Annual
Report
2023
Lion Selection Group Limited
ABN 26 077 729 572
Level 2, 175 Flinders Lane
Melbourne Vic 3000
Tel: +61 3 9614 8008
www.lionselection.com.au
Contents
Lion is well-funded and has a
clear focus, with the ability to be
opportunistic as markets weaken.
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53
57
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Chairman’s Letter to Shareholders
Net Tangible Asset Backing as at 30 September 2023
Lion Manager’s Report
Lions Target investment Market
Portfolio Development
Investment Deployment in 2022 and 2023
Legacy Investments
The Implications of Climate Change
Principal Risks and Uncertainties
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Lion Selection Group Limited Directors’ Declaration
Financial Statements
Statement of Comprehensive Income for the Year ended 31 July 2023
Statement of Financial Position as at 31 July 2023
Statement of Cash Flows for the Year ended 31 July 2023
Statement of Changes in Equity for the Year ended 31 July 2023
Notes to the Financial Statements for the Year ended 31 July 2023
Independent Auditor’s Report
Shareholder Information
Lion Selection Group Limited Registry
Corporate Directory
Lion Selection Group Limited 2023 Annual Report
1
Chairman’s Letter to Shareholders
Your directors are pleased to present the
Lion Selection Group Annual Report for the year ended
31 July 2023. I am pleased to report that the state of
your company is strong and the outlook positive.
emerged between strongly performing lithium equities and
the underlying commodity pricing, as compared with the
inverse for gold where equities are weak compared with a
resilient gold price. The outlook for such metals and M&A
activity in each sector is possibly an explanation for the
divergent performance.
Since exiting Pani, Lion has returned $14.6M to
shareholders through a series of dividends and an on-
market buy-back. Lion continues to balance its investment
requirements with market conditions and capital growth.
Lion’s main asset at present is cash, which sets us aside
of most other investors that are focussed on the micro-
capitalisation resources sector. Periods of extreme
volatility have historically provided some of the most
lucrative investment opportunities in companies that
depend on market funding, and Lion is absolutely focussed
on putting in place the building blocks of a portfolio whilst
the market is weak and there are very few other investors
targeting, or able to follow their interests in this space. This
makes Lion a a simple way to invest in high growth mineral
companies. Lion is extremely well positioned to benefit
from the eventual recovery in the mining cycle. We are
well-funded and have a clear focus, with the ability to be
opportunistic as markets weaken.
Barry Sullivan
Chairman
Weakening equity market conditions are reducing the price
of micro-capitalisation resources companies at a time
where Lion is very well funded, creating a once-in-a-cycle
investing opportunity.
Having profitably exited large investments in Indonesia in
2022 and carefully navigated the falling markets of the last
18 months, Lion has now begun to make more substantial
investments. Lion is targeting a commodity diversified,
Australian focussed portfolio of pre-development mineral
resource investments in both projects and companies.
Investments will be selected for value proposition, risk profile
and strategic considerations with the objective of obtaining
multiples of capital growth through the mining cycle.
Lion has $76.1M# net cash which is earning a strong return
of interest while its purchasing power (for investing in
micro-cap resources companies) has increased strongly
over the past 18 months as the market (especially for
micro-cap resources companies) has weakened.
Across the global equity market, risk appetite has
diminished and is yet to return despite some indications
that inflation has plateaued, impacting share prices and
the ability to raise funds. Lion has seen a material uptick in
deal flow, and pricing has become more attractive.
The market continues to fall away as companies find
it increasingly challenging to raise funds with budgets
being cut to match what is achievable. Within this general
market trend there are exceptions, including the continued
remarkable success of the Australian lithium sector which
has grown to a material capitalisation from a ‘standing
start’ only a few short years ago. A notable disparity has
# as at 30 September 2023
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Lion Selection Group Limited 2023 Annual Report
Net Tangible Asset Backing
as at 30 September 2023
The unaudited net tangible asset backing of Lion as at 30 September 2023
is 61.6 cents per share (before tax) and 61.5 cents per share
(after tax). This excludes $1.6M in contingent liabilities relating to
Lion’s acquisition of investments from African Lion 3.*
Net Cash
Portfolio
Less Tax
Net Tangible Assets – Post-tax
NTA per share – Post-tax
UNAUDITED NTA
A$M
76.1
10.9
(0.1)
A$86.9M
61.5cps
* Contingent Consideration
Lion’s NTA excludes potential contingent consideration that may be payable if Lion sells its investment in either PhosCo
or Atlantic Tin.This obligation arises following Lion agreeing to purchase the shares it did not own in African Lion 3 Ltd
to consolidate ownership (with the exception of Lion Manager Pty Ltd who opted to hold its investment). The transaction
involved Lion agreeing to pay contingent consideration in certain circumstances for up to 5 years ending 3 March 2026.
The value of the contingent consideration depends on the ultimate exit price for PhosCo and/or Atlantic Tin, how long
Lion holds the investments, and how much additional investment is made.
Lion Selection Group Limited 2023 Annual Report
3
Lion Manager’s Report
Since exiting long-held Indonesian gold investments between
2021 and 2022, Lion has begun to develop a new portfolio,
taking advantage of the weakening of the equity market for
micro-capitalisation resources companies.
Lion Selection Group ASX:LSX provides a simple
way to invest in high growth mineral companies,
with a track record of value creation and dividends
Lion Investment Focus
Targeting
Pre-Development Stage
Greatest value growth potential
Selection
Driven by deep conviction value
Suitable risk level versus entry/upside valuations
New Opportunities
$76.1M cash to invest *
Australian Focus
For new investments
✓ Global mining investment
destination of choice
✓ Efficient and accessible
✓ Geologically rich and diverse
Commodity Diversity
Strategic materials, Precious and Base metals
✓ Low to moderate processing risks
✓ Simple logistics
✓ Future facing/excellent ESG credentials
✓ Outright best demand growth projections
Investing in a falling market
Pre-development resources companies – smashed
Investment target group has fallen over
50% in price since the last peak in the
resources equity market
* as at 30 September 2023
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Lion Selection Group Limited 2023 Annual Report
Equity Portfolio
12.5% of NTA*
Erdene: Gold/Mongolia
[TSX:ERD]
Atlantic Tin: Tin/Morocco
[unlisted]
Saturn Metals: Gold/Australia
[ASX:STN]
PhosCo: Phosphate/Tunisia
[ASX:PHO]
Sunshine Metals:
Base metals/Australia
[ASX:SHN]
Alto Metals: Gold/Australia
[ASX:AME]
Great Boulder: Gold/Australia
[ASX:GBR]
Kin-Gin: Gold/Japan
[unlisted]
Plutonic: Gold & Copper/Australia
[unlisted]
legacy investments shown in pale grey
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Track Record
Total Shareholder Return as at 31 July 2023
(since inception July 1997)1-7
Distributed via dividends and buyback
during 2022 and 2023
7.8% pa
$14.6M
Notes
1. Investment performance figures reflect the historic performance of Lion Selection Group Limited (ASX:LSG, 1997–2007), Lion Selection
Limited (ASX:LST, 2007-2009), Lion Selection Group Limited (NSX:LGP, 2009-2013) and Lion Selection Group Limited (ASX:LSX,
2013-present).
2. Methodology for calculating total shareholder return is based on MorningStar (2006), which assumes reinvestment of distributions.
3. Distributions made include cash dividends, shares distributed in specie as a dividend, proceeds from an off-market buyback conducted
in December2008, and the distribution of shares in Catalpa Resources via the demerger of Lion Selection Limited in December 2009. Lion
assume all distributions are reinvested, with all non-cash distributions sold and the proceeds reinvested on the distribution pay date.
4. Investment performance is pre-tax and ignores the potential value of franking credits on dividends that were partially or fully franked.
5. Past performance is not a guide to future performance.
6. Indices used for comparison are accumulation indices, which assume reinvestment of dividends.
7. Source: IRESS, Lion Manager.
Lion Selection Group Limited 2023 Annual Report
5
Lion’s Target Investment Market
pre-development/micro capitalisation
resources companies. WEAKENING
Exploration companies rely on fundraising from the equity
market to sponsor ongoing work. Liquidity has been drying up
since equity markets began to falter in early 2022, and it has
not improved in 2023.
This is demonstrated by the patterns of listings of resources
companies and capital raising by already listed explorers,
which now frequently features steep discounts and attaching
options. Such incentives to investors are not required in
stronger markets and harbingers of funding stress.
The decline in liquidity is not limited to the resources sector.
Liquidity is likely to remain low for micro-capitalisation
companies, especially explorers in the resource sector, so
long as sentiment in the equity market is afflicted by high
interest rates.
The departure of liquidity has a compounding effect on
share prices. As well as a general lack of buyers, the
absence of new investors to support equity fundraisings
places the onus back onto existing shareholders. Inevitably,
some shareholders sell shares to follow their interests,
which further depresses share price.
Great opportunities are presenting
but it’s not the bottom
Lion’s target investment group has fallen in price – down
by a median measure of over 50% since the start of 2022,
which has multiplied the purchasing power of Lion’s
available cash. Of 511 metals and mining companies listed
on ASX with a market capitalisation of less than $50M,
86% have performed negatively since the start of 2022.
Lion reviewed many of these companies in 2021, preferring
to wait on the sidelines. Since then some have made
significant progress with their project but share price has
declined materially.
The market is beginning to present attractive opportunities
for Lion investment, but we don’t think it is the bottom.
Historically cyclical lows have been marked by capitulation
events which have not presented so far. The precarious
nature of equity market sentiment makes it even more
challenging to forecast whether liquidity is likely to surge
or dry up completely. Given the persistency of inflation and
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Lion Selection Group Limited 2023 Annual Report
elevated interest rates that have overshadowed the general
equity market downturn, the lowest risk forecast is the status
quo, and it is premature to say that liquidity is near to the
bottom. The additional challenge for resources companies
is a weakening Chinese economic growth pattern, and
lower commodity prices leading mining equities lower.
Lion remains alert to the investment risks posed by the
current market and our expectation of normal cyclical
evolution that takes place as liquidity falls away before
another mining boom cycle begins:
● Commodity price weakening
Many mineral commodities have retreated from highs
achieved in early 2022. Long term fundamentals remain
attractive but the short term is likely to be influenced by
global economic factors which are faltering.
● Equity sentiment defying commodity lead
Lithium is a great example of where equity market
sentiment has defied a weakening in commodity prices.
For now, it appears that the market is prepared to
speculate on a return to higher lithium prices. But there
are other examples of proposed project developments
premised on forecast higher prices for strategic metals.
● High profile collapse
Nothing compounds negative sentiment like the share
price collapse of a company that had many institutional
investors’ hopes pinned to it.
● An extended period of poor liquidity
We can say with great confidence that liquidity will return
to the market, but we have no idea when. In the meantime,
the biggest risk to investors is remaining liquid enough to
follow their investments. Even great stories suffer in weak
markets and when they need to raise money an investor
can be severely diluted holding a company they deeply
believe in but can’t follow their investment.
The market has brought many opportunities to attractive
prices, so Lion is happy to begin making investments.
Portfolio Development
Lion is targeting a commodity diversified, Australian focussed
portfolio of pre-development mineral resource investments.
Investments will be selected for value proposition, risk profile and
strategic considerations with the objective of obtaining multiples
of capital growth through the mining cycle.
Lion’s investment focus of pre-development stage
mineral resource companies and projects exposes Lion’s
shareholders to one of the highest growth sectors of the
equity market. This investment approach carries the strong
potential for value creation, but it also requires a specialist
approach to investment selection and monitoring of risks.
Lion is targeting a commodity diversified, Australian
focussed portfolio of pre-development mineral resource
investments. Investments will be selected for value
proposition, risk profile and strategic considerations with
the objective of obtaining multiples of capital growth
through the mining cycle.
Lion has experienced a high volume of new opportunity
flow through 2022 which has increased during 2023.
High volumes of assessment work typically result in far
fewer investments than opportunities reviewed. This
work has begun to deliver carefully chosen investments
to cornerstone the targeted project development-oriented
portfolio and a watchlist of opportunities at an advanced
stage of assessment to be carefully monitored as the
market continues to weaken.
A combination of factors have produced a once-in-a-cycle
investing opportunity for Lion:
1. Strong and persistent share price deterioration
in the junior resource market since early 2022.
Funding stress is setting in for the early stage/micro
capitalisation companies that Lion targets
for investment.
2. Lion is strongly funded with a cash balance of
$76.1M.
Lion considers new opportunities from a variety of
perspectives, some of which have been exposed by current
market conditions. For example:
● Cents in the dollar opportunities
Defined and attractive projects are now becoming
available at capitalisations below their ‘replacement
cost’ (the investment that has historically been made to
achieve the level of definition and derisking).
● Leverage to consolidation
Gold in Western Australia is a great example, where there
are many established process facilities with dwindling ore
reserves, and independently owned gold resources that
are cheaper and lower risk to acquire via M&A than to
replace by exploration.
● Exposure to strong projected demand growth for
commodities required for the transition to renewable
power
This theme is well promoted, but contains new
uncertainties and whilst existing resources are likely to
become far more valuable, this is a long game where the
unknown variable is ‘when ?’.
● Contrarian investing
Either targeting pre-development companies that are
struggling to raise capital, or specific parts of the sector
(such as gold developers) that are underperforming their
mining peers.
● Exploiting a technical development un-recognised by
the market
When investors turn away from the sector, good news goes
un-rewarded and developments that might be turning points
in a strong market are ignored. This is an opportunity to
invest after de-risking, but without the price uplift.
In all cases, a long-term view is essential to being able to
realise contained value.
Lion Selection Group Limited 2023 Annual Report
7
Investment Deployment in 2022 and 2023
The main asset in Lion’s Net Tangible Assets is cash, which is
available for investing and will see the portfolio of Australian
focussed investments added to, across a number of
commodity exposures.
Lion has added five new names to the portfolio since
exiting Pani, making $5.75M of new investments in 2022
and 2023. This activity has seen a heavy weighting toward
pre-development gold companies, which are amongst the
most contrarian opportunities in the market at present.
Lion has assessed a large number of strategic
materials situations across a broad suite of the relevant
commodities that are considered within that category. The
transition to renewable power and battery storage favours
Australia, which is endowed with geology rich in critical
and strategic minerals and tier-one mining-commercial
jurisdiction. The opportunities assessed for investment in
strategic minerals situations have so far been overlooked
for investment because of the respective levels of risk
versus the opportunity pricing. This has resulted in a strong
watchlist of opportunities which may well come into range
again soon as commodity prices weaken.
