Navigator Global Investments Limited (ASX:NGI)
ASX Appendix 4E
For the year ended 30 June 2021
Results for announcement to the market
(all comparisons to the year ended 30 June 2020)
Amounts in USD’000
30 June 2021
Revenue from ordinary activities
Up
6%
to
107,958
Earnings before interest, tax, depreciation and amortisation
Up
24%
to
37,803
Profit from ordinary activities after tax attributable to members
Up
47%
to
26,755
Net profit for the period attributable to members
Up
47%
to
26,755
Dividends
Final 2020 dividend per share (paid 4 September 2020)
Interim 2021 dividend per share (paid 12 March 2021)
The directors have determined an unfranked final dividend of United States (US) 6.0 cents
per share (with 100% conduit foreign income credits). The dividend dates are:
Amount per ordinary
share
Franked
%
USD 5.5 cents
USD 3.5 cents
0%
0%
Conduit
foreign
income %
0%
100%
Ex-dividend date:
Record date:
Payment date:
25 August 2021
26 August 2021
10 September 2021
NGI dividends are determined in US dollars. However, shareholders will receive their dividend in Australian dollars. Currency conversion will
be based on the closing foreign exchange rate on the record date of 26 August 2021.
Dividend Policy
The Company has set a policy of paying a dividend of 70% to 80% of the earnings before interest, depreciation, amortisation and tax
(EBITDA). Dividends will be unfranked and will have conduit foreign income credits attached.
The payment of dividends will be subject to corporate, legal and regulatory considerations.
The above policy allows the NGI Group to retain a portion of cash generated from operating activities, and to therefore have funds available
to make additional investments into the Lighthouse Funds where such investments further the overall operating interests of the Group, or to
act on external investment and/or acquisition opportunities as and when they may arise.
A dividend reinvestment plan does not operate in respect to dividends of the Company.
Net tangible assets
Per ordinary share
30 June 2021
30 June 2020
USD 109.47 cents
USD 25.18 cents
Additional Appendix 4E requirements can be found in the Directors’ Report and the 30 June 2021 annual financial report and accompanying
notes.
This report is based on the 30 June 2021 annual financial report (which includes consolidated financial statements audited by Ernst &
Young).
2021 ANNUAL REPORT
NAVIGATOR GLOBAL INVESTMENTS LIMITED
AND ITS CONTROLLED ENTITIES
ABN 47 101 585 737
1
DIRECTORS
Michael Shepherd
Fernando (Andy) Esteban
Nicola Meaden Grenham
Andy Bluhm
Sean McGould
COMPANY SECRETARY
Amber Stoney
SECURITIES EXCHANGE LISTING
Navigator Global Investments Limited shares are listed on the
Australian Securities Exchange (ASX Code: NGI)
WEBSITE
www.navigatorglobal.com.au
REGISTERED OFFICE
Level 21
10 Eagle Street
Brisbane QLD 4000
PRINCIPAL OFFICE
Toowong Tower
Level 3, 9 Sherwood Road
Toowong QLD 4066
+61 7 3218 6200
SHARE REGISTRAR
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 1235
1300 554 474
+61 2 8280 7111
www.linkmarketservices.com.au
AUDITOR
Ernst & Young
Level 51, 111 Eagle Street
Brisbane QLD 4000
CONTENTS
2021 SNAPSHOT
FROM THE CHAIRMAN AND CEO
OPERATING & FINANCIAL REVIEW
DIRECTORS’ REPORT
LEAD AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
2
3
9
27
43
44
92
93
100
UNLESS OTHERWISE INDICATED, THE NUMBERS IN THIS
ANNUAL REPORT HAVE BEEN PRESENTED IN
US DOLLARS (USD)
1
2021 SNAPSHOT
AUM
20.9 billion
Adjusted
Operating
Revenue
92.8 million
Adjusted
EBITDA
31.6 million
Basic
EPS
14.97 cps
FY2021
Dividend
2
9.5 cps
USD 11.8 bn
FROM THE CHAIRMAN
AND CEO
3
Annual Report 2021
A year of significant change and evolution
The 2021 financial year has been a year of significant change and evolution for the Navigator Global
Investments Limited Group.
Whilst the COVID-19 pandemic has become the new normal that the world has learned to live with, we
would like to acknowledge the efforts of our dedicated staff in continuing to effectively work under what can
be trying conditions. We are very fortunate that we are able to accommodate our staff working from their
homes, giving them the best opportunities to protect themselves and their families from contracting the
coronavirus. We understand that working outside of a traditional office environment itself comes with
challenges, and we commend our staff in adapting to still be able to meet their deliverables and maintain
effective communication. We have hope that the uptake of available vaccines around the world will enable
us to move to a position of welcoming our staff back to our offices across the globe, and enabling them to
re-establish their face-to-face relationships with each other and our clients.
Despite the challenges of COVID, our people have delivered excellent results for this financial year. Not
only have they been able to deliver a transformative acquisition of the NGI Strategic Portfolio, which has
increased the NGI Group’s investments by $238.1 million as at 30 June 2021, but our core operating
business, Lighthouse Investment Partners (Lighthouse), has rebuilt it’s AUM to pre-pandemic levels to
close the financial year at $13.9 billion.
All of the above has enabled us to deliver an Adjusted EBITDA of $31.6 million for the 2021 financial year,
which is pleasingly above the earnings guidance we provided at the time of releasing our interim results in
February 2021.
Acquisition of NGI Strategic Portfolio
As noted above, this year saw the completion of a transformative acquisition for the NGI Group. On
1 February 2021, the Group completed its acquisition of the NGI Strategic Portfolio. The Portfolio
comprises passive minority stakes in six boutique alternative asset managers:
The acquisition of the Portfolio is an important step for the NGI Group in delivering on a sound growth and
diversification strategy, and it creates a platform for Navigator to seek and implement other acquisition
opportunities.
The Portfolio was acquired from funds managed by Dyal Capital Partners and its affiliates. Dyal Capital
Partners (Dyal) is a leading provider of capital to alternative investment management companies globally.
The transaction was structured to achieve a number of core objectives for NGI:
adding quality investments to the NGI balance sheet which have a long-term track record of
generating strong returns and cash distributions to partners
providing diversification to the Group’s earnings, including added a preferred income stream
support on-going cash flow and profitability
establishing an on-going partnership with Dyal to create opportunities for additional growth
4
The purchase price
The acquisition is structured in 2 stages:
Navigator Global Investments Limited
Completed 1 February 2021
To be completed after the end of the
2025 Calendar Year
Navigator acquired approximately 70% of the combined
minority interest investments in exchange for an issue of
Navigator ordinary shares and Convertible Notes
The value of the issued shares and Convertible Notes was
linked to the NGI share price on 1 February 2021
40,524,306 Ordinary Shares were issued with a value of
$63.8 million
102,283 Convertible Notes were issued with a value of
$102.3 million
Navigator will acquire the remaining 30% interest in the
minority interest investments after the end of the 2025
calendar year.
The remaining interest will be acquired for cash, and is
calculated based on an agreed formula linked to the earnings
produced over the next 5 calendar years, capped at $200
million.
This future payment was recognised in the balance sheet as a
redemption liability at a fair value of $69.1 million on
1 February 2021.
The total purchase price was therefore $235.2 million, for which NGI acquired $219.4 million of investments and $15.8 million of cash.
There was no goodwill or bargain recognised in relation to the acquisition.
Portfolio performance and distributions
Navigator is entitled to a preferred distribution arrangement until the end of the first five years, after which it will acquire the remaining 30%
interest in the NGI Strategic Portfolio and be entitled to the entire distribution stream.
This preferred distribution is $17 million for the FY2021 profit sharing period, indexed at 3% per annum thereafter. Navigator is also entitled to
20% of any distributions above this preferred distribution amount.
The distributions earned for the FY2021 profit sharing period were $28.9 million, of which Navigator’s share is $19.5 million. As the
transaction closed during the financial year, $3.7 million of Navigator’s distributions will be recognised in the profit and loss statement, whilst the
remaining $15.8 million is accounted for as acquired cash.
The managers within the NGI Strategic Portfolio have all performed well since the transaction closed on 1 February 2021. This has been due to
either strong investment performance over the past 5 months, good net capital inflows, or a combination of both. One manager had a decrease
in assets under management attributable to the sale of certain of its assets during the period.
As a result of the increase in assets under management across the NGI Strategic Portfolio, the fair value of the investments as at 30 June 2021
is estimated at $238.1 million. Similarly, the estimate of the amount of the redemption payment due in 2026 has also been increased to $79.7
million. The net effect of these two increases to fair value estimates results in an $8.0 million unrealised net gain in fair value in the profit and
loss statement. However, since the net gain is unrealised and both the assets and liability are long term in nature, this amount has been
excluded from the Group’s Adjusted EBITDA of $31.6 million.
Rebuilding Lighthouse AUM
The Group finished the 2020 financial year impacted by some of the significant negative
market reaction from the initial outbreak of the COVID-19 pandemic. Some of our
Lighthouse portfolios had experienced large draw downs in March 2020, and by June 2020
AUM was reflecting both the impact of this negative performance and the expected
increase in redemption demand as a response.
We are very pleased that despite this difficult start to the year, Lighthouse was able to
reverse these impacts through a strong investment performance result across it’s portfolios,
particularly in the first half of the financial year. These investment performance results also
aided client retention efforts, enabling the Lighthouse team to significantly reduce the
quantum of redemptions over the course of the year. Lighthouse also saw opportunities for
new clients emerge, showing positive net inflows in both its Hedge Fund and Managed
Account Services products. These service offerings remain a key area of expected future
growth.
The combined effect of investment performance and client retention has led to an 18%
increase in Lighthouse AUM over the year, to close at $13.9 billion as at 30 June 2021.
2
.
4
1
9
.
3
1
8
.
1
1
3
.
1
1
5
.
9
June 2017 June 2018 June 2019 June 2020 June 2021
5
Annual Report 2021
Operating performance
FY 21 operating performance
The Operating and Financial Review on pages 9 to 26 sets out detailed information on the Group’s activities for FY2021. We take this
opportunity to highlight a few key points:
Navigator delivered adjusted EBITDA of $31.6 million (with statutory EBITDA of $37.8 million).
Management fee revenue was $75.6 million for the year, a decrease of 14% on the prior year.
Performance fee revenue for the year was $13.5 million, an increase of $8.0 million on the previous financial year. Strong investment
performance, particularly in the first half of the financial year, drove the significant increase.
Accounting income from the NGI Strategic Portfolio was $3.7 million, however the full benefit of the FY2021 profit sharing on the
Portfolio was $19.5 million when taking into account the $15.8 million of cash acquired in the transaction.
Operating expenses (net of revenue from fund expense reimbursements and provision of office space, and adding back cash lease
payments now recognised as a financing cost) decreased by $0.5 million on the prior year. Increases in staff costs, primarily due to
higher variable compensation, were off-set by cost reductions across most other expenditure areas.
