Milton
Annual Report 2021

Plain-text annual report

Annual Report 2021 Company Profile Milton Corporation Limited Milton Corporation Limited  Annual Report 2021 i Milton was established as a private investment company for four shareholders in 1938. It became a public company in 1950 and listed on the Sydney Stock Exchange in 1958. Milton is now an investment company for 30,000 shareholders and is listed on the Australian Securities Exchange (ASX) under the code MLT. Investment philosophy Milton is predominantly a long term investor in companies and trusts listed on the ASX that are well managed, with a profitable history and an expectation of increasing dividends and distributions. Turnover of investments is low and capital gains arising from disposals are reinvested. Milton also holds liquid assets such as cash and term deposits as well as real property development through joint ventures. Milton aims to pay increasing fully franked dividends to shareholders over time. Benefits of investing Shareholders receive fully franked dividends semi-annually. Ordinary fully franked dividends are paid out of profit after tax excluding special investment revenue and costs associated with the acquisition of subsidiaries. Dividends have been paid every year since listing and they have been fully franked since the introduction of franking. Special fully franked dividends may be paid out of special investment revenue. The investment portfolio provides shareholders with exposure to diversified assets. Milton’s $3.6 billion equity investment portfolio comprises interests in companies and trusts which are listed on the ASX and are expected to deliver increased investment revenue over the long term. Consistent application of this investment philosophy over many years has created a portfolio that is not aligned with any securities exchange index. Shareholders have an investment in a low cost, efficiently managed company with total administration costs that represent 0.14% per annum of total assets. Milton’s board oversees the performance of its executives who are employed by the company to manage its investments for the benefit of shareholders. Company Profile Milton Corporation Limited Important Dates Final Dividend Ex date: 31 August 2021 Payment date: 14 September 2021 DRP has been suspended Proposed Scheme of Arrangement with WHSP Scheme Booklet 6 August 2021 lodged with ASX: Announcement of 3 September 2021 Scheme consideration: Proxy cut-off date: 11 September 2021 at 10.00am Scheme Meeting: 13 September 2021 at 10.00am Directors Report 2 Operating and Financial Review 2 Dividends 3 Five Year Financial Summary 4 Portfolio Performance 5 Review of Investments  6 Top 25 Investments 6 Classification of Investments 7 Management Expense Ratio (MER) 8 COVID19 concerns and Impacts  8 2022 Financial Year Outlook 8 Board of Directors and Company Secretary 9 Remuneration Report 12 Auditor’s Independence Declaration 19 Milton Corporation Foundation 20 Financial Statements  21 Directors’ Declaration 48 Independent Auditor’s Report 49 Corporate Directory 53 ASX Information  54 Corporate Governance Statement Our Corporate Governance Statement is available on the company website at milton.com.au/corporate-governance.html and is lodged with ASX with this Report. 1 www.milton.com.au www.milton.com.au ASX:  MLT Contents Net Profit after tax A$ 92.4m Underlying Operating Profit(1) A$ 90.0m Basic Earnings Per Share cents per share 13.73 Underlying Earnings Per Share cents per share 13.38 Fully Franked Ordinary Dividends cents per share 13.75 Total Portfolio Return(2) 33.2% Total Assets A$ 3.7Bn Management Expense Ratio 0.14% Key Highlights (1) Underlying operating profit excludes special investment revenue (1) Underlying operating profit excludes special investment revenue and merger & acquisition costs net of tax. and merger & acquisition costs net of tax. (2) One year Total Portfolio Return (TPR) is unadjusted for franking credits (2) One year Total Portfolio Return (TPR) is unadjusted for franking credits which may be of benefit to certain shareholders which may be of benefit to certain shareholders 2 Milton Corporation Limited  Annual Report 2021 The directors present their report together with the financial statements of the consolidated entity (“Milton”) consisting of Milton Corporation Limited and its subsidiaries for the financial year ended 30 June 2021 and the independent auditor’s report thereon. Principal activities The principal activity of Milton is investment. Milton invests in companies and trusts, real property development, fixed interest securities, and liquid assets such as cash and term deposits. There has been no significant change in the nature of this activity during the financial year. Operating and Financial Review Financial Highlights Milton Corporation reported net profit after tax of $92.4 million for the year ended 30 June 2021, a decrease of 21.0% on the prior year. This represents earnings of 13.73 cents per share. Underlying profit after tax for 2021, which excludes special dividend income, was $90.0 million, a decrease of 19.1% on the prior year. Milton’s Board primarily uses underlying profit when determining ordinary dividends to enhance their reliability. Underlying earnings per share decreased by 19.4% to 13.38 cents per share. Ordinary dividend income of $95.7 million, generated by Milton’s diversified $3.6 billion portfolio of Australian listed companies, declined by 18.3% in 2020. Whilst dividends from Milton’s diversified portfolio were sharply lower in the first half of FY21 due to COVID related reductions, dividends in the second half of FY21 increased by 17.8% from the second half of 2020 as economies reopened and company earnings recovered. Milton’s total portfolio return for the 12-month period to 30 June 2021 was 33.2%, outperforming the All Ordinaries Accumulation index return of 30.2%. Milton reported a total shareholder return for the 12-month period to 30 June 2021 of 59.1%. The above measures exclude the benefits of franking credits. Special dividend income was $2.8 million in 2021, a reduction of 51.4% from the elevated $5.8 million of special dividend income in the 2020 financial year. Milton’s property joint ventures performed well with profits up 246.0% from 2020 as sales volumes increased materially. Reduced interest was received due to lower term deposit rates and lower cash balances. Dividends Milton’s Board of Directors have declared a final dividend of 8.0 cents per share, payable on 14 September 2021 to shareholders of record on 1 September 2021. Full year ordinary dividends of 13.75 cents per share were declared in relation to 2021 earnings. This represents a payout ratio of 102.9% of Milton’s 2021 underlying profit after tax. All 2021 dividends are fully franked. It is the Board’s expectation that 2022 dividend income from Milton’s investment portfolio of 75 companies will be higher than 2021. We expect stronger dividend production particularly from Milton’s financial services and resource sector investments. Dividends paid or declared by Milton to members since the end of the previous financial year are shown in the table opposite. Dividend Reinvestment Plan (DRP) Milton’s DRP has been suspended due to the proposed merger with WHSP and all shareholders will be paid their dividend in cash. Directors Report for the year ended 30 June 2021 3 www.milton.com.au ASX:  MLT Cents per share ¢ Total amount $’000 Date of payment Declared and paid during the year Final 2020 ordinary fully franked 8.5 57,063 2 September 2020 Interim 2021 ordinary fully franked 5.75 38,670 4 March 2021 Declared after end of year and not provided for at 30 June 2021 Final 2021 ordinary fully franked 8.0 53,938 14 September 2021 Dividends No LIC capital gain was included in the above dividends. 5.0 7.0 9.0 11.0 13.0 15.0 17.0 19.0 21.0 23.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 MLT DPS MLT EPS Cents Per Share Dividends per share (DPS) Earnings per share (EPS) Earnings and Dividends over 10 Years 4 Milton Corporation Limited Milton Corporation Limited  Annual Report 2021   Annual Report 2021 Five Year Financial Summary Notes Notes 1 Underlying operating profit after tax excludes special investment revenue and costs associated with the merger & acquisition of subsidiaries. Underlying operating profit after tax excludes special investment revenue and costs associated with the merger & acquisition of subsidiaries. 2 Before provision for tax on unrealised capital gains and before providing for the ordinary final dividend. Before provision for tax on unrealised capital gains and before providing for the ordinary final dividend. 3 After provision for tax on unrealised capital gains and before providing for the ordinary final dividend. After provision for tax on unrealised capital gains and before providing for the ordinary final dividend. 2021 2020 2019 2018 2017 Underlying operating profit after tax1 ($m) 90.0 111.3 133.6 128.8 122.0 Underlying earnings per share (cents) 13.4 16.6 20.1 19.6 18.7 Profit after tax ($m) 92.4 116.9 147.7 130.0 122.4 Earnings per share (cents) 13.7 17.4 22.2 19.8 18.8 Management Expense Ratio (%) 0.14 0.14 0.14 0.14 0.12 Interim dividend (cps) 5.75 9.0 9.0 8.8 8.7 Final dividend (cps) 8.0 8.5 10.4 10.2 10.0 Full year ordinary dividend (cps) 13.75 17.5 19.4 19.0 18.7 Special dividend (cps) – – 2.5 – – Net assets2 at 30 June ($m) 3,708 2,863 3,292 3,114 2,939 NTA per share pre-tax2 at 30 June ($) 5.50 4.26 4.92 4.73 4.51 NTA per share post-tax3 at 30 June ($) 4.69 3.83 4.30 4.16 3.99 Last sale price at 30 June ($) 6.30 4.09 4.71 4.61 4.51 All Ordinaries Index at 30 June 7,585 6,001 6,699 6,290 5,764 Ten year TSR (% per annum) 12.0 7.2 9.7 6.5 4.7 Five year TSR (% per annum) 12.6 2.5 5.2 9.1 12.9 Shares on issue (million) 674.2 671.3 669.0 658.2 651.9 Number of shareholders 30,304 29,514 26,995 25,864 24,726 Directors Report continued 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 5 10 15 20 25 2020 2021 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 Ordinary dividend Special dividend Investment value with dividends re-invested Dividend (Cents per Share) Investment Value ($) 10% 30% 20% 50% 40% 60% 70% 0% MLT TPR MLT TSR Percent per annum 6 Months 15.46 33.69 1 Year 33.20 59.14 3 Years (pa) 9.33 15.59 5 Years (pa) 9.75 12.60 10 Years (pa) 9.20 12.01 15 Years (pa) 6.96 7.69 20 Years (pa) 8.84 9.90 If $10,000 invested in MLT in June 2001, and if dividends were re-invested over the 20 years, the value of the investment in June 2021 would be worth $66,087. Ordinary dividends increased from 8.80cps in FY2001 (adjusted for 5:1 split in Oct 2013) to 13.75cps in FY2021. Total portfolio return (TPR) is the percentage change in Milton’s NTA per share plus dividends received by shareholders. Total shareholder return (TSR) is the percentage change in Milton’s share price plus dividends received by shareholders. TPR and TSR above do not take into account franking credits which may be of benefit to certain shareholders. Portfolio Performance Milton’s portfolio reflects the emphasis placed on investing in companies that pay increasing dividends over the long term from quality earnings streams. Milton’s portfolio is not aligned to any index so it may underperform broad market indices over the short term. Milton’s long term returns are shown below. The returns do not take into account the benefit of franking credits which may be utilised by some shareholders. 5 www.milton.com.au ASX:  MLT Total Returns over Periods Up to 20 Years Dividend and Investment Growth over 20 years 6 Table B.  