Lion invested in Great Boulder Resources (ASX:GBR) in
April 2022 and followed this investment in March 2023,
then invested in Alto Metals (ASX:AME) in July 2023.
These companies share similar characteristics in their
investment thesis. Both are strongly exposed to the theme
of consolidation in the Western Australian gold sector and
contain relatively shallow established gold Resources.
Both have delivered growth in Resources during 2022 and
2023 and have attractive targets to test to potentially add
to their respective mineral inventories, within large areas
of historically under- (or un-) explored greenstone geology
under their control. Lion has always been attracted to gold
investments for their low risk profile, as gold is typically far
easier to separate and sell than other commodities and
both of these investments have the potential for multiple
commercialisation scenarios.
In November 2022 Lion announced an investment into
unlisted company Plutonic Limited, which has two early-
stage exploration projects in Northern Australia, with a
focus on the Champion project in the Northern Territory.
Plutonic is an unusual investment for Lion, having only
rarely and hence very selectively made investments at such
an early stage historically. Exploration stage investments
can produce excellent investment returns but carry the
risk of total investment loss due to the uncertainties of
exploration. The attraction of Plutonic to Lion, which makes
it a virtually unique opportunity, is the very large scale
of geological potential that exists at Champion where
previously unrecognised epithermal textures have been
identified in quartz veins and are extensive over a very large
area. Success at Champion would mean the discovery of
a new district which could hold immense value. Lion has
been able to invest in Plutonic for a very attractive price
and offers Lion shareholders exposure to the potential
of discovery driven value creation. Lion’s investment in
Plutonic creates a unique exposure for shareholders, as it is
not possible for most investors to invest directly in Plutonic.
Lion made a small investment in Sunshine Metals
(ASX:SHN) in September 2023. Sunshine holds a base
metals dominated (zinc, copper, gold) Resource in
North Queensland within a geological belt that contains
numerous similar examples of mineralisation. As a result
of investments by historic owners of the ground, Sunshine
benefits from defined Resources that are open in all
directions and established targets that are revealed in the
data-rich ground position. There has been mining in the
district for over a century and the project is well located
with respect to critical infrastructure, which reduces the
risk threshold for potential future project development.
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Lion Selection Group Limited 2023 Annual Report
Lion’s most recent investment, and largest single
deployment of capital for a long while, is Saturn
Metals (ASX:STN). Saturn has a large established
gold Resource in Western Australia near Leonora,
which is the product of numerous drilling campaigns
that represent a large historic investment in the
project over time. Recent metallurgical test work
has shown that high recoveries of gold can be
obtained by heap leach style processing, which led
to the announcement of a preliminary economic
assessment published in August 2023. Lion sees
Saturn as an opportunity to be involved with the
development of a gold asset that has the potential to
be strategic in size.
The main asset in Lion’s Net Tangible Assets is
cash, which is available for investing and will see the
portfolio of Australian focussed investments added
to, across a number of commodity exposures.
Legacy Investments
Lion holds several legacy
investments, which do not fit
within the strategy of focussing
on Australia, yet are awaiting
realisation of their contained value
and are not yet at the stage that
Lion considers sale is warranted.
PhosCo Limited
(ASX:PHO)
Rock Phosphate in Tunisia.
Awaiting licence restitution and new licence granting.
Erdene Resource Development Corp
(TSX:ERD)
Gold and Molybdenum in Mongolia.
Early development works have begun at the Khundii gold
project which was discovered by Erdene in 2015.
Atlantic Tin
(unlisted)
Tin in Morocco.
Awaiting commercial pathway to liquidity.
Kin Gin
(unlisted)
Gold in Japan.
A license portfolio containing defined epithermal gold
deposits and historic mines has been assembled for
very low cost. Awaiting approvals to
enable drilling.
Lion considers that modest follow-on
investment may be required in some
legacy investments.
Lion Selection Group Limited 2023 Annual Report
9
The Implications of Climate Change
Climate change represents both a risk and
an opportunity for the mining sector.
Mining companies need to prepare for
climate hazards from changing weather
and sea levels, and emissions restrictions
on an industry that consumes circa 4-7%
of greenhouse gas emissions globally1.
The transition to renewable energy and replacement of
carbon-based fossil fuels will require a huge increase in
global metal production for battery storage, transmission
lines, automotives etc and for equipment for hotter climate
(e.g. air conditioners). These major shifts in commodity
demand represent a huge positive to investment in metals
in Australia.
Lion welcomes transition from carbon-based energy
to renewables, with Lion’s focus including the metals
needed for renewable energy along with gold.
Lion believes this ‘once-in-a-century’ shift will take
decades and will be bumpy, as new technologies
emerge. The western world has leapt into the unknown,
decommissioning fossil fuel power plants and de-funding
fossil fuel projects. Now it is up to the engineers of the
world to come up with the solutions for world energy, and
for the miners of the world to respond. This will take time,
as factories tool up, customers decide on alternatives and
mines await approval.
There needs to be a massive increase in metals exploration
and development work which is currently too slow. New
mines take around 15 years to develop from discovery
for permitting, feasibility and financing ahead of building.
This lag effect is increasingly due to hurdles imposed
continuously by government and communities with new
mines often not welcome. Effectively governments have
their feet on both the accelerator and the brake at the same
time with a disconnect between public enthusiasm to de-
carbonise but hesitancy to support mining. Co-ordinated
long term polices are needed by government.
Australia has become Lion’s key focus, ticking all the boxes
and becoming the world’s ‘go-to’ country for commodity
solutions:
● Beneficiary of the US Inflation Reduction Act focus on
supply chains from free trading nations
● Geologically prospective
● Rule of law
● Capable people
● Vibrant equity and debt markets
● Reliable supply chains
● Open markets vs the imaginary allure of resource
nationalism
● Stability
● Water availability, with many foreign competitors in
water stressed areas
● Appropriate ESG balance
● In Lion’s back yard, with the projects and people
well known.
That said, Australia needs to ensure that the right policy
frameworks are in place to encourage greater investment
and to cut down the time to go from mine to market. If the
transition to renewables progresses too slowly or worse
fails, there will be large increases in power and metal
prices fuelling even greater inflation and an erosion of
living standards.
Strap in as the transition for renewable energy is likely
to be very dynamic, with technological developments,
political decisions and economic factors all being
extremely volatile.
1. https://www.mckinsey.com/capabilities/sustainability/our-insights/sustainability-blog/here-is-how-the-mining-industry-can-respond-to-climate-change
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Lion Selection Group Limited 2023 Annual Report
Principal Risks and Uncertainties
The activities of Lion are subject to risks that can adversely impact its business and financial condition. The risks and
uncertainties described below are not the only ones that Lion may face. There may be additional risks unknown to Lion and
other risks, currently believed to be immaterial, which could turn out to become material.
Risk Factor
Nature
Investment
in resource
companies
Lion has investments in a range of resource companies whose exploration, development and mining
activities are at varying stages. Lion’s investees are subject to operating risks that are inherent to mining
and exploration activities, and may influence the financial performance and share price of the investees.
The value of Lion’s investments in these companies, and in turn the financial performance of Lion itself, will
continue to be influenced by a variety of factors including:
• general investment, economic and market conditions as outlined above, which can affect the investee’s
performance and share price;
• exploration is a speculative endeavour which may not result in investees finding economic deposits
capable of being successfully exploited;
• mining operations may be affected by a variety of factors which may or may not be within the control of
the investee. Whether or not income will result from exploration and development programs depends on the
successful establishment of mining operations. Factors including costs, integrity of mineralisation, consistency
and reliability of ore grades, metallurgical recoveries, and commodity prices affect successful project
development and mining operations;
• depending on the location of its exploration and/or mining activities, an investee may be subject to political
and other uncertainties, including risk of civil rebellion, expropriation, nationalisation, regulatory changes
(including environmental, social, taxation and royalties) and renegotiation or nullification of existing
contracts, mining licences and permits or other agreements;
• reliance on the performance of key management of Lion, investees and Lion Manager;
• investees may enter into hedging transactions to fix the commodity price for a portion of production
and there is a risk that the investee may not be able to deliver into these hedges if, for example, there is
a production shortage at their mining operations, which could adversely affect the investee’s operating
performance if the commodity price moves unfavourably;
• investees that borrow money are potentially exposed to adverse interest rate movements that may
affect their cost of borrowing, which in turn would impact on their earnings and increase the financial risk
inherent in their businesses. In this situation there is also risk that an investee may not be able to repay its
debts and may be at risk of bankruptcy;
• resource nationalisation, politicial unrest, war or terrorist attacks anywhere in the world could result in a
decline in economic conditions worldwide or in a particular region, which could impact adversely on the
business, financial condition and financial performance of the investee;
• there is a risk that investees may lose title to mining tenements if conditions attached to licences are
changed or not complied with. Further, it is possible that tenements in which Lion’s investees have an interest
may be subject to misappropriation or legal challenge in jurisdictions without well-established legal systems.
• a form of native title reflecting the rights and entitlements of indigenous inhabitants to traditional lands
may exist on investee’s tenements, such that exploration and/or mining restrictions may be imposed or
claims for compensation forthcoming; and
• the high initial funding requirements of emerging exploration and mining companies can result in delays in
developing projects and a lack of liquidity, which may affect Lion’s ability to invest or divest.
Market
Movements
The performance of Lion and the prices at which its shares may trade on ASX can be expected to fluctuate
depending on a range of factors including movements in inflation, interest rates, exchange rates, general
economic conditions and outlooks, changes in government, fiscal, monetary and regulatory policies, prices
of commodities, global geo-political events and hostilities and acts of terrorism. Certain of these factors
could affect the trading price of Lion’s shares, regardless of operating performance. Lion attempts to mitigate
these factors by implementing appropriate safeguards and commercial actions but these factors are largely
beyond Lion’s control. The underlying value of Lion’s investments in its investees also may not be fully
reflected in Lion’s share price.
Reliance
on key
personnel
A number of key management and personnel is important to attaining the respective business goals of
Lion. One or more of Lion’s or Lion Manager’s respective key employees could leave their employment, and
this may adversely affect the ability of Lion to conduct its business and, accordingly, affect the financial
performance and share price of Lion. Further, the success of Lion in part depends on the ability of Lion and
Lion Manager to attract and retain additional highly qualified management and personnel.
Lion Selection Group Limited 2023 Annual Report
11
Corporate Governance Statement
As a professional investor in junior miners, Lion is particularly focussed
on the corporate governance of its investee companies. Lion’s approach
is based on experience through multiple resource cycles and reflects its
view that in corporate governance one size does not fit all and careful
consideration must be given for smaller mining companies, notably a
material sub-set of ASX listed companies. Three key departures are
relevant, in particular for pre-production mining companies:
(1)
(2)
(3)
The ASX guidelines provide that
non-executive directors should not
receive options with performance
hurdles or performance rights as part
of their remuneration which may lead
to bias in their decision making and
compromise their objectivity. Lion
notes that pre-production mining
companies almost all have limited
cash, and issuing appropriately
structured options both reduces the
cash burden on the company and
provides greater alignment with the
interests of shareholders.
Because the mineral resource/ore
reserve usually has both greater value
and risk than purely financial assets,
a company’s internal controls and
processes surrounding establishing
and announcing these are one of
the most material aspects for pre-
production mining companies.
This extends to studies that seek
to establish parameters around
how a mining operation might
operate. This area continues to be
overlooked in the ASX guidelines
and consideration should be given
for how mining companies approve
such releases, and having geological
and mining expertise at board level
to understand the issues and provide
formal approval. Regulatory debate
in 2016 focussed on scoping study
disclosure and restricting release
of this information which is vital to
investor comprehension and proper
functioning of the ASX as a funding
mechanism. Lion continues to oppose
any restriction on disclosure of
feasibility work.
The ASX Corporate Governance
Council requires listed firms to
adopt a majority of ‘independent’
board members without links
to management or substantial
shareholders (ie 5% or greater
shareholding), or explain ‘if not, why
not’. The concept is that such directors
should be more dispassionate
and less biased in favour of
either management or significant
shareholders. We note that there is
limited empirical research supporting
that such boards add value to a
company, and in Lion’s experience this
structure can be detrimental for junior
mining companies. Lion concurs that
it is essential that a board operates as
an effective check on management,
however a non-executive director with
a significant shareholding is often
better placed to fulfil this role, and
has interests closely aligned with the
general shareholder register.
Junior mining companies often have
many challenges to be overcome to
develop their projects, and need the
necessary entrepreneurial drive to
achieve this. In a crisis, an ASX-defined
independent director risks being
disinterested, overly conservative, or
may lack the fortitude to see the task
through when their personal incentives
are limited to on-going director’s fees.
12
Lion Selection Group Limited 2023 Annual Report
Corporate Governance Statement
Introduction
The Board of Directors of Lion Selection Group Limited
(Lion or the Company) is committed to high standards of
corporate governance. The Company recognises that it has
responsibilities to its shareholders and personnel, as well
as to the communities in which it invests.
As required by the ASX Listing Rules, this statement
discloses the extent to which the Company follows the 4th
Edition of the ASX Corporate Governance Principles and
Recommendations released in February 2019 by the ASX
Corporate Governance Council (ASX Recommendations).
Except where otherwise explained, the Company follows
all of the ASX Recommendations.
This Corporate Governance Statement has been approved
by the Board of Directors of Lion Selection Group Limited.
PRINCIPLE 1: Lay solid foundations for
management and oversight
Recommendation 1.1
A listed entity should have and disclose a board
charter setting out:
(a) the respective roles and responsibilities of its
board and management; and
(b) those matters expressly reserved to the board and
those delegated to management.
The Board
The Company has adopted a Board Charter that sets
out the role and functions of the Board, the Chair and
management and includes a description of those matters
expressly reserved to the Board and those delegated to
management. A copy of the Company’s Board Charter is
available on the Company’s website.
The Board of directors monitors the progress and
performance of Lion on behalf of its shareholders, by
whom it is elected and to whom it is accountable. The
Board Charter seeks to ensure that the Board discharges
its responsibilities in an effective and capable manner.
The Board’s primary responsibility is to satisfy the
expectations and be a custodian for the interests of its
shareholders. In addition, the Board seeks to fulfil its
broader ethical and statutory obligations, and ensure that
Lion operates in accordance with these standards. The
Board is also responsible for identifying areas of risk and
opportunity, and responding appropriately.
