance with that Legislative
Instrument, unless otherwise indicated.

Environmental Regulation
No significant environmental regulations apply to the Company.

This report is made in accordance with a resolution of the Directors of Gowing Bros. Limited.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Non-Audit Services
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.

Professor J. West
Director

Huon Valley, TAS
26 October 2022

J. E. Gowing
Director

Kerikeri, New Zealand
26 October 2022

The Board of Directors has considered the position in accordance with advice received from the Audit Committee and is satisfied that the
provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDExecutives
Executives are officers of the Company who are involved in, concerned
with, take part in and are able to influence decisions in the management
of the affairs of the Company. Persons who were executives for all or part
of the financial year ended 31 July 2022 were:
• J. E. Gowing, Managing Director
• J. E. Gowing (James), Associate Director – Finance and Joint

Company Secretary

Executive remuneration is a combination of a fixed total employment
cost package and a discretionary incentive element which may be
awarded by cash or invitation to participate in the Company’s Employee
Share & Option Scheme or Deferred Employee Share Plan Scheme.
Remuneration is referenced to relevant employment market conditions
and reviewed annually to ensure that it is competitive and reasonable.

The incentive element is awarded at the discretion of the
Remuneration Committee and approved by the Board on the basis of
recommendations from the Managing Director. The Managing Director’s
incentive element is awarded at the discretion of the Remuneration
Committee and approved by the Board. In determining the amount (if
any) of bonus payments or of options or shares issued, consideration
is given to an executive’s effort and contribution to both the current
year performance and the long term performance of the Company, the
scope of the executive’s responsibility within the Company, the scale and
complexity of investments required to be managed, the degree of active
management required and the degree of skill exhibited in the overall
process. Regard is also given to the quantum of an executive’s total
remuneration.

Remuneration Report

The Remuneration Report is set out under the following main
headings:

• Principles used to determine the nature and amount of

remuneration

• Details of remuneration
• Service agreements
• Additional information

The information provided in this remuneration report has been audited
as required by section 308(3C) of the Corporations Act 2001.

Principles used to Determine the Nature and
Amount of Remuneration
It is the Company’s objective to provide maximum stakeholder benefit
from the retention of a high quality board and executive team by
remunerating Directors and executives fairly and appropriately with
reference to relevant employment market conditions and the nature of
Company operations.

The Board has established a Remuneration Committee which consists
of the following Directors:

• S. J. Clancy, Chairman of the Remuneration Committee
• J. E. Gowing, Managing Director

Non-Executive Directors

For Non-executive Directors, remuneration is by way of Directors’ fees
as described below. For the Executive Director and senior executives,
remuneration is by way of a fixed salary component and a discretionary
incentive component as described below.

Persons who were Non-executive Directors of the Company for all or
part of the financial year ended 31 July 2022 were:

• Prof. J. West, Chairman of the Board
• J. G. Parker
• S. J. Clancy

Directors’ fees

The remuneration of Non-executive Directors is determined in
accordance with the Directors’ remuneration provisions of the
Company’s constitution. Fees and payments to Non-executive Directors
reflect the demands which are made on, and the responsibilities of, the
Directors. Non-executive Directors’ fees and payments are reviewed
annually by the Remuneration Committee in line with the market
and approved by the Board. The Chairman’s fees are determined
independently to the fees of Non-executive Directors based on
comparative roles in the external market. Non-executive Directors do
not receive any performance based remuneration or share options.

There is no scheme to provide retirement benefits to Non-executive
Directors outside of statutory superannuation.

Remuneration Report

Details of Remuneration
Details of the remuneration of the Directors and key management personnel are set out in the following tables:

2022

Non-executive Directors

Prof. J. West (Chairman)

J. G. Parker

S. J. Clancy

Executive Directors

J. E. Gowing

Other key management personnel

J. E. Gowing (James)¹

Total key management
personnel compensation

2021

Non-executive Directors

Prof. J. West (Chairman)

J. G. Parker

S. J. Clancy

Executive Directors

J. E. Gowing

Other key management personnel

J. E. Gowing (James)¹

R. Ambrogio²

Total key management
personnel compensation

Cash
salary and
fees

Cash
bonus

Movement in
provision for
annual leave

Non-
monetary
benefits

Share
based
$

Share
bonus

Post –
employment
$

Long term
$

Total
$

Superannuation

Movement in
provision for long
service leave

94,941

52,121

43,620

190,682

163,575

119,272

473,529

12,211

5,961

18,172

9,534

11,879

4,380

25,793

104,475

64,000

48,000

216,475

16,425

2,511

194,722

11,978

54,196

2,194

139,405

4,705

550,602

Cash
salary and
fees

Cash
bonus

Movement in
provision for
annual leave

Non-
monetary
benefits

Share
based
$

Share
bonus

Post –
employment
$

Long term
$

Total
$

Superannuation

Movement in
provision for long
service leave

94,978

53,394

43,819

192,191

164,321

90,440

129,777

576,729

(35,803)

2,686

(21,049)

(54,166)

9,062

10,986

4,181

24,229

104,040

64,380

48,000

216,420

15,679

(30,435)

113,762

8,717

6,435

101,843

(12,770)

102,393

55,060

(43,205)

534,418

¹J.E. Gowing (James) was appointed as Associate Director – Finance and Joint Company Secretary on 1 October 2020.
²R. Ambrogio resigned from his position as CFO and Joint Company Secretary on 30 November 2020.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDRemuneration Report

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

ASX Listing Requirements

1. Shareholders at 14 October 2022

Fixed

Performance

Range of shares

No. of shareholders

Executive Directors

J. E. Gowing

Other key management personnel

J.E. Gowing (James)

R. Ambrogio

2022 (%)

2021 (%)

2022 (%)

2021 (%)

100

The information provided in this remuneration report has been audited
as required by section 308(3C) of the Corporations Act 2001.

Additional Information

Employee Share & Option Scheme: The scheme is operational. No
shares or options were issued under this scheme during the year.

Deferred Employee Share Plan Scheme: All employees and non-
executive directors are eligible to participate in the Company’s Deferred
Employee Share Plan Scheme. Shares issued under this plan during the
year were purchased on market.

The Company Employee Share & Option Scheme and Deferred
Employee Share Plan Scheme may be utilised as a part of the award
of any incentive payment for all employees which in turn assists in
aligning the interests of employees with the long term performance of
the Company.

Service Agreements
There are/ were service agreements in place with J. Parker, J. Gowing,
Prof. J. West, S. Clancy, J.E. Gowing.

Remuneration and other terms of employment for the Managing
Director, executives and other key management personnel are
approved by the Board and provide for the provision of performance-
related incentives.

Other major provisions relating to remuneration are set out below:

J. E. Gowing, Managing Director

• No fixed term.
• Base salary, inclusive of superannuation, as at 31 July 2022
of $180,000, to be reviewed annually by the Remuneration
Committee.

• No termination benefit is payable.

J. E. Gowing (James), Associate Director – Finance

• No fixed term.
• Base salary, inclusive of superannuation, as at 31 July 2022
of $135,000, to be reviewed annually by the Remuneration
Committee.

• No termination benefit is payable

The table set out below reflects the relationship between Remuneration Policies and Company Performance:

2022

2021

2020

2019

2018

Net Profit/(loss) after tax

Basic and diluted earnings/(loss) per share

Dividends per share declared

Share buy back – number of shares

Share buy back – value

Share price at financial year end

$10.9m

20.42c

8.0c

314k

$912k

$2.77

$10.4m

19.35c

8.0c

121k

$202k

$2.74

$4.7m

8.82c

8.0c

193k

$393k

$1.34

($19.4)m

(36.07)c

10.0c

$2.45

$6.5m

12.18c

12.0c

47k

$135k

$2.89

1 – 1,000 shares

1,001 – 5,000 shares

5,001 – 10,000 shares

10,001 – 100,000 shares

Over 100,000 shares

Total shareholders

362

417

166

340

1,339

The number of shareholdings held in less than marketable parcels is 143.

2. Voting Rights
Members voting personally or by proxy have one vote for each share.

3. Substantial Shareholders at 14 October 2022
The substantial shareholders as defined by Section 9 of the Corporations Act 2001 are:

John Edward Gowing

Carlton Hotel Limited

21,054,706

4,701,144

Ordinary shares

4. Top 20 Equity Security Holders at 14 October 2022
In accordance with Australian Securities Exchange Listing Rule 4.10, the top 20 equity security holders are:

No. of ordinary shares

% of issued shares

Audley Investments Pty Ltd

Carlton Hotel Limited

Mr John Edward Gowing

Mr John Gowing

Mr Frederick Bruce Wareham

Ace Property Holdings Pty Ltd

Charles and Cornelia Goode Foundation Pty Ltd

J P Morgan Nominees Australia Pty Limited

Mr Ronald Langley & Mrs Rhonda Langley

Enbeear Pty Limited

Mr Graeme Legge

Beta Gamma Pty Ltd

Mrs Jean Kathleen Poole-Williamson

T N Phillips Investments Pty Ltd

Jamina Investments Pty Ltd

Mr Philip Anthony Feitelson

BNP Paribas Nominees Pty Ltd

DDH Graham Limited

Capitol Securities Pty Ltd

Extra Edge Pty Ltd

Total

Total issued share capital

15,711,151

4,701,144

3,676,709

1,187,189

1,152,358

1,100,000

1,008,925

660,580

636,829

633,000

630,368

568,443

550,000

441,258

435,000

424,970

373,586

353,987

345,500

35,690,997

53,311,125

5. Corporate Governance Practices
The Company’s statement on the main corporate governance practices in place during the year is set out on the Company’s website at
www.gowings.com/reports-announcements/.