5-year historical performance
The Board considers EBITDA to be the most relevant measure of the Company’s overall financial performance.
Statutory EBITDA for 2021 increased by 24% on the prior year, a reflection in the strong recovery of the Lighthouse business after the beginning
of the pandemic, as well as the addition of income from the acquisition of the NGI Strategic Portfolio during the year.
2017
2018
2019
2020
2021
EBITDA (USD millions)
Cash flows from operating activities (USD millions)
Dividends per share for the financial year (US cents)
29.848
30.088
14.0
34.212
32.921
16.0
37.652
22.565
17.0
30.518
32.562
14.0
Dividend amount for the financial year (USD millions)
22.648
26.058
27.281
22.885
Dividend payout as a % of EBITDA
76%
76%
72%
75%
37.803
22.199
9.5
25.419
80%1
Closing share price (dollars)
AUD 2.40
AUD 5.34
AUD 3.94
AUD 1.19
AUD 1.78
Change in share price (dollars)
▲ AUD 0.11 ▲ AUD 2.94 ▼ AUD 1.40 ▼ AUD 2.75 ▲ AUD 0.59
1 2021 payout ratio calculated on Adjusted EBITDA of $31.587 million. Adjusted EBITDA excludes the impact of $8.0 million of net unrealised
changes in fair value of the NGI Strategic investment portfolio and redemption liability.
Dividends
The Directors determined an unfranked dividend of 6.0 US cents per share (with 100%
conduit foreign income credits) payable 10 September 2021. Added to the interim dividend of
3.5 cents per share, this brings the total for the year to 9.5 US cents per share.
The FY2021 combined interim and final dividends equates to a payout ratio of 80% of Adjusted
EBITDA.
The Directors are satisfied that the current capital management policy of paying a dividend of
between 70-80% of EBITDA continues to strike the right balance between rewarding
shareholders and ensuring the Group can retains sufficient resources to take advantage of any
growth opportunities which may arise.
FY2021 dividends of
9.5
cents per share
6
Navigator Global Investments Limited
Corporate governance
Strong governance and a culture which values ethics and integrity are a key priority for the Navigator board.
Our core values
We are very aware that people are the heart of everything we do.
That’s why our core values are centered around how we want employees to behave with our clients, our managers and with each other.
These values have been the guiding force within our Lighthouse business since the beginning, and the Navigator board formally adopted
these values in May 2019 to ensure that we articulate them externally as well as internally:
Ethics & Integrity
Do the right thing at all times
and in all circumstances,
whether or not anyone is
watching
Teamwork
Work together and use all of the
resources of the firm to make
decisions that will maximise
value
Professionalism
Treat all people (internally and
externally) with respect and
dignity
Client Loyalty
Do more than is expected by the
client
Continuous Improvement
& Excellence
All employees are responsible for
proactively achieving regular,
incremental improvements
Board composition
During the financial year, Navigator welcomed Ms Nicola Meaden Grenham as director on 8 October 2020, with her appointment approved by
shareholders at the 2020 Annual General Meeting. Nicola brings over 30 years of knowledge and experience in the global alternative asset
management sector, and she has proven to be an excellent complement to the existing Directors.
The NGI Strategic Portfolio transaction terms also include a right for Dyal to nominate a director for appointment to the board, however this right
has yet to be exercised. The Navigator Board will continue to review its composition as the Group executes on its growth strategy.
7
Annual Report 2021
Outlook
FY21 was yet another busy and challenging year. It has definitely been an exciting one in terms of growth, and has laid the ground work for
even more growth by acquisition.
The NGI Group is more diversified than ever before. It is powered by high quality earnings diversified across product, client type and
geography. It is also positioned with the financial resources and capabilities to drive strong long-term growth.
NGI’s earnings profile is now highly
diversified between Lighthouse and
the six current investments in our
NGI Strategic Portfolio
Multi-year outlook for stable, well-
covered preferred earnings stream
from the NGI Strategic Portfolio
Lighthouse generates management
fee concentrated earnings from a
diverse product set and client base
Long-term
Growth
Active pipeline of new potential
strategic investment and acquisition
opportunities
The Lighthouse business is well
positioned for growth across multiple
products and continues to invest in
additional product innovation
NGI Strategic managers continue to
tactically launch new products and
strategies
On behalf of the Directors, we would like to extend our thanks again to all of our staff, who have shown resilience and adaptability in responding
to the necessary changes in working conditions arising from the global pandemic. They have remained focused on delivering quality investment
and client service, with the goal of assisting our clients through the continuing global uncertainties. We look forward to the safe resolution of the
pandemic, and in the meantime extend our hope that you and your family remain safe and well.
Michael Shepherd
Chairman
Sean McGould
Chief Executive Officer
8
OPERATING AND
FINANCIAL REVIEW
9
Annual Report 2021
Navigator Global Investments Limited is a diversified asset management holding
company dedicated to partnering with leading management teams who operate
institutional quality businesses globally, primarily in the alternative investment
management sector
The Navigator Global Investments Limited (Navigator) operates a business which is broader and more diversified than ever before. Our
performance is driven by high quality earnings diversified across product, client type, geography and positioned with the financial resources and
capabilities to drive strong long-term growth. Our focus is on a sector of the asset management industry experiencing strong growth and high
barriers to entry.
We look for opportunities which provide exposure to high quality asset management businesses for our shareholders, and look to achieve this
with flexible ownership and operating structures. With the successful acquisition of minority stakes in high quality alternative asset managers
during the 2021 financial year, our business is currently structured along two key lines:
Full/Majority owned
Operating businesses
Minority stakes
Strategic investments
NGI Strategic Holdings
Strategic Portfolio
After a successful year of both organic and acquisition growth, Navigator is well positioned to continue executing its strategic plan for growth
with:
Diversified and scaled portfolio of cash flow generating assets
Clean balance sheet
Large and growing addressable market
Deep investment and operational expertise
Dyal Capital Partners, the industry leading investor in alternative investment
management companies globally, as a strategic partner and long-term shareholder
10
Navigator Global Investments Limited
About Lighthouse
Our wholly-owned operating business is Lighthouse Investment Partners, LLC (‘Lighthouse’). Lighthouse is a global investment management
firm which offers hedge fund strategies to investors who are looking to diversify their asset mix and realise growth with a lower correlation to
traditional equity and fixed income allocations.
Lighthouse believes the most effective way to achieve diversification from traditional markets is through exposure to intelligently designed and
actively managed portfolios of hedge fund strategies. Lighthouse’s overall objective is to create and deliver innovative investment solutions that
compound investor capital.
As at 30 June 2021, Lighthouse is managing $13.9 billion of assets under management.
Lighthouse has an investor base that spans North America, Europe, the Asia-Pacific and the Middle East. It’s clients are primarily institutional,
and include high net worth individuals, family offices, endowments, foundations, trusts, investment banks, benefit plans, pension funds,
healthcare and insurance companies.
As a global business with a global client base, Lighthouse has offices in New York, Chicago, Palm Beach Gardens, London, Hong Kong and
Tokyo.
34
Investment
professionals
US$14bn
Total AUM
112
Direct
employees
1000+
Investors
worldwide
25 Year
Track record
11
Annual Report 2021
Lighthouse is a global investment firm with a diversified mix of business
The foundation for the services provided by Lighthouse is its proprietary managed accounts program. Entrepreneurial and innovative,
Lighthouse has since its inception employed proprietary managed accounts. This program has allowed Lighthouse to build truly differentiated
alternative asset portfolios with idiosyncratic exposures, and spurring continuing evolution.
Hedge
Fund
Solutions
Lighthouse offers a broad range of hedge fund solutions, including strategic partnerships, custom managed
portfolios and commingled funds.
In its strategic partnerships, Lighthouse works closely with large strategic investors to customise their
alternative investment exposure and meet specific needs across middle office, risk monitoring and
investment advisory services. Strategic partners may utilise a variety of Lighthouse’s services, ranging
from investments in its Hedge Funds or Commingled Funds, Customised Funds or utilisation of its
Managed Account Services.
Customised Solutions offers investors who are able to commit to a significant investment size the
ability to access the benefits of the managed account structure in their own customised portfolio while
still receiving portfolio construction, manager selection and due diligence services from the Lighthouse
investment team.
Lighthouse also offers a number of hedge fund solutions through its commingled funds, the largest
strategies of which are:
Diversified – a multi-strategy approach, absolute return focused with low correlation and beta to
traditional markets.
Global Long/Short – a global long/short equity fund seeking equity-like returns with lower volatility
than traditional global equity investments.
Hedge
Funds
A growing focus of the Lighthouse business is its Hedge Fund offering. These products are structured as
multi-portfolio manager hedge fund products.
The largest Hedge Fund product is North Rock, which specialises in absolute return strategies with
a low correlation to public equity markets. The North Rock fund houses multiple investment teams,
representing independent investment specialists operating under North Rock’s platform.
Mission Crest is a multi-portfolio manager global macro hedge fund which has been incubated for
several years, and which can now be accessed directly by investors.
Additional products using the multi-portfolio manager structure are in development and Lighthouse sees
this as a key area for additional growth.
Managed
Account
Services
Lighthouse offers dedicated Managed Account Services for large institutions who have significant
allocations to hedge fund assets.
Managed Account Services provides these clients with access to the benefits of a managed account
structure, allowing them to maintain control of manager selection and allocation decisions.
Lighthouse offers clients a unique skill set and knowledge which allows us to provide them with efficient
onboarding, specialised legal structuring and compliance services, counterparty management and robust
operational oversight. Internally built expertise also means a high level of customisation, and support
purpose-built tools for advanced portfolio analytics, risk management and treasury functionality.
Lighthouse has built its infrastructure over time to handle the complexity of operating a large account
program in terms of number of managers strategies and assets under management.
12
Assets under management
(AUM)
After experiencing a significant reduction to AUM at the beginning
of the financial year due to the impacts on performance of the
turbulent and challenging markets caused by the COVID-19
pandemic, strong investment performance from Lighthouse since
the September 2020 quarter has grown AUM back to pre-
pandemic levels.
We have seen a shift in how some of our key strategic partnership
clients choose to utilise our services. For the past several years,
some clients have restructured their assets with us to move away
from solely customised portfolios, to holding assets across
commingled funds, customised funds and using our managed
account services to better manage their own separate hedge fund
asset exposures. In particular, the largest Hedge Fund product,
North Rock, has drawn particular attention from our larger strategic
clients.
Navigator Global Investments Limited
2
.
4
1
9
.
3
1
8
.
1
1
3
.
1
1
5
.