Responsibility for the administration and functioning of
Lion is delegated by the Board to the Chief Executive
Officer and to Lion Manager Pty Ltd (the Manager),
which provides investment management services to
the Company. Through monitoring the performance of
these parties at least annually by way of performance
evaluations, the Board ensures that Lion is appropriately
administered and managed. Lion’s investments are
managed by the Manager. Lion’s Board reviews the
Manager’s performance internally through the Manager’s
reports, processes and presentations. The Board monitors
the Manager’s staffing and processes.
In addition, the Board guides strategic planning and
ensures it adheres to the interests and expectations of
Lion’s shareholders, manages risks and opportunities,
and monitors company progress, expenditure, significant
business investments and transactions, key performance
indicators and financial and other reporting.
Management
The Manager has been appointed by Lion to implement
its investment strategy and manage its investments. This
includes all steps of the investment selection process and
the making of recommendations to the Board.
A Management Agreement has been established to
formalise the relationship between the Company and the
Manager. The Manager, under this agreement, undertakes
to act as investment manager for Lion. The Manager
is at liberty to engage specialists and consultants as
appropriate to assist in the investment assessment
process and provides a regular flow of information to Lion’s
directors. Lion’s Board retains the power to make the final
investment decision on the basis of this information and
advice. This retention of final investment decision allows
the Board to effectively review the function and proficiency
of the Manager and of the investment selection processes.
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing
a director or senior executive or putting someone
forward for election as a director; and
(b) provide security holders with all material
information in its possession relevant to a decision
on whether or not to elect or re-elect a director.
Lion ensures that all candidates for directorship and senior
executives are well known to the company. In addition, all
appropriate checks and due diligence are undertaken by
the Lion board prior to nominating a director for election or
appointment of a senior executive.
Information about candidates who are standing for
election or re-election as a director including biographical
details, qualifications, experience and other directorships
is provided to shareholders to enable them to make an
informed decision.
Lion Selection Group Limited 2023 Annual Report
13
Corporate Governance Statement
Recommendation 1.3
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
The terms on which the directors and senior executives
are appointed is set out in the written agreement between
the Company or the Manager and the individual. This
establishes the roles and responsibilities of each person,
their duties and accountabilities.
Recommendation 1.4
The company secretary of a listed entity should be
accountable directly to the board, through the chair, on
all matters to do with the proper functioning of
the board.
The Company Secretary is responsible for co-ordination
of all Board business, including agendas, Board papers,
minutes, communication with regulatory bodies and ASX
and all statutory and other filings.
Through the Chairman, the Company Secretary is
accountable directly to the Board on all matters to do with
the proper functioning of the Board.
Recommendation 1.5
A listed entity should:
(a) have and disclose a diversity policy;
(b) through its board or a committee of the board
set measurable objectives for achieving gender
diversity in the composition of its board, senior
executives and workforce generally; and
(c) disclose in relation to each reporting period:
1. the measurable objectives set for that period to
achieve gender diversity;
2. the entity’s progress towards achieving those
objectives; and
3. either:
(A) the respective proportions of men
and women on the board, in senior
executive positions and across the whole
organisation (including how the entity
has defined “senior executive” for these
purposes); or
(B) if the entity is a ‘relevant employer’ under
the Workplace Gender Equality Act, the
entity’s most recent ‘Gender Equality
Indicators’, as defined in and published
under that Act.16
14
Lion Selection Group Limited 2023 Annual Report
Recommendation 1.5 continued
If the entity was in the S&P/ASX 300 Index at
the commencement of the reporting period, the
measurable objective for achieving gender diversity
in the composition of its board should be to have not
less than 30% of its directors of each gender within a
specified period.
The Company has adopted a Diversity Policy which
provides a framework for the Company to establish and
achieve measurable diversity objectives.
In accordance with all matters set out in the Diversity
Policy, given the size of the Company, Lion has formed
the view that it would not, at this time, be appropriate or
practical to establish measurable objectives for achieving
gender diversity.
The Board did not set measurable gender diversity
objectives for the past financial year with respect to
recommendation 1.5(c). Lion does not at this time intend
to comply with this recommendation. However, this
position will be reviewed annually by the Board.
Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose for each reporting period whether a
performance evaluation has been undertaken in
accordance with that process during or in respect
of that reporting period.
Recommendation 1.7
A listed entity should:
(a) have and disclose a process for evaluating the
performance of its senior executives at least once
every reporting period; and
(b) disclose for each reporting period whether a
performance evaluation has been undertaken in
accordance with that process during or in respect
of that period.
The small scale of the Board and the nature of the Company’s
activities make the formal establishment of a performance
evaluation strategy unnecessary. Performance evaluation
is managed by the Chairman. The Chairman assesses
each Board member’s performance and the performance
of management (including the Chief Executive Officer), the
Board as a whole and its committees on an annual basis.
This process includes one-on-one and collective meetings.
Corporate Governance Statement
PRINCIPLE 2: Structure the board to be
effective and add value
Recommendation 2.1
The board of a listed entity should:
(a) have a nomination committee which:
1. has at least three members, a majority of
whom are independent directors; and
2. is chaired by an independent director,
and disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
Recommendation 2.3
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an interest, position, association
or relationship of the type described in Box 2.3
but the board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association
or relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
A summary of the Lion directors’ skills and experience is
set out below:
Skills and Experience
No. of Lion Directors
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs to
address board succession issues and to ensure
that the board has the appropriate balance of
skills, knowledge, experience, independence and
diversity to enable it to discharge its duties and
responsibilities effectively.
Leadership and Governance
Leadership
Corporate Governance
Strategy
Operations
Geology & Exploration
Infrastructure
Engineering
Project Delivery
Finance & Risk
Accounting
Finance
Acquisitions
Risk Management
Mining Investment
Lion recognises that Recommendation 2.1 of the Principles
and Recommendations of the ASX Corporate Governance
Council suggests the establishment of a Nomination
Committee and associated Charter. However, in view of
the small size of Lion’s Board, the Board in its entirety, acts
effectively as Nomination Committee and there is no need
to further subdivide it. As such, a Nomination Committee is
an unnecessary measure for Lion.
The Lion Board as a whole reviews the size, structure and
composition of the Board including competencies and
diversity, in addition to reviewing Board succession plans
and continuing development.
Recommendation 2.2
A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
It is a policy of Lion that the Board comprises individuals
with a range of knowledge, skills and experience which are
appropriate to its objectives.
Lion’s Constitution provides that the number of directors is
to be determined by the Board and shall not be less than
three. As a matter of policy, the Board is comprised of a
majority of independent non-executive directors.
At present, the Company has four directors – three
independent non-executive directors, being Barry Sullivan
(who is also the Chairman), Chris Melloy and Peter
Maloney, and an executive director, Robin Widdup. The
relevant skills, experience and expertise of each director
as well as the period of office held by each director are
described in the Company’s Annual Report.
Recommendation 2.4
A majority of the board of a listed entity should be
independent directors.
Lion Selection Group Limited 2023 Annual Report
15
4
4
4
1
2
2
4
2
3
4
4
4
Corporate Governance Statement
The independent and objective judgment of Lion’s directors
is of paramount importance to the effective operation of
the Board. Independence is defined for the purposes of
the director as he/she being independent of any business
relations, whether managerial or otherwise, with Lion or its
actual or potential investments which might interfere with
their ability to make sound, unfettered, objective judgments,
and act in the best interest of Lion and its shareholders.
The directors’ independence is regularly assessed by
the Board.
The majority of the Board of Lion are independent non-
executive directors.
The executive director, Robin Widdup, is a director of the
Manager, which manages Lion’s portfolio. To avoid any
conflict of interest and in keeping with the Corporations
Act, Mr Widdup is not present during any deliberations
concerning Lion’s relationship with the Manager, nor does
he vote in relation to such matters.
Recommendation 2.5
The chair of the board of a listed entity should be an
independent director and, in particular, should not be
the same person as the CEO of the entity.
PRINCIPLE 3: Instil a culture of acting
lawfully, ethically and responsibly
Recommendation 3.1
A listed entity should have and disclose its values.
The Company is committed to conducting all of its
business activities fairly, honestly, with the highest level
of integrity and professionalism and in compliance with
all applicable laws, rules and regulations. The Board is
dedicated to the highest ethical standards and recognises
and supports the Company’s commitment to compliance
with these standards.
A statement of the Company’s core values is available on
its website.
Recommendation 3.2
A listed entity should:
(a) have and disclose a code of conduct for its
directors, senior executives and employees; and
(b) ensure that the board or a committee of the board
is informed of any material breaches of that code.
To accord with good corporate governance practices
and in step with our objective of diversification of Board
representatives, the roles of Chairman and Chief Executive
Officer have been segregated.
Recommendation 2.6
A listed entity should have a program for inducting new
directors and for periodically reviewing whether there is
a need for existing directors to undertake professional
development to maintain the skills and knowledge
needed to perform their role as directors effectively.
The directors of the Board are specifically and individually
selected for their diverse skills and knowledge already
acquired through their education, professions, experience,
positions held and ongoing exposure to industry.
In accordance with the Company’s Board Charter:
● new Board appointees will undertake an induction
program to ensure effective and active participation at
the earliest opportunity;
● the Board is responsible for procuring appropriate
professional development opportunities for Directors to
develop and maintain the skills and knowledge needed to
effectively perform their role as Directors.
The Company’s Code of Conduct applies to the directors,
senior executives and employees of the Company and the
Manager.
The Company’s Code of Conduct is available on the
Company’s website. Any material breach of the Code of
Conduct is reported to the Board.
All directors and employees of the Company must, and the
directors must ensure that the Manager and its employees,
preserve the highest standards of integrity, accountability
and honesty in their dealings, operating in strict adherence
to statutory and ethical obligations. All such individuals
are to be mindful and respectful of relevant policies and
responsibilities, must avoid all conflicts of interest or,
where a conflict is able to be managed, must speak with
the Chairman about how the conflict should be managed
(who will consult with the board of directors if necessary).
Where there is uncertainty about whether a conflict exists,
all directors and employees are encouraged to discuss the
relevant circumstances with the Chairman. All concerns
about a breach of the Code of Conduct are to be reported
to the Chairman (who will in turn consult with the board).
The Company’s practices are to be stringently monitored
by the Board, while the Board itself must adhere to the
principles of its charter and uphold a high standard of
independence, objectivity and openness in its dealings and
relationship with shareholders and the management team.
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Lion Selection Group Limited 2023 Annual Report
Corporate Governance Statement
Disclosures of wrongdoing are of importance to the
Company’s risk management and corporate governance
framework.
The Company encourages a culture of ‘speaking up’ to
raise concerns about possible unlawful, unethical or
socially irresponsible behaviour or other improprieties
without fear of retaliation or otherwise being
disadvantaged.
The Company’s Whistleblower Policy is available on the
Company’s website. Under the Whistleblower policy,
all Disclosable Matters are reported to the Board or a
committee of the Board.
Recommendation 3.4
A listed entity should:
(a) have and disclose an anti-bribery and corruption
policy; and
(b) ensure that the board or a committee of the board
is informed of any material breaches of that
policy.
(a) The Company’s Anti-Bribery and Corruption Policy is
available on the Company’s website.
(b) Any material breaches of the Anti-Bribery and
Corruption Policy are to be reported to the Board or a
committee of the Board
In addition to its Code of Conduct, the Company’s
Shareholder Communications Policy, Securities Trading
Policy and Continuous Disclosure Policy, collectively form
a solid ethical foundation for company practices and
must be complied with at all times.
Ethical Policies
Lion’s policies on indigenous communities, the
environment and social governance are as follows:
Local Indigenous Communities
Lion’s policy is that developments of investees are not
exploitative of local and indigenous communities and must
assist local communities such through symbiotic project
development. Investees are to have a focus on health,
education and employment of indigenous people near to
investee companies’ development projects.
Environment
Lion’s policy is that the environmental impact of
developments be in line with country/international
standards and not adversely impact local communities’
geology/economy.
Statement of Social Governance
It is the Company’s objective to achieve sustainable
economic and social benefits to the communities in which
mineral activity takes place by:
● recognising local realities and concerns;
● promoting dialogue and participation;
● building social and economic capital; and
● integrating activities locally and regionally.
To achieve its social governance objectives, the Company
considers the following areas of activity:
● Exploration/access to land and resources.
● Project development and governance of mining and
processing activity.
● Rent (royalty, tax etc) capture and distribution.
● Stewardship of water, biodiversity and energy use.
● Waste management.
● Social and environmental aspects of mine closure.
Subsequent stages of metals trade, smelting and refining
may often be beyond the influence of the Company.
Recommendation 3.3
A listed entity should:
(a) have and disclose a whistleblower policy; and
(b) ensure that the board or a committee of the board
is informed of any material incidents reported
under that policy.
Lion Selection Group Limited 2023 Annual Report
17
Corporate Governance Statement
PRINCIPLE 4: Safeguard the integrity
of corporate reports
Recommendation 4.1
The board of a listed entity should:
(a) have an audit committee which:
1. has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
2. is chaired by an independent director, who is
not the chair of the board,
and disclose:
3. the charter of the committee;
4. the relevant qualifications and experience of
the members of the committee; and
5. in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity of
its corporate reporting, including the processes for
the appointment and removal of the external auditor
and the rotation of the audit engagement partner.
The Company has an Audit Committee all of whom are
independent non-executive directors. The Audit Committee
is chaired by an independent director who is not chair of
the Board.
The Charter of the Lion Audit Committee and the relevant
qualifications of the committee’s members is available on
the Company’s website.
Recommendation 4.2
The board of a listed entity should, before it approves
the entity’s financial statements for a financial period,
receive from its CEO and CFO a declaration that,
in their opinion, the financial records of the entity
have been properly maintained and that the financial
statements comply with the appropriate accounting
standards and give a true and fair view of the financial
position and performance of the entity and that the
opinion has been formed on the basis of a sound
system of risk management and internal control which
is operating effectively.
Prior to approval of any financial statement for a financial
period, the Chief Executive Officer of Lion (who is also
responsible for the financial reports of the company)
provides to the Lion Board a declaration in accordance with
Section 295A of the Corporations Act which also accords
with Recommendation 4.2.
18
Lion Selection Group Limited 2023 Annual Report
Recommendation 4.3
A listed entity should disclose its process to verify the
integrity of any periodic corporate report it releases
to the market that is not audited or reviewed by an
external auditor.