29.47

8.82

6.90

2.23

2.16

2.06

1.89

1.24

1.19

1.18

1.07

1.03

0.83

0.82

0.80

0.70

0.66

0.65

66.95

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

Financial Report

Consolidated Statement of Profit or Loss

For the year ended

Revenue

Interest income

Equities

Private equities

Investment properties

Development properties

Revenue from the sale of goods (Surf Hardware International)

Total revenue

Other income

Gains / (losses) on disposal or revaluation of:

Private equities

Investment properties

Freehold properties

Derivatives

Other income

Total other income

Total revenue and other income

Expenses

Investment properties

Development properties

Finished goods, raw materials and other operating expenses (Surf
Hardware International)

Administration

Borrowing costs

Depreciation and amortisation

Employee benefits

Public company

Total expenses

Profit from continuing operations before income tax expense

Income tax expense

Profit from continuing operations

Profit from continuing operations is attributable to:

Members of Gowing Bros. Limited

Non-controlling interests

Profit from continuing operations

Notes

31 July 2022
$’000

31 July 2021
$’000

132

894

100

17,606

55,507

74,239

2,751

1,404

3,732

7,887

82,126

7,020

52,355

2,550

2,833

1,721

1,322

461

68,262

13,864

(2,944)

10,920

10,915

10,920

186

437

449

17,686

1,816

50,578

71,152

2,515

156

946

587

1,869

6,073

77,225

7,364

1,168

44,439

4,142

3,410

2,134

487

458

63,602

13,623

(3,241)

10,382

10,381

10,382

The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying Notes

Statement of Profit or Loss

Statement of Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Directors’ Declaration

Auditor’s Independence Declaration

Independent Auditor’s Report

The consolidated financial statements were authorised for issue by the Directors on 26 October 2022.
The Directors have the power to amend and reissue the consolidated financial statements.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

Consolidated Statement of Other Comprehensive Income

Consolidated Statement of Financial Position

For the year ended

Notes

31 July 2022
$’000

31 July 2021
$’000

As at

Notes

31 July 2022
$’000

31 July 2021
$’000

Profit from continuing operations

10,920

10,382

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Exchange rate differences on translating foreign operations, net of tax

(53)

Items that will not be reclassified subsequently to profit or loss:

Changes in fair value of equity instruments held at fair value through other
comprehensive income, net of tax

Total comprehensive income

Total comprehensive income attributable to:

Members of Gowing Bros. Limited

Non-controlling interests

Total comprehensive income

Earnings per share

Basic earnings per share

Diluted earnings per share

994

11,986

11,981

11,986

20.42c

4,703

15,032

15,031

15,032

19.35c

The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the accompanying Notes.

Current assets
Cash and cash equivalents

Inventories

Trade and other receivables

Other

Total current assets

Non-current assets
Other receivables

Loans receivable

Equities

Private equities

Development properties

Investment properties

Property, plant and equipment

Intangibles

Right of use assets

Deferred tax assets
Other

Total non-current assets

Total assets

Current liabilities
Trade and other payables

Borrowings

Lease liabilities

Current tax liabilities

Provisions

Total current liabilities

Non-current liabilities
Trade and other payables

Borrowings

Lease liabilities

Provisions

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity
Contributed equity

Reserves

Retained profits

Contributed equity and reserves attributable to members of Gowing Bros. Limited

Non-controlling interests

Total equity

20
21

13,713

12,940

6,814

1,190

34,657

925

45,808

4,646

30,206

205,324

4,409

3,758

1,713

1,701
3,049

301,539

336,196

5,116

2,851

1,346

2,010

1,207

12,530

94,310

532

321

26,508

121,723

134,253

201,943

11,781

100,309

89,849

201,939

201,943

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying Notes.

30,813

8,265

6,562

1,075

46,715

850

43,087

8,003

18,950

203,595

1,551

3,916

1,747

2,386
1,616

285,764

332,479

6,368

1,115

997

4,740

3,222

16,442

108

94,309

974

333

25,163

120,887

137,329

195,150

12,693

99,151

83,307

195,151

(1)

195,150

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

For the year ended

Notes

31 July 2022
$’000

31 July 2021
$’000

For the year ended

Contributed
Equity
$’000

Capital Profits
Reserve-Pre
CGT Profits
$’000

Revaluation
Reserves
$’000

Foreign
Currency
Reserve
$’000

Retained
Profits
$’000

Non-
Controlling
Interests
$’000

Total
$’000

Balance at 31 July 2020

12,895

90,503

4,451

197

76,031

(2)

184,075

Total comprehensive income
/ (loss) for the year

Transfer of loss on disposal
of equity instruments
at fair value through
comprehensive income to
retained profits, net of tax

Transfer of prior year
revaluation increment to
retained profits on the sale of
freehold properties

Transactions with owners in
their capacity as owners:

Share buy-back

Dividends declared

Balance at 31 July 2021

Total comprehensive income
/ (loss) for the year

Transfer of gains on disposal
of equity instruments
at fair value through
comprehensive income to
retained earnings, net of tax

Transactions with owners in
their capacity as owners:

Share buy-back

Dividends declared

(202)

12,693

(912)

4,703

(53)

10,381

15,032

941

(1,591)

(941)

1,591

(3,755)

83,307

(202)

(3,755)

(1)

195,150

90,503

8,504

144

994

10,915

11,986

(92)

(4,281)

89,849

(912)

(4,281)

201,943

Cash flows from operating activities

Receipts in the course of operations (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Dividends received

Interest received

Borrowing costs paid

Income taxes paid

Net cash (outflows) / inflows from operating activities

Cash flows from investing activities

Payments for purchases of properties, plant and equipment

Payments for purchases of intangibles

Payments for purchases of development properties

Payments for purchases of investment properties

Payments for purchases of equity investments

Payments for loans made

Proceeds from repayment of loans made

Proceeds from sale of properties, plant and equipment

Proceeds from sale of development properties

Proceeds from sale of equity investments

Proceeds from sale of investment properties

Net cash (outflows) / inflows from investing activities

Cash flows from financing activities

Payments for share buy-backs

Proceeds from borrowings

Repayment of borrowings

Repayment of lease liabilities

Payment for termination of derivative

Dividends paid

Balance at 31 July 2022

11,781

90,503

9,590

216

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.

Net cash (outflows) / inflows from financing activities

Net (decrease) / increase in cash and cash equivalents held

Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.

81,636

(76,417)

994

(2,833)

(4,071)

(596)

(3,368)

(21)

(11,256)

(1,054)

(11,970)

(375)
-
-

15,687

400

(11,957)

(912)

1,837

(100)

(1,091)

(4,281)

(4,547)

(17,100)

30,813

13,713

76,849

(63,674)

886

168

(3,410)

(1,385)

9,434

(601)

(31)

(3,994)

(1,507)

(5,494)

(550)

2,400

8,000

1,816

2,160

2,199

(202)

10,000

(786)

(946)

(3,730)

(3,755)

581

12,214

18,599

30,813

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDNotes To The Consolidated Financial Statements

New, revised or amending Accounting Standards and Interpretations
issued but not yet mandatory

Certain new Australian Accounting Standards and Interpretations have
been recently published that are not yet mandatory for the reporting
period ended 31 July 2022. The Group's assessment is that these new
Australian Accounting Standards and Interpretations are not expected
to have a material impact on the Group in future reporting periods.

(b) Principles of Consolidation

The consolidated financial statements incorporate all the assets,
liabilities and results of the Company and all the subsidiary
companies and other interests it controlled during the year ended 31
July 2022. The Company controls an entity when it is exposed to, or
has the rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the
entity. Details of subsidiary companies and other interests of the
Company are set out in note 37.

The assets, liabilities and results of its subsidiaries are fully
consolidated into the financial statements of the Group from the
date which control is obtained by the Group. The consolidation
of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses
on transactions between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed
and adjustments made where necessary to ensure uniformity of the
accounting policies of the Group.

Equity interests in a subsidiary not attributable, directly or indirectly,
to the Group are presented as “non-controlling interests”. The
Group initially recognises non-controlling interests that are present
ownership interests in subsidiaries and are entitled to a proportionate
share of the subsidiary’s net assets on liquidation at either fair
value or at the non-controlling interests’ proportionate share of
the subsidiary’s net assets. Subsequent to initial recognition, non-
controlling interests are attributed their share of profit or loss and
each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the
consolidated statement of financial position and consolidated
statement of comprehensive income.

1. Summary Of Significant Accounting Policies

Gowings Bros. Limited (“the Company”) is a company limited by
shares incorporated in Australia whose shares are publicly traded on
the Australian Securities Exchange (“ASX”). The consolidated financial
statements comprise the Company and its controlled entities (referred
herein as “the Group”).

The principal accounting policies adopted in the preparation of the
consolidated financial statements are set out below. These policies
have been consistently applied to all the years presented, unless
otherwise stated.

(a) Basis of preparation

These general purpose consolidated financial statements have been
prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001.

Compliance with IFRS

The consolidated financial statements comply with International
Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”).

Historical cost convention

These consolidated financial statements have been prepared under
the historical cost convention, as modified by the revaluation of
equities (financial assets at fair value through other comprehensive
income), private equities (financial assets at fair value through profit
or loss), investment properties and certain classes of property, plant
and equipment.

Critical accounting estimates

The preparation of consolidated financial statements in conformity
with Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s
accounting policies. Areas involving a higher degree of judgement and
complexity or where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 3.

Comparative information

Information has been reclassified where applicable to enhance
comparability.

Amending Accounting Standards and Interpretations

Several amending Accounting Standards and Interpretations apply for
the first time for the current reporting period commencing 1 August
2021. These amending Accounting Standards and Interpretations
did not result in any adjustments to the amounts recognised or
disclosures in the financial report.

1. Summary Of Significant Accounting Policies (Continued)

(d) Goodwill

Business combinations occur where the Group acquires control over
one or more businesses.

Goodwill is carried at cost less any accumulated impairment losses.
Goodwill is carried as the excess of the sum of:

A business combination is accounted for by applying the acquisition
method, unless it is a combination involving entities or businesses
under common control. The business combination will be accounted
for from the date that control is attained, whereby the fair value of
the identifiable assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to certain limited
exceptions).

When measuring the consideration transferred in the business
combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial
recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is
remeasured in each reporting period to fair value, recognising any
change to fair value in profit or loss, unless the change in value can be
identified as existing at acquisition date.

Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under
comparable terms and conditions.

All transaction costs incurred in relation to business combinations are
recognised as expenses in profit and loss when incurred.

The acquisition of a business may result in the recognition of goodwill
or a gain from a bargain purchase.

the consideration transferred;

(i)
(ii) any non-controlling interest (determined under either the full

goodwill or proportionate interest method); and

(iii) the acquisition date fair value of any previously held equity

interest;

over the acquisition date fair value of net identifiable net assets acquired.

The acquisition date fair value of the consideration transferred for
a business combination plus the acquisition date fair value of any
previously held equity interest form the cost of the investment.

Fair value re-measurements in any pre-existing equity holdings are
recognised in profit or loss in the period in which they arise. Where
changes in the value of such equity holdings had previously been
recognised in other comprehensive income, such amounts are recycled to
profit or loss.

The amount of goodwill recognised on acquisition of each subsidiary
in which the Group holds a less than 100% interest will depend on the
method adopted in measuring the non-controlling interest. The Group
can elect in most circumstances to measure the non-controlling interest
in the acquiree either at fair value (“full goodwill method”) or at the non-
controlling interest’s proportionate share of the subsidiary’s identifiable
net assets (“proportionate interest method”). In such circumstances, the
Group determines which method to adopt for each acquisition and this is
stated in the respective notes to these financial statements disclosing the
business combination.

Under the full goodwill method, the fair value of the non-controlling
interests is determined using valuation techniques which make the
maximum use of market information where available. Under this method,
goodwill attributable to the non-controlling interest is recognised in the
consolidated financial statements.

Goodwill on acquisitions of subsidiaries is included in intangible assets.