Top 25 investments at 30 June 2021 Market Value $m Commonwealth Bank 313.6 W H Soul Pattinson & Company 309.5 Westpac Banking Corporation 258.0 Macquarie Bank Limited 254.4 BHP Group Limited 235.8 CSL Limited 171.5 Wesfarmers Limited 170.1 National Australia Bank 128.0 Eagers Automotive Limited 112.5 Woolworths Limited 112.0 Rio Tinto Limited 84.7 Transurban Group 82.7 Brickworks Limited 81.1 ALS Limited 79.3 Telstra Corporation Limited 57.3 Coles Group Limited 51.2 Perpetual Limited 49.3 Amcor PLC 48.7 Johns Lyng Group 46.5 ASX Limited 42.7 Charter Hall Group 39.7 ARB Corporation Limited 39.3 Sonic Healthcare Limited 36.1 Goodman Group 35.8 Suncorp Group Limited 35.8 Total market value of Top 25 2,875.6 Total Assets 3,710.2 Directors Report continued Review of Investments Milton’s total assets were $3.7 billion at 30 June 2021 (2020: 2.9 billion). Net Tangible Assets (NTA) per share before deferred tax liability was $5.50 per share. Total portfolio return, combining Milton’s NTA per share movement and dividends received by shareholders was 33.2%. Total shareholder return, combining Milton’s share price movement and dividends received by shareholders was 59.1%. Cash balances at 30 June 2021 were $79.1 million, decreased from $114.1 million at 30 June 2020. Milton continues to have no debt. 2021 was a very strong year for equity returns with markets recovering from the COVID lows of mid-2020 supported by successful vaccine programs in most OECD countries, low interest rates and a sharp recovery in corporate earnings. Milton added to its portfolio over the financial year taking advantage of the opportunities presented by volatility and company capital raises. Major changes to Milton’s portfolio in 2020 allowed for reinvestment in new and existing positions, which contributed strongly to returns in 2021. After a transformative 2020 financial year, the 2021 financial year was less active in terms of portfolio changes. $79.8 million was added to new and existing equity investments. Investments were increased in Johns Lyng Group, Magellan Financial Group, Amcor PLC, Pro Medicus, Carsales.com, EQT Holdings, Coles Group, Pendal Group, IOOF Holdings and Cleanaway Waste Management. A new investment was made in IPH. $43.2 million of portfolio sales were made in 2021 and included the complete disposals of Milton’s investments in Coca Cola Amatil (due to takeover), QBE Insurance Group and Sims. Milton’s Investment in the Charter Hall Long WALE REIT was reduced. During the year Woolworths Limited demerged its hotel business Endeavour Group Limited. As is its practice, Milton recognized the transaction through its capital account as it is non-cash. We note that certain industry peers will record this as a demerger dividend through profit and loss. The gain on demerger taken to reserves is approximately $16.1 million. 6 Milton Corporation Limited  Annual Report 2021 The Milton management team, with the support of the Investment Committee, continue to review and modify our portfolio on an ongoing basis. Milton’s portfolio reflects the emphasis we place on companies that pay increasing dividends over the long term from quality earnings streams. We believe that the portfolio is well positioned to grow its dividend income over the long term, but recognise that the current situation is one of elevated volatility. 7 www.milton.com.au ASX:  MLT Classification of Investments by Sector The following asset classification table shows the composition of Milton’s assets by sector. Notes 1 Investments are grouped according to their asset classes using the Global Industry Classification (“GICS”) codes. 2 Liquids include cash, term deposits, hybrid securities and dividends receivable. 3 Includes additions from acquisition of subsidiaries of $5.2 million. Classification1 Closing position $m Additions3 $m Disposals $m Change in value $m Opening position $m 2021 Income $m Closing position weighting % Banks 699.9 0.8 – 213.1 486.0 21.1 18.9 Diversified Financials 451.5 30.3 (4.4) 81.0 344.6 14.2 12.2 Materials 450.3 11.9 (3.7) 112.6 329.5 18.8 12.1 Consumer Staples 365.9 2.1 (14.2) 68.3 309.7 10.6 9.9 Energy 356.4 – – 128.5 227.9 6.8 9.6 Health Care 240.8 3.0 – 13.3 224.5 2.7 6.5 Retailing 168.7 – – 96.3 72.4 2.8 4.5 Commercial Services 149.0 12.7 – 48.8 87.5 2.9 4.0 Insurance 142.3 20.7 (8.4) 34.9 95.1 2.5 3.8 Transport 139.9 – – 3.5 136.4 2.7 3.8 Real estate 135.4 0.6 (12.5) 36.2 111.1 4.4 3.6 Telecommunications 78.0 – – 1.2 76.8 2.7 2.1 Media 55.4 2.9 – 12.8 39.7 0.7 1.5 Utilities 47.8 – – (36.2) 84.0 4.3 1.3 Capital Goods 45.8 – – 14.1 31.7 0.7 1.2 Information Technology 28.9 – – 2.2 26.7 0.3 0.8 Consumer Services 23.7 – – 2.2 21.5 0.2 0.7 Other shares 1.6 – – 0.5 1.1 0.1 – Total equity investments 3,581.3 85.0 (43.2) 833.3 2,706.2 98.5 96.5 Liquids2 93.0 125.0 2.1 Property joint ventures 23.8 24.7 0.1 Other assets 12.1 10.2 1.3 Total 3,710.2 2,866.1 100.0 8 Milton Corporation Limited  Annual Report 2021 Management Expense Ratio (MER) Milton is fully internally managed, with no performance or management fees paid. Investment staff are focused on maximising net returns to shareholders with Management and the Board aligned with shareholders. Milton’s MER for the 2021 year was 0.14%, unchanged from previous year. COVID19 Concerns and Impacts COVID19 has had broad impact on economies, companies and individuals. The pandemic remains a major global issue, and is likely to have ongoing impact even as vaccines are rapidly rolled out. Milton have taken steps to ensure that its employees are working in a safe environment, and the company has continued to operate as normal, with employees working remotely as required. An ongoing risk remains that companies may reduce, delay or cancel dividends due to COVID related factors which will directly impact Milton’s own income. These decisions may be driven by further outbreaks, extended lockdowns, the impact of economic recession or regulators. Proposed Scheme of Arrangement with WHSP On 22 June 2021, Milton announced a proposed merger with W H Soul Pattinson & Company (WHSP) where WHSP would acquire 100% of the share capital of Milton via Scheme of Arrangement. The offer consists of a scrip consideration reflecting a 10% premium to Milton’s NTA before tax (adjusted for any final and special dividends), capped at $31 per WHSP share. In addition to the 8 cents final dividend declared, Directors expect to announce a fully franked special dividend of approximately 37 cents per share payable if the Scheme of Arrangement is approved. Shareholders will also be eligible for the expected WHSP final dividend. The Independent Milton Directors consider the Scheme to be in the best interests of Milton Shareholders having regard to the attractive premium to net tangible assets offered to Milton Shareholders, the allowance for payment of fully franked dividends, the retention of Milton’s existing management team and the diversified investment proposition created by combining Milton and WHSP, two well established investment companies with similar investment approaches. 2022 Financial Year Outlook Milton forecasts that company earnings and dividend growth will be robust in 2022 and that dividend payments will increase from our portfolio of 75 companies. As a result, we expect that Milton’s earnings will be higher in 2022. We expect that this increase will be tilted towards the first half of the financial year. We note however that significant uncertainty remains as evidenced by a resumption of lockdowns post financial year end across the country. Valuations in the equity market are at historically high levels but forward multiples are showing signs of moderation due to robust future earnings expectations. Elevated valuations appear to be driven primarily by low interest rates. We do not expect cash rates to increase sharply in the short term, but note that long-term interest rates have begun to rise in certain markets due to inflationary concerns. The successful vaccine programs in most OECD countries have contributed to confidence as economies re-open. Company earnings have recovered sharply and most key economic measures are strong and growing. This globally synchronised recovery provides a very favourable backdrop for equities. Notwithstanding Milton’s much reduced bank sector investments, we remain alert to pressure on bank earnings and dividends due to compliance costs, credit quality and the impact of technology based disruption. We remain confident that our mining stocks are well positioned to generate growing income due to high iron ore prices and low debt levels. Milton’s joint venture investments are expected to continue to perform well, supported by first homebuyer activity, a preference for regional living and generous government schemes. Milton’s strong balance sheet with no debt, available profit reserves and franking credits provides confidence in Milton’s ability to continue paying fully franked dividends in the ordinary course of business. Directors Report continued 9 www.milton.com.au ASX:  MLT Board of Directors and Company Secretary Directors The directors of Milton at any time during or since the end of the financial year are: Robert D. Millner FAICD Independent non-executive chairman Director of Milton Corporation Limited since 1998 and appointed chairman in 2002. Chairman of the Investment and Remuneration Committees. Extensive experience in the investment industry. Other current directorships: Director of Apex Healthcare Berhad since 2000, Chairman of BKI Investment Company Limited since 2003, Director of Brickworks Limited since 1997 and appointed chairman in 1999, Director of New Hope Corporation Limited since 1995 and appointed chairman in 1998, Director of TPG Telecom Limited since 2000, Director of Tuas Limited since June 2020, Director of Washington H. Soul Pattinson & Company Limited since 1984 and appointed chairman in 1998. Former directorships in the last three years: Australian Pharmaceutical Industries Limited from 2000 to June 2020. Graeme L. Crampton B.Ec, FCA, FAICD Independent non-executive director Director of Milton Corporation Limited since 2009. Chairman of the Audit & Risk Committee and a member of the Remuneration Committee. A Chartered Accountant and former partner of a major firm of Chartered Accountants for more than 28 years and has extensive experience in the investment industry. Kevin J. Eley CA, F Fin, FAICD Independent non-executive director Director of Milton Corporation Limited since 2011. Member of the Investment and Audit & Risk Committees. A Chartered Accountant and has extensive experience in the investment industry. Other current directorships: Director of EQT Holdings Limited since 2011 and HGL Limited since 1985. Director of Pengana Capital Group Limited since 2017 (formerly Hunter Hall International Limited from 2015 to 2017). Justine E. Jarvinen BE(Chem), F Fin, GAICD Independent non-executive director Appointed a non-executive director of Milton since August 2017. Member of the Investment Committee. An Engineer with experience in equity markets and strategy development. Brendan J. O’Dea B.Ec, M.Bus, CA, MAICD Managing Director Managing Director of Milton Corporation Limited with effect from 1 August 2018. Member of the Investment Committee. A Chartered Accountant and has extensive investing and business management experience with over 22 years at a global investment bank as a Managing Director. Ian A. Pollard BA (Macq), MA (Oxon), D Phil (IMC), FIAA, FAICD Independent non-executive director Director of Milton Corporation Limited since 1998. Member of the Audit & Risk and Remuneration Committees. An Actuary and over 44 years of involvement in the investment industry. Company Secretary Nishantha Seneviratne MBA, FCPA, ACMA, CGMA, AICM, AGIA, ACIS Joined Milton in March 2010 and appointed the Company Secretary and Chief Financial Officer in December 2012. Prior to joining Milton, he was a Financial Controller for a group of private companies. He is a fellow member of CPA (Australia) and an associate member of the Governance Institute of Australia (GIA) and Institute of Chartered Secretaries and Administrators (ICSA). 10 Milton Corporation Limited  Annual Report 2021 Directors’ meetings The number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of Milton during the financial year are shown in Table D below. Directors’ relevant interests No director has or has had any interest in a contract entered into since the last Directors’ Report or any contract or proposed contract with Milton or any subsidiary or any related entity other than as disclosed in note 17 to the financial statements. The relevant interest of each director in the capital of Milton at the date of this report is as follows: Director Directors’ Meetings Investment Committee Meetings Audit & Risk Committee Meetings Nomination Committee Meetings Remuneration Committee Meetings A B A B A B A B A B R.D. Millner 5 7 15 16 * * * * 0 1 G.L. Crampton 7 7 * * 5 5 * * 1 1 K.J. Eley 7 7 15 16 5 5 * * * * B. O’Dea 7 7 16 16 * * 1 1 * * I.A. Pollard 7 7 * * 5 5 1 1 1 1 J.E. Jarvinen 7 7 16 16 * * 1 1 * * A Number of meetings attended. B Number of meetings held during the time the director held office or was a member of the committee during the year. * Not a member of the relevant committee. Directors Report continued Director Number of Shares R.D. Millner 13,047,096 G.L. Crampton 169,172 K.J. Eley 141,000 B.J. O’Dea 665,510 J.E. Jarvinen 15,000 I.A. Pollard 108,119 Table D.  