9
June 2017
June 2018
June 2019
June 2020
June 2021
30 June 2020
Net Flows
Performance
30 June 2021
Hedge Fund Solutions
Commingled Funds
USD 3.76 bn
▼ USD 1.48 bn
▲ USD 0.66 bn
USD 2.94 bn
Customised Solutions
USD 3.75 bn
▼ USD 0.51 bn
▲ USD 0.92 bn
USD 4.16 bn
Hedge Funds
USD 1.00 bn
▲ USD 0.49 bn
▲ USD 0.19 bn
USD 1.68 bn
Managed Account Services
USD 3.26 bn
▲ USD 1.33 bn
▲ USD 0.56 bn
USD 5.15 bn
Combined total
USD 11.77 bn
▼ USD 0.17 bn
▲ USD 2.33 bn
USD 13.93 bn
Hedge Fund Solutions
Commingled Funds
The negative investment performance experienced by the multi-
strategy portfolios in March 2020 had the biggest impact on the
Commingled Funds in terms of redemption pressure. Whilst
redemptions where at higher than historical levels in the first six
months of the calendar year, strong rebound performance by these
funds over the course of the financial year helped to stem
redemptions in each progressive quarter. The below chart shows
commingled fund net outflow for each financial quarter:
September 2020
quarter
December 2020
quarter
March 2021
quarter
June 2021
quarter
-0.17
-0.27
-0.37
-0.67
Given the headwinds to the Commingled Funds which existed at
the beginning of the financial year, the trend in reduced outflows
provides confidence that the AUM in commingled funds has
stabilised.
Customised Solutions
Customised Solutions AUM grew by 11% or $410 million to close
the financial year at $4.16 billion.
Strong investment performance significantly grew AUM, which
more than off-set the overall net redemptions experienced over the
financial year.
The largest outflow quarter was September 2020, where the $380
million net outflow was not unexpected coming off the March 2020
performance of the multi-strategy products.
13
Annual Report 2021
Assets under management
(AUM)(continued)
Hedge Funds
Lighthouse’s Hedge Fund products increased an impressive 68%
to be $1.68 billion of AUM as at 30 June 2021. Whilst strong
investment performance was a key contributor to growth,
increasing AUM by $190 million, these funds also attracted net
inflows of $490 million over the year.
The Hedge Fund products continue to be of significant interest to
both our existing clients and potential new clients. We expect
these products to continue to drive AUM growth in the next
financial year.
Managed Account Services
AUM in Managed Account Services increased 58% over the
financial year to end at $5.15 billion. Over 70% of that growth was
due to net inflows of $1.33 billion.
The year commenced positively with two new clients in July 2020
who funded a combined $400 million. A third new client
commenced during the December quarter with an initial funding of
$200 million.
The remaining increase in AUM was due to additional net flows
from existing clients.
There is significant interest in the Managed Account Service
capabilities, and it is anticipated that it will continue to be an
important source of AUM growth for Lighthouse.
Fees
Lighthouse revenue from clients is largely generated by management fees, although it has a number of portfolios across both Commingled
funds and Customised solutions clients which also may generate a performance fee:
Some Commingled funds have share classes which have a management fee and include a performance fee. Generally, where a
performance fee arrangement is in place, the management fee rate for that share class is lower. The varying fee options for a particular
Commingled fund allow investors to select a fee structure which best suits their requirements.
Fee arrangements for Customised solutions clients are negotiated individually. Whilst most arrangements involve only a management fee,
some clients also have a performance fee component as part of their fee structure.
The indicative range for management fee rates for each of these
services is as follows:
Indicative management fee range
Commingled Funds
Customised Solutions
Managed Account Services
0.50%-2.00%pa
0.45%-0.90%pa
Up to 0.50%pa
Management fee rebate arrangements may also apply to fees
charged to particular clients within Commingled Fund structures.
Fee rebates are directly off-set against management fee revenue.
Management fee rates
The average management fee for the 2021 financial year was
0.58% per annum (2020: 0.66% per annum).
0.68%
0.66%
0.58%
e
e
f
t
n
e
m
e
g
a
n
a
m
e
g
a
r
e
v
A
0.80%
0.60%
a
p
%
0.40%
0.20%
0.00%
FY 2019
FY 2020
FY 2021
This management fee rate represents the blended net
management fee rate across all AUM. While there are a number
of factors which impact the average management fee rate across
periods, the main driver is the relative proportion of AUM invested
across Commingled Funds, Customised Solutions funds and
Managed Account Services clients.
14
Performance fees
Strong performance, particularly in the first half of the financial
year resulted in Lighthouse earning performance fee revenue for
the year of $13.5 million, up $8.0 million on the prior year.
Performance fees are variable in nature, and it is difficult to
forecast how much, if any, performance fee revenue will be earned
by the Group in future periods
8
.
9
7
.
3
9
.
1
7
.
3
2
.
0
9
.
0
H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021
People
Lighthouse has 112 direct employees across the following
functional divisions as at 30 June 2021 (2020: 111):
t
n
e
m
t
r
a
p
e
d
y
b
s
e
e
y
o
p
m
E
l
Investment
Distribution
34
28
Operations
16
Legal & Compliance
Technology
14
12
HR & Administration
8
There are also 24 employees as at 30 June 2021 who’s
employment cost is included in both the ‘Revenue from
reimbursement of fund operating expenses’ and ‘Reimbursable
fund operating expenses’ lines of the profit and loss statement and
in Note 4 of the financial statements
.
Navigator Global Investments Limited
15
Annual Report 2021
About NGI Strategic Holdings
NGI Strategic Holdings was established as a division of Navigator during the 2021 financial year to commence a new initiative for making
investments in high quality boutique alternative asset managers.
The first transaction completed for this strategic initiative was the acquisition of a portfolio of six minority interests in alternative asset managers
in February 2021, which is referred to as the NGI Strategic Portfolio..
As at 30 June 2021, the NGI Strategic Holdings portfolio was comprised of passive minority interests in the following asset managers:
Firm AUM: US$9.6 billion
Year founded: 2005
Headquarters: New York, USA
Investment Strategy: Structured public and private credit strategies across high yield
asset-based securities, commercial and residential credit
Firm AUM: US$8.9 billion
Year founded: 2004
Headquarters: New York, USA
Investment Strategy: A global, alternative investment management firm operating
across a broad range of derivatives-based strategies with a deep understanding of
volatility
Firm AUM: US$8.0 billion
Year founded: 1991
Headquarters: Paris, France
Investment Strategy: Global quantitative and systematic strategies
Firm AUM: US$6.3 billion
Year founded: 1981
Headquarters: New York, USA
Investment Strategy: Multi-strategy across various credit and relative value strategies,
including performing credit (CLOs and bank loan SMAs)
Firm AUM: US$3.6 billion
Year founded: 2003
Headquarters: New York, USA
Investment Strategy:
metals and agricultural sectors
Global commodities specialist platform with exposure to energy,
Firm AUM: US$2.5 billion
Year founded: 1995
Headquarters: New York, USA
Investment Strategy: Global macro
16
The key characteristics of the NGI Strategic Portfolio are:
Navigator Global Investments Limited
US$38.9 bn
Total Portfolio
AUM
Offices in
6
countries
US$7.0bn
Ownership
adjusted AUM
25
Strategies
74%
Performance fee
eligible AUM
114
products
AUM figures are as of 30 June 2021.
Estimated performance fee eligible AUM is based on March-July AUM figures, depending on the manager
Whilst it has only been 5 months since the NGI Strategic Portfolio was acquired, we have been pleased by the contribution of the Portfolio to
Navigator’s operating performance for the 2021 financial year.
Assets under management (AUM)
$37.9
$37.8
$38.9
$34.3
$33.2
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
The NGI Strategic Portfolio total AUM is at its highest levels than
over the previous five years, showing a 17% increase for the
financial year, and a 9% increase over the six months to 30 June
2021.
Ownership adjusted total AUM of $7.0 billion is up from $5.9 billion
at the end of the prior comparative period1.
Strategies across the NGI Strategic Portfolio generated strong
relative returns for their clients throughout the 2021 financial year
and continue to show a low correlation to one another. We are
seeing sustained and diversified client demand across the
managers.
1
Historical portfolio AUM has been adjusted to reflect one manager’s 2021 sale of certain assets. The sale is not expected to have a
material impact on the earnings outlook of that manager.
17
Annual Report 2021
The transaction on 1 February 2021
The acquisition of the NGI Strategic Portfolio has been undertaken in two parts.
Stage
Completed 1 February 2021
Navigator acquired approximately 70% of the combined minority interest investments in exchange for an issue of Navigator ordinary shares and
Convertible Notes (the upfront consideration).
The value of the upfront consideration on 1 February 2021 is:
Value of shares issued
63.8 million
Value of Convertible Notes issued
102.3 million
Upfront consideration
166.1 million
Stage
To be completed after the end of the 2025 Calendar Year
Navigator will acquire the remaining 30% interest in the minority interest investments after the end of the 2025 calendar year. This will be
acquired for cash, and is calculated based on an agreed formula linked to the earnings produced over the next 5 calendar years, and is capped
at $200 million. Navigator recognises this future payment (the redemption liability) in the balance sheet at its fair value. This redemption
liability is contingent consideration.
The value of the deferred consideration on 1 February 2021 is:
Redemption liability
Deferred consideration
69.1 million
69.1 million
Total consideration
$235.2 million
Purchase price vs fair value of acquired assets
The total consideration (purchase price) has been assessed as being equivalent to the fair value of the assets acquired in the transaction.
Navigator did not recognise any bargain or goodwill in relation to the acquisition.
Purchase Price
$235.2 m
Shares
$63.8m
Notes
$102.3m
Redemption liability
$69.1 m
Assets Acquired
$235.2 m
Investments
$219.4m
Cash
$15.8m
18
Navigator Global Investments Limited
The assets and liabilities as at 30 June 2021
As both the investments acquired and the redemption liability are recognised at their fair value on the balance sheet, Navigator reassessed the
fair value as at balance date.
Given the overall positive growth in AUM and performance across the NGI Strategic Portfolio, the fair values of both the investments and the
redemption liability have increased over the 5 months to 30 June 2021:
Fair value as at
1 February 2021
Investments -
$219.4m
$18.6 m
Fair value as at
30 June 2021
Investments -
$238.0m
Redemption liability
($69.1 m)
Redemption liability
($79.7 m)
$10.6 m
Net asset impact
$150.3 m
Net asset impact
$158.3 m
$8 m
Changes in the fair value of both the investments and the redemption liability are recognised in the profit and loss statement.
Distributions
Profit share arrangement
A profit sharing arrangement is in place over the next 5 years until Navigator acquires the remaining 30% of the combined minority interest
investments.
This profit sharing arrangement includes Navigator being entitled to a preferred distribution amount, and retaining 20% of any amounts in
excess of this preferred distribution amount as follows:
Preferred distribution amount
$17.0 m
$17.5 m
$18.0 m
$18.6 m
$19.1 m
Share of amount in excess of preferred distribution amount
20%
20%
20%
20%
20%
FY21
FY22
FY23
FY24
FY25
FY2021 profit share and accounting treatment
The NGI Strategic Portfolio earned combined distributions from the managers of $28.9 million for the FY2021 profit sharing period.
The FY2021 profit sharing period was agreed to include all distributions received by the NGI Strategic Portfolio which relate to calendar year
2020 distributions made by the managers prior to 1 February 2021, and any distributions received between 1 February 2021 and 30 June 2021.