The Company undertakes significant review of any
information to verify its integrity prior to its release to the
market. This includes separate reviews by the Company’s
Chief Financial Officer, Company Secretary and Directors
as necessary. Where a release is to include matter of
substance, the Company will seek additional input and
guidance from its Auditors prior to the information being
released to the market.
PRINCIPLE 5: Make timely and
balanced disclosure
Recommendation 5.1
A listed entity should have and disclose a written
policy for complying with its continuous disclosure
obligations under listing rule 3.1.
The Company’s Continuous Disclosure Policy provides
details of the Company’s policies and procedures for
compliance with its continuous disclosure obligations.
The Continuous Disclosure Policy is available on the
Company’s website.
Recommendation 5.2
A listed entity should ensure that its board receives
copies of all material market announcements
promptly after they have been made.
The Board reviews and considers each material market
announcement and provides it approval for release prior to
any information being released to the market.
Recommendation 5.3
A listed entity that gives a new and substantive
investor or analyst presentation should release a
copy of the presentation materials on the ASX Market
Announcements Platform ahead of the presentation.
All substantive investor or analyst presentations are
released to the ASX Markets Announcements Platform
ahead of any such presentations. Once released, the
presentations are also published on the Company’s website.
Corporate Governance Statement
PRINCIPLE 6: Respect the rights of
security holders
Recommendation 6.1
A listed entity should provide information about itself
and its governance to investors via its website.
ASX announcements, quarterly reports, presentations,
notices of meetings and explanatory material are posted
to Lion’s website regularly. Other information on the site
includes details of Lion’s investment portfolio, Lion’s share
price, information about the Company and its directors
and management and also the Company’s governance and
policies. Information from the Annual General Meetings
and regular updates to investors as well as links to the
share registry and other sites of interest are also available
on the Company’s website.
Lion’s website contains a specific corporate governance
landing page where information regarding the Company’s
policies is easily accessible by shareholders.
Lion places great importance on the communication
of accurate and timely information to its shareholders
and market participants. Lion recognises that efficient
and continuous contact between the Company and the
interested public, and particularly with shareholders and
their representatives, is an essential part of earning the
trust and loyalty of shareholders, building shareholder
value and allowing shareholders to make informed
decisions regarding their investment in Lion. Lion
encourages shareholder participation at general meetings
and welcomes regular contact with its shareholders.
Recommendation 6.4
A listed entity should ensure that all substantive
resolutions at a meeting of security holders are
decided by a poll rather than a show of hands.
The Company will continue to comply with
Recommendation 6.4 and ensure all substantive
resolutions at a meeting of security holders will be decided
on a poll rather than a show of hands.
Recommendation 6.2
A listed entity should have an investor relations
program that facilitates effective two-way
communication with investors.
In addition to the management and investment services
the Manager provides to Lion, the Manager also provides
comprehensive investor relations services which are
reviewed annually by the Lion board. Both the Lion Board
and the Manager are mindful of the importance of not
only providing information, but also encouraging and
enabling two-way communication between the Company
and its shareholders.
The Company has adopted a Shareholder Communications
Policy which outlines a range of ways information is
communicated to shareholders. A copy of the Shareholder
Communications Policy is available on the Company’s
website.
Recommendation 6.3
A listed entity should disclose how it facilitates and
encourages participation at meetings of security
holders.
Recommendation 6.5
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
Lion’s register of security holders is maintained by
Computershare Investor Services Pty Limited.
Lion actively encourages security holders to
communicate electronically with the company and
Computershare. Security holders can elect to receive
electronic communications from the Company via the
Computershare Investor Centre. Lion has implemented
online voting for general meetings via the Computershare
Investor Centre to encourage higher voting participation
from its security holders.
Lion Selection Group Limited 2023 Annual Report
19
Corporate Governance Statement
Individual investments each have their own risks which
relate to the mining industry generally. Under the guidance
of the Lion board, the Manager has established procedures
relating to investment and divestment decisions, and
management of investments with emphasis on risk
assessment. The Manager reports through monthly
reports and at Board meetings on Lion’s investments and
related risk.
The Board aims to reduce investment risk through
diversifying investments geographically and avoid over-
dependence on a single commodity, investee company or
country. In certain circumstances the Board may elect to
have higher concentrations of the Company’s portfolio in a
particular commodity, investee company or country if the
anticipated rewards merit this approach.
Recommendation 7.3
A listed entity should disclose:
(a) if it has an internal audit function, how the
function is structured and what role it performs; or
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of its
risk management and internal control processes.
Lion has no internal audit function. The Lion Board and
Audit Committee are responsible for establishing and
maintaining an internal control structure. This structure is
documented and periodically reviewed with the CEO.
Recommendation 7.4
A listed entity should disclose whether it has any
material exposure to environmental and social risks
and, if it does, how it manages or intends to manage
those risks.
The activities of Lion are subject to risks that can
adversely impact its business and financial condition.
Risks and uncertainties are described in the Company’s
Annual Report.
PRINCIPLE 7: Recognise and
manage risk
Recommendation 7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
1. has at least three members, a majority of
whom are independent directors; and
2. is chaired by an independent director, and
disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s
risk management framework.
Recommendation 7.2
The board or a committee of the board should:
(a) review the entity’s risk management framework at
least annually to satisfy itself that it continues to
be sound and that the entity is operating with due
regard to the risk appetite set by the board; and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
In view of the small size of Lion’s Board, the Board in its
entirety acts, effectively, as a committee to oversee risk
and there is no need to further subdivide it.
Lion is a specialist investor in listed and unlisted mining
and exploration companies and assets and its major
business risk is the performance of these companies and
assets. Risks associated with the exploration and mining
industry include geological, technical, political, title and
commodity pricing risks.
The main areas of business risk to the Company arise
from:
● failure of an investee company due to one or a number
of the above causes;
● downturn in the stock market; and
● changes to the law – corporations/taxation legislation.
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Lion Selection Group Limited 2023 Annual Report
Corporate Governance Statement
PRINCIPLE 8: Remunerate fairly
and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) have a remuneration committee which:
1. has at least three members, a majority of
whom are independent directors; and
2. is chaired by an independent director, and
disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs
for setting the level and composition of
remuneration for directors and senior executives
and ensuring that such remuneration is
appropriate and not excessive.
Recommendation 8.2
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of executive
directors and other senior executives.
Compensation Arrangements and
Remuneration Committee
Due to the small size of the Lion Board and the fact that
remuneration matters are monitored by the Board in its
entirety, the Board believes a separate Remuneration
Committee is unnecessary and inappropriate.
Neither the Executive Director nor Chief Executive Officer
receives any remuneration from the Company, but are paid
by the Manager, which receives fees from the Company as
per the Management Agreement. Additionally, remuneration
matters for the Company predominantly relate to the
remuneration paid to the Manager, something which is
addressed by a set formula in the Management Agreement.
Lion’s Constitution stipulates that the aggregate
remuneration available for division amongst the non-
executive directors is determined by the shareholders in
general meeting. With shareholder approval, the aggregate
was increased to $200,000 per annum commencing
1 August 2011. This amount, or some part of it, is divided
among the non-executive directors as determined by the
Board. At present the aggregate annual remuneration paid
to non-executive directors is $195,000.
D&O Insurance and Indemnity
The Company maintains a Directors and Officers and
Company Reimbursement Insurance Policy.
An indemnity agreement has been entered into between
Lion and each of the directors of the Company and with the
Chief Executive Officer and the Company Secretary. Under
the agreement, the Company has agreed to indemnify
those officers against any claim or for any expenses or
costs which may arise as a result of work performed in
their respective capacities to the extent permitted by law.
There is no monetary limit to the extent of this indemnity.
Performance Evaluation
The small scale of the Board and the nature of the
Company’s activities make the formal establishment
of a performance evaluation strategy unnecessary.
Performance evaluation is managed by the Chairman.
The Chairman assesses each Board member’s
performance and the performance of management
(including the Chief Executive Officer), the Board as a
whole and its committees on an annual basis. This process
includes one-on-one and collective meetings.
Recommendation 8.3
A listed entity which has an equity-based remuneration
scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise) which
limit the economic risk of participating in the
scheme; and
(b) disclose that policy or a summary of it.
Lion does not have an equity based remuneration scheme.
Lion Selection Group Limited 2023 Annual Report
21
Corporate Governance Statement
PRINCIPAL 9: Additional Recommendations that only apply in certain cases
Recommendation 9.1
A listed entity with a director who does not speak the language in which board or security holder meetings are held or
key corporate documents are written should disclose the processes it has in place to ensure the director understands
and can contribute to the discussions at those meetings and understands and can discharge their obligations in
relation to those documents.
Not applicable.
Recommendation 9.2
A listed entity established outside Australia should ensure that meetings of security holders are held at a reasonable
place and time.
Not applicable.
Recommendation 9.3
A listed entity established outside Australia, and an externally managed listed entity that has an AGM, should ensure
that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.
Not applicable.
22
Lion Selection Group Limited 2023 Annual Report
Director’s Report
The Directors of Lion Selection Group
Limited (‘Lion’ or ‘the Company’)
submit their report on the operations
of the Company for the financial year
ended 31 July 2023.
The result for the year reflects a
mark to market gain of $0.9 million
with respect to investments, with
key movements in the portfolio value
outlined below:
In February 2023 Lion completed the
sale of its 72.8M Merdeka shares for
a total of A$32.5 million, compared
with A$26.5 million (US$20 million) at
the time they were received.
At the date of this report Lion had
141,150,775 fully paid ordinary shares
on issue.
Directors
The following persons were directors
of Lion during the financial year and
up to the date of this report:
● Barry Sullivan
Non-Executive Chairman
● Peter Maloney
Non-Executive Director
● Chris Melloy
Non-Executive Director
● Robin Widdup
Director
Principal Activities
During the financial year the principal
continuing activities of the Company
were investment in mining and
exploration companies.
Operating and Financial Review
This financial report is prepared
in accordance with Australian
Accounting Standards and therefore
includes the result of the ‘mark to
market’ of the Company’s investment
portfolio in both the Statement of
Comprehensive Income and the
Statement of Financial Position.
The Company’s profit after tax
for the year was $0.6 million
(2022: $9.0 million).
Lion’s portfolio has performed well
with Lion exiting two key investments
during 2022 placing it in a strong
position to take advantage of new
opportunities with a renewed focus
on Australian opportunities.
Lion has begun to take selective
advantage of once-in-a-cycle
opportunities with investments
made into Great Boulder (ASX: GBR),
Plutonic Limited (unlisted) and Alto
Metals (ASX: AME).
● A mark to market increase of
$2.6 million on Lion’s deferred
consideration from the Pani Joint
Venture that was sold during
2022, including an increase in
PT Merdeka Copper Gold TBK
(Merdeka) shares received as
consideration for the Pani sale.
● Decrease in the value of Lion’s
investment in PhosCo of
$2.6 million following PhosCo having
its Chaketma Phosphate Project
mining concession denied and the
exploration permit cancelled.
● A mark to market increase of
$1.0 million in the valuation
of Lion’s investment in Erdene
Development Corporation, with
Erdene’s completion of a joint
venture agreement to finance and
develop its Bayan Khundii Gold
Project in Mongolia.
At 31 July 2023 the Company held
investments valued at $13.1 million
(2022: $56.6 million), and cash and
term deposits of $75.0 million
(2022: $40.6 million).
Pani Joint Venture
In 2022 Lion sold its Pani interest to
Merdeka (Lion’s Pani joint venture
partner) and Andalan International
Pte Ltd (Andalan, an entity controlled
by Provident Capital) for US$52 million
comprising:
● US$22 million cash (less Indonesian
withholding tax of US$2.6 million),
● US$20 million (72.8 million)
Merdeka shares (IDX:MDKA); and
● Deferred consideration of
US$10 million (subject to adjustment)
due on 28 January 2023.
On 1 February 2023 Lion announced
that it had received US$10 million
deferred consideration for the sale of
its interest in the Pani Joint Venture,
with US$7.15 million received on
31 January 2023 and US$2.85 million
received on 1 February 2023.
The completion of the sale of the
Merdeka shareholding and receipt of
the deferred consideration concludes
Lion’s exit from Pani and Indonesia.
Dividends
On 27 September 20221 Lion
Selection Group Limited declared a
1.5¢ps annual unfranked dividend to
shareholders (totalling $2.2 million)
which was paid on 31 October 2022
(2022: $5.2 million). On 27 February
20232 the Board determined to pay
a special unfranked dividend of 2¢ps
which was paid on 3 April 2023
(totalling $2.8 million).
Compliance with Environmental
Regulations
Lion has a policy that environmental
impacts of developments of investees
are in line with country/international
standards and do not adversely
impact local communities.
Lion has not been notified by any
investee of any environmental breach
by any government or other agency,
and is not aware of any such breach.
Significant Changes in the State
of Affairs
There were no significant changes in
the state of affairs of the Company.
Significant Events after Balance Date
There has not arisen in the interval
between the end of the financial year
and the date of this report, any item,
transaction or event of a material or
unusual nature which has or may
significantly affect the operations of
the Company, the results of those
operations, or the state of affairs of
the Company in future periods.
1. See ASX Announcement dated 27 September
2022, Lion to pay 1.5¢ps annual dividend in
October 2022
2. See ASX Announcement dated 20 February
2023, Dividend/Distribution - LSX
Lion Selection Group Limited 2023 Annual Report
23
Director’s Report
Proceedings on Behalf of the
Company
No proceedings have been brought
or intervened in on behalf of the
Company with leave of the court
under section 237 of the Corporations
Act 2001.
Likely Developments and Future
Results
The Company’s future operating
results will depend on the results
of its investments. The Company’s
ability to sustain profits is dependent
on future sales of investments which
in turn are dependent on market
opportunities and the performance of
the Company’s various investments,
which are difficult to predict.
There are a wide variety of risks
associated with the mining and
exploration industry including market
conditions, exploration, operational
and political risk, tenure of tenements,
liquidity and native title issues.
Because of the vagaries of the mining
and exploration industry and the
long term nature of most of Lion’s
investments, the directors are unable
to predict future results.
Corporate Governance Statement
In recognising the need for the
highest standards of corporate
behaviour and accountability,
the directors of Lion support the
applicable principles of good
corporate governance. The
Company’s corporate governance
statement can be found in the
Investor Section of our website
www.lionselection.com.au.
Employees
At 31 July 2023 there was 1 full time
equivalent employee of the Company
(2022: 1 FTE).