Directors’ Meetings 11 www.milton.com.au ASX:  MLT Indemnification and insurance of directors, officers and auditors Neither Milton nor any related entity has indemnified or agreed to indemnify, paid or agreed to pay any insurance premium which would be prohibited under Section 199A or Section 199B of the Corporations Act 2001 during or since the financial year ended 30 June 2021. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and legal expenses insurance contracts as such disclosure is prohibited under the terms of the contracts. Significant changes in the state of affairs There were no significant changes in the state of affairs of Milton during the past financial year other than as disclosed in the financial statements. Events subsequent to reporting date Apart from the information contained in note 24 to the financial statements, no matter or circumstance has arisen since the end of the financial year that has or may significantly affect the operations, results or state of affairs of Milton in subsequent financial years. Likely developments Milton will continue its investment activities consistent with its objective of generating increasing revenue for distribution to its shareholders from its diversified portfolio of assets. The performance of Milton’s investments is subject to and influenced by many external factors and therefore it is not appropriate to predict the future results of the investments and Milton’s performance. This Directors Report contains information relating to Milton’s past performance, review of operations, outlook and the proposed Scheme of Arrangement. Environmental regulations There are no significant environmental regulations that apply directly to Milton. Environmental, Social and Governance matters are considered by Milton’s Investment committee to ensure sustainability of income. Non-audit services During the year, Pitcher Partners, Milton’s auditor, has performed certain non-audit services in addition to its statutory duties. Details of the amounts paid to the auditors and related practices of the auditor are disclosed in note 19 to the consolidated financial statements. The board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: a All non-audit services were subject to the corporate governance procedures adopted by Milton and have been reviewed and approved by the Audit & Risk Committee to ensure they do not impact on the integrity and objectivity of the auditor, and a The non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional Statement APES110 Code of Ethics for Professional Accountants (including Independence Standards), as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for Milton, acting as an advocate for Milton or jointly sharing risks and rewards. The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 19. Rounding off The company is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191, and in accordance with that legislative instrument, amounts in the Directors’ Report and financial report have been rounded off to the nearest thousand dollars, unless otherwise stated. 12 Milton Corporation Limited  Annual Report 2021 This report, which is audited, details the policy for determining the remuneration of directors and executives and provides specific details of their remuneration. Remuneration Report for the year ended 30 June 2021 2021 $ 2020 $ Chairman base fee 147,358 147,358 Director base fee 73,679 73,679 Chairman of the Audit & Risk Committee fee 6,520 6,520 Member of the Audit & Risk Committee fee 3,696 3,696 Member of the Investment Committee fee 6,520 6,520 Base fees and committee fees (including superannuation contributions) Remuneration of non-executive directors Non-executive directors are paid base fees, committee fees and superannuation contributions. Fees are not linked to Milton’s performance and no bonuses are paid or options issued. Each year the base fees and committee fees are determined by the board of directors who take into account the demands made on directors and the remuneration of non executive directors of comparable Australian companies. Non-executive directors, who were appointed before 30 June 2003, are entitled to retirement benefits in accordance with a shareholder approved scheme. In June 2003 the board resolved to cap retirement benefits for all directors at the amounts provided as at 30 June 2003. The total balance provided at 30 June 2021 is $100,905 (2020: $100,905). Remuneration of executives Executive remuneration is a key element of the staff retention strategy which is designed to attract and retain appropriately qualified and experienced professionals who share Milton’s goals and values and will seek to deliver superior long term returns to its shareholders. The remuneration of the managing director and senior executives is reviewed annually by the Remuneration Committee which then makes recommendations to the board for its consideration and approval. In formulating its recommendations, the Remuneration Committee considers: a the short term and long term performance of the Company as measured by dividend growth and total returns; a the contribution of the managing director and the senior executives to this performance; a market trends in remuneration in terms of both quantum and structure; and a the remuneration of key management personnel of other listed investment companies with similar long term investment philosophies and objectives. Executive remuneration includes a component known as the Total Employment Cost Package (TECP), and it may include a cash bonus component and an equity component. The total remuneration paid to non-executive directors in 2021 was $475,546 (2020: $475,546). In October 2011 shareholders approved an increase in the maximum non-executive directors’ total remuneration to $700,000. 13 www.milton.com.au ASX:  MLT The TECP includes cash salary, company contributions to superannuation and it may include non monetary benefits such as the provision of a motor vehicle and car parking. No executive is entitled to a guaranteed bonus however the board may award a cash bonus to reward an executive’s outstanding contribution to the achievement of Milton’s objectives. The board will consider qualitative measures such as contribution to the investment process, participation in board discussions, timeliness and accuracy of reports and staff development when assessing executive performance. In determining the amount of any bonus the board has regard to quantitative measures such as underlying operating earnings per share, dividends per share and total returns relative to the market as a whole. Average cash bonus paid was 11.9% of TECP for 2021. The equity component of the remuneration package encourages executives to have an investment in Milton to align their interests with shareholders. The equity component is delivered through participation in the Senior Staff Share Plan (“SSSP”), which was approved by shareholders at Milton’s Annual General Meeting on 9 October 2001 (refer note 18b to the financial statements). In accordance with the terms of the SSSP, the directors determine the maximum number of shares for which the executive may apply. All SSSP shares are acquired on the market and held on behalf of the executives by the trustee of the SSSP. The price offered to the executive shall be at a discount of one cent per share to the market value of the shares. Executives are required to hold the SSSP shares for a minimum period of three years however the benefit to the executive is increased through long term ownership to the extent dividends are paid and the Milton share price appreciates. Milton provides an interest free loan to the executives to fund the acquisition of each parcel of SSSP shares. Each loan is repaid by the application of the after tax proceeds from the dividends paid on the SSSP shares. The opportunity cost to Milton of providing the loan is the notional interest. The Remuneration Committee includes this cost when it reviews each executive’s TECP. SSSP shares may not be sold, transferred, mortgaged or otherwise dealt with by the executive for a period of three years from the date of issue or until the executive ceases employment with Milton. If the executive’s employment ceases, the executive may within 30 days repay the loan and direct the trustee to transfer the shares to the executive or, provided the value of the shares is greater than the loan outstanding, direct the trustee to sell the shares, repay the loan and distribute the balance to the executive. Otherwise the trustee will sell the shares when so directed by Milton and apply the proceeds to the repayment of the loan. The board considers that the SSSP is appropriately designed to encourage long term ownership of shares by executives, which then aligns their interests with that of Milton’s predominantly long term shareholder base. Executives, other than the managing director, may participate in the Employee Share Plan (“ESP”) which provides for a bonus of up to $1,000 to be paid in the form of Milton shares (refer note 18a to the financial statements). Eligible executives are provided with life, total and permanent disablement and salary continuance insurance. The overall level of executive reward takes into account the performance of Milton over a number of years. Key performance indicators for Milton over five years are tabled on the following page. At Milton’s 2020 Annual General Meeting, shareholders supported the remuneration report for the 2020 financial year with 91.47% of the proxies in favour of the resolution to approve the report. The resolution to approve the remuneration report was passed by a show of hands at the Annual General Meeting held in October 2020. 14 Milton Corporation Limited  Annual Report 2021 Remuneration Report continued 2021 2020 2019 2018 2017 Profitability Underlying operating profit ($ million) 90.0 111.3 133.6 128.8 122.0 (Decline) growth in underlying operating profit (%) (19.1) (16.7) 3.7 5.6 (3.5) Underlying earnings per share (cents) 13.4 16.6 20.1 19.6 18.7 (Decline) growth in underlying earnings per share (%) (19.4) (17.3) 2.4 4.7 (4.1) Dividend Full year ordinary dividend (cents per share) 13.75 17.50 19.40 19.00 18.70 (Decline) growth in full year ordinary dividend (%) (21.4) (9.8) 2.1 1.6 0.5 Special dividend (cents per share) – – 2.5 – – Capital Net asset backing per share pre-tax(1) at 30 June ($) 5.50 4.26 4.92 4.73 4.51 Growth (decline) in net asset backing per share (%) 29.1 (13.4) 4.0 4.9 6.9 Net assets(1) at 30 June ($ million) 3,708 2,863 3,292 3,114 2,939 Total Return Ten year Total Shareholder Return (TSR) 12.0 7.2 9.7 6.5 4.7 Ten year Total Portfolio Return (TPR) 9.2 7.1 9.6 6.9 4.2 Ten year accumulation return of the All Ordinaries Index (XAOAI) 9.4 7.8 10.0 6.2 3.5 1 Before provision for tax on unrealised capital gains Key performance indicators 15 www.milton.com.au ASX:  MLT Details of remuneration Amounts of remuneration Details of the remuneration of each non-executive director of Milton Corporation Limited, the managing director and specified executives of Milton for the years ended 30 June 2020 and 2021 are set out in the following tables. Non- executive directors Short Term Benefits – Fees Post Employment Super- annuation Retirement Benefits paid Total Paid Retirement Provision(1) $ $ $ $ $ R.D. Millner Chairman 2021 140,528 13,350 – 153,878 55,905 2020 140,528 13,350 – 153,878 55,905 G.L. Crampton Director 2021 56,199 24,000 – 80,199 – 2020 56,199 24,000 – 80,199 – K.J. Eley Director 2021 76,616 7,279 – 83,895 2020 76,616 7,279 – 83,895 – I.A. Pollard Director 2021 70,662 6,713 – 77,375 45,000 2020 70,662 6,713 – 77,375 45,000 J.E. Jarvinen Director 2021 73,241 6,958 – 80,199 – 2020 73,241 6,958 – 80,199 – Total remuneration 2021 417,246 58,300 – 475,546 100,905 2020 417,246 58,300 – 475,546 100,905 1 The directors’ retirement benefits have been capped at the balance provided at 30 June 2003 Non-executive directors of Milton Corporation Limited 16 Milton Corporation Limited  Annual Report 2021 Remuneration Report continued Short Term Benefits Managing director and executives Salary Cash Bonus(1) Post Employment Super- annuation Other long term benefits(2) Share based payments(3) Total $ $ $ $ $ $ B.J. O’Dea Managing Director 2021 664,500 112,500 24,000 – 71,597 872,597 2020 651,000 112,500 24,000 – 68,580 856,080 D.N. Seneviratne CFO, secretary 2021 214,872 27,500 20,128 4,577 34,598 301,675 2020 205,740 27,500 19,260 3,461 38,616 294,577 Total remuneration 2021 879,372 140,000 44,128 4,577 120,357 1,174,272 2020 856,740 140,000 43,260 3,461 107,196 1,150,657 1 Represents 100% of cash bonus paid or payable which vested in the year. 2 Other long term benefits comprise changes in long service leave provisions and long service leave paid. 3 Represents the notional value of interest on loans provided to acquire Milton shares under the Senior Staff Share Plan. Fixed remuneration Performance-related STI Performance-related LTI 2021 2020 2021 2020 2021 2020 B.J. O’Dea 78.9% 78.8% 12.9% 13.1% 8.2% 8.1% D.N. Seneviratne 79.4% 77.6% 9.1% 9.3% 11.5% 13.1% Managing director and executives of Milton Corporation Limited and its subsidiaries The relative proportions of total remuneration of above key management personnel that are fixed or related to performance are as follows: There are no fixed term employment contracts between Milton and its employees. Employment may be terminated with four weeks’ notice by either Milton or the employee. There are no contractual provisions for any termination payments other than for unpaid annual and long service leave. 