Goodwill is tested for impairment annually and is allocated to the
Group’s cash-generating units or groups of cash-generating units, which
represents the lowest level at which goodwill is monitored but where
such level is not larger than an operating segment. Gains and losses on
the disposal of an entity include the carrying amount of goodwill related
to the entity sold.

Changes in the ownership interests in a subsidiary that do not result in a
loss of control are accounted for as equity transactions and do not affect
the carrying amounts of goodwill.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

1. Summary Of Significant Accounting Policies (Continued)

(j) Right of use assets

(m) Revenue recognition

(e) Segment reporting

Equities

Cash and fixed interest

Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
including:
•
•
•
•
•
•
• Other

Surf Hardware International business

Development properties

Investment properties

Private equities

(f) Foreign currency translation

(i) Functional and presentation currency
Items included in the consolidated financial statements of the
Group are measured using the currency of the primary economic
environment in which the Group operates (“functional currency”). The
consolidated financial statements are presented in Australian dollars,
which is the Group’s functional and presentation currency.

(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Translation differences on private equities held at fair
value through profit or loss are recognised in profit or loss as part
of the fair value gain or loss. Translation differences on equities are
recognised in equity.

(iii) Foreign Operations
The financial results and position of foreign operations, whose
functional currency is different from the Group’s presentation
currency, are translated as follows:

(a) assets and liabilities are translated at exchange rates prevailing at
the end of the reporting period;
(b) income and expenses are translated at average exchange rates for
the period; and
(c) retained earnings are translated at the exchange rates prevailing at
the date of the transaction.

Exchange differences arising on translation of foreign operations with
functional currencies other than Australian dollars are recognised in
other comprehensive income and included in the foreign currency
translation reserve in the consolidated statement of financial position.
The cumulative amount of these differences is reclassified into profit
or loss in the period in which the operation is disposed of.

(g) Income tax

The income tax expense or benefit for the period is the tax payable on
the current period’s taxable income adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and
to unused tax losses. Deferred income tax is provided in full, using
the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. Deferred tax assets and liabilities
are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled.

No deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a
business combination, that at the time of the transaction did not
affect either accounting profit or loss or taxable profit or loss. Deferred
tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the Group has a legally
enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously. Current
and deferred tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.

(h) Impairment of non-financial assets

Assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash generating units).
Non-financial assets that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.

A right of use asset is recognised at the commencement date of a
lease. The right of use asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and,
except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying
asset, and restoring the site or asset.

Right of use assets are depreciated on a straight-line basis over
the unexpired period of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the Group expects to obtain
ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life. Right of use assets are
subject to impairment or adjusted for any remeasurement of lease
liabilities.

The Group has elected not to recognise a right of use asset and
corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.

(k) Inventories

Inventories comprise raw materials and finished goods and are stated
at the lower of cost and net realisable value. Costs of raw materials
and finished goods are determined after deducting rebates and
discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.

Revenue is recognised for the major business activities as follows:
(i) Equities

Dividend income is recognised when received. Revenue from the
sale of investments is recognised at trade date.

(ii) Property rental

Rental income is recognised in accordance with the underlying
rental agreements.

(iii) Land development and sale

Revenue is recognised on settlement.

(iv) Sales of goods

Revenue from the sale of goods is recognised at the point in
time when the customer obtains control of the goods, which is
generally at the time of delivery.

(v) Other investment revenue

Trust income and option income is recognised when earned.

(vi) Other property revenue

Other property revenue is recognised in accordance with
underlying agreements or when the right to receive payment is
established.
(vii) Interest revenue

Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.

(n) Trade and other receivables

Receivables consists mainly of amounts due for rental income and
sale of goods. Receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest
method, less any allowance for expected credit losses. Amounts
are usually due between seven and ninety days from invoice date.
Amounts due for the sale of financial assets and properties are usually
due on settlement unless the specific contract provides for extended
terms.

(i) Property, plant and equipment

(l) Intangibles Other than Goodwill

Property, plant and equipment (excluding freehold properties) are
measured at cost less accumulated depreciation and accumulated
impairment losses. Costs are measured at fair value of assets given
up, shares issued or liabilities undertaken at the date of acquisition
plus incidental costs directly attributable to the acquisition. Freehold
properties are measured at fair value, with changes in fair value
recognised in other comprehensive income. Depreciation is calculated
on a straight-line basis to write off the net cost or revalued amount of
each item of plant and equipment (excluding freehold land) over its
expected useful life to the Group. Estimates of remaining useful lives
are made on a regular basis for all assets, with annual reassessments
for major items. Land is not depreciated. Depreciation is calculated to
allocate cost or revalued amounts, net of their residual values, over
their estimated useful lives, as follows:

Furniture, fittings and equipment
Motor vehicles
Buildings

3 to 10 years
6 years
40 years

The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at each statement of financial position date. An asset’s
carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated
recoverable amount. Gains and losses on disposal are determined
by comparing proceeds with carrying amount. These are included in
profit or loss.

Intangible assets are identifiable non-monetary assets without
physical substance. They are recognised only if it is probable the
asset will generate future benefits for the Group. Those assets with an
indefinite useful life are tested for impairment annually. All intangible
assets are tested for impairment when there is an indication that
carrying amounts may be greater than recoverable amounts as set out
in note 1(h).

(i) Patents
Patents have a finite useful life and are carried at cost less
accumulated amortisation and impairment losses. Amortisation
is calculated using the straight-line method to allocate the cost of
patents over their useful lives.

(ii) Brand names
Brand names are initially recognised at fair value when acquired
in a business combination. Brand names are assessed to have an
indefinite useful and are carried at cost less accumulated impairment.
An indefinite useful life is considered appropriate when there is no
foreseeable limit to the period over which the brand name is expect to
generate cash flows.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

1. Summary Of Significant Accounting Policies (Continued)

(o) Investments and other financial assets

Investments and other financial assets are initially measured
at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit
or loss. Such assets are subsequently measured at either amortised
cost or fair value depending on their classification. Classification is
determined based on both the business model within which such
assets are held and the contractual cash flow characteristics of the
financial asset unless, an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash
flows have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
When there is no reasonable expectation of recovering part or all of a
financial asset, it’s carrying value is written off.

(i) Financial assets at fair value through profit of loss

Financial assets not measured at amortised cost or at fair value
through other comprehensive income are classified as financial
assets at fair value through profit or loss. Typically, such financial
assets will be either: (i) held for trading, where they are acquired
for the purpose of selling with an intention of making a profit, or
a derivative; or (ii) designated as such upon initial recognition
where permitted. Fair value movements are recognised in profit
or loss.

Where there has not been a significant increase in exposure to
credit risk since initial recognition, a 12-month expected credit loss
allowance is estimated. This represents a portion of the asset’s
lifetime expected credit losses that is attributable to a default event
that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit
risk has increased significantly, the loss allowance is based on the
asset’s lifetime expected credit losses. The amount of expected credit
loss recognised is measured on the basis of the probability weighted
present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.

For financial assets measured at fair value through other
comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is
recognised in profit or loss.

(p) Investment properties

Investment properties, principally comprising freehold commercial and
retail buildings, are held for long-term rental yields and are not occupied
by the Group. Investment properties are initially recognised at cost,
including transaction costs, and are subsequently remeasured at fair
value. Movements in fair value are recognised directly to profit or loss.

Investment properties are derecognised when disposed of or when there
is no future economic benefit expected.

(ii) Financial assets at fair value through other comprehensive income

(q) Joint ventures

Financial assets at fair value through other comprehensive
income include equity investments which the Group intends to
hold for the foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.

The fair values of quoted investments are based on current
market prices. If the market for a financial asset is not active
(and for unlisted securities), the Group establishes fair value
by using valuation techniques. These include the use of recent
arm’s length transactions, reference to other instruments that
are substantially the same and relying as little as possible
on unobservable inputs and maximising the use of relevant
observable inputs.

Jointly controlled assets
The proportionate interests in the assets, liabilities and expenses of
joint venture activities have been incorporated in the consolidated
financial statements under the appropriate headings. Details of the
joint ventures are set out in note 38

(r) Trade and other payables

These amounts represent liabilities for goods and services provided to
the Group prior to the end of the financial year and which are unpaid.
The amounts are unsecured and are usually paid within thirty to sixty
days after the end of the month of recognition.

(iii) Impairment of financial assets

(s) Borrowings

The Group recognises a loss allowance for expected credit losses
on financial assets which are either measured at amortised cost
or fair value through other comprehensive income.
The measurement of the loss allowance depends upon the
Group’s assessment at the end of each reporting period as to
whether the financial instrument’s credit risk has increased
significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or
effort to obtain.

Borrowings are initially recognised at the fair value of the
consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest
method. Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the liability for
at least 12 months after the statement of financial position date.

any anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in which
they are incurred.

Lease liabilities are measured at amortised cost using the effective interest
method. The carrying amounts are remeasured if there is a change in the
following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment
is made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right of use asset is fully written down.

(y) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Group, excluding any costs
of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
issued during the year
(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after tax effect of the interest and other financing costs
associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential
ordinary shares.

(z) Rounding of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding
in the Financial/ Directors' Reports) Instrument 2016/191 issued by
the Australian Securities and Investments Commission relating to
the "rounding off" of amounts in the directors' report and financial
report. Amounts in the directors' report and financial report have
been rounded to the nearest thousand dollars in accordance with that
Legislative Instrument, unless otherwise indicated

(t) Dividends

Provision is made for the amount of any dividend declared,
determined or publicly recommended by the Directors on or before
the end of the financial year but not distributed at balance date.

(u) Employee entitlements

(i) Wages, salaries and annual leave

Liabilities for wages, salaries and annual leave are measured as
the amount unpaid at the reporting date in respect of employees’
services up to that date at pay rates expected to be paid when
the liabilities are settled.

(ii) Long service leave

A liability for long service leave is recognised, and is measured
as the present value of expected future payments to be made in
respect of services provided by employees up to the reporting
date. Consideration is given to expected future wage and salary
levels and periods of service.

(v) Borrowing costs

Borrowing costs are recognised as expenses in the period in which
they are incurred except where they are included in the costs of
qualifying assets. Only borrowing costs relating specifically to the
qualifying asset are capitalised. Borrowing costs include interest on
bank overdrafts and short-term and long-term borrowings, including
amounts paid or received on interest rate swaps.

(w) Cash and cash equivalents

For purposes of the statement of cash flows, cash includes deposits
at call which are readily convertible to cash on hand and are subject
to an insignificant risk of changes in value, net of outstanding bank
overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the consolidated statement of financial position.