Remuneration Report
All disclosures in this remuneration
report have been audited. This
remuneration report outlines the
director and executive remuneration
arrangements of the Company
as required by section 308 (3C)
of the Corporations Act 2001. For
the purposes of this report, key
management personnel of the
Company are defined as those
persons having authority and
responsibility for planning, directing
and controlling the major activities
of the Company, directly or indirectly,
including any director, and includes the
executive employed by the Company
considered to meet the definition of
key management personnel.
Key Management Personnel
Remuneration Framework
Emoluments of individual Board
members and other key management
personnel are determined on the
basis of market conditions and the
level of responsibility associated with
their position. The emoluments are
not specifically related to company
performance and there are no long-
term or short-term performance-
related incentives provided to
key management personnel.
Remuneration and other terms of
employment for key management
personnel are formalised in either
service agreements or employment
contracts.
The remuneration policy in relation
to directors is determined by the full
Board. Remuneration of other key
management personnel is determined
by the directors of the Company.
Directors’ fees are determined within
an aggregate directors’ fee pool limit,
which is periodically recommended
for approval by shareholders. As
approved by shareholders at the
Annual General Meeting held on
1 December 2011, the maximum
aggregate amount, including
superannuation contribution, that may
be paid to directors of the Company
as remuneration for their services is
$200,000 for any financial year.
Other key management personnel
receive a base salary and
superannuation contributions
in accordance with Australian
superannuation guarantee legislation.
Lion’s only contracted executive,
Ms Jane Rose, is employed under
an employment contract with no
fixed duration. The contractual notice
period under this agreement is 3
months with no termination benefit
specified in the agreement. The other
key management personnel are
not subject to any notice period or
termination benefit with respect to
their positions with the Company.
The remuneration policy of the
Company with respect to directors
and other key management personnel
provides for Director’s & Officer’s
(D&O) Insurance cover, but does not
provide options, shares, loans or any
other non-monetary benefits.
Voting and Comments at the
Company’s 2022 Annual General
Meeting
The Company received more than
92% of ‘yes’ votes on its Remuneration
Report for the previous financial year.
The Company did not receive any
specific feedback at the Company’s
2022 Annual General Meeting on its
remuneration practices.
Details of Remuneration
Details of remuneration paid/
payable to directors and the other
key management personnel of the
Company are detailed in the following
table. The benefits provided to key
management personnel are fixed
with no at-risk components
of remuneration.
24
Lion Selection Group Limited 2023 Annual Report
Director’s Report
Key Management Personnel of the Company – Remuneration for year to 31 July 2023
FIXED REMUNERATION
VARIABLE REMUNERATION
SALARIES/
FEES
LEAVE
ENTITLEMENTS
POST-EMPLOYMENT
SUPERANNUATION
CASH BONUS
TOTAL
NOTES
$
R A Widdup
(a)
Other Key Management Personnel
(a)
2023
NAME
Directors
B J K Sullivan
P J Maloney
C Melloy
C K Smyth
J M Rose
Total
2022
NAME
Directors
B J K Sullivan
P J Maloney
C Melloy
R A Widdup
(a)
Other Key Management Personnel
(a)
C K Smyth
J M Rose
Total
$
-
-
-
-
-
$
6,242
27,500
27,500
-
-
(4,631)
(4,631)
11,920
73,162
$
-
-
-
-
-
-
-
$
65,417
51,667
51,667
-
-
120,369
289,120
$
-
-
-
-
-
10,482
10,482
$
4,745
27,500
27,500
-
-
9,151
68,896
$
-
-
-
-
-
-
-
$
52,000
40,000
40,000
-
-
110,674
242,674
59,175
24,167
24,167
-
-
113,080
220,589
47,255
12,500
12,500
-
-
91,041
163,296
FIXED REMUNERATION
VARIABLE REMUNERATION
SALARIES/
FEES
LEAVE
ENTITLEMENTS
POST-EMPLOYMENT
SUPERANNUATION
CASH BONUS
TOTAL
NOTES
$
(a) R A Widdup and C K Smyth are employed by Lion Manager Pty Ltd, and do not receive any remuneration from the Company
Prior year numbers were updated to include the movement in the annual leave provision.
Both Mr R A Widdup and Mr C K Smyth are executive directors and beneficial owners of Lion Manager Pty Ltd (Lion Manager)
and have the capacity to significantly influence decision making of that company. Lion Manager provides management and
investment services to Lion.
Lion entered into a Management Agreement with Lion Manager, under which Lion Manager provides the Company with
management and investment services. These arrangements were approved by shareholders at Lion’s AGM on 5 December
2012, with ongoing management fees of 1.5% p.a. based on the direct investments under management. There is an
incentive applicable which would apply where Lion’s performance outperforms a benchmark. In addition, up to a 12 month
termination fee may be applicable should Lion seek to terminate the management agreement. Further details of the
Management Agreement are set out in the Notice of Meeting for the 2012 AGM, available on Lion’s website. As at the date
of this report, no incentive fee had accrued with respect to the Lion Manager contract.
Lion Selection Group Limited 2023 Annual Report
25
Director’s Report
Key Management Personnel Shareholdings
At the date of this report the direct and indirect interests of the directors and other key management personnel in the
ordinary shares and options of Lion are detailed below. No shares or options were issued as remuneration.
Shareholdings of Key Management Personnel of the Company
NAME
Directors
P J Maloney
C Melloy
R A Widdup
B J K Sullivan
Other Key Management Personnel
C K Smyth
J M Rose
Total
NAME
Directors
P J Maloney
C Melloy
R A Widdup
B J K Sullivan
Other Key Management Personnel
C K Smyth
J M Rose
Total
BALANCE
1 AUGUST 2022
SHARES ISSUED AS
REMUNERATION
ON-MARKET
PURCHASE OF
SHARES
CLOSING BALANCE
31 JULY 2023
2,190,389
5,800,000
16,717,277
813,074
1,505,137
-
27,025,877
-
-
-
-
-
-
-
-
-
-
-
-
2,190,389
5,800,000
16,717,277
813,074
1,505,137
-
27,025,877
BALANCE
1 AUGUST 2021
SHARES ISSUED AS
REMUNERATION
ON-MARKET
PURCHASE OF
SHARES
CLOSING BALANCE
31 JULY 2022
2,190,389
5,751,509
16,717,277*
813,074
1,431,137
-
26,903,386*
-
-
-
-
-
-
-
48,491
2,190,389
5,800,000
-
16,717,277
-
813,074
74,000
1,505,137
-
-
122,491
27,025,877
* The opening number of shares has been updated to reflect historical shares omitted in the prior year.
Options on issue
There were no options on issue during 2023.
26
Lion Selection Group Limited 2023 Annual Report
Director’s Report
Information on
Directors
Barry Sullivan
BSc (Min), ARSM, FAusIMM, MAICD
Chairman
Barry Sullivan is an experienced and
successful mining engineer with a
career spanning over 40 years in the
mining industry. His initial mining
experience was gained in the South
African gold mining industry, followed
by more than 20 years with Mount
Isa Mines. In the final five years of his
tenure with MIM, Barry was Executive
General Manager responsible for
the extensive Mount Isa and Hilton
operations.
Barry was previously Non-Executive
Chairman for EganStreet Resources,
non-executive Director and
Chairman of Exco Resources and
a non-executive Director of Catalpa
Resources, Sedimentary Holdings,
Bass Metals and Allegiance Mining.
He was also a non-executive director
of Lion’s predecessor company, Lion
Selection Limited.
Barry has been a non-executive
director of Lion since December
2011, becoming Chairman from
25 February 2016. Barry is also a
member of the Lion Audit Committee.
Peter Maloney
BComm, MBA (Roch)
Non-Executive Director
Peter Maloney has broad commercial,
financial and management expertise
and experience. He has been Chief
Financial Officer of Lion and an
executive director of Lion Manager.
Prior to that he held senior executive
positions with WMC Resources and a
number of other companies.
Peter holds a Bachelor of Commerce
from the University of Melbourne and
an MBA from University of Rochester.
He has also completed the Advanced
Management Program at Harvard
Business School.
Peter has been a non-executive
director of Lion since December
2010, including serving as Chairman
between 1 January 2012 and 24
February 2016. Peter is also Chairman
of the Lion Audit Committee.
Chris Melloy
BE (Mining) (Hons), MEngSc,
MAusIMM, F Fin
Non-Executive Director
Chris Melloy is a mining engineer
with some 40 years’ experience in
the mining industry in operations,
securities analysis and investment.
He held senior positions in MIM and
JB Were & Son prior to joining Lion.
Chris was an Executive Director of
Lion Manager from its inception in
1997 through to 2011, becoming a
non-executive director of Lion on
1 November 2012. Chris is also a
member of the Lion Audit Committee.
Robin Widdup
BSc (Hons), MAusIMM
Director
Robin has over 40 years of industry
experience. He graduated from Leeds
University in 1975 with an Honours
Degree in Geology. From 1986 to
1997 Robin worked as an Analyst
and Manager for J B Were & Sons
– Resource Research team. Robin
founded Lion Selection Group and
Lion Manager in 1997.
Robin is a director of Lion Manager
Pty Ltd, Chairman of PhosCo Ltd and
a non-executive director of One Asia
Resources Limited.
Other Key Management
Personnel
Craig Smyth
BCA (Acctg), M App Fin, CA
Chief Executive Officer
Craig Smyth graduated from the
Victoria University of Wellington
with a Bachelor of Commerce and
Administration, and has completed
his Master of Applied Finance at
the University of Melbourne. Craig’s
financial background includes
Coopers & Lybrand, Credit Suisse
First Boston (London) and ANZ
Investment Bank. He is currently the
CEO of Lion and Executive Director
of Lion Manager Pty Limited. Craig
is a member of the Institute of
Chartered Accountants of Australia
and New Zealand.
Jane Rose
Investor Relations Manager &
Company Secretary
Jane Rose commenced work in 1983
as a legal administrative assistant.
During the following 12 years, Jane
held senior administrative positions
with Phillips Fox and Corrs Chambers
Westgarth in Melbourne and Nabarro
Nathanson in London.
On returning to Australia, Jane
worked as Executive Assistant to
the Managing Director of Acacia
Resources Limited and AngloGold
Ashanti Limited where she was also
responsible for the management of
various corporate initiatives, including
marketing and co-ordination of
investor relations activities. From
2002 to 2006, Jane worked for
several Lion investees, including MPI
Mines Ltd, Leviathan Resources and
Indophil Resources. Jane worked
with Lion in early 2007 to assist with
the merger, and she subsequently
joined the company in July 2007 as
Corporate Relations Manager.
In November 2008 Jane was
appointed Company Secretary.
Lion Selection Group Limited 2023 Annual Report
27
Rounding of Amounts
The Company is of a kind referred to
in ASIC Instrument 2016/191 relating
to the ‘rounding off’ of amounts in
the financial report and Directors’
report. Amounts in the financial
report and Directors’ report have been
rounded off in accordance with that
Instrument to the nearest thousand
dollars unless specifically stated to
be otherwise.
This report has been made in
accordance with a resolution of
the directors.
B J K Sullivan
Chairman
R A Widdup
Director
Melbourne
Indemnification of Directors
and Officers
An indemnity agreement has been
entered into between Lion and each
of the Company’s directors named
earlier in this report and with the
Company Secretary. Under the
agreement, the Company has agreed
to indemnify those officers against
any claim or for any expenses or
costs which may arise as a result of
work performed in their respective
capacities to the extent permitted by
law. There is no monetary limit to the
extent of this indemnity.
Lion has paid an insurance premium
of $84,218 in respect of a contract
insuring each of the directors,
previous directors of the Company,
and other key management personnel,
against all liabilities and expenses
arising as a result of work performed
in their respective capacities, to the
extent permitted by law.
Auditor Independence
We have obtained an independence
declaration from our auditors,
PricewaterhouseCoopers, as required
under section 307 of the Corporations
Act 2001. A copy can be found on
page 29.
Non-Audit Services
No fees for non-audit services were
paid/payable to the external auditors
during the year ended 31 July 2023.
The directors are satisfied that the
provision of non-audit services is
compatible with the general standard
of independence for auditors imposed
by the Corporations Act 2001.
Director’s Report
Directors’ Meetings
During the year and up until the date
of this report, the Company held 14
directors’ meetings. The table below
reflects attendances of the directors
at meetings of Lion’s Board.
BOARD OF DIRECTORS
ATTENDED
MAX.
POSSIBLE
ATTENDED
P J Maloney
R A Widdup*
B J K Sullivan
C P Melloy
14
12
14
14
14
12
14
14
* R A Widdup was excluded from two
meetings of Independent Directors
considering a possible transaction with
Lion Manager, a company in which
Mr Widdup has a beneficial interest.
Audit Committee Meeting
During the year and up until the date
of this report, the Company held two
Audit Committee meetings.
The table below reflects attendances
of the Audit Committee meetings.
AUDIT COMMITTEE
ATTENDED
MAX.
POSSIBLE
ATTENDED
P J Maloney
B J K Sullivan
C P Melloy
2
1
2
2
2
2
Directors’ Benefits
Since the end of the preceding
financial year, no director has received
or become entitled to receive a
benefit, other than benefits disclosed
in this report as emoluments or the
fixed salary of a full time employee
of the Company or a related body
corporate, by reason of a contract
made by the Company or related
body corporate with the director or
with a firm of which he is a member,
or with an entity in which he has a
substantial financial interest.
28
Lion Selection Group Limited 2023 Annual Report
Auditor’s Independence Declaration
As lead auditor for the audit of Lion Selection Group Limited for the year ended 31 July 2023,
I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
Graeme McKenna
Partner
PricewaterhouseCoopers
Melbourne
14 September 2023
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Lion Selection Group Limited 2023 Annual Report
29
Lion Selection Group Limited
Directors’ Declaration
In accordance with a resolution of the directors of Lion Selection Group Limited, we declare that:
1.
In the opinion of the directors:
(a)
the financial statements, notes set out on pages 31 to 52 are in accordance with the Corporations Act 2001
and other mandatory reporting requirements, including:
(i)
(ii)
complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the financial position of the Company’s position as at 31 July 2023 and
its performance for the 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.
3.
4.
Note 2(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
This declaration has been made after receiving the declarations required to be made to the directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 31 July 2023.
The directors have been given the declaration by the chief executive officer required by section 295A of the
Corporations Act 2001.