17 www.milton.com.au ASX:  MLT Share based compensation, Senior Staff Share Plan equity holdings and loans The movements during the reporting period are as follows: Opening Balance Received as Remuneration Closing Balance Shares Shares(1) Shares B.J. O’Dea Managing Director 2021 300,000 228,000 528,000 2020 200,000 100,000 300,000 D.N. Seneviratne CFO, secretary 2021 202,500 60,000 262,500 2020 177,500 25,000 202,500 1 Received as remuneration in 2021 comprise staff shares purchased in relation to 2020 (144,000 MLT shares) and 2021 (144,000 MLT shares) financial years. Comparative in 2020 comprise staff shares purchased in relation to 2019. Executives’ shareholdings in relation to the Senior Staff Share Plan – Number of shares held Loans in relation to the Senior Staff Share Plan Details regarding loans outstanding at the reporting date to specified directors and specified executives, are as follows: Opening Balance Net change Closing balance Highest balance in the year Notional Interest(1) $ $ $ $ $ B.J. O’Dea Managing Director 2021 1,352,727 1,097,985 2,450,712 2,450,712 71,597 2020 915,186 437,541 1,352,727 1,396,793 68,580 D.N. Seneviratne CFO, secretary 2021 742,971 275,613 1,018,584 1,018,584 34,598 2020 652,313 90,658 742,971 772,715 38,616 1 The notional interest has been included under “Share Based Payment” in the remuneration of the managing director and the executive disclosed on page 16. Notional interest is based on the applicable FBT benchmark interest rate, which for the year averaged 4.73% (2020: 5.20%). Apart from the loan balances shown above, there were no loans outstanding to key management personnel. Terms and conditions of the loans are referred to in note 18b to the financial statements. 18 Milton Corporation Limited  Annual Report 2021 Share holdings of key management personnel and their related parties – Number of shares held Share holdings of non-executive directors and their related parties – Number of shares held Remuneration Report continued Opening Balance Received as Remuneration Other Acquisitions Closing Balance Shares Shares Shares Shares B.J. O’Dea Managing Director 2021 388,392 228,000 49,118 665,510 2020 252,141 100,000 36,251 388,392 D.N. Seneviratne CFO, secretary 2021 203,907 60,000 – 263,907 2020 178,907 25,000 – 203,907 Opening Balance Changes Closing Balance Shares Shares Shares R.D. Millner 37,366,914 – 37,366,914 G.L. Crampton 169,172 – 169,172 K.J. Eley 131,000 10,000 141,000 I.A. Pollard 160,009 – 160,009 J.E. Jarvinen 15,000 – 15,000 Total Number of Shares 37,842,095 10,000 37,852,095 End of Audited Remuneration Report Signed in accordance with a resolution of the directors. G.L. CRAMPTON B.J. O’DEA Chairman – Audit & Risk Committee Managing Director Sydney, 11 August 2021 19 www.milton.com.au ASX:  MLT Auditor’s Independence Declaration to the Directors of Milton Corporation Limited ABN 18 000 041 421 I declare that to the best of my knowledge and belief, during the year ended 30 June 2021 there have been no contraventions of: i) the auditor’s independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii) APES 110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Milton Corporation Limited and the entities it controlled during the year. S.S. WALLACE Partner 11 August 2021 Auditor’s Independence Declaration 20 Milton Corporation Limited  Annual Report 2021 The Foundation was established in 1988 to support charitable organisations, particularly those which direct assistance to persons that are disadvantaged in the community. The objective is to create a vehicle with sufficient capital that can make regular meaningful donations from the earnings derived from its investments. Contributions from Milton, shareholders and others over the years have helped to grow the Foundation’s total assets at 30 June 2021 to $2.3 million. Milton Foundation’s assets can now support annual distributions of over $100,000. In 2021, a total of $120,000 was distributed to fifteen organisations, which provide much needed support for the disadvantaged in society in Australia. The Foundation has provided $2.6 million of assistance to the community since its establishment. The Foundation is a deductible gift recipient registered with the Australian Charities and Not-for-profits Commission (ACNC) and donations of $2 or more are tax deductible. J.F. CHURCH Chairman of Trustees Sydney, 11 August 2021 Milton Corporation Foundation ABN 95 051 921 133 Shareholders can support the Foundation by either: Forwarding a cheque to: The Trustees Milton Corporation Foundation PO Box R1836 Royal Exchange NSW 1225 or Direct deposit into the bank account: Account Name:  Milton Corporation Foundation BSB:  082-067 Account No:  038263869 Financial Statements Contents 21 21 www.milton.com.au ASX: www.milton.com.au ASX:  MLT   MLT Financial Statements Consolidated Income Statement Consolidated Income Statement 22 22 Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income 23 23 Consolidated Statement of Financial Position Consolidated Statement of Financial Position 24 24 Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity 25 25 Consolidated Statement of Cash flows Consolidated Statement of Cash flows 26 26 Notes to the financial statements Key Numbers Key Numbers 1. Revenue 1. Revenue 27 27 2. Tax  2. Tax  28 28 3. Earnings Per Share  3. Earnings Per Share  30 30 4. Dividends Paid  4. Dividends Paid  30 30 5. Dividend Franking Account  5. Dividend Franking Account  31 31 6. Listed Investment Company 6. Listed Investment Company capital gain account  capital gain account  31 31 Assets Assets 7. Investments in equity instruments  7. Investments in equity instruments  32 32 8. Investment in joint venture entities  8. Investment in joint venture entities  33 33 9. Cash  9. Cash  34 34 10. Receivables  10. Receivables  34 34 Capital Management: Capital Management: 11. Share Capital  11. Share Capital  35 35 12. Reserves  12. Reserves  35 35 Risk Risk 13. Critical accounting estimates, 13. Critical accounting estimates, judgements and assumptions  judgements and assumptions  36 36 14. Management of financial risk  14. Management of financial risk  36 36 15. Capital risk management  15. Capital risk management  37 37 Group Structure Group Structure 16. Subsidiaries  16. Subsidiaries  38 38 Other Information Other Information 17. Related party transactions  17. Related party transactions  39 39 18. Share Based Payments  18. Share Based Payments  40 40 19. Auditor’s Remuneration  19. Auditor’s Remuneration  41 41 20. Parent entity disclosures  20. Parent entity disclosures  42 42 21. Summary of other accounting policies  21. Summary of other accounting policies  42 42 22. Cash flow information  22. Cash flow information  44 44 23. Contingent liabilities  23. Contingent liabilities  44 44 24. Events subsequent to reporting date  24. Events subsequent to reporting date  44 44 25. Holdings at Fair Value through Other 25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2021  Comprehensive Income at 30 June 2021  45 45 22 Milton Corporation Limited  Annual Report 2021 Consolidated Income Statement for the year ended 30 June 2021 Note 2021 $’000 2020 $’000 Ordinary dividends and distributions 1a 95,725 117,210 Interest 1c 377 1,478 Net gains on trading portfolio 1d 1,016 789 Other revenue 545 661 Operating Revenue 97,663 120,138 Share of net profits of joint ventures – equity accounted 8a 3,074 888 Special dividends and distributions 1b 2,799 5,761 Income from operating activities 103,536 126,787 Administration expenses (4,844) (4,528) Merger and acquisition related costs (441) – Profit before income tax expense 98,251 122,259 Income tax expense thereon 2a (5,872) (5,302) Profit attributable to shareholders of Milton 92,379 116,957 Note 2021 Cents 2020 Cents Basic and diluted earnings per share 3 13.73 17.45 The Consolidated Income Statement is to be read in conjunction with the Notes to the Consolidated Financial Statements. 23 www.milton.com.au ASX:  MLT Consolidated Statement of Comprehensive Income for the year ended 30 June 2021 2021 $’000 2020 $’000 Profit 92,379 116,957 Other comprehensive income Items that will not be reclassified to profit and loss Revaluation of investments 833,591 (427,178) Provision for tax (expense) benefit on revaluation of investments (255,285) 127,171 Other comprehensive income, net of tax 578,306 (300,007) Total comprehensive income for the year attributable to the shareholders of Milton 670,685 (183,050) The Consolidated Statement of Comprehensive Income is to be read in conjunction with the Notes to the Consolidated Financial Statements. 24 Milton Corporation Limited  Annual Report 2021 Consolidated Statement of Financial Position as at 30 June 2021 Note 2021 $’000 2020 $’000 Current assets Cash 9 79,106 114,069 Receivables 10a 13,875 10,938 Prepayments 55 410 Total current assets 93,036 125,417 Non-current assets Investments 7 3,581,349 2,706,159 Joint ventures – equity accounted 8b 23,780 24,709 Receivables 18b 5,871 4,117 Property, plant and equipment 5,916 5,376 Deferred tax assets 2c 243 292 Total non-current assets 3,617,159 2,740,653 Total assets 3,710,195 2,866,070 Current liabilities Payables 1,290 1,456 Current tax liabilities 100 782 Provisions 114 66 Total current liabilities 1,504 2,304 Non-current liabilities Deferred tax liabilities 2d 545,893 289,725 Provisions 226 274 Total non-current liabilities 546,119 289,999 Total liabilities 547,623 292,303 Net assets 3,162,572 2,573,767 Shareholders’ equity Issued capital 11 1,658,174 1,644,321 Capital profits reserve 12b 84,507 74,263 Asset revaluation reserve 12a 1,229,096 661,034 Retained profits 190,795 194,149 Total equity attributable to shareholders of Milton 3,162,572 2,573,767 The Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Consolidated Financial Statements. 25 www.milton.com.au ASX:  MLT Consolidated Statement of Changes in Equity for the year ended 30 June 2021 Issued capital $’000 Capital profits reserve $’000 Asset revaluation reserve $’000 Retained profits $’000 Total equity $’000 Balance at 1 July 2020 1,644,321 74,263 661,034 194,149 2,573,767 Profit – – – 92,379 92,379 Other comprehensive income – – 578,306 – 578,306 Total comprehensive income – – 578,306 92,379 670,685 Net realised gains – 10,244 (10,244) – – Transactions with shareholders: Share issues 13,853 – – – 13,853 Dividends paid – – – (95,733) (95,733) Balance at 30 June 2021 1,658,174 84,507 1,229,096 190,795 3,162,572 Issued capital $’000 Capital profits reserve $’000 Asset revaluation reserve $’000 Retained profits $’000 Total equity $’000 Balance at 1 July 2019 1,633,055 66,148 969,156 207,087 2,875,446 Profit – – – 116,957 116,957 Other comprehensive income – – (300,007) – (300,007) Total comprehensive income – – (300,007) 116,957 (183,050) Net realised gains – 8,115 (8,115) – – Transactions with shareholders: Share issues 11,266 – – – 11,266 Dividends paid – – – (129,895) (129,895) Balance at 30 June 2020 1,644,321 74,263 661,034 194,149 2,573,767 The Consolidated Statement of Changes in Equity is to be read in conjunction with the Notes to the Consolidated Financial Statements. 