(x) Lease liabilities

A lease liability is recognised at the commencement date of a lease.
The lease liability is initially recognised at the present value of the lease
payments to be made over the term of the lease, discounted using
the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Lease payments
comprise of fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

2. Financial Risk Management

2. Financial Risk Management (Continued)

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk),
liquidity risk, credit risk and fair value estimation risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group through the mix of investment classes. The
Board of Directors and management undertake various risk management practices, both informally on a daily basis and formally on a monthly
basis at board level. Risks are identified and prioritised according to significance and probability. Progress towards managing these risks is
documented and formally reviewed on a monthly basis.

Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised financial assets and liabilities are denominated in a
currency that is not the Group’s functional currency. The Group does not have a policy with regard to hedging currency risk. The Group has
not hedged its foreign currency investments. The multiple currencies provide diversification benefits to the portfolio. The Group monitors
foreign currency movements daily and seeks advice from foreign currency specialists as to potential courses of action that may protect or
enhance the value of the Group’s investments.

The Group’s exposure to foreign currency risk on financial assets and liabilities at the reporting date was as follows:

Currency exposure in AUD

Cash and cash equivalents

Trade and other receivables

Trade and other payables

Lease liabilities

Equities

Private equities

31st July 2022

31st July 2021

USD
$’000

4,572

2,310

(476)

(784)

6,278

1,252

EUR
$’000

156

2,084

(290)

(613)

346

GBP
$’000

(48)

(25)

JPY
$’000

712

740

(269)

(141)

259

USD
$’000

7,380

2,169

(586)

(1,207)

5,924

1,424

EUR
$’000

235

1,719

(288)

(150)

406

GBP
$’000

(44)

(21)

JPY
$’000

538

938

(492)

(275)

296

Based on the cash held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, cash would have been
$508,000 higher / $416,000 lower (2021: $820,000 higher / $671,000 lower). If the Australian dollar weakened / strengthened by 10% against the
GBP, cash would have been $7,000 higher / $5,000 lower (2021: $4,000 higher / $3,000 lower). If the Australian dollar weakened / strengthened
by 10% against the EUR, cash would have been $17,000 higher / $14,000 lower (2021: $26,000 higher / $21,000 lower). If the Australian dollar
weakened / strengthened by 10% against the JPY, cash would have been $79,000 higher / $65,000 lower (2021: $60,000 higher / $49,000 lower).

Based on the trade receivables held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, receivables
would have been $257,000 higher / $210,000 lower (2021: $241,000 higher / $197,000 lower). If the Australian dollar weakened/strengthened by
10% against the EUR, receivables would have been $232,000 higher / $189,000 lower (2021: $191,000 higher / $156,000 lower). If the Australian
dollar weakened/strengthened by 10% against the JPY, receivables would have been $82,000 higher / $67,000 lower (2021: $104,000 higher /
$85,000 lower).

Based on the trade payables held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, payables
would have been $53,000 higher / $43,000 lower (2021: $65,000 higher / $53,000 lower). If the Australian dollar weakened/strengthened by
10% against the EUR, payables would have been $32,000 higher / $26,000 lower (2021 $32,000 higher / $26,000 lower). If the Australian dollar
weakened/strengthened by 10% against the GBP, payables would have been $5,000 higher / $4,000 lower (2021: $5,000 higher / $4,000 lower). If
the Australian dollar weakened/strengthened by 10% against the JPY, payables would have been $30,000 higher / $24,000 lower (2021: $55,000
higher / $45,000 lower).

Based on the lease liabilities held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, lease liabilities
would have been $87,000 higher / $71,000 lower (2021: $134,000 higher / $110,000 lower). If the Australian dollar weakened/strengthened by
10% against the EUR, lease liabilities would have been $68,000 higher / $56,000 lower (2021: $17,000 higher / $14,000 lower). If the Australian
dollar weakened / strengthened by 10% against the GBP, lease liabilities would have been $3,000 higher / $2,000 lower (2021: $2,000 higher /
$2,000 lower). If the Australian dollar weakened / strengthened by 10% against the JPY, lease liabilities would have been $16,000 higher / $13,000
lower (2021: $31,000 higher / $25,000 lower).

Based on the equities held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, equities would have
been $698,000 higher / $571,000 lower (2021: $658,000 higher / $539,000 lower). If the Australian dollar weakened/strengthened by 10% against
the EUR, equities would have been $38,000 higher / $31,000 lower (2021: $45,000 higher / $37,000 lower). If the Australian dollar weakened/
strengthened by 10% against the JPY, equities would have been $29,000 higher / $24,000 lower (2021: 33,000 higher / $27,000 lower).

Based on the private equities held at 31 July 2022, if the Australian dollar weakened / strengthened by 10% against the US dollar, private equities
would have been $139,000 higher / $114,000 lower (2021: $158,000 higher / $129,000 lower).

The percentage change is the expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable
possible fluctuations taking into consideration movements over the last 6 months each year and the spot rate at each reporting date.

(i) Price risk

The Group is exposed to asset price risk. This arises from equities and private equities held by the Group. A price reduction at 5% and 10%
spread equally over the investment portfolio would reduce its value by $2,523,000 (2021: $2,555,000) and $5,045,000 (2021: $5,109,000)
respectively.

The Group seeks to reduce market risk at the investment portfolio level by ensuring that it is not overly exposed to one company or
one particular sector of the market. The relative weightings of the individual investments and the relevant market sectors are reviewed
regularly and risk can be managed by reducing exposure where necessary. The Group does not have set parameters as to a minimum or
maximum amount of the portfolio that can be invested in a single company or sector. The writing and purchasing of options provides some
protection against a fall in market prices by both generating income to partially compensate for a fall in capital values and buying put
protection to lock in asset prices.

(ii)

Interest rate risk
The Group’s interest-rate risk arises from long-term borrowings and cash on deposit. Borrowings issued at variable rates expose the Group
to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. The Group’s interest bearing
assets include deposits on the overnight money market. Interest earnt on these deposits varies according to the Reserve Bank’s monetary
policy decisions.

As at the reporting date, the Group had the following variable rate borrowings:

Borrowings

0.83%

Net exposure to cash flow interest rate risk

97,161

0.79%

95,424

Weighted average
interest rate

31st July 2022
Balance $’000

Weighted average
interest rate

31st July 2021
Balance $’000

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has
a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group
obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the consolidated statement of financial
position and notes to the consolidated financial statements. The Group does not hold any collateral.

Liquidity risk

This is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent liquidity risk
management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of
committed credit facilities and the ability to close-out market positions. Management monitors its cash flow requirements daily. Furthermore,
management monitors the level of contingent payments on a weekly basis by reference to known sales and purchases of securities and
dividends and distributions to be paid or received.

Maturity of Financial Liabilities

31 July 2021

Non-derivatives

Non-interest bearing

Fixed rate

Variable rate

Total non-derivatives

Less than
1 year

Between
1-2 years

Between
2-5 years

Over
5 years

Total contractual
cash flow

6,368

997

1,115

8,480

108

766

94,309

95,183

208

6,476

1,971

95,424

103,871

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

2. Financial Risk Management (Continued)

Maturity of Financial Liabilities (continued)

31 July 2022

Non-derivatives

Non-interest bearing

Fixed rate

Variable rate

Total non-derivatives

Fair value estimation risk

Less than
1 year

Between
1-2 years

Between
2-5 years

Over
5 years

Total contractual
cash flow

5,116

1,346

2,851

9,313

230

94,310

94,592

302

5,168

1,878

97,161

104,207

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

Fair value hierarchy

The Group measures fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.
Level 2: inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly.
Level 3: unobservable inputs for the assets or liability.

The following tables present the Group’s assets measured and recognised on a recurring basis at fair value at 31 July 2021 and 31 July 2022.
The Group does not have any liabilities measured at fair value at either reporting date.

31 July 2021

Financial assets – designated at fair value through other
comprehensive income

Investments – Australian equities

Investments – Global equities

Financial assets – designated at fair values through profit or loss

Investments – Private equities

Investments – Investment properties

Total

31 July 2022

Financial assets – designated at fair value through other
comprehensive income

Investments – Australian equities

Investments – Global equities

Financial assets – designated at fair values through profit or loss

Investments – Private equities

Investments – Investment properties

Total

Level 1

$’000

16,483

1,704

18,187

Level 1

$’000

29,903

4,860

34,763

Level 2

$’000

Level 3

$’000

Total

$’000

Level 2

$’000

19,977

4,923

8,003

203,595

236,498

Level 3

$’000

9,022

2,023

4,646

205,324

221,015

36,460

6,627

8,003

203,595

254,685

Total

$’000

38,925

6,883

4,646

205,324

255,778

The Group had no assets or liabilities measured at fair value on a non-recurring basis in the current period.

Fair values of financial instruments not recognised at fair value

The Group has a number of financial instruments which are not measured at fair value at 31 July 2022. The carrying amounts of cash and cash
equivalents, current trade and other receivables, current trade and other payables, current borrowings and current lease liabilities are assumed
to approximate their fair value due to their short-term nature. The carrying amounts of non-current trade and other payables, borrowings and
lease liabilities approximate their fair value as the impact of discounting is not significant.

2. Financial Risk Management (Continued)

Fair value hierarchy (continued)

Valuation techniques used to determine fair values
Specific valuation techniques used to determine fair value include:

• The fair value of listed Australian and global equities is based

on quoted market prices at the reporting date.

• The fair value of directly held unlisted Australian and global

equity investments is determined by management valuations
in accordance with the AVCAL valuation guidelines. A variety of
methods are used including reference to recent shares issued
and net assets of underlying investments.

•

Investments in private equities primarily consist of

investments in managed private equity funds, each of which
consists of a number of investments in individual companies,
none of which are material. Fair value of managed private
equity investments has been determined using fund manager
valuations, which are prepared in accordance with AVCAL
Guidelines. Directors have reviewed those valuations.
• The fair value of sub-regional and neighbourhood shopping
centre investment properties is determined by management
with reference to the latest independent valuations prepared
for each shopping centre updated for changes in operating
income and capitalisation rates which reflect vacancy rates,
tenant profile, lease expiry, developing potential and the
underlying physical condition of the property. For other
investment properties, fair value is based on current market
prices in an active market for properties of similar nature or
recent prices in less active markets.

Fair value measurements using significant unobservable inputs (level 3). The following table presents the changes in level 3 items for the period
ended 31 July 2022:

Reconciliation of level 3 fair value movements

Opening balance

Transfers to level 1

Purchases

Sales

Amortisation and depreciation

Net gain recognised to profit and loss

Net gain recognised to other comprehensive income

Closing balance

31 July 2022
$’000

31 July 2021
$’000

236,498

(18,469)

4,560

(9,494)

(329)

5,598

2,651

235,100

(949)

4,675

(7,107)

(510)

2,671

2,618

221,015

236,498

Gains and losses on Australian and global equities are presented in
the changes in fair value of equity instruments at fair value through
other comprehensive income, net of tax line item in the consolidated
statement of comprehensive income.

Gains and losses of private equities and investment properties are presented
net as other income in the consolidated statement of profit or loss.