On behalf of the Board
B J K Sullivan
Chairman
Melbourne
Date: 14 September 2023
R A Widdup
Director
30
Lion Selection Group Limited 2023 Annual Report
Statement of Comprehensive Income for the Year ended 31 July 2023
Gain/(loss) attributable to movement in fair value
Interest income
Other income
Foreign exchange gain/(loss)
Management fees
Employee benefits
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Net profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss) for the year
Attributable to:
Members
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
NOTES
4
4
5
2023
$’000
904
2,195
69
-
2022
$’000
8,127
120
55
80
(1,521)
(1,269)
(289)
(598)
760
(179)
581
-
581
581
(243)
(718)
6,152
2,879
9,031
-
9,031
9,031
Cents per share Cents per share
0.4
0.4
6.0
6.0
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Lion Selection Group Limited 2023 Annual Report
31
Financial Statements
Statement of Financial Position as at 31 July 2023
Current Assets
Cash and cash equivalents
Term deposits
Trade receivables and other assets
Financial assets
Total current assets
Non-Current Assets
Financial assets
Property, plant and equipment
Total non-current assets
Total Assets
Current Liabilities
Trade and other payables
Tax payable
Lease liabilities
Total current liabilities
Non-Current Liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
NOTES
13
3
6
7
7
8
9
5
5 (b)
11
12
10
2023
$’000
2022
$’000
7,534
67,500
1,169
-
76,203
13,101
296
13,397
89,600
96
-
89
185
220
220
440
625
20,619
20,000
102
44,106
84,827
12,534
392
12,926
97,753
150
237
81
468
308
43
351
819
88,975
96,934
121,900
125,404
1,341
1,341
(34,266)
(29,811)
88,975
96,934
The above statement of financial position should be read in conjunction with the accompanying notes.
32
Lion Selection Group Limited 2023 Annual Report
Financial Statements Statement of Cash Flows for the Year ended 31 July 2023
Cash flows from operating activities
Interest received
Other income received
NOTES
2023
$’000
1,129
69
2022
$’000
105
55
Payments to suppliers and employees (including GST)
(2,316)
(2,170)
Interest paid
Income tax paid
(17)
(238)
(17)
-
Net cash inflow/(outflow) from operating activities
13(b)
(1,373)
(2,027)
Cash flows from investing activities
Payments for investments
Funds placed on term deposit
Proceeds from investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Dividends paid
On-market share buy-back
Payments for lease liability
Net cash inflow/(outflow) from financing activities
(2,263)
(47,500)
46,705
(3,058)
(5,036)
(3,537)
(81)
(8,654)
(4,084)
(20,000)
45,807
21,723
(5,255)
(778)
(62)
(6,095)
Net increase/(decrease) in cash and cash equivalents
(13,085)
13,601
Effects of exchange rate changes on foreign currency
denominated cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
-
20,619
7,534
80
6,938
20,619
The above statement of cash flows should be read in conjunction with the accompanying notes
Lion Selection Group Limited 2023 Annual Report
33
Financial Statements
Statement of Changes in Equity for the Year ended 31 July 2023
Balance at 1 August 2022
Total comprehensive income/(loss)
Transactions with owners in their capacity as owners
Dividends paid
Share buy-back
ISSUED
CAPITAL
$’000
125,404
RESERVES
$’000
1,341
-
-
(3,504)
-
-
-
ACCUMULATED
LOSSES
$’000
TOTAL
$’000
(29,811)
96,934
581
581
(5,036)
-
(5,036)
(3,504)
Balance at 31 July 2023
121,900
1,341
(34,266)
88,975
Balance at 1 August 2021
126,214
1,341
(33,587)
93,968
Total comprehensive income/(loss)
Transactions with owners in their capacity as owners
Dividends paid
Share buy-back
-
-
(810)
-
-
-
9,031
9,031
(5,255)
-
(5,255)
(810)
Balance at 31 July 2022
125,404
1,341
(29,811)
96,934
The above statement of changes in equity should be read in conjunction with the accompanying notes
34
Lion Selection Group Limited 2023 Annual Report
Financial Statements Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 1. CORPORATE INFORMATION
The financial report of Lion Selection Group Limited (‘Lion’ or ‘the Company’) for the year ended 31 July 2023 was
authorised for issue in accordance with a resolution of the directors on 14 September 2023. The directors have the
power to amend and reissue the financial report.
Lion is a company limited by shares incorporated in Australia. The nature of the operations and principal activities
of the Company are described in the Directors’ Report. The registered address of Lion is Level 2, 175 Flinders Lane,
Melbourne.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. Comparative information is
reclassified where appropriate to enhance comparability.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.
Lion is a for-profit entity for the purpose of preparing the financial statements.
The financial report complies with Australian Accounting Standards. The financial report also complies with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The financial report has been prepared on a historical cost basis, except for certain financial assets and financial
liabilities that have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available to Lion under ASIC Instrument 2016/191. Lion is an
entity to which the class order applies.
Lion meets the qualifying criteria under AASB 10 of an ‘investment entity’, and entities controlled by Lion (Asian
Lion Limited (wound up in 2022), African Lion 3 Limited (wound up in 2023) and Lion Selection Asia Limited do not
provide investment related services to the Company. Accordingly, the Company has applied the exemption from
consolidating these entities and continues to carry these investments at fair value.
(b)
New accounting standards and interpretations
New standards
The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or
amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Accounting standards issued but not yet effective
There are no standards that are not yet effective and that would be expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable future transactions.
(c)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have an impact on the carrying amounts of certain assets
and liabilities are:
(i) Fair value of investments and other financial assets
The Company carries its investments at fair value with changes in the fair values recognised in profit or loss.
The fair value of investments and other financial assets that are not traded in an active market is determined
based on either a recent sale price, or where not available, the market value of underlying investments.
Determination of market value involves the Company’s judgment to select a variety of methods and in making
assumptions that are mainly based on market conditions existing at each balance sheet date. The key
assumptions used in this determination are set out in note 2(j).
Lion Selection Group Limited 2023 Annual Report
35
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
(ii) Income taxes
Lion is subject to income taxes in Australia. Judgment is required in determining the provision for income taxes
and deferred taxes. There are many transactions and calculations undertaken during the ordinary course of
business for which the ultimate tax determination is uncertain. Lion recognises liabilities for anticipated tax
audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the current and
deferred tax provisions in the period in which such determination is made.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that sufficient future taxable amounts will be available to utilise those temporary differences and
losses. This involves judgment regarding the future financial performance and is therefore inherently uncertain.
To the extent assumptions regarding future profitability change, there can be an increase or decrease in the level
of deferred tax assets recognised which can result in a charge or credit in the period in which the change occurs.
(d)
Other Income
Other income is recognised to the extent that it is probable that the economic benefits will flow to Lion and the other
income can be reliably measured. The following specific recognition criteria must also be met before other income
is recognised:
(i) Interest
Income 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 fair value of the financial asset.
(ii) Dividends
Dividend income is recognised when the shareholders’ right to receive the payment is established.
(e)
Cash, cash equivalents and term deposits
For cash flow statement purposes, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with maturities of three months or less or that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and
bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Other short-
term, highly liquid investments with original maturities of more than three months are shown within term deposits
on the balance sheet.
(f)
Trade and other receivables
Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. Trade
receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less loss allowance.
The Company applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. The Company recognises a provision based on historical default
rates, debtor analysis and the Company’s monitoring of credit risk. Trade and other receivables are written off when
there is no reasonable expectation of recovery.
(g)
Foreign currency translation
Both the functional and presentation currency of Lion is Australian dollars (AUD).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges
and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
36
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
Transactions and balances (continued)
are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and
liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair
value gain or loss.
(h)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
•
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused
tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilised, except:
•
•
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable
that the temporary difference will reverse in the foreseeable future and taxable profit will be available against
which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity as part of other comprehensive
income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Tax Consolidated Group
The Company and its wholly-owned entities have implemented the tax consolidation legislation. The head entity,
Lion Selection Group Limited, and the wholly-owned entities in the tax consolidated group account for their own
current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group
continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from wholly-
owned entities in the tax consolidated group.
Lion Selection Group Limited 2023 Annual Report
37
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
(i)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
•
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the balance sheet.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(j)
Investments, other financial assets and Investments in associates
The Company classifies its financial assets into the following categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or loss), and
those to be held at amortised cost.
The classification depends on the business model for managing the financial assets and the contractual terms of
the cash flows.
Lion is a venture capital organisation, and designates its investments as being fair value through profit or loss. The
scope of AASB 128 Investments in Associates allows the Company to elect to measure that investment at fair value
through profit or loss in accordance with AASB 9. After initial recognition, investments are measured at fair value,
with gains or losses on fair value of investments being recognised in the Statement of Comprehensive Income. The
fair value of assets is re-measured at each reporting date. This recognition is more relevant to shareholders and
consistent with internal investment evaluation.
The fair value of financial assets traded in active markets is based on their quoted market prices at the end of
the reporting period without any deduction for estimated future selling costs. The quoted market price used for
financial assets held by the Company is the current bid price.
The fair value of financial assets that are not traded in an active market are determined using valuation techniques.
The Company uses a variety of methods and makes assumptions that are based on market conditions existing at
each reporting date. Valuation techniques used include the use of comparable recent arm’s length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models
and other valuation techniques commonly used by market participants making the maximum use of market inputs
and relying as little as possible on entity-specific inputs.
All regular purchases and sales of financial assets are recognised on the trade date (i.e. the date that the Company
commits to purchase the asset). Regular purchases or sales are purchases or sales of financial assets under
contracts that require delivery of the assets within the period established generally by regulation or convention in
the marketplace.
Investments in controlled entities
During the period the Company held a 100% ownership interest in Asian Lion Limited (wound up in 2022) and Lion Selection
Asia Limited, a 99% ownership interest in African Lion 3 Limited (wound up in 2023), and controls these companies. Lion
is an investment entity for the purposes of AASB 10 Consolidated Financial Statements, AASB 127 Separate Financial
Statements, and AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities.
AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities is effective for annual periods
beginning on or after 1 August 2014, exempting ‘Investment entities’ from consolidating controlled investees.
Investment entities are entities that:
38
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
Investments in controlled entities (continued)
(a) obtain funds from one or more investors for the purpose of providing those investors with investment
management services;
(b) commit to their investor(s) that their business purpose is to invest funds solely for returns from capital
appreciation, investment income or both, and
(c) measure and evaluate the performance of substantially all of their investments on a fair value basis.
(k)
Derecognition of financial assets and financial liabilities
(i) Financial assets
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
(ii) Financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
de-recognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.
(l)
Leases
Right-of-use assets and lease liabilities are established on the balance sheet for leases with an expected term
greater than one year. The lease term is equal to the base contractual term and, where material, is adjusted for
renewal or termination options that are reasonably certain to be exercised. Leases are recognised when the leased
asset is available for use by the Company. Assets and liabilities arising from a lease are initially measured on a
present value basis.
Lease liabilities include the net present value of the outstanding lease payments, which mainly comprise fixed
payments (including in-substance fixed payments) and variable lease payments that are based on an index or
rate, plus if applicable any residual value guarantees, purchase options and termination payments less any lease
incentive receivable. When material adjustments to variable lease payments based on an index or rate take effect,
the lease liability is reassessed and adjusted against the right of use asset. The portion of fixed payments related
to service costs is included in the calculation of lease liabilities. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in
the Company, the Company’s incremental borrowing rate is used, being the rate that the entity would have to pay
to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar environment
with similar terms, security and conditions. The lease liability is subsequently measured at amortised cost using
the effective interest method. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date and any lease incentive received. Initial direct costs
incurred are not considered to be significant and have been excluded from measurement of the right-of-use asset. The
right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight line basis.
Payments associated with short term leases (i.e. lease with a term of 12 months or less) and leases of low value
assets are charged to expenditure as incurred over the duration of the lease. Variable payments under these lease
agreements are not significant.
(m)
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation 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 value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash generating units).
Lion Selection Group Limited 2023 Annual Report
39
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
(n)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the Statement of Comprehensive Income over the period of the borrowings using the
effective interest method.
(o)
(p)
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless Lion has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Payables
Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. Payables represent liabilities for goods and services provided to the Company prior to the end
of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in
respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within
30 days of recognition.
Provisions and contingencies
Provisions are recognised when Lion has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
When Lion expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage
of time is recognised as an interest expense.
A contingent liability is disclosed when the Company has a:
(i) possible obligation arising from past events where it has yet to be confirmed whether the entity has a present
obligation that could lead to an outflow of resources embodying economic benefits; or
(ii) present obligation that does not meet the recognition criteria of a provision (because either it is not probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, or a
sufficiently reliable estimate of the amount of the obligation cannot be made).
(q)
Employee leave benefits – Wages, salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave that are
expected to be settled within 12 months of the reporting date are recognised in other payables in respect of
employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are
measured at the rates paid or payable.
The liability for long service leave for which Lion has an unconditional right to defer settlement for at least 12
months after the balance sheet date is recognised in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods
of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds
with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
40
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
(r)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
If the entity reacquires its own equity instruments, for example, as a result of a share buy-back, those instruments
are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss
and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised
directly in equity.
(s)
(t)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the
reporting period.
Earnings per share
Basic earnings per share is calculated as net after tax, adjusted to exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided by the weighted average number of ordinary shares.
Diluted earnings per share is calculated as net profit, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution
of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
(u)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the segments, has been identified as the Board.
Investments have similar characteristics and so segments are determined on a geographical basis. Lion invests
only in small and medium mining and exploration companies with gold and base metal activities in Australia, Africa
and Asia.
NOTE 3. FINANCIAL RISK MANAGEMENT
Lion’s activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk), credit risk
and liquidity risk. Lion’s overall risk management program is carried out under policies approved by the Board of Directors,
focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial
performance of the Company. The Board provides written principles for overall risk management, as well as policies covering
specific areas. The Board reviews and agrees policies for managing each of these risks and they are summarised below.
Lion also monitors the market price risk arising from all financial instruments.
Lion Selection Group Limited 2023 Annual Report
41
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 3. FINANCIAL RISK MANAGEMENT (continued)
Lion holds the following financial instruments:
Financial assets
Cash and cash equivalents
Term deposits
Investments in securities
Trade receivables and other assets
Financial liabilities
Trade and other payables
(a)
Market risk
(i) Price risk
2023
$’000
7,534
67,500
13,101
1,169
89,304
96
96
2022
$’000
20,619
20,000
56,640
68
97,327
150
150
Lion is exposed to equity securities price risk, with many of the Company’s equity investments being publicly
traded. This arises from investments held by Lion and classified on the balance sheet as fair value through
profit or loss.