Given the acquisition occurred part way through the financial year, the accounting treatment for FY2021 does not match the profit share
calculation, as Navigator can only recognise the portion of distributions received after 1 February 2021 as income in its profit and loss
statement.
The following is a reconciliation of the profit share calculation to the amount of net distribution income recognised in the profit and loss
statement:
Profit share
Accounting treatment
Distributions received prior to 1 February 2021
$15.8m
Distributions received between 1 February 2021 and 30 June 2021
$13.1m
Dyal’s profit share (net of applicable portfolio expenses)
($9.4m)
Benefit to Navigator
$19.5 m
$15.8m
$13.1m
($9.4m)
$3.7m
$19.5 m
Acquired assets in the
Balance Sheet
Recognised in the
Profit & Loss
Net distribution to
Navigator
19
Annual Report 2021
FY2022 - 2025 distributions
From FY2022, the accounting treatment for the distributions received under the profit share is simplified, and all distributions are recognised as
income in the profit and loss as and when they are received.
The following chart demonstrates Navigator’s FY2022 calculated profit share amount for a range of different potential FY2022 total distribution
amounts, where Navigator is entitled to the first $17.5 million of distributions received plus 20% of the distributions above $17.5 million:
NGI share
Dyal share
2.0
6.0
10.0
14.0
18.0
18.0
19.0
20.0
21.0
22.0
-
15.0
-
10.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Potential total distributions for FY22
-
5.0
5.0
20
Navigator Global Investments Limited
Navigator Group Results
FY21 Adjusted EBITDA of $31.6m
Statutory
USD millions
Adjusted
USD millions
Excluded from
Adjusted
USD millions
Management fees
Performance fees
Reimbursement of fund operating expenses
Revenue from provision of serviced office space
Net distributions from NGI Strategic portfolio
Total revenue
Operating expenses
Result from operating activities
Net finance income/(costs)
Non-operating expenses
75.6
13.5
17.0
1.8
3.7
111.6
(79.0)
32.6
10.8
(5.6)
75.6
13.5
-
-
3.7
-
-
17.0
1.8
-
92.8
18.8
(63.4)
(15.6)
29.4
2.8
(0.5)
(3.2)
(8.0)
5.1
EBITDA
37.8
31.6
(6.2)
These revenue are a direct reimbursement of expenses incurred and on-charged to other parties at no mark-up. They have
been off-set directly against expenses in the presentation of “Adjusted EBITDA”
Following the adoption of AASB 16 Leases, the office lease component of occupancy expense is recognised below the EBITDA
line as a financing activity. The net cash lease payments of $3.2 million made during the year are adjusted against EBITDA so
that it represents a closer measure of the annual cash operating cost associated with the Group’s various office premises
leases.
On acquiring the NGI Strategic portfolio the Group recognised both investments and a liability for contingent consideration (the
redemption liability) in the balance sheet at fair value. Changes in the fair value of these assets and liability have resulted in a
net movement of $8.0m being recognised in the profit and loss statement. This net change in fair value has been excluded from
the presentation of ‘Adjusted EBITDA’
More details in relation to the distributions from NGI Strategic portfolio are set out on page 19.
The Group has incurred legal, tax and other professional services costs incurred in relation to the acquisition of the NGI
Strategic Portfolio. $5.1 million of these costs have been expensed and are considered non-recurring.
21
Annual Report 2021
The below presentation of the Group’s results is a non-IFRS measure and is intended to show the Group’s performance before the impact of
expense items such as depreciation, amortisation, and non-operating items such as net interest income. Net profit before and after income tax
reconciles to the income statement on page 46.
Management fee revenue
Performance fee revenue
Revenue from reimbursement of fund operating expenses
Revenue from provision of office space and services
Net distribution income from strategic investment portfolio
Total income
Employee expense
Professional and consulting expense
Reimbursable fund operating expenses
Occupancy expense
Information and technology expense
Distribution expense
Other operating expenses1
Total operating expenses1
Result from operating activities1
Net finance income, excluding interest
Other non-operating expenses
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Net interest expense
Depreciation and amortisation
Profit before income tax
Income tax expense
Net profit after income tax
Basic EPS (cents per share)
Consolidated USD millions
2021
75.571
13.532
17.027
1.828
3.661
2020
87.511
5.576
7.068
1.354
-
111.619
101.509
(47.916)
(44.216)
(5.036)
(17.027)
(1.180)
(3.372)
(1.788)
(2.652)
(6.344)
(7.068)
(1.583)
(3.540)
(2.798)
(3.795)
(78.971)
(69.346)
32.648
10.803
(5.648)
37.803
(0.796)
(4.525)
32.482
(5.727)
26.755
14.97
32.163
0.921
(2.566)
30.518
(0.651)
(3.998)
25.869
(7.721)
18.148
11.19
Increase/
(decrease)
(14%)
143%
141%
35%
100%
10%
8%
(21%)
141%
(25%)
(5%)
(36%)
(30%)
14%
2%
1073%
120%
24%
22%
13%
26%
(26%)
47%
34%
The Adjusted EBITDA below adds back net cash lease payments made during the financial year in order to reflect the Group’s EBITDA prior to
the adoption of AASB 16 where the office lease component of occupancy expense is treated as a financing activity.
ADJUSTED EBITDA
Consolidated USD millions
2021
2020
Increase/
(decrease)
Earnings before interest, tax, depreciation and amortisation (EBITDA)
37.803
30.518
Additional cash payments made for office leases (net)
Non-recurring transaction costs expensed
Net fair value impact of the NGI Strategic portfolio and liability
Impairment loss
(3.290)
5.101
(8.026)
-
(2.238)
1.799
-
0.769
Adjusted Earnings before interest, tax, depreciation and amortisation
(Adjusted EBITDA)
31.587
30.846
24%
47%
184%
100%
100%
2%
22
1
1 Excludes net finance income / (costs) including interest, depreciation and amortisation. These items have been excluded so as to present the expenses
and result arising from the Group’s core operating activities.
Navigator Global Investments Limited
Net distributions from the NGI Strategic Portfolio
$3.7 million (no pcp)
The Group acquired the NGI Strategic Portfolio on 1 February
2021. Page 19 sets out additional information regarding the
acquisition and calculation of Navigator’s share of distributions
received.
The terms of the acquisition included an agreement between the
parties to share distributions received by the NGI Strategic
Portfolio.
Agreed profit share for FY2021
Distributions received after 1 February 2021
$13.1 million
Dyal profit share
$9.4 million
Net distribution income to Navigator
$3.7 million
Navigator received $15.8 million in cash on acquisition relating to
distributions received prior to 1 February 2021. This amount is
included in the profit share calculation, but is not recognised as
income in the profit and loss statement. Rather, this $15.8 million
is accounted for as cash acquired on the balance sheet in
accordance with AASB 3 Business Combinations.
Revenue
Management fee revenue
$75.6 million (▼ 14% pcp)
Management fees decreased to $75.6 million in FY2021, mainly
due to the shift in the AUM mix away from commingled funds,
which generally have higher management fee rates, to customised
and managed account services assets which have lower
management fee rates. This change in AUM mix is reflected in the
lower average management fee rate, which decreased to 0.58%
per annum for this year (FY2020 0.66% per annum).
Page 13 shows changes in AUM over FY2021 across the various
services provided by Lighthouse.
Performance fee revenue
$13.5 million (▲ 143% pcp)
The Group earns performance fees on select portfolios. The fees
represent an agreed share of investment outperformance of a fund
or portfolio over a defined benchmark and/or high watermark and
may be subject to hurdles.
Performance fee revenue for the year was $13.5 million, an
increase of $8.0 million on the previous financial year. The
Lighthouse portfolios generally performed well over the course of
the year, particularly in the first half.
Approximately 58% of the performance fees have been earned
from Commingled Funds. Additional Share classes have been
introduced during the year to select Commingled Funds which
have a fee structure that has a lower management fee, but allows
Lighthouse to earn a performance fee.
Revenue from reimbursement of fund operating
expenses
$17.0 million (▲ 141% pcp)
The Group is entitled to reimbursement for fund expenses that it
has paid on behalf of the funds. While the funds generally pay
their own operating expenses directly, there are some expenses,
such as financial data services, software and technology
expenses, where it is more practical for the Group to incur and pay
the expense and then be reimbursed by the relevant fund(s).
The reimbursement is recognised as revenue, and there is a
corresponding off-setting expense. As the revenue and expense
directly off-set, there is no net impact on profit.
Revenue from reimbursement of fund operating expenses and
reimbursable fund operating expenses incurred for the year were
both $17.0 million (2019: $7.1 million). The significant increase on
the prior year is due to the introduction of new expense payment
and reimbursement arrangements commencing from 1 January
2021 with some of the Group’s funds.
Revenue from provision of office space and services
$1.8 million (▲ 35% pcp)
The Group provides office space and services to a number of
external parties at its New York and London offices. This revenue
is a direct recharge of occupancy and professional fees incurred
by the Group.
23
Other expenses
$2.7 million (▼ 30% pcp)
Other expenses were $2.7 million for the year. Other expenses
mainly comprises general administration costs, regulatory fees and
charges, travel and entertainment expenses.
The decrease on the prior year largely related to a $0.7m reduction
in travel expenses for the 2021 financial year due to the pandemic.
Income tax expense
The Group recognises an accounting tax expense in its income
statement at an effective tax rate of 17.6% (2020: 29.9%). The
effective tax rate reflects:
the proportion of income earned in the various jurisdictions in
which the Group operates;
in the case of income earned in the United States, this
income is taxed at a rate which is a combination of the United
States federal tax rate of 21%, individual United States state-
based taxes; and,
the effect of other permanent and temporary tax adjustments.
The Group has significant tax losses available to off-set its tax
liabilities, and hence there is no tax payable in relation to this
accounting tax expense other than in relation to some relatively
nominal United States state-based taxes. It is expected that taxes
will be payable on the NGI Strategic Portfolio income earned in the
United States from the 2022 financial year.
Annual Report 2021
Operating expenses
Employee expense
$47.9 million (▲ 8% pcp)
There was a $3.7 million increase in employee expense for the
Group as compared to the prior year.
Whilst fixed compensation remains largely flat compared to the
prior year, the variable compensation was 13% higher. This
increase reflects:
A higher level of performance fees in the FY21 result, which
contributes a greater amount to the variable compensation
pool; and
A variable compensation award to key staff involved in the
successful completion of the NGI strategic portfolio.
Professional & consulting fees
$5.0 million (▼ 21% pcp)
The Group utilises a number of expert consultants across its
business, in particular to provide specialist assistance and support
in technology, legal, managed account services and investment
process. Professional and consulting fees vary depending on the
specific projects and operating needs in each period.
Occupancy expense
$1.2 million (▼ 25% pcp)
Occupancy expense relates to short-term leases and common
area maintenance costs. Office premises rent expense previously
included as occupancy expense is now reclassified as a financing
activity.
Occupancy expense for year ended 30 June 2021 is $1.2 million
(2020: $1.6 million).