26 Milton Corporation Limited  Annual Report 2021 Consolidated Statement of Cash Flows for the year ended 30 June 2021 Note 2021 $’000 2020 $’000 Cash flows from operating activities Dividends and distributions received 95,465 126,106 Interest received 568 1,564 Distributions received from joint venture entities 4,003 967 Other receipts in the course of operations 546 959 Proceeds from sales of trading securities 17,240 7,317 Payments for trading securities (16,224) (6,528) Other payments in the course of operations (4,185) (4,740) Income taxes paid (5,639) (4,549) Net cash provided by operating activities 22a 91,774 121,096 Cash flows from investing activities Proceeds from disposal of investments 43,171 276,270 Proceeds from redemption of other financial assets – 1,465 Payments for investments in equities and trusts (79,805) (268,670) Payments for investments in joint ventures – (1,663) Payments for mergers and acquisitions 16 (441) – Cash on acquisition of subsidiaries 358 – Payments for property, plant and equipment (1,026) (5,377) Loans repaid by other entities 660 324 Loans advanced to other entities (2,377) (1,043) Net cash provided by (used in) investing activities (39,460) 1,306 Cash flows from financing activities Payments for share issue costs (42) (32) Ordinary dividends paid 4a (87,235) (118,607) Net cash used in financing activities (87,277) (118,639) Net (decrease) increase in cash assets held (34,963) 3,763 Cash assets at the beginning of the year 114,069 110,306 Cash assets at the end of the year 9 79,106 114,069 The Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Consolidated Financial Statements. 27 www.milton.com.au ASX:  MLT Notes to the Consolidated Financial Statements for the year ended 30 June 2021 Key Numbers 1. Revenue Milton’s revenue is derived from dividends, distributions, interest income, profit from joint ventures and net gains arising from the trading portfolio. 2021 $’000 2020 $’000 a. Ordinary dividends and distributions Milton receives ordinary dividend income and trust distributions from its long term investments in companies and trusts listed on the Australian Securities Exchange. Investments held in portfolio at 30 June 94,602 106,797 Investments sold during the year 1,123 10,413 95,725 117,210 b. Special dividends and distributions This special investment revenue is received on an ad hoc basis and cannot be relied upon each year. Investments held in portfolio at 30 June 2,799 5,761 Investments sold during the year – – 2,799 5,761 Dividends and distributions are brought to account on the dates that the securities trade ex-dividend. Demerger dividends arising from company de-consolidations are treated as a return of capital and not as a dividend. c. Interest Milton earns interest on its cash, term deposits and other liquid assets. Interest from deposits and cash 377 1,478 377 1,478 Interest on cash and term deposits is brought to account on an accruals basis. Interest on other liquid securities is recognised on the date these securities trade ex-dividend. d. Net gains from trading portfolio Net gains from trading portfolio 1,016 789 Trading securities are recognised initially at cost and subsequently measured at fair value. Changes in fair value are taken directly through the income statement. Dividends from trading securities are brought to account on the dates the securities trade ex-dividend. Notes to the Consolidated Financial Statements continued Key Numbers 28 Milton Corporation Limited  Annual Report 2021 2. Tax This note provides analysis of Milton’s income tax expense, shows amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. The note also details the deferred tax assets and liability balances and their movements. 2021 $’000 2020 $’000 a. Reconciliation of Income Tax Expense to prima facie tax payable Profit before income tax 98,251 122,259 Prima facie income tax expense calculated at 30% on the profit before income tax expense 29,476 36,678 Increase (decrease) in income tax expense due to: Tax offset for franked dividends (23,930) (30,823) (Over) provision in prior year (557) (792) Other differences 883 239 Income tax expense on profit 5,872 5,302 b. Tax expense composition Current tax on profits for the year 5,497 5,857 (Over) provision in prior year (557) (792) Decrease (increase) in deferred tax assets (note 2c) 49 (2) Increase in deferred tax liabilities (note 2d) 883 239 5,872 5,302 c. Deferred tax assets The balance comprises temporary differences attributable to: Provisions 127 279 Share issue expenses 4 – Other 112 13 Total deferred tax assets 243 292 Movements: Balance at 1 July 292 294 (Charged) credited to the income statement (49) 2 (Charged) to equity – (4) Balance at 30 June 243 292 To be recovered within 12 months 91 39 To be recovered after more than 12 months 152 253 243 292 29 www.milton.com.au ASX:  MLT 2021 $’000 2020 $’000 d. Deferred tax liabilities The balance comprises temporary differences attributable to: Amounts recognised directly in equity: Revaluation of investments 539,441 289,876 Realised capital losses (15,363) (16,529) Amounts recognised in profit: Gains on scrip for scrip rollovers 21,399 16,045 Income receivable which is not assessable for tax until receipt 416 333 545,893 289,725 Movements: Balance at 1 July 289,725 416,657 Charged to income statement 883 239 Charged (credited) to other comprehensive income 255,285 (127,171) Balance at 30 June 545,893 289,725 To be settled beyond 12 months 545,893 289,725 The income tax expense for the year is the tax payable on the current year’s taxable income based on the current income tax rate applicable for the year adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and any unused tax losses. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. Milton Corporation Limited (the parent entity) and its wholly-owned subsidiaries have formed an income tax consolidated group. Each entity in the group recognises its own current and deferred tax, except for any deferred tax assets arising from unused tax losses from subsidiaries, which are immediately assumed by the parent entity. The current tax liability of each group entity is subsequently assumed by the parent entity. There is no tax funding agreement between Milton Corporation Limited and its subsidiaries. Deferred tax balances attributable to revaluation amounts are recognised directly in equity through the asset revaluation reserve. e. Offsetting deferred tax balances: Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities. Deferred tax assets from realised capital losses are offset against deferred tax liabilities from unrealised capital gains. Deferred tax liabilities have been recognised for capital gains tax on the unrealised gains in the investment portfolio at current tax rates. As Milton does not intend to dispose of the investment portfolio this tax may not be payable at the amount disclosed in Note 2d above. Any tax liability that may arise on disposal of investments is subject to tax legislation relating to the treatment of capital gains and the applicable tax rate at the time of disposal. Notes to the Consolidated Financial Statements continued Key Numbers 30 Milton Corporation Limited  Annual Report 2021 2. Tax (continued) Deferred tax assets relating to carried forward capital losses have been recognised based on current tax rates. Utilisation of the tax losses requires the realisation of capital gains in subsequent years and the ability to satisfy certain tests at the time the losses are recouped. The deferred tax assets related to carried forward capital losses have been offset against the related deferred tax liabilities as disclosed in Note 2d. 3. Earnings Per Share 2021 Cents 2020 Cents Basic earnings per share 13.73 17.45 $’000 $’000 Profit attributable to shareholders of the parent entity 92,379 116,957 No. of Shares No. of Shares Weighted average number of ordinary shares used in the calculation of basic earnings per share 672,708,732 670,366,099 Diluted earnings per share and basic earnings per share are the same because there are no potential dilutive ordinary shares. 4. Dividends Paid 2021 $’000 2020 $’000 a. Recognised in the current year An ordinary final dividend of 8.5 cents per share in respect of the 2020 financial year paid on 2 September 2020 (2020: Ordinary final dividend of 10.4 cents per share paid on 3 September 2019) 57,063 69,572 An ordinary interim dividend of 5.75 cents per share paid on 4 March 2021 (2020: 9.0 cents per share paid on 5 March 2020) 38,670 60,323 95,733 129,895 Dividends paid in cash 87,235 118,607 Dividends reinvested in shares 8,498 11,288 95,733 129,895 31 www.milton.com.au ASX:  MLT 2021 $’000 2020 $’000 b. Not recognised in the current year Since the end of the financial year, the directors declared an ordinary final dividend in respect of the 2021 year of 8.0 cents per share payable on 14 September 2021 (2020: ordinary final dividend of 8.5 cents per share paid on 2 September 2020) 53,938 57,063 5. Dividend Franking Account 2021 $’000 2020 $’000 The amount of franking credits available to shareholders for the subsequent financial year, adjusted for franking credits that will arise from the payment of the current tax liability and franked dividend receivable 121,416 122,864 Subsequent to year end, the franking account will be reduced by the proposed final dividend to be paid on 14 September 2021 (2020: final dividend paid on 2 September 2020) (23,116) (24,455) 98,300 98,409 The franking account balance would allow Milton to frank additional dividend payments up to an amount of $229,367,362 (2020: $229,621,193) which represents 34 cents per share (2020: 34 cents per share). 6. Listed Investment Company capital gains account 2021 $’000 2020 $’000 Balance of the Listed Investment Company (LIC) capital gains account available to shareholders for the subsequent financial year 1,688 1,655 Distributed LIC capital gains may entitle certain shareholders to a special deduction in their income tax return. LIC capital gains available for distribution are dependent upon the disposal of investment portfolio holdings, which qualify for LIC capital gains and the receipt of LIC capital gain distributions. 32 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Assets 7. Investment in equity instruments Milton is predominantly a long term investor in companies and trusts listed on the Australian Securities Exchange. 2021 $’000 2020 $’000 Investments – non-current Quoted investments – at fair value 3,580,934 2,705,785 Unquoted investments – at fair value 415 374 3,581,349 2,706,159 a. Included in quoted investments are: Shares in other corporations 3,330,385 2,476,375 Stapled securities in other corporations 250,549 229,410 3,580,934 2,705,785 b. Included in unquoted investments are: Units in trusts 415 374 Investments are recognised initially at cost and Milton has made an irrevocable election to present subsequent changes in fair value of equity instruments in other comprehensive income through the asset revaluation reserve after deducting a provision for the potential deferred capital gains tax liability as these investments are long term holdings of equity instruments. Quoted investments are valued continuously at fair value, which is determined by the unadjusted last-sale price quoted on the Australian Securities Exchange at the measurement date. Use of unadjusted last sale price in an active market such as the Australian Securities Exchange falls within the Level 1 fair value hierarchy of measuring fair value under AASB 13. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. 2021 $’000 2020 $’000 c. Investments disposed of during the year The disposals occurred in the normal course of Milton’s operations as a listed investment company or as a result of takeovers or mergers. Fair value at disposal date Equity investments 59,298 276,270 Gains on disposal after tax Equity investments 10,244 8,115 When an investment is disposed, the cumulative gain or loss, net of tax thereon is transferred from the asset revaluation reserve to the capital profits reserve as disclosed in Note 12. 33 www.milton.com.au ASX:  MLT 8. Investment in joint venture entities Milton has a long history of investing in property development joint ventures. Wholly owned subsidiaries of Milton have investments in separate joint venture entities that have non-controlling interests in three property development joint venture partnerships. 