To manage its price risk, including exposure to changes in commodity prices arising from investments in
equity securities, the Company diversifies its portfolio. Diversification by way of different commodities and
locations of the portfolio is done in accordance with the limits set by the Company, however from time to
time the Company may seek to increase exposure to particular investments. Lion does not hedge its equities
securities price risk. Based on the financial instruments held at the end of the period, if the value of equity
securities had increased by 10%/decreased by 10% with all other variables held constant, the Company’s post-
tax profit for the year would have been $1,310,000 higher/lower (2022: $5,656,000 higher/lower) as a result of
gains/losses on equity securities classified as fair value through profit or loss.
(ii) Interest rate risk exposures
Lion is exposed to interest rate risk through its primary financial assets. The interest rate risk exposures
together with the effective interest rate for each class of financial assets and financial liabilities at balance date
are summarised below. Most assets and liabilities are current, maturing within one year, with the exception of
investments in securities, the value of which will be realised at the discretion of the Company.
42
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 3. FINANCIAL RISK MANAGEMENT (continued)
2023
Financial assets
Cash – AUD
Cash – USD
Term deposits
Investments in securities
Financial liabilities
Trade and other payables
2022
Financial assets
Cash – AUD
Cash – USD
Term deposits
Investments in securities
Financial liabilities
Trade and other payables
FLOATING
INTEREST
RATE
$’000
FIXED
INTEREST
RATE
$’000
NON
INTEREST
BEARING
$’000
TOTAL
$’000
AVERAGE INTEREST RATE
FLOATING %
FIXED %
7,520
14
-
-
-
-
-
67,500
-
-
10,607
10,000
12
-
-
-
-
20,000
-
-
7,520
3.1
-
-
-
13,101
14
67,500
13,101
96
96
20,607
0.4
-
-
-
56,640
12
20,000
56,640
150
150
-
-
-
-
-
-
-
-
-
-
4.1
-
-
2.3
-
3.3
-
-
(b)
(c)
(d)
Credit risk
Lion is exposed to credit risk. Credit risk arises from cash and cash equivalents and deposits with banks as well
as credit exposures to counterparties, including outstanding receivables and committed transactions. Lion has a
policy of maintaining its cash and cash equivalents with the ‘top 4’ Australian Banks. For other counterparties, if
there is no independent rating, management assesses the credit quality of the party, taking into account its financial
position, past experience and other factors. The maximum exposure to credit risk approximates the carrying values
as disclosed above.
Based on historical default rates, debtor analysis and the Group’s monitoring of credit risk, no impairment allowance
is considered necessary in respect of trade receivables not past due.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the ability to
close out market positions. Lion manages liquidity risk by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities.
Fair value measurements
The Company carries its investments at fair value with changes in value recognised in profit or loss.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
(b) Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices); and
(c) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of financial instruments traded in active markets (such as publicly traded securities) is based on
quoted market prices at the reporting date.
Lion Selection Group Limited 2023 Annual Report
43
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 3. FINANCIAL RISK MANAGEMENT (continued)
Recognised fair value measurements
The following tables present the Company’s assets and liabilities measured and recognised at fair value for the
periods ended 31 July 2023 and 31 July 2022.
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
At 31 July 2023
Assets
Financial assets at fair value through profit or loss
Total Assets
At 31 July 2022
Assets
9,691
9,691
3,410
3,410
Financial assets at fair value through profit or loss
10,133
Total Assets
10,133
46,507
46,507
-
-
-
-
13,101
13,101
56,640
56,640
Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments that are not traded in an active market (for example, unlisted investments) is
determined using valuation techniques. These valuation techniques maximise the use of observable market data
where it is available and rely as little as possible on unobservable inputs. If all significant inputs required to fair value
an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments are applied in accordance with the International
Private Equity and Venture Capital Valuation Guidelines, including:
• Net assets, looking through to the underlying assets held through interposed investment vehicles.
• The fair value of unlisted option contracts is determined using a Black Scholes valuation at the reporting date.
• The use of quoted market prices or dealer quotes for similar instruments where available.
• Other techniques, such as Monte Carlo option-pricing models and discounted cash flow analysis, are used to
determine fair value for the remaining financial instruments.
The price of a recent investment conducted in an orderly transaction between market participants generally
represents fair value as of the transaction date. At subsequent measurement dates, the price of a recent investment
may be an appropriate reference point for estimating fair value subject to the current facts and circumstances
including changes in market conditions or changes in the performance of the investee company that would impact
a market participant’s perspective of fair value.
Valuation processes
The Lion Manager includes a team that performs monthly valuations of the financial instruments required for
financial reporting purposes, including level 3 fair values. This team reports directly to the Lion Board. Discussions
of valuation processes and results are held between the Lion Manager and the Lion Board at least once every six
months in line with Lion’s half-yearly reporting dates, including changes in level 2 and 3 fair values.
44
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 4. INCOME AND EXPENSES
Gain/(loss) attributable to movement in fair value of investments
Mark to Market adjustment for year – investments realised during year
Mark to Market adjustment for year – deferred consideration
Mark to Market adjustment for year – investments held at end of year
Gain/(loss) attributable to movement in fair value of investments
as recorded in the Statement of Comprehensive Income
2023
$’000
(140)
2,568
(1,524)
904
2022
$’000
405
-
7,722
8,127
Lion is a long term investor and investment performance generally spans a number of financial periods. Measured on historic
cost, gross profit/(loss) on investments realised during the year includes mark to market adjustments realised in the current
year as well as mark to market adjustments recognised in the Statement of Comprehensive Income in prior years as set out
in the table below. This analysis excludes the sale of the interest in Pani Joint Venture by Lion Selection Asia Limited. Lion
Selection Asia Limited is owned 100% by Lion.
Results of investments realised during year
Proceeds from sale of shares
Historical cost of investment sales
Gross profit/(loss) measured at historical cost on investments realised
Represented by:
Mark to Market recognised in prior periods (including on acquisition)
Mark to Market recognised in current year
The total profit/(loss) is after charging the following other expenses
Investor relations
Directors and Officers insurance
Legal expenses
Depreciation
Corporate overheads
Total other expenses
87
(4,049)
(3,962)
(3,822)
(140)
(3,962)
103
93
38
96
268
598
17,502
(27,198)
(9,696)
(10,101)
405
(9,696)
111
87
143
81
296
718
Lion Selection Group Limited 2023 Annual Report
45
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 5. INCOME TAX EXPENSE
(a) Statement of Comprehensive Income
Current income tax expense/(benefit)
Deferred income tax expense/(benefit)
Income tax expense/(benefit) reported in the Statement of Comprehensive Income
Reconciliation of income tax expense
Profit/(loss) from ordinary activities before income tax
Prima facie tax thereon at 30%
Tax effect of permanent and temporary differences:
Other non-deductible or non-assessable amounts
Assessable income brought to revenue account
Tax losses utilised – revenue account
Foreign tax credit available
Total income tax expense/(benefit)
(b) Deferred tax liabilities
The balance compromises temporary differences attributable to:
Unrealised investments – revenue account
Accrued interest income
Other temporary differences
Set-off of deferred tax assets pursuant to set-off provisions
Tax losses available – revenue account
Other temporary differences
Net deferred tax liabilities
(c) Unrecognised temporary differences
2023
$’000
(299)
478
179
760
228
(21)
311
(339)
-
179
634
324
7
965
(719)
(26)
220
2022
$’000
237
(3,116)
(2,879)
6,152
1,846
(3)
193
(1,329)
(3,586)
(2,879)
124
-
-
124
(81)
-
43
A deferred tax asset has not been recognised in the Statement of Financial Position as the benefits will only be realised
if the conditions for deductibility and/or recognition set out in Note 2(h) occur.
Unrecognised temporary differences at 31 July relate to the following:
Tax losses available – revenue account
Temporary difference – unrealised investments (capital account)
Accrued expenses/Other temporary differences
Unrecognised tax losses and temporary differences at 31 July
Potential tax benefit @ 30%
55,653
-
-
55,653
16,696
57,053
26,567
34
83,654
25,096
Capital losses have previously been realised in relation to foreign controlled companies which held assets which were
used in an ‘active business’. In the current period, Lion has opted to apply the default position under the participation
exemption rule which disregards such capital losses (or gains).
46
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 6. TRADE RECEIVABLES AND OTHER ASSETS
Interest Receivable
Prepayments
Security deposits
Sundry debtors
Total trade receivables and other assets, net
NOTE 7. FINANCIAL ASSETS
Unlisted investments (at fair value) - Current
Listed investments (at fair value) – Non-current
Unlisted investments (at fair value) – Non-current
Total financial assets
Listed shares are readily saleable with no fixed terms.
NOTE 8. PROPERTY, PLANT AND EQUIPMENT
Plant, property and equipment – Cost
Accumulated depreciation
Total property, plant and equipment
NOTE 9. TRADE AND OTHER PAYABLES
Sundry creditors and accruals
Total trade and other payables
NOTE 10. ACCUMULATED LOSSES
Movements in accumulated losses were as follows:
2023
$’000
1,082
34
35
18
1,169
-
9,691
3,410
13,101
506
(210)
296
96
96
2022
$’000
15
34
35
18
102
44,106
10,134
2,400
56,640
506
(114)
392
150
150
Accumulated losses at the beginning of the financial year
(29,811)
(33,587)
Net profit/(loss) for period
Dividends paid
Accumulated losses at the end of the financial year
NOTE 11. CONTRIBUTED EQUITY
Issued and paid up capital (fully paid)
Opening balance
Share buy-back
Issued and paid up capital (fully paid)
581
(5,036)
(34,266)
9,031
(5,255)
(29,811)
125,404
126,214
(3,504)
(810)
121,900
125,404
Lion Selection Group Limited 2023 Annual Report
47
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 11. CONTRIBUTED EQUITY (continued)
Share capital
Issued and paid up capital (fully paid)
Opening balance
Share buy-back
Issued and paid up capital (fully paid)
Capital Risk Management
2023
SHARES
2022
SHARES
148,406,526
150,141,271
(7,255,751)
(1,734,745)
141,150,775
148,406,526
Lion’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to
provide returns for shareholders. In order to maintain or adjust the capital structure, Lion may adjust the amount of dividends
paid to shareholders, return capital to shareholders or issue new shares.
NOTE 12. OPTION RESERVE
Opening balance
Option Reserve
2023
$’000
1,341
1,341
2022
$’000
1,341
1,341
The option reserve relates to historical options that were issued under the terms of Lion’s acquisition of One Asia Resources
Limited’s interest in the Pani gold project. These options expired on 12 April 2020.
NOTE 13. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purpose of the Statement of Financial Position and Statement of Cash Flows, cash and cash equivalents includes
cash on hand and in banks, term deposits, cash managed by third parties and other bank securities which can be
liquidated at short notice (less than three months), net of outstanding bank overdrafts if applicable.
Cash at the end of the year as shown in the Statement of Cash Flows is reconciled to the related item in the Statement
of Financial Position as follows:
Cash on hand and at bank
7,534
20,619
(b) Reconciliation of net profit/(loss) after income tax to
net cash inflow/(outflow) from operating activities
Net profit/(loss) after income tax
Adjustments for non-cash income and expense items:
Movement in fair value of investments (increase)/decrease in assets
Other non-cash (income)/expenses
Decrease/(increase) in assets:
Other receivables
(Decrease)/increase in liabilities:
Current income tax liabilities
Deferred tax liabilities
Payables
581
9,031
(904)
98
(8,127)
(7)
(1,067)
(59)
(237)
178
(22)
237
(3,116)
14
Net cash inflow/(outflow) from operating activities
(1,373)
(2,027)
48
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 14. EARNINGS PER SHARE
(a) Profit/(loss) used in calculating earnings per share
2023
$’000
581
2022
$’000
9,031
2023
NUMBER
2022
NUMBER
(b) Weighted average number of ordinary shares for basic earnings per share
143,699,115
149,860,260
The calculation of weighted average number for the basic earnings per share does not include any potential ordinary shares
with respect to options as there are no options on issue (2022: Nil).
NOTE 15. COMMITMENTS AND CONTINGENT LIABILITIES
Superannuation Commitments
Lion does not have its own superannuation plan. The only commitment to superannuation is with respect to statutory
commitments. At balance date, the Company was contributing to various approved superannuation funds at the choice of
employees at a minimum rate of 11% of salaries paid. Employees are able to make additional contributions to their chosen
superannuation funds by way of salary sacrifice up to the age based deductible limits for taxation purposes.
Contingent Liabilities
Lion has a potential liability for contingent consideration that may be payable if Lion sells its investment in either PhosCo
(formerly Celamin) or Atlantic Tin (formerly Kasbah). This obligation arises following Lion agreeing to purchase the shares
it did not own in African Lion 3 Ltd (AFL3) to consolidate ownership (with the exception of Lion Manager who opted to hold
its investment). The transaction involved part cash consideration and Lion agreeing to pay contingent consideration to be
paid in certain circumstances for up to 5 years until March 2026. The value of the contingent consideration decreases
annually and depends on the ultimate exit price for PhosCo and/or Atlantic Tin, how long Lion holds the investments, and
how much additional investment is required. The decision to sell the investments in PhosCo and Atlantic Tin is entirely at
Lion’s discretion.
Based on a theoretical sale at the carrying value for both investments at 31 July 2023, contingent consideration of $1.7M
would arise.
NOTE 16. REMUNERATION OF AUDITORS
(a) Audit services
Audit and review of financial reports
Total remuneration for audit services
(b) Non-audit services
2023
$
2022
$
122,200
122,200
142,290
142,290
No fees for non-audit services were paid/payable to the external auditors during the year ended 31 July 2023 (2022: Nil).
Lion Selection Group Limited 2023 Annual Report
49
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 17. RELATED PARTY DISCLOSURES
(a) Directors and Key Management Personnel
The directors and key management personnel in office during the financial year and up until the date of this report are
as follows:
Barry Sullivan
Peter Maloney
Chris Melloy
Robin Widdup
Craig Smyth
Jane Rose
(Non-Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
(Director)
(Chief Executive Officer)
(Company Secretary)
(b) Subsidiaries and Associates
Lion meets the qualifying criteria under AASB 10 of an ‘investment entity’, and entities controlled by Lion (Asian Lion
Limited (wound up in 2022), African Lion 3 Limited (wound up in 2023) and Lion Selection Asia Limited) do not provide
investment related services to the Company. Accordingly, the Company has applied the exemption from consolidating
these entities and continues to carry these investments at fair value. Similarly, the scope of AASB 128 Investments in
Associates allows the Company to elect to measure that investment at fair value through profit or loss in accordance
with AASB 9.