During the year there were transfers of equities from level 3 to level
1 due to these equities being listed on stock exchanges, there were
no other transfers between the levels of the fair value hierarchy
during the period ended 31 July 2022. Transfers between the levels
of the fair value hierarchy are recognised at the beginning of the
reporting period. There were no changes made to any of the valuation
techniques used due to determine fair value during the year.

Refer to the following notes for reconciliation of individual classes of assets:

• Equities - refer to note 13
• Private equities - refer to note 14
•

Investment properties - refer to note 16

Transfers between fair value hierarchy levels and changes in valuation
techniques used to determine fair value

Significant unobservable inputs used in level 3 fair value
measurements

Significant unobservable inputs used in level 3 fair value
measurements relate to sub-regional and neighbourhood shopping
centre capitalisation rates. Refer to note 16 for further disclosures
pertaining to these inputs.

3. Critical Accounting Estimates And
Judgements

Managed and Direct Private Equity

The Group’s practice for ‘Managed Private Equity’ valuations is to
procure each Fund Manager’s published unit price valuation and review
it for reasonableness, potential misstatements and impairments.
In reviewing each Fund Manager’s valuation, consideration is given
to audited accounts, compliance with Australian Venture Capital
Association (“AVCAL”) valuation guidelines, Australian Accounting
Standards, valuation methodology and assumptions, peer valuations,
recent market prices, liquidity and control provisions, discussions with
the Fund Manager and, where considered relevant, meetings with the
underlying investee company’s management.

The impact of the revaluation of managed private equities at 31 July

2022 was a loss of $1,018,000 (2021: a gain of $2,515,000) recognised in
profit or loss.

The Group holds ‘Direct Private Equity’ investments in unlisted private
companies which have been valued using the Board and management’s
best estimation of market value. The valuation considerations for
managed private equity are applied to direct private equity based on
recent shares issued and net assets of underlying investments, liquidity
and minority shareholder provisions.

Investment property

Investment property valuations are estimated by the board and
management with reference where possible to external valuations,
market appraisals, recent comparable sales, date of purchase and
capitalisation rate valuations. The impact on profit or loss relating
to the revaluation of investment properties was a gain of $1,250,000
(2021: gain of $156,000).

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED4. Segment Information

4. Segment Information (Continued)

The Group comprises of the following business segments, based on the group’s management reporting systems:

For the year ended

• Cash and fixed interest
• Equities
• Private equities
•
Investment properties
• Development properties
• Surf Hardware International business
• Other

Revenue from external customers by geographical region

Australia

United States of America

Japan

Europe

Total revenue from external customers

31 July 2022
$’000

31 July 2021
$’000

31,422

17,765

8,214

15,712

73,113

33,216

17,363

7,926

11,575

70,080

For the year ended

31 July 2022
$’000

31 July 2021
$’000

The Group only derives revenue from external customers in the investment properties, development properties and Surf Hardware
International business segments.

Segment revenue

Cash and fixed interest – interest received

Equities – dividends and option income received

Private equities – distributions received

Investment properties – rent received

Development properties – realised gains on disposal

Surf Hardware International business – sale of goods

Segment other income

Private equities – realised and unrealised gains

Investment properties –realised and unrealised gains

Other

Total segment revenue and other income

For the year ended

Segment revenue

Cash and fixed interest

Equities

Private equities

Investment properties

Development properties

Surf Hardware International business

Other

Total segment result

Income tax expense

Net profit after tax

As at

Segment assets

Cash and fixed interest

Equities

Private equities

Investment properties

Development properties

Surf Hardware International business

Unallocated assets

Total assets

Segment liabilities

Investment properties

Surf Hardware International business

Unallocated liabilities

Total liabilities

Non-current assets by geographical region

Australia

United States of America

Japan

Europe

Total non-current assets

132

894

100

17,606

55,507

74,239

2,751

1,404

3,732

7,887

82,126

186

437

449

17,686

1,816

50,578

71,152

2,515

156

3,402

6,073

77,225

31 July 2022
$’000

31 July 2021
$’000

132

894

2,851

9,318

3,109

(2,440)

13,864

(2,944)

10,920

186

437

2,964

7,293

648

5,304

(3,209)

13,623

(3,241)

10,382

31 July 2022
$’000

31 July 2021
$’000

13,713

45,808

4,646

205,324

30,206

23,713

12,786

336,196

91,175

7,231

35,847

134,253

30,813

43,087

8,003

203,595

18,950

18,821

9,210

332,479

91,276

5,700

40,353

137,329

290,885

274,760

8,702

697

1,255

9,312

1,040

652

301,539

285,764

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

4. Segment Information (Continued)

For the year ended

Payments for the acquisition of:

- Investment properties

- Development properties

- Equities

Gains / (losses) on disposal or revaluation of:

- Investment properties

- Private equities

Unallocated:

- Payments for the acquisition of property, plant and equipment

- Payments for the acquisition of intangibles

31 July 2022
$’000

31 July 2021
$’000

1,054

11,256

11,970

1,404

2,751

3,368

1,507

3,994

5,494

156

2,515

601

Accounting policies

Segment information is prepared in conformity with the accounting policies of the Group as disclosed in note 1.

6. Income Tax Expens

For the year ended

Current tax

Deferred tax

Over provided in prior years

Income tax attributable to:

Profit from continuing operations

Aggregate income tax expense on profit

Reconciliation of income tax expense to prima facie tax on profit

Profit from continuing operations before income tax expense

Tax at the Australian tax rate of 30% (2021: 30%)

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Non-assessable income/ Non-deductible expenses

Franked dividends

Over provision in prior year

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be
allocated to a segment on a reasonable basis.

Deferred tax assets recorded not recognised and effect of tax rates in foreign
jurisdictions

All segments other than Surf Hardware International business segment
Segment assets include all assets used by a segment and consist primarily of operating cash, investments, investment properties, development
properties and plant and equipment, net of related provisions. While most of these assets can be directly attributable to individual segments,
the carrying amounts of certain assets used jointly by segments are allocated based on reasonable estimates of usage. Segment liabilities
consist of borrowings. Segment assets and liabilities do not include income taxes. Tax assets and liabilities, trade and other creditors and
employee entitlements and goodwill are represented as unallocated amounts.

Surf Hardware International business segment
Segment assets include all assets (excluding operating cash of $1.65 million (2021: $1.81 million) which is included in the cash segment) used by
the Surf Hardware International business segment and consist primarily of trade and other receivables, inventories, plant and equipment, right
of use assets and intangibles, net of related provisions. Segment liabilities consist of borrowings, trade and other payables, lease liabilities and
employee entitlements. Segment assets and liabilities do not include income taxes. Tax assets and liabilities are represented as unallocated
amounts.

Segment cash flows

Segment information is not prepared for cash flows as management consider it not relevant to users in understanding the financial position and
liquidity of the Group.

5. Operating Profit

For the year ended

Profit from continuing operations before income tax expense includes the
following specific items:

Gains

Private equity investment distributions

Expenses

Interest and other borrowing costs

Employee benefits

Cost of sales (Surf Hardware International)

Cost of sales (Development properties)

31 July 2022
$’000

31 July 2021
$’000

100

2,833

11,421

34,078

449

3,410

9,800

29,087

1,168

Income tax expense

Amounts recognised directly in equity
Aggregated current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly debited or (credited) to equity

7. Cash And Cash Equivalents

As at

Cash at bank and on hand

8. Current Trade And Other Receivables

Trade debtors

Less: expected credit losses

Balance at end of year

9. Other Current Assets

Prepayments

Other

Balance at end of year

10. Current Inventories

At cost or net realisable value

Raw materials and finished goods

Balance at end of year

31 July 2022
$’000

31 July 2021
$’000

1,526

1,511

(93)

2,944

13,864

4,160

(791)

(126)

(93)

(206)

2,944

426

1,181

2,553

(493)

3,241

13,623

4,087

(30)

(83)

(493)

(240)

3,241

2,016

31 July 2022
$’000

13,713

31 July 2021
$’000

30,813

7,111

(297)

6,814

1,181

1,190

12,940

6,711

(149)

6,562

1,075

8,265

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

11. Non-Current Other Receivables

16. Non-Current Investment Properties

31 July 2022
$’000

31 July 2021
$’000

As at

Other receivables

Balance at end of year

12. Non-Current Loan Receivables

Loan receivables

Interest on loans are charged at commercial interest rates.

13. Non-Current Equities

At fair value through other comprehensive income

Balance at beginning of year

Revaluation to fair value

Additions

Transfers

Disposal proceeds

Balance at end of year

Changes in fair value of equities are recorded in equity.

14. Non-Current Private Equities

At fair value through profit or loss

Balance at beginning of year

Revaluation to fair value

Additions

Transfers

Disposal proceeds

Net gain on disposal

Balance at end of year

Changes in fair values of private equities at fair value through the profit or loss are recorded in other income.

15. Non-Current Development Properties

At cost or net realisable value

Balance at beginning of year

Additions

Disposal proceeds

Net gain on disposal

Other

Balance at end of year

18,950

11,256

30,206

925

43,087

1,421

9,608

408 -

(8,716)

45,808

8,003

(1,018)

658

(71)

(6,695)

3,769

4,646

850

32,265

6,718

6,491

(2,387)

43,087

4,751

2,515

783

(46)

8,003

16,117

3,994

(1,816)

648

18,950

As at

At fair value

Balance at beginning of year

Additions

Disposal proceeds

Net gain on disposal

Amortisation on incentives

Net gain from fair value adjustment

Balance at end of year

Amounts recognised in profit of loss for investment properties

Rental revenue

Direct operating expenses from rental generating properties

Net gain on disposal

Net gain on revaluation

Changes in fair values of investment properties are recorded in other income.

31 July 2022
$’000

31 July 2021
$’000

203,595

1,054

(400)

154

(329)

1,250

205,324

17,606

(7,020)

154

1,250

11,990

202,442

1,507

(510)

156

203,595

17,686

(7,364)

156

10,478

Valuation
Method

Weighted
average cap
rate 2022

Weighted
average cap
rate 2021

31 July 2022
$’000

31 July 2021
$’000

Sub-regional and neighbourhood shopping
centres (Coffs Central, Port Central and
Kempsey Central)

Other properties

(a)

(b)

6.51%

198,575

198,069

6,749

205,324

5,526

203,595

(a)

Fair value is based on capitalisation rates, which reflect vacancy rates, tenant profile, lease expiry, developing potential and the
underlying physical condition of the property. The higher the capitalisation rate, the lower the fair value.

Capitalisation rates used and the fair value adopted for each property at 31 July 2022 were based on external valuations adjusted
for any changes in assumptions, estimates or source data with reference to the properties current and forecasted performance,
vacancy levels, tenancy profile and recent market data.