2021 $’000 2020 $’000 a. Contribution from joint venture entities Milton has interests in the following joint venture entities: 33.33% interest in the Ellenbrook Syndicate Joint Venture contribution to operating profit before tax (2020: 33.33%) 2,224 1,213 23.33% interest in The Mews Joint Venture contribution to operating profit before tax (2020: 23.33%) 207 85 50% interest in the LWP Huntlee Syndicate No 2 Joint Venture (2020: 50%) 100 (410) Write back of provision for diminution in value 543 – Share of net profits of joint ventures 3,074 888 b. Consolidated interest in the assets and liabilities of the joint venture entities Current assets 12,506 12,612 Non-current assets 17,217 19,310 Current liabilities (1,442) (2,696) Non-current liabilities (4,501) (3,974) 23,780 25,252 Provision for diminution in value – (543) Net assets 23,780 24,709 Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures based on rights and obligations arising from the joint arrangement rather than the legal structure of the joint arrangement. Each joint venture partnership agreement provides that partners have rights to the net assets of the partnership. Accordingly, Milton has assessed the nature of its joint arrangements and determined that all current interests are joint ventures and thus accounted for using the ‘Equity Method’. Under the ‘Equity Method’, Milton’s investments in joint ventures are valued initially at cost and periodically adjusted for changes in value due to Milton’s share in the joint ventures’ income or losses, distributions and any call payments. 34 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Assets 8. Investment in joint venture entities (continued) c. Contingencies and capital commitments Guarantee facility by parent company Milton agreed to provide a guarantee subject to a maximum of $10 million to Bankwest to support a repayment of a principal amount on a loan payable on 30 June 2022 (or on a later agreed date) by a joint venture in which LWP Huntlee Syndicate No 2 has a 23.75% interest. This facility, which is on commercial terms, is secured by a second ranking mortgage over the real property of the joint venture as well as guarantees provided by other related entities of the joint venture. As at 30 June 2021 Milton’s contingent liability amounted to $10 million (30 June 2020: $10 million). Other than the above, the directors are not aware of any material contingent liabilities, contingent assets or capital commitments as at 30 June 2021. 9. Cash Cash include cash at bank, deposits with banks or financial institutions and term deposits maturing within three months or less. 2021 $’000 2020 $’000 Cash at bank 3,142 6,034 Deposits at call 39,964 38,035 Term deposits 36,000 70,000 79,106 114,069 The weighted average interest rate for cash and deposits at call as at 30 June 2021 is 0.4% p.a. (2020: 0.2% p.a.). The weighted average interest rate of term deposits as at 30 June 2021 is 0.4% (2020: 1.4%) with an average term of 6.8 months (2020: 4.5 months). 10. Receivables 2021 $’000 2020 $’000 a. Receivables – current Dividends receivable 13,677 10,523 Interest receivable 67 258 Sundry debtors 131 157 13,875 10,938 b. Terms and conditions Sundry debtors are due within 30 days and no interest is charged. 35 www.milton.com.au ASX:  MLT Capital Management 11. Share capital Milton may offer shareholders the opportunity to increase their holdings by participation in the Share Purchase Plan and in the Dividend Reinvestment Plan. Milton may also increase its capital through renounceable rights issues and acquisition of investment companies with the consideration being the issue of Milton shares. All capital consists of fully paid ordinary shares which are listed on the ASX and carry one vote per share and equal rights to receive dividends. Movement in share capital 2021 No. of Shares 2021 $’000 2020 No. of Shares 2020 $’000 Opening balance 671,326,397 1,644,321 668,963,092 1,633,055 Acquisition of unlisted investment companies 972,243 5,387 – – Dividend Reinvestment Plan(1) 1,931,724 8,498 2,363,305 11,288 Less: Transaction costs (net of tax) – (32) – (22) Closing balance 674,230,364 1,658,174 671,326,397 1,644,321 1 Milton’s Dividend Reinvestment Plan (DRP) offers shareholders the option to reinvest all or part of their dividend in new ordinary shares. In the 2021 financial year, Milton issued 1,203,381 new shares in September 2020 and 728,343 new shares in March 2021 under the DRP (2020:1,288,011 issued in September 2019 and 1,075,294 issued in March 2020). 12. Reserves Nature and purpose of reserves Changes in fair value of investments are presented in other comprehensive income through the asset revaluation reserve as referred to in Note 7. Upon disposal of long-term investments, the realised gain or loss, net of any tax expense or benefit, is transferred from the asset revaluation reserve and recorded in the capital profits reserve. 2021 $’000 2020 $’000 a. Asset revaluation reserve Opening balance 661,034 969,156 Revaluation of investments net of provision for tax 578,306 (300,007) Net realised (gains) (10,244) (8,115) 1,229,096 661,034 b. Capital profits reserve Opening balance 74,263 66,148 Net realised gains 10,244 8,115 84,507 74,263 36 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Risk This section of the notes discusses Milton’s exposure to various risks and shows how these could affect Milton’s financial position and performance. 13. Critical accounting estimates, judgements and assumptions Judgements, estimates and assumptions are required to prepare financial statements. Apart from the items mentioned below, there are no key assumptions or sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. i) Deferred tax liabilities from unrealised capital gains are offset against deferred tax assets from realised capital losses as disclosed in Note 2e. ii) Classification of joint arrangements as joint ventures as disclosed in Note 8. 14. Management of financial risk The risks associated with the financial instruments, such as investments and cash, include credit, market and liquidity risks which could affect Milton’s future financial performance. The Board has approved policies and procedures to manage these risks. The effectiveness of these policies and procedures is continually reviewed by management and annually by the Audit & Risk Committee. a. Credit risk exposures Milton’s principal credit risk exposures arise from the investment in liquid assets, such as cash, bank term deposits and income receivable. The risk that financial loss will occur because a counterparty to a financial instrument fails to discharge an obligation is known as credit risk. The credit risk on Milton’s financial assets, excluding investments, is the carrying amount of those assets. Individual bank limits have been approved by the board for the investment of cash. Cash is invested for the short to medium term with major Australian banks which have a Standards and Poor’s short term rating of A2 and above. Income receivable comprises accrued interest and dividends and distributions which were brought to account on the date the shares or units traded ex-dividend. There are no financial instruments overdue. All financial assets and their recoverability are continuously monitored by management and reviewed by the board on a quarterly basis. b. Market risk Market risk is the risk that changes in market prices will affect the fair value of the financial instrument. The fair value of the quoted investments is determined by the unadjusted last sale price quoted on the Australian Securities Exchange at the measurement date. Milton is exposed to market risk through the movement of the security prices of the companies and trusts in which it is invested. The market value of individual companies fluctuates daily and the fair value of the portfolio changes continuously, with this change in the fair value recognised through the asset revaluation reserve. 37 www.milton.com.au ASX:  MLT Investments represent 97% (2020: 94%) of total assets. A 5% movement in the market value of investments in each of the companies and trusts within the portfolio would result in a 4.8% (2020: 4.7%) movement in the net assets before provision for tax on unrealised capital gains at 30 June 2021. The net asset backing before provision for tax on unrealised capital gains would move by 27 cents per share at 30 June 2021 (2020: 20 cents at 30 June 2020). Milton’s management continuously monitors the performance of the companies within its portfolio and makes portfolio recommendations which are considered by the Investment Committee. The Milton board reviews the portfolio on a quarterly basis. Milton is not directly exposed to foreign currency risk as all its investments are quoted in Australian dollars. The fair value of Milton’s other financial instruments are unlikely to be materially affected by a movement in interest rates as they generally have short dated maturities and variable interest rates. c. Liquidity risk Liquidity risk is the risk that Milton is unable to meet its financial obligations as they fall due. Milton manages liquidity risk by monitoring forecast and actual cashflows. All accounts payable are due and payable within 1-3 months. 15. Capital risk management The parent entity invests its equity in a diversified portfolio of assets with the objective of generating a growing income stream for distribution to shareholders in the form of fully franked dividends. The capital base is managed to ensure there are funds available for investment as opportunities arise. Capital may be increased through the issue of shares under the Share Purchase Plan and the Dividend Reinvestment Plan. Shares may also be issued through renounceable rights issues and as consideration for acquisition of other investment companies. 38 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Group Structure 16. Subsidiaries Investments in subsidiaries are carried at net asset value which approximates fair value of the controlled entities. Income from dividends is brought to account when they are declared. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. a. Basis of Consolidation The consolidated financial statements include the financial statements of Milton being the parent entity and its subsidiaries. The balances and effects of transactions between subsidiaries included in the consolidated financial statements have been eliminated in full. Where entities have come under the control of the parent entity during the year, their operating results have been included in the group from the date control was obtained. Entities cease to be consolidated from the date on which control is transferred out of the group and the consolidated financial statements include the result for the part of the reporting period during which the parent entity had control. b. Milton Corporation Limited’s subsidiaries The following subsidiaries have been included in the consolidated financial statements. The parent entity and all subsidiaries are incorporated in Australia: Percentage of Interest held 2021 % 2020 % 85 Spring Street Properties Pty Ltd 100 100 Chatham Investment Co. Pty Limited 100 100 Incorporated Nominees Pty Limited 100 100 Milhunt Pty Limited 100 100 ACN007531240 Pty Limited – 100 Kay Harrison Pty Limited 100 – c. Acquisition and disposal of subsidiaries Milton acquired 100% shares on an unlisted investment company for a total consideration of 972,243 new Milton shares with a fair value of $4,695,934 in April 2021. ACN 007531240 Pty Ltd acquired in 2019 was placed into voluntary liquidation during the year. (2020: Unlisted investment company Kembar Pty Ltd acquired in February 2019 was placed into voluntary liquidation). d. Business Combinations The acquisition method of accounting has been used to account for all business combinations. The business combinations have been accounted from the date Milton attained control of the subsidiaries. The considerations transferred for the acquisitions comprise the fair values of the identifiable assets transferred and the liabilities assumed. Costs related to the acquisitions, other than those associated with the issue of equity securities, are expensed to the consolidated income statement as incurred. 39 www.milton.com.au ASX:  MLT Other Information 17. Related party transactions 2021 $’000 2020 $’000 a. Directors and Key Management Personnel compensation Short-term benefits 1,437 1,414 Other long-term benefits 5 4 Post-employment benefits 102 101 Share-based payments 106 107 1,650 1,626 Information regarding individual directors’ and executives’ compensation and equity instruments disclosures, as permitted by Corporations Regulations 2M.3.03, are provided in the Remuneration Report section of the Directors’ Report on pages 12 to 18. b. Shareholdings of non–executive directors and their related parties – number of shares held Non-executive directors and their related parties held 5.6% (2020: 5.6%) of the voting power of Milton as at year end. All shares acquired by non-executive directors and their related parties during the year were purchased on an arm’s length basis. Movements in the number of shares held are given below. There were no amounts outstanding from or due to any non-executive director or their related parties as at 30 June 2021. 