Transactions with controlled entities:
Lion Selection Asia Limited (100% ownership interest)
During the year, the Company received net funds from Lion Selection Asia Limited of US$32,622,411 (A$46,604,787)
(2022: advanced funds of US$19,384,383 (A$26,676,879)), with a loan liability balance of US$nil (A$nil) (2022: loan asset
US$4,118,650 (A$5,893,890)). The amount payable to Lion Selection Asia Limited was interest free and payable at call.
African Lion 3 Limited (99% ownership interest)
In March 2021, Lion agreed to purchase the shares it did not own in AFL3 to consolidate ownership (with the exception of
Lion Manager who opted to hold its investment). The transaction involved the payment of $392,000 in cash consideration
to the other AFL3 Shareholders, with all AFL3 investments distributed in specie to Lion and Lion Manager on a pro rata
basis. Lion also agreed for contingent consideration to be paid in certain circumstances for up to 5 years. Refer to
Note 15 Commitments and Contingent Liabilities for further details. African Lion 3 Limited was wound up in 2023.
(c) Key Management Personnel Remuneration
Short term employee benefits
Post-employment benefits
(d) Lion Manager Contract
2023
$
215,958
73,162
289,120
2022
$
173,778
68,896
242,674
Lion entered into a Management Agreement with Lion Manager, under which Lion Manager provides the Company
with management and investment services. These arrangements were approved by shareholders at Lion’s AGM on
5 December 2012, with ongoing management fees of 1.5% p.a. based on the direct investments under management.
Management fees of $1,520,699 were paid in the current year. There is an incentive applicable which would apply where
Lion’s performance outperforms a benchmark. In addition, up to a 12 month termination fee may be applicable should
Lion seek to terminate the management agreement. Further details of the Management Agreement are set out in the
Notice of Meeting for the 2012 AGM, available on Lion’s website. As at the date of this report, no incentive fee had accrued
with respect to the Lion Manager contract with the benchmark materially exceeding Lion’s Market Capitalisation.
50
Lion Selection Group Limited 2023 Annual Report
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 18. MATERIAL INVESTMENTS
CARRYING AMOUNT
ENTITY OWNERSHIP
The Company had direct and indirect ownership of
the following material investments at year end:
2023
$’000
African Lion 3
Lion Selection Asia
Merdeka
Deferred Pani Consideration
PhosCo Ltd (formerly Celamin Holdings)
Erdene Resource Development
Atlantic Tin (formerly Kasbah Resources)
-
-
-
-
3,126
5,228
2,013
2022
$’000
-
8
28,515
15,514
5,684
4,071
2,013
2023
%
-
100
-
-
15
4
4
2022
%
99
100
0.3
-
15
4
4
Each of the above companies is involved in the mining and exploration industry.
NOTE 19. SEGMENT INFORMATION
Management has determined the Company’s segments based on the internal reporting reviewed by the Board to make
strategic decisions. The Company provides patient equity capital to carefully selected small and medium mining enterprises.
Investments have similar characteristics and so segments are determined on a geographical basis. Lion invests only in
mining and exploration companies and projects with gold and base metal activities in Australia, Africa, and Asia. Information
with respect to geographical segments is set out below.
2023
Mark to Market adjustment
Segment Income
Segment Expense
Segment Result Before Tax
Segment assets
Segment liabilities
Other Segment Information
AUSTRALIA
$’000
(47)
(47)
-
(47)
2,408
-
Assets acquired during the period
2,250
Cash Flow Information
Net cash flow from operating activities
-
Net cash flow from investing activities
(2,250)
Net cash inflow from financing activities
-
AFRICA
$’000
(2,558)
(2,558)
-
(2,558)
5,140
-
-
-
-
-
ASIA
$’000
3,509
3,509
-
3,509
5,553
-
-
CORPORATE
$’000
-
2,264
(2,408)
(144)
76,499
625
TOTAL
$’000
904
3,168
(2,408)
760
89,600
625
13
-
2,263
(1,373)
46,692
(47,500)
-
(8,654)
(1,373)
(3,058)
(8,654)
Lion Selection Group Limited 2023 Annual Report
51
Financial Statements
Notes to the Financial Statements for the Year ended 31 July 2023
NOTE 19. SEGMENT INFORMATION (continued)
2022
Mark to Market adjustment
Segment Income
Segment Expense
Segment Result Before Tax
Segment assets
Segment liabilities
Other Segment Information
AUSTRALIA
$’000
(45)
(45)
-
(45)
205
-
AFRICA
$’000
2,780
2,780
-
2,780
7,698
-
ASIA
$’000
5,392
5,392
-
5,392
48,738
-
CORPORATE
$’000
-
255
(2,230)
(1,975)
41,112
819
TOTAL
$’000
8,127
8,382
(2,230)
6,152
97,753
819
Assets acquired during the period
250
955
2,349
530
4,084
Cash Flow Information
Net cash flow from operating activities
Net cash flow from investing activities
Net cash inflow from financing activities
-
(250)
-
-
-
(2,027)
(915)
43,189
(20,301)
-
-
(6,095)
(2,027)
21,723
(6,095)
NOTE 20. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction
or event of a material or unusual nature which has or may significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future periods.
52
Lion Selection Group Limited 2023 Annual Report
Financial Statements Independent auditor’s report
To the members of Lion Selection Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Lion Selection Group Limited (the Company) is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Company’s financial position as at 31 July 2023 and of its financial performance for
the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
• the statement of financial position as at 31 July 2023
• the statement of comprehensive income for the year then ended
• the statement of changes in equity for the year then ended
• the statement of cash flows for the year then ended
• the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information
• the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act
2001 and the ethical requirements of the Accounting Professional & 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.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Lion Selection Group Limited 2023 Annual Report
53
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.
The principal activities of the Company involve investing in mining and exploration companies and projects through a
number of listed and unlisted investments.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
report as a whole, taking into account the geographic and management structure of the Company, its accounting
processes and controls and the industry in which it operates.
Materiality
• For the purpose of our audit we used overall materiality of $889,700, which represents approximately 1% of the
Company’s net assets.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.
• We chose net assets because, in our view, it is the benchmark against which the performance of the Company is most
commonly measured, and it is a commonly accepted benchmark.
• We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit scope
• Our audit focused on where the Company made subjective judgements, for example, significant accounting estimates
involving assumptions and inherently uncertain future events.
• The Company’s finance function and corporate office is based in Melbourne, where we predominantly perform our audit
procedures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report for the current period. The key audit 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. Further,
any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit
matters to the Audit Committee.
54
Lion Selection Group Limited 2023 Annual Report
Key audit matter
How our audit addressed the key audit matter
Fair value of investments
Refer to note 3(d) and note 7
As at 31 July 2023, the total fair value of the Company’s
investments amounted to $13.1 million.
The fair value applied by the Company to these listed and
unlisted investments was a key audit matter due to the
significant impact that any movement in the fair value could
have on the net assets as at 31 July 2023.
We obtained the Company’s investment schedule as at
31 July 2023, which includes a listing of each investment
held, and compared the total of the investment schedule to
the amount recorded in the financial statements.
We assessed whether the investment valuation techniques
used by the Company were in accordance with Australian
Accounting Standards.
We performed the following procedures, amongst others,
on the fair value of these investments:
• For a sample of listed and unlisted equity investments,
we compared the number of shares held to supporting
evidence such as holding statements
• For a sample of listed and unlisted investments, together
with PwC internal valuation experts, we assessed the fair
value with reference to quoted market prices or market
observable data, if available. Where that information
was unavailable, we considered other available financial
information in assessing the fair value.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report for the year ended 31 July 2023, but does not include the financial report and our auditor’s report thereon.
Prior to the date of this auditor’s report, the other information we obtained included the directors’ report. We expect the
remaining other information to be made available to us after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or
any form of assurance conclusion thereon through our opinion on the financial report. We have issued a separate opinion
on the remuneration report.
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 on the other information that we obtained prior to the date of this auditor’s report,
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.
When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and use our professional judgement to determine the appropriate
action to take.
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 Company 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 Company or to cease operations, or have no realistic alternative but to do so.
Lion Selection Group Limited 2023 Annual Report
55
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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 24 to 26 of the directors’ report for the year ended 31 July 2023.
In our opinion, the remuneration report of Lion Selection Group Limited for the year ended 31 July 2023 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.
PricewaterhouseCoopers
Graeme McKenna
Partner
Melbourne
14 September 2023
56
Lion Selection Group Limited 2023 Annual Report
Shareholder Information
Top 20 holders of ordinary fully paid shares – 30 September 2023
RANK NAME
1
Rojana Hero Pty Ltd
2 Mr Robin Anthony Widdup + Mrs Janet Widdup
3
4
5
BNP Paribas Noms Pty Ltd
Inconsultare Pty Ltd
Retzos Executive Pty Ltd
6 Mr Mark Gareth Creasy
7
Brigstow Pty Ltd
8 Mrs Pamela Julian Sargood
9
10
Cpac Melloy Super Pty Ltd
J P Morgan Nominees Australia Pty Limited
11 HSBC Custody Nominees (Australia) Limited
12 Mr Thomas James Hudson + Mrs Carol Ann Hudson
13 Mr Dominic Paul McCormick
14 Mr John Joseph Ryan
15
16
17
Perpetual Corporate Trust Ltd
Retzos Investments Pty Ltd
Bnp Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
18 Wal Assets Pty Ltd
19 Majoli Pty Ltd
20
Branjee Farm Pty Ltd
NO. OF SHARES % OF UNITS
7,483,653
7,319,369
6,146,295
6,000,000
4,500,000
4,448,976
3,791,841
3,700,000
3,382,259
2,934,352
2,473,196
2,417,319
2,001,609
1,457,000
1,313,117
1,270,000
1,251,757
1,207,802
1,195,651
1,181,642
5.30
5.19
4.35
4.25
3.19
3.15
2.69
2.62
2.40
2.08
1.75
1.71
1.42
1.03
0.93
0.90
0.89
0.86
0.85
0.84
Total Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
65,475,838
75,674,937
46.39
53.61
Distribution of Shareholdings as at 30 September 2023
SIZE OF HOLDING (ORDINARY FULLY PAID SHARES)
NO. OF SHAREHOLDERS
1 – 1,000
1,001 – 5,000
5,001 –10,000
10,001 – 100,000
100,001 Over
Total Shareholders
Number of ordinary shareholders with less than a marketable parcel
330
867
248
592
179
2,216
443
Lion Selection Group Limited 2023 Annual Report
57
Shareholder Information
Voting Rights
All ordinary shares issued by Lion Selection Group Limited carry one vote per share without restriction.
Substantial Shareholders as at 30 September 2023
The following information is extracted from notices received by the company.
NAME
Robin Anthony Widdup
Chris Retzos
No. OF ORDINARY SHARES
16,717,277
9,147,942
Lion Directors and Lion Manager Holdings
As at 30 September 2023, the members of the Lion Board and Lion Manager held shares directly and/or indirectly in
Lion Selection Group Limited as follows:
NAME
Peter Maloney
Chris Melloy
Barry Sullivan
Robin Widdup
Craig Smyth
Hedley Widdup
Total
No. OF ORDINARY SHARES
2,190,389
5,800,000
813,074
16,717,277
1,505,137
1,102,093
28,127,970
58
Lion Selection Group Limited 2023 Annual Report
Lion Selection Group Limited Registry
You can gain access to your security
holding information in a number of
ways. The details are managed via
our registrar, Computershare Investor
Services, and can be accessed as
outlined below.
Computershare Investor Services Pty Limited
Enquiries within Australia
Enquiries outside Australia
Investor Enquiries Facsimile
Investor Enquiries Online
1300 850 505
+61 3 9415 4000
+61 3 9473 2500
www.investorcentre.com/contact
INVESTORPHONE
INTERNET ACCOUNT ACCESS VIA INVESTOR CENTRE
InvestorPhone provides telephone
access 24 hours a day 7 days a week.
Securityholders can view their details
online via Investor Centre:
STEP 1 Call 1300 850 505
(within Australia) or
61 3 9415 4000
(outside Australia)
STEP 2 Say ‘Lion Selection Group
Limited’
STEP 3 Follow the prompts to gain
secure, immediate access
to your holding details,
registration details and
payment information.
STEP 1 Go to
www-au.computershare.
com/Investor/
STEP 2 Select ’Single Holding’.
STEP 3 Enter your Securityholder
Reference Number (SRN)
or Holder Identification
Number (HIN), postcode or
country if outside Australia.
STEP 4 Enter LSX or Lion Selection
Group Limited.
STEP 5 Type in the characters shown
and click the ‘Agree and
Continue’ button to accept
the Terms and Conditons.
Alternatively, update your details or
manage your portfolio by registering
as a member of Investor Centre:
STEP 1 Go to
www-au.computershare.
com/Investor/
STEP 2 Click on ‘Login’ and enter
your User ID and follow
the prompts to login, or
for new users click on
the ‘Register Now’ link
and follow the prompts
to register.
Lion Selection Group Limited 2023 Annual Report
59
Corporate Directory
Registered and Principal Office
Level 2
175 Flinders Lane
Melbourne Vic 3000
+61 3 9614 8008
Tel:
+61 3 9614 8009
Fax:
Email:
info@lsg.com.au
Website: www.lionselection.com.au
Directors
• Barry Sullivan
Non-Executive Chairman
• Peter Maloney
Non-Executive Director
• Chris Melloy
Non-Executive Director
• Robin Widdup
Director
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street, Abbotsford Vic 3067
Postal Address – GPO Box 2975 Melbourne Vic 3001
Enquiries within Australia
Enquiries outside Australia
Investor Enquiries Facsimile
Investor Enquiries Online
Website:
1300 850 505
+61 3 9415 4000
+61 3 9473 2500
www.investorcentre.com/contact
www.computershare.com
Chief Executive Officer
Craig Smyth
Company Secretary
Jane Rose
Auditors
PricewaterhouseCoopers
60
Lion Selection Group Limited 2023 Annual Report
Lion Selection Group Limited
ABN 26 077 729 572
Level 2, 175 Flinders Lane
Melbourne Vic 3000.
Tel: +61 3 9614 8008
www.lionselection.com.au