Adjusted EBITDA on page 21 includes an additional $3.3 million of
cash payments made for office leases (net of additional cash rent
received from sub-leases) so that it represents a closer measure of
the annual cash operating cost associated with the Group’s
various office premises leases.
Information and technology expenses
$3.4 million (▼ 5% pcp)
There has been a $0.2 million or 5% decrease in information and
technology expenses. Technology is a core operating requirement
for business operations, and technology costs are expected to
continue at current levels.
Distribution expense
$1.8 million (▼ 36% pcp)
Distribution expense relates to third party distribution
arrangements, whereby ongoing payments are made to third
parties in relation to clients they have introduced and who continue
to be invested in Group portfolios. Distribution expense does not
include rebates on management fees paid to clients, as these are
off-set directly against management fee revenue.
The distribution expense for this financial year was $1.8 million
(2020: $2.8 million). This reduction is largely due to the reduction
in Commingled fund AUM over the year, and at present represents
2.4% of management fee revenue (2020: 3.2%).
24
A balance sheet positioned for growth
Assets
Cash
Receivables
Investments
Intangible assets
Right-of-use (lease) assets
Recognised deferred tax assets
Liabilities
Lease liabilities
Other financial liabilities
Net tangible assets per share
Navigator Global Investments Limited
Consolidated USD millions
2021
2020
52.097
20.955
252.151
94.418
13.700
40.620
22.062
81.264
109.47
27.032
16.047
14.734
94.513
19.280
45.972
23.160
-
25.18
Cash
Intangible assets
The Group’s cash balance increased $25.1 million on the prior
period, with the increase largely related to the cash acquired with
and distributions received from the NGI Strategic Portfolio.
Receivables
Receivables relates mainly to management fees, performance fees
and reimbursements owing for fund expenses for which payment
has not yet been received as at 30 June 2021. The increase in
this balance compared to the prior year is consistent with higher
performance fees accrued as at balance date compared to the
prior year.
Investments
When the Company acquired Lighthouse in January 2008, it
recognised $499.5 million of goodwill in relation to the transaction.
An impairment loss of $405.7 million was recognised against the
goodwill balance in the 2009 financial year. The Company has
continued to carry a written-down goodwill balance of $93.8 million
since that time.
Right-of-use assets
The Group recognises right-of-use (ROU) assets in relation to
certain office leases. The reduction in the ROU asset to $13.7
million compared to the prior year is due to ongoing depreciation
and the sub-leasing of space at the Group’s Chicago office during
the year.
The Group holds significant investments at fair value on its
balance sheet:
Deferred tax assets
The Group completed a significant transaction to acquire a
portfolio of minority investment stakes in alternative asset
managers. The investments acquired are recognised at fair
value through the profit and loss statement, and fair value has
been estimated at $238.1 million as at 30 June 2021.
The Group holds $14.1 million of investments in Lighthouse
funds. Investments are held for a number of reasons,
including to meet regulatory commitments, contractual
requirement of a customised client mandate, or to seed a new
product which will be offered to external investors in the
future.
The Group’s balance sheet includes a deferred tax asset of $40.6
million which is comprised of carried forward tax losses and
deductible temporary differences relating to the US tax
consolidated groups.
Lease liabilities
The Group has a number of office premises leases in various
locations around the world, and has records a lease liabilities of
$22.1 million as at 30 June 2021 (2020: $23.2 million). Lease
payments are allocated between principal and finance cost in the
Statement of Cash Flows.
Other financial liabilities
The majority of other financial liabilities relates to the redemption
liability, which is the estimated fair value of the contingent
consideration Navigator will pay in FY2026 to acquire the
remaining share of interests in the NGI Strategic Portfolio.
Additional details in relation to the redemption liability are included
on page18.
25
Annual Report 2021
COVID-19 impact
The COVID-19 had continued to create disruption to businesses across every industry.
The Group is in a more fortunate position than most in that whilst our business and operations have certainly been impacted by the pandemic,
and will likely continue to be so for some time, we have not experienced some of the acute issues that have arisen for businesses in other
industries that have been more directly affected. The key implications and impacts for the business as a result of the pandemic are outlined
below.
The Group’s response and management plans for the pandemic have focused on:
Ensuring the well-being of our staff, including the implementation of work-from-home capability as and when required across all of our
offices globally;
Assisting our clients to understand the impacts on their investment portfolios and working with them to adapt their investment allocations in
response to changing market conditions; and
Ensuring that we keep stakeholders informed of key impacts on the business.
Business and economic factors
As the Group operates in the alternative asset management industry, business and economic
factors have had the largest potential impact on our business.
Amounts receivable from external
parties
Despite the initial negative business impact from the extreme volatility of global markets in March
2020, the business has recovered well. Both Lighthouse and the NGI Strategic portfolio have
delivered strong investment results and grown AUM through a combination of investment
performance and net capital inflows over the year.
The majority of our revenue is earned from products managed by the Group, and we have
historically had a very low default rate in relation to our trade and other receivables. The
pandemic has not had any impact on the expectation that all of the Group’s trade and other
receivables will be received in accordance with normal trading terms.
Cash distributions received by the NGI Strategic Portfolio were also within expectations.
Supply chains
The nature of the Group’s operations means that it is not dependent on supply chains for
obtaining inventory or consumables critical to the Group being able to provide its services.
Exposures to overseas operations,
transactions and currencies
Containment measures
Key service providers have been able to continue to provide services to the Group without
significant interruption despite ‘stay-at-home’ orders applying in various global locations out of
which they may operate.
The Group’s functional currency is USD and the majority of its assets, liabilities, revenues and
expenses are denominated in USD. Volatility in the AUD:USD exchange rate over the financial
year has not resulted in any material losses to the Group.
The Group has been very fortunate that we have been able to continue to operate under a work-
from-home model where necessary with minimal disruptions. The Group has and will continue to
adhere to all local health, social distancing and travel advice/guidelines. Throughout the year,
the Group has:
eliminated non-essential travel;
restricted of access to our office premises in accordance with local guidelines; and
utilised digital technologies, particularly for online collaboration and meetings.
Government support and assistance
The Group has not applied for any government or other support or assistance.
Cash flow management
The Group has not experienced any cash flow issues, and expects to be able to appropriately
manage its cash flow in both the short and long term.
Debt and lease contracts
The Group has a $15 million Credit Facility which matures on 27 July 2022.
There have not been any modifications to our existing leases. The Group entered into a sub-
lease of its Chicago office during the year due to a reduction in headcount in November 2019,
which was prior to the pandemic.
26
DIRECTORS’ REPORT
27
Annual Report 2021
The Directors present their report together with the financial statements of the Group comprising
Navigator Global Investments Limited (‘Navigator’ or ‘the Company’) and its subsidiaries for the
year ended 30 June 2021 and the auditor’s report thereon.
The Directors of the Company at any time during or since the end of the financial year are:
Michael Shepherd, AO
Chairman and Independent non executive director
Appointed 16 December 2009
Chairman of the Remuneration and Nominations Committee
Member of the Audit and Risk Committee
Michael has extensive experience in financial markets and the financial services industry having held
a range of senior positions including Vice Chairman of ASX Limited, and directorships of several of
ASX’s subsidiaries including Australian Clearing House Pty Ltd.
Currently, Michael is Chairman of the Shepherd Foundation, an independent director of Investsmart Group Limited, and is an
independent Compliance Committee Member for UBS Global Asset Management (Australia) Limited.
Michael is also a Senior Fellow (SF Fin), Life Member and past President of the Financial Services Institute of Australasia and a
Member of the Australian Institute of Company Directors.
Fernando (Andy) Esteban
Independent non executive director
Appointed 18 June 2008
Chairman of the Audit and Risk Committee
Member of the Remuneration and Nominations Committee
Andy holds a Bachelor of Business majoring in Accounting, is a CPA and a Member of the Australian
Institute of Company Directors.
He has over 35 years’ experience in the financial services industry, of which 21 years were with Perpetual Trustees Australia Ltd. In
1999 he established FP Esteban and Associates, a private business specialising in implementing and monitoring risk management
and compliance frameworks in the financial services industry.
He has provided consulting services to a number of domestic and global organisations in Australia and South East Asia. From July
2005 until June 2008 he was an independent director of Credit Suisse Asset Management (Australia) Ltd.
Nicola Meaden Grenham
Non executive director
Appointed 8 October 2020
Member of the Remuneration & Nominations Committee
Nicola is a specialist in alternative investments with significant knowledge and experience of
strategic business development and investment management in hedge funds and private markets.
From 2008 to 2012, Nicola was CEO of Alpha Strategic Plc, a UK listed company which provided independent, owner-
managed investment managers with access to passive minority equity capital. She currently runs Dumas Capital Ltd, a
company she founded in 2004 which provides strategic advisory and research services in the alternative investment sector.
She is a Member of the Conseil de Pilotage Stratégique of BlackRock France S.A.S, chairs the Executive Committee of the
Capital Holdings Funds Plc; and serves as an independent director on alternative investment funds.
28
Navigator Global Investments Limited
Andrew Blum
Non executive director
Appointed 17 October 2012
Member of the Audit and Risk Committee
Andrew is the founder and principal of Chicago-based DSC Advisors, LP (DSC), which is the
investment manager of Delaware Street Capital Master Fund, LP. Delaware Street Capital Master
Fund, LP holds a substantial shareholding in Navigator.
DSC invests in a wide array of companies and industries seeking to identify and acquire undervalued securities and sell-short
overvalued securities.
Prior to forming DSC, he was a founder and Principal of Walton Street Capital, LLC, and prior thereto worked as a Vice President
at JMB Realty Corporation and as an Associate at Goldman Sachs.
Randall Yanker
Independent Non executive
Appointed 14 October 2014
Resigned 8 April 2021
Randall has extensive experience in the investment management, and in particular hedge funds.
He co-founded Alternative Asset Managers, L.P. (‘AAM’) in 2004, which is a private investment
firm with primary focus on making strategic investments in the asset management sector.
Prior to AAM, Randall was responsible for establishing multi-billion dollar global alternative
investment and hedge fund platforms as CEO of Lehman Brothers Alternative Investment
Management, and before that was a Managing Director of Swiss Bank Corp.
He is a graduate of Harvard College (1983) with a degree in Economics, and serves on the board
and is a Trustee of The New School University, a Trustee of SEI Advisors’ Inner Circle Fund III,
and Advisory Board member of HF2 Financial Management.
Sean McGould
Executive Director & Chief Executive Officer
Appointed 3 January 2008
Sean is the co-founder of Lighthouse and has served as its Chief Executive Officer, President
and Co-Chief Investment Officer since inception.
He supports the investment team in the manager search, selection and review process and is the
Chairman of the Investment Committee. Sean has been overseeing all aspects of the portfolios since August 1996.
For more than 20 years, Sean has been investing in various alternative investment strategies. Prior to founding Lighthouse, Sean
was the director of the Outside Trader Investment Program at Trout Trading Management Company and was responsible for the
allocation of the fund’s assets to external alternative asset strategies. Prior to Trout, Sean worked for Price Waterhouse and
passed the Certified Public Accountant examination.