(b) Current prices in an active market for properties of similar nature or recent prices of different nature in less active markets

Sensitivity analysis of sub-regional and neighbourhood shopping centre investment properties held at fair value

At 31 July 2022, a reduction of 0.5% in the capitalisation rate applied to each property would result in an additional gain of $17.724 million in
the consolidated statement of profit or loss and consolidated statement of other comprehensive income. Similarly, an increase of 0.5% in the
capitalisation rate of each property would result in an additional loss of $15.172 million in the consolidated statement of profit or loss and
consolidated statement of other comprehensive income.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

17. Non-Current Property, Plant and Equipment

19. Non-Current Right of use Assets

Year ended 31 July 2021

Opening net book amount

Additions

Disposals

Depreciation charge

Closing net book amount

At 31 July 2021

Cost

Accumulated depreciation

Net book amount

Year ended 31 July 2022

Opening net book amount

Additions

Disposals

Depreciation charge

Closing net book amount

At 31 July 2022

Cost

Accumulated depreciation

Net book amount

Freehold Property
$’000

Motor vehicles
$’000

Furniture, fittings
& equipment $’000

7,061

(7,061)

194

(29)

223

584

(361)

223

253

(47)

429

832

(403)

429

1,385

425

(12)

(470)

1,328

8,352

(7,024)

1,328

3,115

(2)

(461)

3,980

11,427

(7,447)

3,980

Total
$’000

8,504

619

(7,073)

(499)

1,551

8,936

(7,385)

1,551

3,368

(2)

(508)

4,409

12,259

(7,850)

4,409

Revaluation to fair value uplifts on property, plant and equipment are recorded in equity.

18. Non-Current Intangibles

Year ended 31 July 2021
Opening net book amount
Additions
Lease modifications
Foreign exchange movements
Depreciation charge
Closing net book amount

At 31 July 2021

Cost

Accumulated depreciation

Net book amount

Year ended 31 July 2022

Opening net book amount

Additions

Lease modifications

Foreign exchange movements

Depreciation charge

Closing net book amount

At 31 July 2022
Cost

Accumulated depreciation

Net book amount

Land and buildings
$’000

Motor vehicles
$’000

Equipment
$’000

2,726
-
-
(69)
(997)
1,660

3,668

(2,008)

1,660

948

(3)

(996)

1,609

4,590

(2,981)

1,609

49
-
-
(2)
(28)
19

(59)

(18)

106

(77)

27
53
-
(2)
(10)
68

(17)

(13)

105

(30)

Total
$’000

2,802
53
-
(73)
(1,035)
1,747

3,831

(2,084)

1,747

996

(1,030)

1,713

4,801

(3,088)

1,713

Additional information regarding leases
The Group leases land and buildings for its offices and retail operations
which have lease terms of between one and five years with, in some
cases, options to extend. On renewal, the terms of the leases are
renegotiated. The Group also leases motor vehicles and equipment
under agreements of between one to five years.

Each lease generally imposes a restriction that, unless there is a

contractual right for the Group to sublet the asset to another party, the
right of use asset can only be used by the Group.

The Group’s leases include extension and termination options which are
exercisable by the Group. These clauses provide the Group opportunities
to manage leases in order to align with its strategies. The extension and
termination options which were reasonably certain to be exercised are
included in the calculation of the right-to-use asset.

As at

Goodwill

Brand names and patents

Balance at end of year

31 July 2022
$’000

31 July 2021
$’000

20. Deferred Tax Assets

2,383

1,375

3,758

2,383

1,533

3,916

As at

The balance comprises temporary differences attributable to:

31 July 2022
$’000

31 July 2021
$’000

Intangible assets, other than goodwill and brand names have finite useful lives. Goodwill and brand names have an indefinite useful life.
Goodwill and brand names are allocated to the Surf Hardware International business segment (“the cash-generating unit”).

The Group tests whether goodwill and brand names have suffered any impairment at each reporting period. The recoverable amount of the
cash-generating unit is determined based on either value-in-use calculations or the estimated fair value less costs to sell.

Goodwill, brand names and patents

The recoverable amount of the cash-generating unit is based on value-in-use of the Surf Hardware International business segment which is
calculated based on the present value of cash flow projections over a five year period with the period extending beyond four years extrapolated
using an estimated growth rate.

Five year projected cash flows in respect of the Surf Hardware International business segment are $21m. Key assumptions include: (a) 10%
discount rate; (b) 7% per annum projected net revenue growth rate; (c) 6% per annum increase in operating expenses; and (d) 3% terminal
growth rate. Based on these assumptions the Directors have determined that no impairment charge shall be recognised during the current
reporting period.

Employee benefits

Accruals

Equities

Derivatives

Tax losses

Other

Net deferred tax assets

Movements:

Opening balance at 1 August

(Debited) / credited to profit or loss
Closing balance at 31 July

Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after 12 months

296

409

159

744

1,701

2,386

(685)
1,701

568
1,133

1,701

306

1,021

320

733

2,386

3,610

(1,224)
2,386

1,222
1,164

2,386

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

21. Other Non-Current Assets

27. Non-Current Borrowings

As at

Other assets

22. Current Trade and Other Payables

Trade creditors

Other creditors and accruals

Balance at end of year

23. Current Borrowings

Bill payable – secured

Commercial advance facility - secured

Balance at end of year

Risk

31 July 2022
$’000

3,049

31 July 2021
$’000

1,616

2,395

2,721

5,116

1,000

1,851

2,851

3,378

2,990

6,368

1,101

1,115

The Group’s exposure to interest rate changes arising from current and non-current borrowings is set out in note 2.

Refinancing / Repayment

The Group expects to renew or refinance current borrowing facilities on normal commercial terms and rates that are acceptable to the Group
prior to the respective repayment dates. Alternatively, the Group believes it has the ability to repay any outstanding debt under these facilities
from excess cash reserves, proceeds received from the disposal of assets or from cash sourced or raised through the Group’s operating or
financing activities.

Security

Information about the security relating to each of the secured liabilities and the fair value of each of the borrowings is provided in note 27.

1,346

2,010

1,207

997

4,740

1,222

2,000

93,222

24. Current Lease Liabilities

Lease liabilities

25. Current Tax Liabilities

Income tax payable

26. Current Provisions

Employee entitlements

Provision for rental abatements and deferrals

Balance at end of year

As at

Bills payable - secured

Risk

31 July 2022
$’000

94,310

31 July 2021
$’000

94,309

The Group’s exposure to interest rate changes arising from current and non-current borrowings is set out in note 2.

Security

Details of the security relating to each of the secured liabilities and further information on banks loans are set out below.

Total secured liabilities

The total secured liabilities (current and non-current) are as follows:

Bills payable – secured¹

Commercial advance facility – secured²

95,310

1,851

97,161

95,410

95,424

¹$1.0 m bill is secured against 328-332 Bong St, Bowral. Interest is charged at BBSY plus 1.84% p.a.
¹$94.310 million bill is secured against Port Central Shopping Centre, Coffs Central Shopping Centre, and Kempsey Central Shopping Centre (the “SC
properties”). The facility consists of two tranches, the first tranche is a non-revolving facility, has a facility limit of $76 million (fully drawn at 31 July
2022). The second tranche is a revolving facility, has a facility limit of $30 million. Interest on the outstanding principal of both tranches is charged
at BBSY plus 0.70%. At 31 July 2022 the current interest rate that applies to amounts advanced is 2.9218% p.a. The lender requires the Group and
SC properties to meet certain financial ratios at 31 July 2022: the SC properties and the Group must have a minimum interest coverage ratio of 2.5
times, the combined facility limit of the first and second tranches must not to exceed 55% of the aggregate market value of the SC properties (based
on the last borrower approval valuation of the SC properties) and the Group’s gearing ratio must not exceed 50%.

²$1.851 million commercial advance facility is held by Gowings SHI Pty Limited and secured by the assets of Gowings SHI Pty Limited, Fin Control
Systems Pty Ltd, Oz4u Holdings Pty Ltd, SHI Holdings Pty Ltd, Sunbum Technologies Pty Ltd, Surf Hardware International Pty Ltd, Surfing Hardware
International Holdings Pty Ltd and Surf Hardware International Asia Pty Ltd. The facility has a total facility limit of $2 million. At 31 July 2022 the
current interest rate that applies to amounts advanced is 8.27%.

As at

Financing Arrangements
Unrestricted access was available at balance date to the following lines of credit:

31 July 2022
$’000

31 July 2021
$’000

Total facilities

Secured bill facilities

Secured commercial advance facility

Secured market rate loan facility

Other

Used at balance date
Secured bill facilities

Secured commercial advance facility

Secured market rate loan facility

Other

Unused at balance date
Secured bill facilities

Secured commercial advance facility

Secured market rate loan facility

Other

107,000
2,000
-
-

109,000

95,310

1,851

97,161

11,690

149

11,839

107,400
2,000
-
-

109,400

95,410

95,424

11,990

1,986

13,976

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

27. Non-Current Borrowings (Continued)

Off-balance sheet

There are no off-balance sheet borrowings or related contingencies.

28. Non-Current Lease Liability

As at

Lease liabilities

29. Non-Current Provisions

31 July 2022
$’000

532

31 July 2021
$’000

974

Employee entitlements

321

333

30. Deferred Tax Liabilities

The balance comprises temporary differences attributable to:

Prepayments

Intangibles

Investment properties

Equities

Other

Net deferred tax liabilities

Movements:

Opening balance at 1 August

Charged/(credited) to profit or loss

Charged/(credited) to equity

Closing balance at 31 July

Deferred tax liabilities to be settled within 12 months

Deferred tax liabilities to be settled after 12 months

109

315

21,322

4,110

652

26,508

25,163

919

426

26,508

108

26,400

26,508

149

315

19,802

4,393

504

25,163

22,050

1,097

2,016

25,163

149

25,014

25,163

31. Contributed Equity

Share capital

Ordinary shares fully paid

Number of
shares 2022

Number of
shares 2021

2022
$’000

2021
$’000

53,311,125

53,624,983

11,781

12,693

Movements in ordinary share capital – for the year ended 31 July 2022

Date

Details

31/07/2021

Balance

11/08/2021

Share buy-back

24/09/2021

Share buy-back

06/01/2022

Share buy-back

14/02/2022

Share buy-back

06/06/2022

Share buy-back

07/06/2022

Share buy-back

Movements in ordinary share capital – for the year ended 31 July 2021

Date

Details

31/07/2020

Balance

15/10/2020

Share buy-back

8/07/2021

Share buy-back

Ordinary shares

Number of
shares

53,624,983

(46,633)

(36,787)

(52,841)

(9,825)

(143,729)

(24,043)

53,311,125

Number of
shares

53,746,240

(100,000)

(21,257)

53,624,983

Issue price per
share

$2.75

$3.00

$3.17

$2.97

$2.85

$2.80

Issue price per
share

$1.51

$2.38

$’000

12,693

(128)

(110)

(168)

(29)

(410)

(67)

11,781

$’000

12,895

(151)

(51)

12,693

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of
and amounts paid on the 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.