2021 No of shares 2020 No of shares Number of shares at beginning of the year 37,842,095 37,397,579 Acquired during the year 10,000 444,516 Number of shares held at end of year 37,852,095 37,842,095 c. Loans to key management personnel and their related parties Details regarding loans outstanding at the reporting date to key management are as shown below. No loans were granted to related parties of any key management personnel. 2021 $ 2020 $ Balance at beginning of the year 2,095,698 1,567,499 Loans advanced 1,434,082 602,009 Loans repaid (60,485) (73,810) Balance at end of the year 3,469,295 2,095,698 Notional interest 106,195 107,196 Notional interest is based on the applicable FBT benchmark interest rate for the year which averaged 4.73% (2020: 5.20%). 40 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Other Information 17. Related party transactions (continued) The loans are advanced to key management personnel in accordance with the Senior Staff Share Plan (SSSP) as disclosed in Note 18b. Loans to individual key management personnel are disclosed in the remuneration report on page 17. d. Other related party transactions All directors have entered into the Deed of Indemnity, Insurance and Access that was approved at the Annual General Meeting held on 10 October 2000. Milton has a Remuneration and Retirement Benefits Deed with Mr R.D. Millner and Dr I.A. Pollard. During the 30 June 2004 year, Milton and the directors varied the Remuneration and Retirement Benefits Deed, whereby the maximum retirement benefit payable to a non–executive director on retirement will be the provision for the director as at 30 June 2003. Apart from the details disclosed in this note no director has entered into a material contract with the parent entity or Milton since the end of the previous financial year and there were no material contracts involving directors’ interests subsisting at the end of the year. e. Loans to and from subsidiaries Loans have been made between the parent entity and wholly owned subsidiaries for capital transactions. The loans between the parent and its subsidiaries have no fixed date of repayment and are non–interest bearing. 2021 $ 2020 $ Amounts owed by (to) subsidiaries at beginning of the year 1,739,060 (12,959,503) Loans advanced from subsidiaries (9,412,135) (967,649) Loans advanced to subsidiaries 27,057,886 15,666,212 Amounts owed by (to) subsidiaries at end of the year 19,384,811 1,739,060 18. Share based payments Under the Employee Share Plan, shares are acquired for employees as part of their remuneration and the cost of the shares is recorded under employment costs. Under the Senior Staff Share Plan, shares are acquired for eligible employees as part of their remuneration and held on their behalf by the trustee of the Plan. The purchase of the Plan Shares is financed by a loan from Milton. a. Employee Share Plan The Employee Share Plan (“ESP”) is available to all eligible employees to acquire ordinary shares in Milton in lieu of a cash bonus of up to $1,000 per year as part of the employee’s remuneration. The transaction and administration costs of acquiring the shares and administering the plan are paid by Milton. During the year 470 shares (2020:414 shares) were acquired by Milton on behalf of eligible employees under the ESP at a cost of $2,080 (2020: $2,088) with a total market value at 30 June 2021 of $2,961. Any shares acquired cannot be disposed of or transferred until the earlier of 3 years from the date of issue or acquisition or on the date that the employee’s employment ceases with Milton. 41 www.milton.com.au ASX:  MLT b. Senior Staff Share Plan The Senior Staff Share Plan (“SSSP”) was approved by shareholders at Milton’s Annual General Meeting on 9 October 2001. Eligible employees are given the opportunity to apply for Plan Shares in Milton which are subscribed for or acquired and held on their behalf by the trustee of the plan. The purchase of these Plan Shares is financed by an interest–free limited recourse loan from Milton with recourse only to Plan Shares. The loan will be repaid partially from any dividends received. Milton administers the SSSP and meets the transactional and administration costs. The trustee of the plan on behalf of eligible employees acquired 254,000 shares (2020: 210,000 shares) at a cost of $1,056,419 (2020: $1,011,375) in relation to 2020 financial year and 234,000 shares in relation to 2021 financial year at a cost of $1,357,153. The shares acquired by the trustee during the year had a market value of $3,074,400 at $6.30 per share as at 30 June 2021. The SSSP loan receivable balance from eligible employees as at 30 June 2021 was $5,870,932 (2020: $4,117,515). Any shares acquired are held in the name of the trustee and classified as Restricted Shares, which cannot become Unrestricted Shares until the earlier of 3 years from the date of issue to the trustee or acquisition by the trustee or on the date that the employee’s employment ceases with Milton. The trustee may transfer Unrestricted Shares to the participant provided that any outstanding loan has been repaid in full. 19. Auditors Remuneration 2021 $’000 2020 $’000 Auditors of the company Audit and review services 123 119 Related practice of the auditor Agreed upon procedures 17 – Other services – 7 140 126 42 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Other Information 20. Parent entity disclosures In accordance with the Corporations Amendment (Corporate Reporting Reform) Act 2010 and the Corporations Act 2001 the following summarised parent entity information is set out below. As at 30 June 2021, and throughout, the financial year ended 30 June 2021 the parent entity was Milton Corporation Limited. 2021 $’000 2020 $’000 Profit of the parent entity Profit for the year 90,681 116,252 Total comprehensive income for the year 670,685 (183,050) Financial position of the parent entity as at 30 June Current assets 93,606 125,394 Non-current assets 3,618,850 2,743,474 Total assets 3,712,456 2,868,868 Current liabilities (1,324) (2,580) Non-current liabilities (548,560) (292,521) Total liabilities (549,884) (295,101) Net assets 3,162,572 2,573,767 Total equity of the parent entity comprising Issued capital 1,658,174 1,644,321 Capital profits reserves 93,092 82,848 Asset revaluation reserve 1,286,473 716,713 Retained profits 124,833 129,885 Total equity attributable to shareholders of the parent entity 3,162,572 2,573,767 21. Summary of other accounting policies a. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian accounting interpretations, other authoritative pronouncements of the Australian Accounting Standards Board, the Corporations Act 2001 and complies with International Financial Reporting Standards (IFRS). Accounting policies adopted in the preparation of these financial statements have been consistently applied to all the years presented, unless otherwise stated. The financial statements include the consolidated entity (“Milton”) consisting of Milton Corporation Limited and its subsidiaries. Milton is a ‘for–profit’ entity. These financial statements have been prepared on an accruals basis and are based on the historical cost basis except as modified by the revaluation of certain financial assets and liabilities measured at fair value. 43 www.milton.com.au ASX:  MLT New and amended standards adopted: There are no other new standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2020 that have a material impact on the amounts recognised in the prior periods or will affect the current or future periods. New and amended standards not adopted: New standards, amendments to standards and interpretations that are effective for annual periods beginning on or after 1 Jan 2021 have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of Milton. b. Rounding of amounts Unless otherwise stated under the option available in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000). c. Operating segments The consolidated entity operates in Australia and engages in investment as its principal activity. As such Milton considers the business to have a single operating segment. d. Property, plant and equipment Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying value or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Milton consolidated group, and that the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the reporting period in which they are incurred. The depreciable amount of all fixed assets including building, but excluding freehold land, is depreciated commencing from the time the asset is held ready for use. Depreciating is calculated on straight line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Building 40 years Plant and equipment 2–15 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year-end. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its recoverable amount. Gains and losses on disposals determined by comparing proceeds with carrying amounts are included in the income statement. 44 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Other Information 22. Cash flow information 2021 $’000 2020 $’000 a. Reconciliation of net profit to net cash provided by operating activities Net profit 92,379 116,957 Share of net profits of joint ventures – equity accounted (3,074) (888) Distributions received from joint venture entities 4,003 967 Merger and acquisition related costs 441 – Depreciation of non-current assets 171 37 Decrease (Increase) in receivables (2,869) 3,522 (Decrease) increase in payables and provisions 495 (274) Increase in income taxes payable 233 753 Increase (decrease) in provisions (5) 22 Net cash provided by operating activities 91,774 121,096 b. Non–cash financing and investing activities Milton acquired an unlisted investment company through an issue of 972,243 new Milton shares with a total fair value of $4,695,934 during the year ended 30 June 2021 (2020: Nil).. 23. Contingent liabilities Contingent liability relating to the interest servicing guarantee facility of $10 million provided on behalf of LWP Huntlee Syndicate No.2 joint venture as disclosed in Note 8c. Milton has engaged Greenhill and Co. Australia Pty Limited (Greenhill) to provide financial advisory services in relation to the proposed merger with WHSP via a scheme of arrangement. In the event the merger is completed, a fee capped at $3,250,000 is payable to Greenhill (any retainer fees paid in the 12 months prior to the merger completion date will be rebated against this fee). The scheme of arrangement becomes complete when the scheme of arrangement becomes effective (estimated late September 2021). Apart from the above, the directors are not aware of any other material contingent liabilities. 24. Events subsequent to reporting date Since the end of the financial year, the directors declared a fully franked ordinary final dividend of 8.0 cents per share payable on 14 September 2021. Milton has entered into a Scheme Implementation Agreement with WHSP, under which it is proposed WHSP will acquire 100% of share capital in Milton it does not already own. The proposed Scheme implementation date is estimated to be in early October 2021. The Scheme Booklet including Notice of Scheme meeting and Independent Expert Report will be sent out to Milton shareholders in early August 2021. This financial report was authorised for issue in accordance with a resolution of directors on 11 August 2021. The directors have the power to amend and reissue the financial statements. 45 www.milton.com.au ASX:  MLT 25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2021 The following holdings are valued at fair value through Other Comprehensive Income. 