29
Annual Report 2021
Board and Committee meetings
Corporate governance
The agenda for meetings is prepared by the Company Secretary in
consultation with the Chairman and Chief Executive Officer, and is
set to ensure adequate coverage of strategic, operational, financial
and governance matters.
Board papers are circulated in advance of the meetings. Senior
executives are invited to attend board meetings, however the
directors may have closed sessions without executive involvement
during meetings at their discretion.
Board meetings
The number of meetings of the Company’s board of directors
during the year ended 30 June 2021, and the number of meetings
attended by each director were:
The Group recognises the value of good corporate
governance. The board believes that effective
governance processes and procedures add to the
performance of the Group and engenders the confidence
of the investment community.
The Company has adopted Listing Rule 4.10.3 which allows
companies to publish their corporate governance statement on
their website rather than in their annual report. The directors have
reviewed the statement, and a copy of the statement, along with
any related disclosures, is available at:
http://www.navigatorglobal.com.au/site/about/corporate-
governance
Held
Attended
Principal activities
Michael Shepherd
Fernando Esteban
Andy Bluhm
Randall Yanker
Nicola Grenham
Sean McGould
12
12
12
10
8
12
12
11
12
9
8
12
Audit and Risk Committee meetings
The number of meetings the Audit and Risk Committee held during
the year ended 30 June 2021, and the number of meetings
attended by each Committee Member were:
The principal activities of the Group during the course of the
financial year were:
the provision of investment management products and
services to investors globally through wholly-owned
subsidiary Lighthouse Investment Partners, LLC; and
investment in a portfolio of minority interests in six alternative
asset management companies.
Operating and financial review
Information on the operations and financial position of the Group
and its business strategies and prospects is included in this annual
financial report on pages 9 to 26.
Held
Attended
Dividends
Michael Shepherd
Fernando Esteban
Andy Bluhm
2
2
2
2
2
2
Remuneration and Nominations Committee meetings
The number of meetings the Remuneration and Nomination
Committee held during the year ended 30 June 2021, and the
number of meetings attended by each Committee Member were:
The directors have determined an unfranked dividend of United
States (US) 6.0 cents per share (with 100% conduit foreign income
credits). The dividend will be paid on 10 September 2021.
Declared and paid
during the year
ended 30 June 2021
Cents
per
share
Total
amount
US$’000
Date of payment
Final 2020 ordinary
5.5
9,217
4 September 2020
Interim 2021 ordinary
& convertible notes
3.5
9,204
12 March 2021
Held
Attended
Total amount
18,421
Together with the unfranked interim dividend of USD 3.5 cents per
share paid to shareholders on 12 March 2021, the total dividend to
be paid in relation to the financial year ended 30 June 2021 will be
USD 9.5 cents per share.
Significant changes in state of affairs
In the opinion of the directors there were no significant changes in
the state of affairs of the Group that occurred during the financial
year not otherwise disclosed in this financial report.
Michael Shepherd
Fernando Esteban
Randall Yanker
Nicola Grenham
2
2
1
1
2
2
-
1
Company secretary
Ms Amber Stoney BCom (Hons) CA holds the position of company
secretary. Amber has held this position for most of her tenure at
Navigator, specifically for the periods 15 March 2007 to 20
November 2008, 18 July 2011 to 9 May 2016 and from 27 June
2016. Amber also holds the position of Chief Financial Officer of
Navigator. Prior to joining the Company in 2003, Amber was a
senior manager at KPMG, specialising in the funds management
industry.
30
Likely developments and expected results
Further information on likely developments in the operations of the
Group and the expected results of operations on pages 9 to 26.
Events subsequent to end of financial year
There has not arisen in the interval between the end of the
reporting period and the date of this report, any item, transaction or
event of a material nature, likely to affect significantly the
operations of the Group, the results of those operations, or the
state of affairs of the Group, in future financial years.
Directors’ interests
The relevant interest of each director in the shares
issued by the Company at the date of this report is
as follows:
Director
Michael
Shepherd
Fernando
Esteban
Andy
Bluhm
Ordinary
shares
125,000
Notes
125,000 shares are held
indirectly by Tidala Pty Ltd
as Trustee for the Shepherd
Provident Fund
27,000
27,000 shares are held
indirectly by FJE
Superannuation Fund
10,101,982
10,101,982 shares are held
indirectly by Delaware
Street Capital Master Fund,
LP (DSC). Mr Bluhm is the
founder and principal of
DSC Advisors, LP, which is
the investment manager of
DSC
Nicola
Grenham
Sean
McGould
6,450
6,450 shares are held
directly
19,438,083
19,436,083 shares are held
indirectly by SGM Holdings,
LLC
Navigator Global Investments Limited
31
Annual Report 2021
This Remuneration
Report for the
Company and its
controlled entities for
the year ended
30 June 2021 forms
part of the Directors’
Report and is audited
in accordance with
section 300A of the
Corporations Act 2001.
Contents
Overview of remuneration policy and structure
Relationship between remuneration policy and company performance
Variable compensation for the 2021 financial year
Non-executive director remuneration
Key management personnel remuneration disclosures
33
35
36
37
38
Reporting in United States dollars
In this report the remuneration and benefits reported have been presented in US
dollars (‘USD’). This is consistent with the functional and presentation currency of
the Group. Where compensation for Australian-based employees is paid in
Australian dollars, it is converted to USD for reporting purposes based on either
specific transaction exchange rates, or the average exchange rate for the payment
period as appropriate. The Australian dollar based compensation paid during the
year ended 30 June 2021 was converted to USD at an average exchange rate of
AUD/USD 0.7471 (2020: AUD/USD 0.6741).
The Remuneration Report outlines the remuneration arrangements for the Group’s key management personnel. Key management personnel
are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the activities of the Group.
With the establishment of the NGI Strategic Holdings business, as well as some internal review of the internal management structure within
Lighthouse, there have been a number of changes in key management personnel compared to the prior year.
Key management personnel during the year ended 30 June 2021 were:
Name
Non-Executive Directors
Michael Shepherd
Chairman and Non-Executive Director
Fernando Esteban
Non-Executive Director
Term
Full year
Full year
Full year
Appointed 8 October 2020
Resigned 7 April 2021
Full year
Full year
Full year
Non-Executive Director
Non-Executive Director
Non-Executive Director
Group Chief Executive Officer and
President & Co-Chief Investment Officer, Lighthouse Investment Partners, LLC
Chief Operating Officer, Lighthouse Investment Partners, LLC
Chief Financial Officer and Company Secretary, Navigator Global Investments
Limited
Executive Managing Director, Lighthouse Investment Partners, LLC
Appointed KMP 20 April 2021
Managing Director of Strategic Corporate Development, NGI Strategic
Holdings
Appointed KMP 13 August 2020
Co-Chief Investment Officer, Lighthouse Investment Partners, LLC
Ceased KMP duties 1 July 2020
Executive Managing Director, Lighthouse Investment Partners, LLC
Ceased KMP duties 20 April 2021
Andy Bluhm
Nicola Grenham
Randall Yanker
Executive Director
Sean McGould
Executives
Rob Swan
Amber Stoney
Ben Browning
Ross Zachary
Kelly Perkins
Scott Perkins
32
Navigator Global Investments Limited
Remuneration report (audited)
Overview of remuneration policy and approach
The overall objectives of the Group’s remuneration policies are to:
embed a culture that promotes the Group’s core values
support the business strategy of the Group by attracting, retaining and rewarding quality staff
encourage appropriate performance and results to uphold client and shareholder interests
properly reflect each individual’s duties and responsibilities
When setting the Group’s approach to remuneration, the Board keeps three key factors front-of-mind:
Operations are based in the US
Navigator is an Australian company listed on the Australian Securities Exchange, however the Group’s operations are
predominantly based in the United States. To be effective in attracting and retaining high quality staff, remuneration
arrangements must therefore be aligned to the expectations of people who are employed in the United States
alternative asset management industry.
These remuneration arrangements may diverge from arrangements which would be considered industry practice within
Australia. The quantum and proportion of variable remuneration to total remuneration packages is one such area.
Variable remuneration is a major component
The remuneration arrangements in place for the Group are generally structured around setting a relatively low fixed
remuneration amount, and having the opportunity to earn variable remuneration as a major component of overall
remuneration. This is particularly true for our United States based senior management. The Board believes this
provides a dynamic basis to be able to adjust the Group’s total remuneration expense, and is also consistent with
United States industry practice.
This approach to remuneration has been in place for well over a decade. Select senior Lighthouse executives have had
bonus entitlements specified in their employment contracts since Lighthouse joined the Navigator Group in 2008, and
these contractual arrangements remain in place (see page 39 for additional details).
Simplicity
A simple, direct metric for setting annual variable remuneration provides an incentive structure that is easily
understandable to both staff and shareholders. An increase in operating results therefore translates into both an
increase in variable compensation for staff and improved returns for shareholders.
This simplicity also extends to the Board exercising its discretion in setting the total amount of variable compensation,
as well as the CEO being able to exercise discretion in allocating bonuses to individuals based on their performance
and contribution. Whilst individual results are important, we also encourage a culture which is able to reward effort,
ethical behaviour and commitment outside of formulaic metrics.
The Board is satisfied that the current arrangements are consistent with alternative asset management industry practice
in the United States, and allow employees to focus on achieving results for clients, which is ultimately in the long-term
interests of shareholders.
33
Annual Report 2021
Remuneration report (audited)
Remuneration structure
The remuneration of staff across the Group, including our senior executives, is comprised of two key components:
Fixed
Variable
Fixed
Fixed remuneration is comprised of:
base salary; and
employer contributions to superannuation and retirement plans
and health care benefits.
Fixed remuneration is generally determined by reference to
benchmark information where available, and having regard to
responsibilities, performance, qualifications and experience.
For senior employees, fixed remuneration is also determined in
accordance with the general principle that fixed remuneration is the
smaller component of their overall compensation package.
Fixed remuneration is reviewed at least annually, or on promotion,
to ensure that it is competitive and reasonable. There are no
guaranteed increases to the fixed remuneration amount.
The amount of fixed remuneration is not dependent on the
satisfaction of a performance condition, or the performance of the
Group or business unit, the Company's share price, or dividends
paid by the Company.
Variable
Variable remuneration is comprised of participation in a cash bonus
pool.
While the Group does not currently have any equity compensation
arrangements in place, should these be enacted, variable
remuneration would also include participation in such arrangements
for select employees.
The existing variable remuneration arrangements are short-term in
nature, and are designed to motivate staff to create value for both:
our clients, thorough investment returns and a high level of
client service; and
the Company's shareholders
The performance of individual staff members, including senior
executives, is conducted at least annually, after which the award of
variable remuneration is considered.
The Board:
approves the overall size of the variable remuneration pool,
approves an award to the CEO,
confirms any contractual obligations regarding variable
remuneration have been complied with, and
delegates authority to the CEO to exercise his discretion to
make variable remuneration allocations to individual staff.