Dividend Reinvestment Plan

The Dividend Reinvestment Plan may be offered to shareholders by Directors and allows shareholders to reinvest dividends into shares in the
Company. The Dividend Reinvestment Plan is suspended for the final dividend declared on 29 September 2022.

Deferred Employee Share Plan

The Deferred Employee Share Plan may be used as part of any incentive payments for all employees. For transaction cost reasons, where
possible shares bought back as part of the Company’s ongoing capital reduction program are recognised for this purpose rather than cancelled.

Options

There were no options on issue at the time of this report.

On-market share buy back

313,858 shares were bought back during the year (2021: 121,257).

Capital risk management

The Company’s objective when managing capital is to safeguard the ability to continue as a going concern, so that continued returns to
shareholders and benefits for other stakeholders can be provided while maintaining an optimal capital structure.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED
31 July 2022
$’000

31 July 2021
$’000

33. Dividends

As at

Ordinary shares

32. Reserves

As at

Capital profits reserve¹

Opening balance

Transfer from retained profits

Closing balance

Long term investment revaluation reserve²

Opening balance

Fair value adjustments on equities

- Equities

- Deferred tax applicable to fair value adjustments

- Transfer of losses on sale of equity instruments at fair value through
comprehensive income to retained profits, net of tax

Closing balance

Asset revaluation reserve³

Opening balance

Fair value adjustments on property, plant and equipment

- Transfer of prior year revaluation increment to retained

profits on the sale of freehold properties

Closing balance

Foreign currency translation reserve⁴

Opening balance

Exchange differences on translation of foreign operations

Closing balance

Total reserves

90,503

8,504

1,420

(426)

9,590

144

216

100,309

90,503

2,860

6,719

(2,016)

941

8,504

1,591

(1,591)

197

(53)

144

99,151

¹ The capital profits reserve is used to record pre-CGT profits.
² The long term investment revaluation reserve is used to record increments and decrements on equities held at fair value through other
comprehensive income.
³ The asset revaluation reserve is used to record increases and decreases in the fair value of property, plant and equipment recognised in
other comprehensive income.
⁴ The foreign currency translation reserve records exchange rate differences arising on translation differences on foreign controlled subsidiaries.

2021 final dividend of 4.0 cents (2020: 3.0 cents interim) per share

2022 interim dividend of 4.0 cents (2021: 4.0 cents interim) per share

Total dividends declared

Dividends paid in cash

Dividends paid via Dividend Reinvestment Plan

31 July 2022
$’000

31 July 2021
$’000

2,142

2,139

4,281

1,609

2,146

3,755

Franked dividends declared and paid during the year were fully franked at the tax rate of 30% (2021: 30%).

Dividends declared after year end

Subsequent to year end the Directors have declared the payment of a final dividend of 4.0 cents per ordinary share fully franked based on tax
paid at 30%. The dividend is payable on 28 October 2022 out of retained profits at 31 July 2022.

The financial effect of the dividend declared subsequent to the reporting date has not been brought to account in the financial statements for
the year ended 31 July 2022 and will be recognised in subsequent financial reports.

Franked dividends

The franked portions of the final dividends declared after 31 July 2022 will be franked out of existing franking credits or out of franking credits
arising from the payment of income tax in the year ended 31 July 2022.

Franking credits available for subsequent financial years (tax paid basis)

5,158

5,790

The above amounts are based on the balance of the franking account at year end, adjusted for:

(a) franking credits that will arise from the payment of the current tax receivable;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(d) franking credits that may be prevented from being distributed in subsequent financial years.

34. Remuneration of Auditors

During the year the following fees were paid or payable for services provided by William Buck (2021: HLB Mann Judd), the auditor of the company:

31 July 2022
$

31 July 2021
$

Audit services – William Buck

Audit and review – group

Audit and review – controlled entities

Audit services – HLB Mann Judd

Audit and review – group

Audit and review – controlled entities

Other services – William Buck

Financial review

Other services – HLB Mann Judd

Tax services

120,800

47,200

73,500

241,500

52,600

139,600

8,500

50,200

250,900

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED35. Commitments For Expenditure

Capital commitments – Private equities

The Group has uncalled capital commitments of up to $1,764,000 (2021: $932,000) in relation to private equity and property fund investments
held at year end.

Capital commitments – Development properties

36. Related Parties (Continued)

The wife of Mr J E Gowing, Managing Director, is a Director of Creative License Pty Limited. Creative License Pty Limited provided marketing
services totalling $nil for the year (2021: $53,590) for the year. The sons of Mr J E Gowing provided operational services during the year on an
employment basis totalling $72,300 (2021: $75,288), and associate director services totalling $nil (2021: $913).

Other related party transactions

The Group has capital commitments of $$1,849,000 (2021: $888,000) in relation to construction works on development properties at year end.

Key management person

Transaction type

31 July 2022
$

559,623

31 July 2021
$

480,139

36. Related Parties

Directors

The names of persons who were Directors of Gowing Bros. Limited at any time during the financial year were J. E. Gowing, J. G. Parker, Prof.
J. West and S. J. Clancy.

Those persons that were also Directors during the year ended 31 July 2021.

Remuneration

Information on remuneration of Directors and other key management personnel is disclosed in the remuneration repot.

Directors and other key management personnel

Short-term employee benefits

Post-employment benefits

Long-term benefits

Detailed remuneration disclosures can be found in the remuneration report on pages 22 to 24.

31 July 2022
$

31 July 2021
$

491,701

54,196

4,705

550,602

522,563

55,060

(43,205)

534,418

Movement in shares

Key management person

J. E. Gowing*

J. G. Parker

Prof. J. West

S. J. Clancy

J. E. Gowing (James)

*Directly and indirectly

Shares held* at

(disposed) during

Shares held* at

(disposed) during

Shares held* at

Shares acquired/

31-Jul-20

No.

20,978,094

57,306

477,581

5,000

64,504

the year

No.

31-Jul-21

No.

20,978,094

57,306

477,581

5,000

64,504

the year

No.

12,108

(42,851)

31-Jul-22

No.

20,990,202

57,306

434,730

5,000

64,504

Other key management personnel did not hold shares in the Company.

Receivables from Directors and Executives

At year end there were $nil receivables from the Directors and executives (2021: $nil).

Transactions with Key Management Personnel and Directors

Key management person

Transaction type

J. E. Gowing

Operational / marketing services

Associate director services

31 July 2022
$

72,300

31 July 2021
$

128,878

913

J. E. Gowing

Donations – Whale Trust

There were no other transactions with Directors and Director related entities and Executives.

37. Interests In Other Entities (Excluding Joint Ventures)

The Group’s principal subsidiaries and other interests are set out below:

Unless otherwise stated, subsidiaries and other interests listed below have share capital comprising of ordinary shares or ordinary units which
are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group.

Entity Name

Pacific Coast Developments 357 Pty Ltd

Pacific Coast Developments 357 Fund

1868 Capital Pty Ltd

Pacific Coast Developments 112 Fund

Gowings SHI Pty Ltd

SHI Holdings Pty Ltd

Fin Control Systems Pty Ltd

Surfing Hardware International Holdings Pty Ltd

Surf Hardware International Asia Pty Ltd

Surf Hardware International Europe SARL

Surf Hardware International UK Ltd

OZ4U Holdings Pty Ltd

Sunbum Technologies Pty Ltd

Surfing Hardware International USA Inc.

Surf Hardware International USA Inc.

Surf Hardware International Hawaii Inc.

Surf Hardware International Japan KK

Surf Hardware International Pty Ltd

Surf Hardware International New Zealand Pty Ltd

Gowings Master Trust

1868 High Yield Trust

Gowings Life Sciences Trust

Gowing Bros Management Services Pty Ltd

Coastbeat Pty Ltd

Gowings Wholesale Property Fund

Coffs Central Pty Ltd

Coffs Central Sub-Trust

Port Central Pty Ltd

Port Central Sub-Trust

Kempsey Central Pty Ltd

Kempsey Central Sub-Trust

Country of
Incorporation

Ownership
Interest % 2022

Ownership
Interest % 2021

Australia

France

England

Australia

United States of America

Japan

Australia

New Zealand

Australia

100

99.9

100

99.9

100

99.9

100

99.9

100

No other interests in subsidiaries or other entities (excluding joint
ventures) were held by the Group in the 31 July 2022 financial year.

Significant Restrictions

Non-controlling interests in subsidiaries and other interests of the
Group are not material to the Group.

Other than certain assets pledged as security detailed in note 27, there
are no significant restrictions over the Group’s ability to access or use
assets, and settle liabilities, of the Group

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED
38. Interests in Joint Arrangements

41. Parent Entity Information

The Group has entered into a joint operation known as Regional Retail Properties, a long term investment in a small regional retail centre. The
Group has a 50% participating interest in this joint operation and is entitled to 50% of its output.

The following information has been extracted from the books and records of the Company and has been prepared in accordance with Australian
Accounting Standards:

The Group’s interests in the assets employed in the joint operations are included in the consolidated statement of financial position, in
accordance with the accounting policy described in note 1(q), under the following classifications

Statement of Financial Position

31 July 2022
$’000

31 July 2021
$’000

31 July 2022
$’000

31 July 2021
$’000

Current assets

Cash and cash equivalents

Trade and other receivables

Total current assets

Non-current assets

Investment properties

Total non-current assets

Current share of assets employed in joint operation

Current liabilities

Trade and other payables

Borrowings

Total current liabilities

Current share of liabilities employed in joint operation

Net assets employed in joint operation

5,500

5,569

1,000

1,046

4,523

100

4,250

4,350

1,101

1,128

3,222

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Capital profits reserve

$1.0 million of borrowings is secured against investment properties of Regional Retail Properties (note 27).

Long term investment revaluation reserve

39. Share Based Payments

The Deferred Employee Share Plan has been in operation since 2006 which allows fully paid ordinary shares to be issued for no cash
consideration from shares held by the Plan. All Australian resident permanent employees and non-executive Directors are eligible to participate
in the scheme. Employees may elect not to participate in the scheme.

Shares are acquired on-market prior to the issue. Shares issued under the scheme may not be sold until the earlier of three years after issue or
cessation of employment of the Group. In all other respects the shares rank equally with other fully-paid ordinary shares on issue.

Asset revaluation reserve

Retained earnings

Total equity

Statement of Profit or Loss and other Comprehensive Income

Net profit after income tax

Total comprehensive income

Parent entity contractual commitments

12,613

309,901

322,514

4,960

120,556

125,516

196,998

11,781

90,503

9,590

85,124

196,998

9,366

994

28,065

293,644

321,709

11,097

118,781

129,878

191,831

12,693

90,503

8,504

80,131

191,831

6,731

4,703

Options

Nil options were on issue at year end (2021: Nil).