2021 2020 Investments in equity instruments Holding Shares Market value $’000 Holding Shares Market value $’000 AGL Energy Ltd. 3,570,141 29,275 3,570,141 60,871 ALS Ltd. 6,079,431 79,276 6,079,431 39,881 Altium Ltd. 318,500 11,686 318,500 10,345 Amcil Ltd. 280,927 343 – – Amcor PLC 3,218,512 48,696 2,433,512 35,237 Ampol Ltd. 394,000 11,115 394,000 11,552 APA Group 2,077,766 18,492 2,077,766 23,126 ARB Corporation Ltd. 911,065 39,349 911,065 16,354 Argo Investments Ltd. 2,010,741 17,956 1,880,841 13,523 ASX Ltd. 548,965 42,660 548,965 46,871 AUB Group Ltd. 1,292,991 28,950 1,292,991 19,007 Australia & New Zealand Banking Group Ltd. 11,110 313 – – Australian Foundation Investment Company Ltd. 198,059 1,549 470,513 2,865 BHP Group Ltd. 4,854,921 235,804 4,854,921 173,903 BKI Investment Company Ltd. 1,223,866 1,983 1,223,866 1,695 Brambles Ltd. 1,431,966 16,381 1,431,966 15,565 Brickworks Ltd. 3,234,567 81,091 3,234,567 51,203 Carlton Investments Ltd. 356,778 10,707 356,778 8,195 Carsales.com Ltd. 1,368,245 27,037 1,197,000 21,235 Charter Hall Group 2,556,000 39,669 2,556,000 24,768 Charter Hall Long WALE REIT 2,609,797 12,397 5,082,095 21,751 CIMIC Group Ltd. 845,739 16,729 845,739 20,399 Cleanaway Waste Management Ltd 11,710,000 30,914 11,250,000 24,750 Coca–Cola Amatil Ltd. – – 1,061,584 9,193 Cochlear Ltd. 33,800 8,506 33,800 6,386 Coles Group Ltd. 2,997,375 51,225 2,877,375 49,405 Commonwealth Bank of Australia 3,140,470 313,639 3,140,470 218,011 CSL Ltd. 601,198 171,456 601,198 172,544 Diversified United Investment Ltd. 130,607 678 130,607 552 Djerriwarrh Investments Ltd. 217,500 667 – – Eagers Automotive Ltd. 6,795,986 112,542 6,795,986 45,873 Holdings 46 Milton Corporation Limited  Annual Report 2021 Notes to the Consolidated Financial Statements continued Holdings 2021 2020 Investments in equity instruments Holding Shares Market value $’000 Holding Shares Market value $’000 Endeavour Group Ltd. 2,936,973 18,474 – – EQT Holdings Ltd. 759,524 20,811 593,954 14,700 Event Hospitality & Entertainment Ltd. 1,010,921 12,778 1,010,921 8,502 Finbar Group Ltd. 3,642,464 3,096 3,642,464 2,550 Goodman Group 1,690,376 35,785 1,690,376 25,102 Insurance Australia Group Ltd. 6,026,948 31,098 6,026,948 34,775 InvoCare Ltd. 2,050,914 23,729 2,050,914 21,494 IOOF Holdings Ltd. 3,303,924 14,108 2,575,014 12,669 IPH Ltd. 1,535,922 11,980 – – Johns Lyng Group Ltd. 9,110,796 46,465 1,950,000 4,583 Lendlease Group 972,539 11,145 972,539 12,030 Lindsay Australia Ltd. 13,341,599 5,003 13,341,599 4,670 Macquarie Group Ltd. 1,625,990 254,354 1,625,990 192,842 McMillan Shakespeare Ltd. 803,532 10,406 803,532 7,296 Magellan Financial Group Ltd. 280,800 15,124 25,000 1,450 Mirrabooka Investments Ltd. 43,600 156 – – National Australia Bank Ltd. 4,880,441 127,965 4,868,831 88,710 Origin Energy Ltd. 1,580,301 7,127 1,580,301 9,229 Pendal Group Ltd. 2,602,949 20,980 2,116,643 12,636 Perpetual Ltd. 1,231,982 49,341 1,231,982 36,553 Premier Investments Ltd. 590,321 16,853 590,321 10,183 Pro Medicus Limited 180,000 10,570 75,000 1,985 QBE Insurance Group Ltd. – – 789,375 6,994 Qube Holdings Ltd. 7,538,951 23,898 7,538,951 21,938 Ramsay Health Care Ltd. 225,283 14,182 225,283 14,986 REA Group Ltd. 92,309 15,603 92,309 9,958 Reece Ltd. 1,231,657 29,079 1,231,657 11,319 Rio Tinto Ltd. 669,120 84,737 669,120 65,547 Scentre Group 5,589,474 15,315 5,589,474 12,129 Schaffer Corporation Ltd. 68,999 1,466 68,999 911 Sims Ltd. – – 452,368 3,587 Sonic Healthcare Ltd. 940,707 36,123 940,707 28,626 Stockland Corporation Ltd 3,844,940 17,917 3,844,940 12,727 47 www.milton.com.au ASX:  MLT 2021 2020 Investments in equity instruments Holding Shares Market value $’000 Holding Shares Market value $’000 Suncorp Group Ltd. 3,218,120 35,753 3,218,120 29,703 Sydney Airport 4,874,629 28,224 4,874,629 27,639 Tank Stream Ventures 50,341 415 50,341 375 Technology One Ltd. 1,855,000 17,270 1,855,000 16,305 Telstra Corporation Ltd. 15,236,961 57,291 15,236,961 47,692 TPG Telecom Ltd. 3,148,725 19,711 3,148,725 28,024 Transurban Group Ltd. 5,815,153 82,750 5,815,153 82,168 Treasury Wine Estates Ltd. 1,206,363 14,090 1,206,363 12,643 Tuas Limited 1,574,363 1,015 1,574,363 1,063 Washington H. Soul Pattinson & Company Ltd. 9,174,640 309,461 9,174,640 179,181 Wesfarmers Ltd. 2,877,375 170,053 2,877,375 128,993 Westpac Banking Corporation 9,994,212 257,951 9,985,458 179,239 Woodside Petroleum Ltd. 1,288,838 28,625 1,288,838 27,903 Woolworths Group Ltd. 2,936,973 111,987 2,936,973 109,490 3,581,349 2,706,159 48 Milton Corporation Limited  Annual Report 2021 1. In the opinion of the directors of Milton Corporation Limited: (a) the consolidated financial statements and notes that are set out on pages 21 to 47 and the Remuneration report, that is set out on pages 12 to 18 in the Directors’ report are in accordance with the Corporations Act 2001, including: (i) giving a true view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; (iii) complying with International Accounting Standards as issued by the International Accounting Standards Board as described in Note 21a to the financial statements; and (b) there are reasonable grounds to believe that Milton Corporation Limited will be able to pay its debts as and when they become due and payable. 2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2021. Signed in accordance with a resolution of the directors. G.L. CRAMPTON B.J. O’DEA Chairman – Audit & Risk Committee Managing Director Sydney, 11 August 2021 Directors’ Declaration for the year ended 30 June 2021 49 www.milton.com.au ASX:  MLT Independent Auditor’s Report Independent Auditor’s Report to the Members of Milton Corporation Limited ABN 18 000 041 421 Report on the Audit of the Financial Report Opinion We have audited the financial report of Milton Corporation Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of the Company, would be in the same terms if given to the Directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 50 Milton Corporation Limited  Annual Report 2021 Independent Auditor’s Report continued Key audit matter How our audit addressed the matter Existence and Valuation of investments in equity instruments and related movement in reserves Refer to Note 2(d): Deferred tax liabilities, Note 7: Investments in equity instruments and Note 12: Reserves At 30 June 2021, the Group’s statement of financial position includes investments in equity instruments of $3,581,349,000, an asset revaluation reserve of $1,229,096,000 and a deferred tax liability recognised in relation thereto of $545,893,000. Listed investments are valued continuously at fair value, which is determined by the unadjusted last-sale price quoted on the Australian Securities Exchange. Changes in fair value of equity instruments are recognised in other comprehensive income through the asset revaluation reserve after deducting a provision for the potential deferred capital gains tax liability, as investments are long term holdings of equity instruments. Given the significance of the balances, the key audit matters for us were whether the Group has accurately recorded the above balances and the movement in the past 12 months and has ownership of the investments at year end. Our procedures included, amongst others: a Documenting our understanding of management’s processes and relevant controls; a Testing relevant controls relating to the portfolio revaluation are performed monthly by management; a Confirming the recording and ownership of a sample of investments and transactions during the year by agreeing the SRN/HIN numbers to share registry holding statements online and to the books and records of the Group; a Analysing and testing the movement in investments by performing tests of controls and test details on purchases and disposals during the period; a Testing management’s calculation of the revaluation of investments and the corresponding deferred income tax effect; and a Assessing the adequacy of disclosures in the financial report. Other Information The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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 of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 51 www.milton.com.au ASX:  MLT Responsibilities of the Directors for the Financial Report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: a Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. a Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. a Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. a Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. a Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. a Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. 52 Milton Corporation Limited  Annual Report 2021 Independent Auditor’s Report continued From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 12 to 18 of the Directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Milton Corporation Limited, for the year ended 30 June 2021, 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. S.S. Wallace PITCHER PARTNERS Partner Sydney 11 August 2021 53 www.milton.com.au ASX:  MLT Directors R. D. MILLNER Chairman G. L. CRAMPTON K. J. ELEY J. E. JARVINEN I. A. POLLARD Management B. J. O’DEA CEO and Managing Director D.N. SENEVIRATNE CFO and Secretary Registered Office & Principal Place of Business Level 5, 261 George Street Sydney NSW 2000 Phone: (02) 8006 5357 Fax: (02) 9251 7033 Email: general@milton.com.au Website: www.milton.com.au Auditors Pitcher Partners Level 16, Tower 2 201 Sussex Street Sydney NSW 2000 Website: www.pitcher.com.au Share Registry Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Phone: (02) 8280 7111 Fax: (02) 9261 8489 Toll free: 1800 641 024 Email: milton@linkmarketservices.com.au Website: www.linkmarketservices.com.au Corporate Directory Milton Corporation Limited 54 Milton Corporation Limited  Annual Report 2021 Top 20 shareholders as at 30 June 2021 ASX Information ASX Code: MLT Name Shares Held % Washington H Soul Pattinson & Company Limited 22,216,178 3.30 Higlett Pty Ltd 17,000,000 2.52 Argo Investments Limited 13,469,198 2.00 HSBC Custody Nominees (Australia) Limited 11,954,121 1.77 Australian Foundation Investment Company Limited 8,092,421 1.20 Bortre Pty Limited 6,079,504 0.90 Danwer Investments Pty Ltd 6,079,504 0.90 Griffinna Pty Ltd 5,190,000 0.77 Citicorp Nominees Pty Limited 4,461,112 0.66 J S Millner Holdings Pty Ltd 3,843,514 0.57 Macdawley Proprietary Limited 3,479,615 0.52 JBF Holdings Pty Ltd 3,440,466 0.51 Hexham Holdings Pty Limited 3,280,079 0.49 Millane Pty Limited 3,165,269 0.47 T N Phillips Investments Pty Ltd 3,119,817 0.46 Jamama Nominees Pty Limited 3,031,214 0.45 Brispot Nominees Pty Ltd 2,990,487 0.44 A V L Investments Proprietary Limited 2,979,080 0.44 John E Gill Trading Pty Ltd 2,814,074 0.42 Chickenfeed Pty Ltd 2,809,614 0.42 David Burns Pty Limited 2,724,955 0.40 Number of shares held Number of shareholders 1 – 1,000 5,353 1,001 – 5,000 8,675 5,001 – 10,000 5,781 10,001 – 100,000 9,800 100,001 and over 695 The number of holders of less than a marketable parcel of $500 (79 shares) 664 On 30 June 2021, there were 30,304 holders of ordinary shares in the capital of Milton. Holders of ordinary shares are entitled to one vote per share. Other Information Milton is taxed as a public company. There is no current on-market buy-back. The total number of transactions in securities undertaken by Milton was 84 and the total brokerage paid or accrued was $152,879. 55 www.milton.com.au ASX:  MLT Share Issues History Share Purchase Plan history Acquisition of unlisted companies Date Issue price per share $ 10.11.1999 8.75 13.11.2000 8.86 13.11.2001 10.79 08.11.2002 11.70 31.10.2003 13.21 29.10.2004 14.10 21.10.2005 17.11 16.10.2006 19.60 19.10.2007 22.48 03.10.2008 17.85 09.10.2009 16.08 30.09.2013 19.12 22.10.2013 5 for 1 share split 01.10.2014 4.45 02.10.2015 4.18 Date Shares issued 21.06.2002 2,287,200 31.12.2002 1,739,112 11.03.2004 2,742,777 01.04.2004 496,809 17.08.2006 1,000,322 23.08.2006 1,476,254 28.08.2006 382,404 21.09.2006 278,103 10.11.2006 1,888,353 23.03.2007 1,895,976 14.05.2007 2,424,582 20.06.2007 252,477 24.09.2007 1,223,252 19.02.2009 3,555,958 26.02.2010 1,016,370 26.02.2010 3,116,341 20.08.2010 2,446,521 21.02.2013 521,464 24.02.2014 3,280,382 22.08.2017 4,114,776 17.08.2018 5,575,148 28.02.2019 2,869,406 03.05.2021 972,243 Date Company Shares issued 31.12.2001 Cambooya Investments Limited 8,273,505 16.12.2010 Choiseul Investments Limited 23,803,854 Acquisition of listed investment companies Date Shares issued Price $ 04.03.2014 187,207 4.27 03.09.2014 698,365 4.55 03.03.2015 712,273 4.56 03.09.2015 998,879 4.39 03.03.2016 921,511 4.19 02.09.2016 1,086,782 4.28 02.03.2017 953,908 4.34 05.09.2017 1,113,757 4.44 01.03.2018 978,655 4.59 04.09.2018 1,188,729 4.66 05.03.2019 1,158,994 4.39 03.09.2019 1,288,011 4.64 05.03.2020 1,075,294 4.94 02.09.2020 1,203,381 4.16 04.03.2021 728,343 4.79 Dividend Reinvestment Plans Date Ratio Notes 22.10.2013 Five shares for one The number of shares issued prior to this date have not been adjusted for the share split. A full list of issues to shareholders since commencement of Capital Gains Tax in September 1985 can be found on the company’s website at www.milton.com.au Share Split ABN: 18 000 041 421 ABN: 18 000 041 421 Level 5, 261 George Street, Sydney NSW 2000 Level 5, 261 George Street, Sydney NSW 2000 T: (02) 8006 5357  F: (02) 9251 7033  E: general@milton.com.au T: (02) 8006 5357  F: (02) 9251 7033  E: general@milton.com.au www.milton.com.au www.milton.com.au An Australian Listed Investment Company since 1958

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