For the 2021 financial year, the proportion of fixed remuneration as compared to performance linked remuneration across the Group was as
follows:
Fixed Remuneration
Variable Remuneration
Chief Executive Officer
Chief Financial Officer
Other KMP
27%
All other staff
51%
54%
72%
28%
73%
49%
46%
Further detail regarding the methodology for determining the 2021 financial year variable remuneration pool is contained on page 36.
34
Navigator Global Investments Limited
Remuneration report (audited)
Long term incentive arrangements
Other benefits
The Group does not currently have any equity incentive schemes or
other long-term incentive arrangements in place.
The Board acknowledges that an equity incentive scheme is a
common component of corporate remuneration structures, and
regularly reviews whether the implementation of equity incentive
arrangements for senior employees would be an appropriate
addition to the Group’s remuneration structure.
The Board continues to consider the implementation of appropriate
long term incentive arrangements, particularly to incentivise key
individuals to build on the NGI Group success in the 2021 financial
year in executing its strategy for growth.
Employees are entitled to additional benefits that may include
educational assistance, adoption assistance and health care
benefits.
Employees are also able to make investments into Lighthouse
managed funds without incurring a management fee. There is no
incremental cost incurred by the Group in providing fee-free
investment management services via the Lighthouse funds to
employees. Having employees invest their own assets into
Lighthouse managed funds is viewed positively by clients and
potential clients as it demonstrates an alignment of interest between
the Lighthouse employee and future investment results for clients.
Nil fee arrangements for employees is common practice in the
United States asset management industry.
Relationship between remuneration policy and company performance
In implementing the remuneration policy and structure, the Board has had regard to what it considers to be the key measure
of the profitability of the Company:
EBITDA - earnings before interest, tax, depreciation, and amortisation from continuing operations.
As an asset management business, the Group’s EBITDA is largely consistent with the cash flow which it generates from its operating activities,
and which is available to pay dividends to shareholders. It is for this reason that NGI’s dividend policy has been set as a pay-out ratio based on
EBITDA.
The following table shows how cash bonuses paid to key management personnel compares to EBITDA and cash flows from operating activities
over the past 5 years:
EBITDA
Cash flows from operating activities
Dividends paid during the financial year
Closing share price (AUD dollars)
Change in share price (AUD dollars)
Key management personnel:
Bonus
Bonus as a % of EBITDA
Bonus as a % of dividends paid during the financial year
US$’000
2021
2020
2019
2018
2017
37,803
22,199
18,421
1.78
0.59
2,963
8%
16%
30,518
32,562
28,208
1.19
(2.75)
3,091
10%
11%
37,652
22,5651
27,451
3.94
(1.40)
34,212
32,921
24,390
5.34
2.94
29,848
30,088
21,023
2.40
0.11
4,6712
3,967
3,293
12%
17%
12%
16%
11%
16%
1 Reflects the change in US employee bonus cycle from calendar years to financial years in 2019.
2 Includes bonus amounts for the 12 months to 31 December 2018 and 6 months to 30 June 2019 for Sean McGould and Scott Perkins.
35
Annual Report 2021
Remuneration report (audited)
Variable compensation for the 2021 financial year
The Board believes in a simple, direct methodology for balancing how we reward staff and deliver value to shareholders through company
financial performance.
Lighthouse variable compensation arrangements
The Board retains the discretion to vary the final amounts approved after calculation based on the above pools, to ensure that they can also factor
in extenuating circumstances.
Lighthouse general pool
Lighthouse incentive fee pool
Company performance metric Basis of variable remuneration
Company performance metric Basis of variable remuneration
Lighthouse EBITDA
(excluding performance fees,
before bonuses and adjusted for
other specified items)
30-35% allocated to
Lighthouse general bonus
pool
Performance fees
50% allocated to Lighthouse
incentive fee bonus pool
All Lighthouse staff are eligible to participate in the Lighthouse
general bonus pool, the amount of which is calculated as 30-35% of
Lighthouse’s EBITDA (before the bonus pools and excluding
performance fee revenue and adjusted for other specified items).
- Allocation of the Lighthouse general bonus pool to staff (other
than as noted below) is determined by the CEO in accordance
with remuneration structure and guidelines established by the
Remuneration and Nominations Committee.
- No individual bonus can be greater than 10% of the
Lighthouse general bonus pool without board approval.
- A bonus for the CEO is determined and approved by the board
based on an assessment of his performance. This bonus
amount forms part of the overall Lighthouse general bonus
pool.
Senior members of the Lighthouse investment team are
eligible to participate in a bonus pool determined as 50% of
performance fee revenue earned by the Lighthouse business from
its Commingled Funds and Customised Solutions portfolios.
This pool is allocated at the discretion of the CEO based on his
assessment of the contribution of each eligible staff member to the
creation of the performance fee revenue. These staff members
may still also receive an allocation from the general bonus pool.
NGI Strategic and Corporate variable compensation arrangements
Discretionary bonuses totalling $945,104 were awarded for staff who:
directly contributed to the operation of the listed parent company, namely staff involved in finance and company secretarial functions in
Australia; and/or
were responsible for the successful completion of the NGI Strategic portfolio acquisition. These awards were based on the relevant
individual’s contribution in assessing, negotiating and implementing what was a high value and complex transaction.
The Remuneration and Nominations Committee recommends a bonus amount for the Chief Financial Officer, which is allocated from the
Corporate bonus pool.
36
Navigator Global Investments Limited
Non-executive director remuneration
Non-executive directors may receive director fees. The
Company’s policy is to remunerate non-executive directors at
market rates for comparable companies having regard to the time
commitments and responsibilities assumed. The aggregate of non-
executive director fees is capped at a maximum of $750,000 per
annum (including superannuation), as approved by shareholders
at the AGM held on 20 November 2014.
Fees paid to non-executive directors are USD, and for the 2021
financial year were as follows:
Chairman
Non-executive directors
USD 170,000 per annum
(plus superannuation)
USD 100,000 per annum
(plus superannuation)
Australian based non-executive directors are also entitled to
superannuation. For the financial year ended 30 June 2021 actual
remuneration for non-executive directors was $445,516 (2020:
$393,630). An increase associated with an additional non-
executive director for a seven-month period compared to the prior
year. A Bluhm has elected not to receive remuneration from the
Company for his role as a non-executive director.
Non-executive directors’ fees cover all main board activities and
membership of any committee. Executive and non-executive
directors may be reimbursed for reasonable expenses properly
incurred in their role as a director. Non-executive directors are not
entitled to participate in executive remuneration schemes, may not
receive performance-linked equity or bonus payments, and are not
provided with retirement benefits other than statutory
superannuation entitlements. Non-executive directors are not
entitled to any benefits or payments on retirement from office.
Remuneration report (audited)
CEO remuneration arrangements
Mr McGould performs two key roles for the Group. He is both:
- Chief Executive Officer of the NGI Group; and
- Co-Chief Investment Officer of Lighthouse.
The Board considers that Mr McGould’s remuneration needs to
encompass both of these roles, and that it should also be
structured so that it is consistent with remuneration principles
which operate in the United States alternative asset management
industry. In previous years, this meant that Mr McGould’s
remuneration was substantially weighted towards variable
remuneration.
Mr McGould’s base salary was increased to $1,000,000 effective
from 1 July 2020, which is the first increase to his base salary of
$250,000 since he joined the Group in 2008. Mr McGould’s base
salary was increased in acknowledgment of the increased scope of
his role with the implementation of the new NGI Strategic
Investment business during the 2021 financial year. Mr McGould
is also entitled to receive health care benefits and retirement
benefits.
The Board has not set specific key performance indicators (KPIs)
for the CEO. Instead, the Board awards Mr McGould a
discretionary bonus amount, taking into account the following
factors:
-
-
-
investment results achieved for clients;
achievement of board-approved budgets and targets, strategic
goals, capital and business restructuring and development of
new business opportunities;
growth in AUM, through both net investment flows and
investment performance of Lighthouse portfolios; and
- Group financial results and dividends paid to shareholders.
The CEO’s bonus is capped at a maximum of 10% of the
Lighthouse general bonus pool. In practice, this means that Mr
McGould’s variable remuneration is constrained by the profitability
of the Group’s main operating business unit.
Mr McGould received a bonus of $400,000 for the year ended 30
June 2021, which is the equivalent of his bonus in the prior year.
This amount was set taking into account the increase in his base
salary which came into effect from 1 July 2020, and his total fixed
and variable compensation acknowledges his contribution to both
the significant recovery of the Lighthouse business since the worst
impact of the pandemic in March 2020, as well as his oversight of
the completion of the NGI Strategic portfolio acquisition.
37
Annual Report 2021
Remuneration report (audited)
Key management personnel remuneration disclosures
Directors’ and executive officers’ remuneration
The following remuneration was paid to key management personnel during the financial year:
Benefit Category
Short-term
Post-
employment
Other long-
term
Total
Salary & fees
Bonus
Other1
Pension &
superannuation
Long service
leave
$
$
$
$
$
$
Non-Executive Directors
Michael Shepherd
Fernando Esteban
Nicola Grenham2
Randall Yanker3
Executive Director
Sean McGould
Executives
Rob Swan
Amber Stoney
Ben Browning4
Ross Zachary5
Kelly Perkins6
Scott Perkins7
Total
2021
2020
2021
2020
2021
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
2021
2020
2021
2020
2021
2020
170,000
170,000
100,000
100,000
73,242
76,944
100,000
1,000,000
250,000
250,000
250,000
236,329
215,808
52,083
226,484
-
250,000
197,917
250,000
-
-
-
-
-
-
-
400,000
400,000
870,000
920,000
242,807
20,589
300,000
550,000
-
1,150,000
600,000
600,000
2,382,999
2,962,807
1,585,808
3,090,589
-
-
-
-
-
-
-
22,671
21,620
22,671
21,620
-
-
4,834
20,735
-
21,620
17,837
21,620
88,748
86,480
15,830
14,130
9,500
9,500
-
-
-
17,400
17,100
17,400
17,100
16,031
14,129
2,500
20,780
-
22,975
5,000
7,500
-
-
-
-
-
-
-
-
-
-
-
3,661
9,780
-
-
-
-
-
-
185,830
184,130
109,500
109,500
73,242
76,944
100,000
1,440,071
688,720
1,160,071
1,208,720
498,828
260,306
359,417
817,999
-
1,444,595
820,754
879,120
104,441
102,434
3,661
9,780
5,542,656
4,875,091
1 Other short-term fixed remuneration amounts relate to health care benefits paid on behalf of US based staff.
2 Appointed as a director 8 October 2020
3 Resigned as a director on 8 April 2021
4 Commenced duties as KMP 20 April 2021 therefore remuneration represents a partial year.
5 Commenced duties as KMP 13 August 2020 therefore remuneration represents a partial year.
6 Ceased KMP duties from 1 July 2020 therefore no remuneration for 2021 financial year.
7 Ceased KMP duties from 20 April 2021 therefore remuneration represents a partial year.
38
Navigator Global Investments Limited
Remuneration report (audited)
Analysis of bonuses included in remuneration
Details of the vesting profile of the short-term incentive bonuses awarded as remuneration to key management personnel of the Group in the
current reporting period are detailed below:
Included in
remuneration
Proportion of
remuneration which is
performance based
% Vested in year
% Forfeited in year
Sean McGould
Rob Swan
Amber Stoney
Ben Browning
Ross Zachary
Scott Perkins
$400,000
$870,000
$242,807
$300,000
$550,000
$600,000
28%
75%
49%
83%
67%
73%
100% 1
100% 2
100%1
100%1
100%1
100% 1
0%
0%
0%
0%
0%
0%
1 Bonus is paid annually on a financial year basis. No amounts vest in future financial years in respect of the financial year ended 30 June 2021.