40. Earnings Per Share

Basic earnings per share (cents)

Diluted earnings per share (cents)

Weight average number of ordinary shares on issue

Net profit after tax

The Company has no contractual commitments other than uncalled capital commitments for private equities and development properties as
noted in note 35 (2021: Uncalled capital commitments for private equities and development properties as noted in note 35).

31 July 2022

31 July 2021

The Company has nil contingent liabilities at year end (2021: nil).

Parent entity contingent liabilities

20.42c

53,488,979

$10,920,000

19.35c

53,665,722

$10,382,000

Parent entity guarantees in respect to debts of its subsidiaries

The Company has not entered into any guarantees in respect to debts of its subsidiaries at year end (2021: nil).

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED
42. Reconcilation of Net Profit to Net Cash Inflow from Operating Activities

Directors’ Declaration

31 July 2022
$’000

31 July 2021
$’000

Profit from ordinary activities after income tax
Amortisation of lease incentives
Depreciation and amortisation
Net gain on sale of private equities
Net gain on sale of freehold property
Net gain on the sale of investment properties
Net gain on the sale of development properties
Revaluation of investment properties to fair value
Revaluation of private equities to fair value
Revaluation of derivatives to fair value
(Increase) / decrease in receivables
(Increase) / decrease in prepayments
(Increase) in inventories
(Decrease) / increase in income taxes
(Decrease) / increase in employee entitlements
Increase in trade creditors and accruals

Net cash (outflows) / inflows from operating activities

10,920
329
1,721
(3,769)
-
(154)
-
(1,250)
1,018
-
(463)
(1,549)
(4,675)
(1,127)
(2,027)
430

(596)

10,382
510
2,134
-
(946)
-
(648)
(156)
(2,515)
(587)
692
246
(3,170)
2,029
(330)
1,793

9,434

43. Changes in Liabilities Arising from Financing Activities

Liabilities from
financing activities

Opening balance –
31 July 2021

Cash flows from
financing activities

Gain on disposal

Lease
Modifications

Closing balance –
31 July 2022

Borrowings¹

Lease liabilities2²

95,424

1,971

1,737³

(1,091)

998

97,161

1,878

¹ Relates to current and non-current borrowings.
² Relates to current and non-current lease liabilities.
³ Relates to the following cash flows from financing activities for the year ended 31 July 2022:

-Proceeds from borrowings

-Repayments of borrowings

1,837

(100)

1,737

44. Subsequent Events

The Group has announced a dividend since the end of the year
which has been included in Note 33.

be realised after the business was sold of $45 million our share
should be above current holding value.

The Group has sold its interest in the Joint Venture Regional Retail
Property for $5.5 million with $1 million in proceeds being used to
repay the borrowings secured against this property.

The Group’s investment in Murray Darling Food Company will

No other matters or circumstances have arisen which has
significantly affected, or may significantly affect, the operations of
the Group, the results of those operations or the state of affairs of
the Group in future financial years.

45. Other Information

Gowing Bros. Limited is incorporated and domiciled in New South
Wales. The registered office, and principal place of business, is Suite
303, 35-61 Harbour Drive, Coffs Harbour, NSW, 2450.

61 2 9264 6321
61 2 9264 6240
info@gowings.com
www.gowings.com

Phone:
Facsimile:
Email:
Website:

Gowing Bros. Limited shares are listed on the Australian Securities
Exchange.

The share register is maintained by Computershare Investor
Services Pty. Limited, Level 3, 60 Carrington Street, Sydney NSW
2000, Telephone 1300 855 080, Overseas callers +61 (0)2 8234 5000,
Facsimile + 61 (0)2 8234 5050

In the directors’ opinion:
(a)

the consolidated financial statements and notes set out on pages 27 to 60 are in accordance with the
Corporations Act 2001, including:
(i)

complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and

(i) giving a true and fair view of the Group’s financial position as at 31 July 2022 and of its performance for the financial year

ended on that date; and

(b)

there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. The notes to the consolidated financial statements include a statement of compliance with International Financial Reporting Standards.

3. The directors have been given the declarations by the chief executive officer and chief financial officer for the year ended 31 July 2022

required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

Professor J. West
Director

Huon Valley, TAS
26 October 2022

J. E. Gowing
Director

Kerikeri, New Zealand
26 October 2022

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED

Gowing Bros. Limited
Auditor’s independence declaration under section 307c of the
Corporations Act 2001

I declare that, to the best of my knowledge and belief, during the year ended 31 July 2022 there have been:

— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in

relation to the audit; and

— no contraventions of any applicable code of professional conduct in relation to the audit.

William Buck
Accountants & Advisors
ABN: 16 021 300 521

L.E. Tutt
Partner
Sydney, 26 October 2022

Gowing Bros. Limited
Independent auditor’s report to members

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Gowing Bros. Limited (the Company and its subsidiaries [the
Group]), which comprises the consolidated statement of financial position as at 31 July 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:

i. giving a true and fair view of the Group’s financial position as at 31 July 2022 and of its financial

performance for the year ended on that date; and

ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Level 29, 66 Goulburn Street, Sydney NSW 2000
Level 7, 3 Horwood Place, Parramatta NSW 2150

+61 2 8263 4000

nsw.info@williambuck.com
williambuck.com.au

Level 29, 66 Goulburn Street, Sydney NSW 2000
Level 7, 3 Horwood Place, Parramatta NSW 2150

+61 2 8263 4000

nsw.info@williambuck.com
williambuck.com.au

William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.

Liability limited by a scheme approved under Professional Standards Legislation.

William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.

Liability limited by a scheme approved under Professional Standards Legislation.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDKey Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

KEY AUDIT MATTER

Valuation of subregional and neighbourhood

shopping centre investment properties

How our audit addressed it

Refer also to notes 16

The Group has subregional and neighbourhood

We have performed procedures to respond to the

shopping centre investment properties as at 31

risk of misstatement of investment properties,

July 2022 totalling $205.3 million.

these procedures included:

The valuation of the Group’s investment properties

requires significant judgement and the use of

— Assessing the competence, capability,

experience, independence and objectivity of
external valuers appointed by management.

subjective assumptions and estimates in

— Evaluating the valuation methodology applied.

determining fair value, including selecting the

appropriate valuation methodology, market rental

rates, vacancy allowances and capitalisation rates.

Due to the significant value attached to the

investment properties in Group’s consolidated

— Testing the reliability and reasonableness of
inputs to underlying contracts and supporting
documentation.

— Testing the appropriateness of assumptions

and estimates with reference to historical rates
and results, available market data, market
conditions and other supporting documentation.

financial statements, level of significant

— Checking mathematical accuracy of valuation

judgements and assumptions applied to determine

calculations.

the fair value of the Group’s investment properties,

this is considered to be a key audit matter.

We have also assessed the adequacy of the

Group’s disclosures with relevance to Australian

Accounting Standards.

KEY AUDIT MATTER

Valuation of Unlisted Equities

Refer also to notes 13 and 14

How our audit addressed it

The Group has investments of $15.7 million in a

We have performed procedures to respond to the

number of unlisted equities at 31 July 2022, which

risk of misstatement of unlisted equities, these

have been included in the Group’s consolidated

procedures included:

statement of financial position.

Management assesses the value of these

investments at least annually, using various

valuation techniques, such as recent arm’s length

transactions, reference to other instruments that

are of a similar nature and other market evidence.

— Assessing the valuation methodology applied

by management.

— Reviewing the valuation inputs including

evidence of recent arm’s length transactions
and agreeing these transactions to external
sources.

— Reviewing the market data and other financial

information.

Due to the significant judgement involved in

assessing the valuation of these assets, this is

considered a key audit matter.

We have also assessed the adequacy of the

Group’s disclosures with relevance to Australian

Accounting Standards.

Other Information

The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 31 July 2022 but does not include the financial report and the
auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDOther Matter

The financial report of Gowing Bros. Limited for the year ended 31 July 2021 was audited by another
auditor who expressed an unmodified opinion on the financial report on 28th October 2021.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.

A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:

https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf

This description forms part of our independent auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 22 to 24 of the directors’ report for the year
ended 31 July 2022.

In our opinion, the Remuneration Report of Gowing Bros. Limited, for the year ended 31 July 2022,
complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.

William Buck
Accountants & Advisors
ABN: 16 021 300 521

L.E. Tutt
Partner
Sydney, 26 October 2022

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITEDIssues to Shareholders Since 19 September 1985

Date

31/10/1985

30/04/1986

31/10/1986

16/03/1987

30/04/1987

30/04/1988

31/10/1988

30/04/1989

16/11/1989

31/10/1990

31/10/1991

30/04/1992

31/10/1992

29/10/1993

29/04/1994

28/04/1995

03/10/1995

31/10/1995

26/04/1996

30/10/1996

25/04/1997

15/05/1997

31/10/1997

30/04/1998

03/11/1998

28/04/1999

18/11/1999

28/04/2000

27/10/2000

27/04/2001

19/10/2001

18/12/2001

22/04/2002

25/10/2002

18/12/2002

24/04/2003

24/10/2003

23/04/2004

25/10/2004

22/04/2005

17/07/2009

05/11/2010

17/12/2010

05/11/2015

13/11/2018

30/04/2019

Particulars

Bonus issue in lieu

1 for 2 Bonus issue

Bonus issue in lieu

Dividend Re-investment

Special Scrip dividend

Dividend Re-investment

1 for 10 Bonus issue

1 for 20 Bonus issue

Dividend Re-investment

Bonus in Lieu Share Plan

1 for 10 Bonus issue

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

2 for 1 Share Split

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

In Specie Distribution

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

Bonus in Lieu Share Plan

Dividend Re-investment

1 for 8 Rights issue

1 for 10 Bonus issue

Dividend Re-investment

Issued From

Asset Revaluation reserve

Accumulated profits

Share Premium – Special Dividend Reserve

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

Share Premium Reserve

Accumulated profits

G Retail Ltd shares issued on listing

Accumulated profits

Share capital

Accumulated profits

Issue Price $

Go North

2.50

3.70

3.75

4.35

3.75

3.80

3.60

3.50

2.60

3.00

2.90

3.10

4.50

2.60

2.35

2.10

1.90

1.95

1.80

2.36

1.95

1.90

1.80

1.95

1.90

2.40

2.55

2.70

2.87

2.42

2.20

2.77

2.52

1% is more than
a drop in the ocean.

Australian Environment Pioneers
Established 1868

G O W I N G B R O S . LT D (ASX : G O W )

154th ANNUAL REPORT 2022 I Year ended 31 July 2022154th ANNUAL REPORT 2022 I Year ended 31 July 2022INVESTING TOGETHER FOR A SECURE FUTUREGOWING BROS. LIMITED