2 Per his service agreements, Rob Swan is entitled to semi-annual compensation calculated as 1.00% of the gross revenue of Lighthouse Investment Partners,
LLC. No amounts vest in future financial years in respect of the financial year ended 30 June 2021. This arrangement has been in place since the acquisition of
Lighthouse in 2008.
Contractual arrangements for senior executives
The Group has entered into service agreements with each
member of key management personnel. These agreements
specify the duties and obligations to be fulfilled.
US-based executives
Service Agreements
Sean McGould, Scott Perkins, and Rob Swan entered into service
agreements commencing on 7 March 2011. The agreements were
for an initial term of four years and thereafter automatically extend
for a one-year term unless either the Group or the employee gives
not less than sixty days’ notice of their intention not to extend the
agreement.
Ross Zachary entered into a service agreement on 19 December
2016. Ben Browning entered into a service agreement
commencing on 7 December 2020.
Termination
The Group may terminate the agreements of US-based executives
at any time for gross negligence or wilful misconduct (‘Good Cause
Termination’). In these circumstances there is no entitlement to a
termination payment.
The Group may terminate the agreement for any reason other than
gross negligence or wilful misconduct at any time by giving not
less than sixty days’ notice.
The employee may terminate the agreement at any time if the
Group fails to comply in any material respect with the terms of the
agreement, there is a material reduction in the compensation
opportunities or there is a material and unconsented change to
responsibilities.
The employee may terminate the agreement and their employment
at any time for any reason other than those noted above by giving
not less than sixty days’ notice.
Potential Termination Benefits
Shareholders approved potential termination benefit arrangements
at the 2018 Annual General Meeting for US-based executives as
follows:
A severance payment of up to $1 million on cessation of
employment, except where their employment has been
terminated for Cause as defined by their employment
contract. Any severance payment made is in lieu of any
unpaid short-term incentive bonus which they would
otherwise be entitled to receive for their performance during
the relevant year in which they ceased employment. The
amount of the severance payment will be pro-rata’d based on
the number of days of service provided by the US Relevant
Executive during a year prior to cessation of their
employment.
Restraint payments may be paid to enforce post-employment
restraint clauses if considered necessary and/or appropriate
to protect matters such as confidential information or
intellectual property. In some jurisdictions, restraint clauses
may be legally unenforceable, or difficult to successfully
enforce, without payment.
The amount of the restraint payment is determined based on
the following circumstances:
-
If employment ceases due to termination for Cause, their
providing notice to the Company, or them not renewing
their contract then:
-
-
they will be entitled to restraint payments for 6
months at their monthly base salary, and
the Board will have the option, but not the
obligation, to extend the restraint period for up to an
additional 6 months by paying the Relevant
Executive a restraint payment of up to USD
166,667 per month.
39
Annual Report 2021
Remuneration report (audited)
-
If employment ceases due to the Company providing the
required contractual notice, the Board has the discretion,
but not the obligation, to enforce the restraint clauses in
the employment contract for up to 12 months by paying
the Relevant Executive a restraint payment of up to USD
166,667 per month.
- These payments are capped at a maximum of $2 million.
Participation in incentive plans
Sean McGould, Ross Zachary, Ben Browning and Scott Perkins
are entitled to participate in incentive plans, including equity-based
plans.
Rob Swan, in addition to his base salary, is entitled to semi-annual
compensation calculated as 1.00% of the gross revenue of
Lighthouse Investment Partners, LLC for the relevant six-month
period and is entitled to participate in equity-based plans.
Australian Based executives
Service Agreement
Amber Stoney is engaged pursuant to an executive services
agreement. Ms Stoney’s working hours are 25 hours per week for
a base salary of A$330,000 per annum inclusive of
superannuation, and a short-term incentive bonus of up to 20% of
this amount.
Termination
The Group may terminate Ms Stoney’s executive services
agreement at any time, without notice for a number of reasons
including bankruptcy, gross negligence or wilful and serious
misconduct. In these circumstances there is no entitlement to a
termination payment. Ms Stoney may terminate the agreement at
any time by giving 6 months’ notice and the Group may terminate
the agreement at any time by giving 6 months’ notice or payment
in lieu.
Participation in incentive plans
The Board may award Ms Stoney an additional short-term
incentive bonus amount at their discretion. This discretion was
exercised in the 2021 financial year in acknowledgement of Ms
Stoney’s contribution to the successful completion of the complex
NGI Strategic Portfolio acquisition. Ms Stoney is eligible to
participate in any equity-based incentive plans.
Non-executive directors
Service Agreement
Enter into agreements with each non-executive director at the time
of their appointment as a director. Each agreement sets out the
rights and obligations of the director, including:
Attendance at board meetings
Prior approval for acceptance of additional roles outside
Navigator
Independence requirements and notification of interests
Remuneration
Provision of a Deed of Indemnity, Insurance and Access
Directors are also required to enter a Director’s Interest Disclosure
Agreement at the time of their appointment.
Termination
A director may resign at any time by providing notice to the
Chairman.
Non-executive directors are required to be elected by shareholders
at the next annual general meeting following their appointment.
Directors do not have a fixed term, however they must be re-
elected by shareholders at an annual general meeting at least
every three years.
A director may be requested to retire from the Board should they
fail to attend three consecutive board meetings without a leave of
absence. In addition, a director may cease to hold office if they
become a disqualified person under the Corporations Act 2001.
Non-executive directors are not entitled to any benefits or
payments on retirement from office.
Participation in incentive plans
Non executive directors are not entitled to participate in any
incentive plans.
Non-executive directors are not entitled to participate in executive
remuneration schemes, may not receive performance-linked equity
or bonus payments, and are not provided with retirement benefits
other than statutory superannuation entitlements.
40
Remuneration report (audited)
Navigator Global Investments Limited
Analysis of performance rights over equity instruments
granted as remuneration
As at 30 June 2021 and 30 June 2020 there were no outstanding
performance rights granted to any key management person of the
Group.
Additional information
Movement in shares
The movement during the reporting period in the number of shares
in the Company held, directly, indirectly or beneficially, by key
management personnel, including their related parties, is as
follows:
Balance
1 July 2020
Purchases
Sales
Balance
30 June 20211
Directors
Michael Shepherd
Fernando Esteban
Andy Bluhm
Nicola Grenham
Sean McGould
Executives
Rob Swan
Amber Stoney
Ross Zachary
125,000
27,000
13,101,982
-
19,438,083
2,936,512
180,374
-
-
-
-
6,4503
-
-
-
20,000
-
-
(3,000,000) 2
-
-
-
-
-
125,000
27,000
10,101,982
6,450
19,438,083
2,936,512
180,374
20,000
1 Refer to page 31 for details on direct and indirect shareholdings.
2 On 28 February 2021, 3,000,000 shares were sold by Delaware Street Capital Master Fund, LP in an off-market trade during an open Trading Window.
3 Shares acquired 1 March 2021 directly by N Grenham.
Other transactions with key management personnel
There were no other transactions with key management personnel during the year.
41
Annual Report 2021
Indemnification and insurance
Rounding of amounts
The Company has a Deed of Indemnity, Insurance and Access in
place with each of the Directors (‘the Deeds’). Pursuant to the
Deeds, the Company indemnifies each Director to the extent
permitted by law for losses and liabilities incurred by the Director
as an officer of the Company or of a subsidiary. This indemnity
remains in force for a period of 7 years from the date the Director
ceases to hold office as a director of the Company.
In addition, the Company will advance reasonable costs incurred
or expected to be incurred by the Director in defending relevant
proceedings on terms determined by the Board. No such
advances were made during the financial year.
During the year, the Group paid insurance premiums to insure the
Directors and Officers of the Company. The terms of the contract
prohibit the disclosure of the premiums paid.
In accordance with ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191
dated 24 March 2016, amounts in the financial report and
directors’ report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
This report is made in accordance with a resolution of directors:
Auditor
Ernst & Young is the auditor of the Group in accordance with
section 327 of the Corporations Act 2001.
Michael Shepherd, AO
Chairman and Non-Executive Director
F P (Andy) Esteban
Non-Executive Director
Sydney, 19 August 2021
Non-audit services
There was $59,308 relating to non-audit services provided by the
entity’s auditors during the financial year to review the explanatory
memorandum which detailed the accounting treatment for the
business combination announced in August 2020.
Details of remuneration paid to auditors is presented in Note 24 of
the financial statements.
Indemnification
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third
parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young Australia
during or since the end of the financial year.
Auditor’s independence declaration
The lead auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 43
and forms part of the directors’ report for the financial year ended
30 June 2021.
Environmental regulation
The Group is not subject to any particular or significant
environmental regulation under any Australian Commonwealth,
State or Territory legislation.
42
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of Navigator Global
Investments Limited
As lead auditor for the audit of Navigator Global Investments Limited for the financial year ended 30
June 2021, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Navigator Global Investments Limited and the entities it controlled during
the financial year.
Ernst & Young
Rebecca Burrows
Partner
19 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FINANCIAL
STATEMENTS
44
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the Financial statements
Results for the year
1. Operating segments
2.
3.
4.
5.
6.
7.
8.
9.
Business Combinations
Revenue
Expenses
Finance income and costs
Cash
Income tax
Dividends
Earnings per share
Group structure
21. Group entities
22. Parent entity disclosures
51
53
55
57
58
59
61
64
65
85
86
Operating assets and
liabilities
10. Trade and other receivables
11.
Investments recognised at fair
value
Intangible assets
12. Plant and equipment
13. Leases
14.
15. Trade and other payables
Employee benefits
16.
Other financial liabilities
17.
Other disclosures
23. Related parties
24. Auditors’ remuneration
25. Commitments
26. Contingent liabilities
27. Subsequent events
66
67
68
69
72
74
74
75
87
88
88
88
89
Directors’ declaration
Independent auditor’s report
Navigator Global Investments Limited
46
47
48
49
50
51
Capital and risk
18. Capital management
19. Capital and reserves
20. Financial risk management
77
77
79
Basis of preparation
28. Corporate information
29. Statement of compliance
30. Basis of measurement
31. Functional and presentation
currency
32. Other accounting policies
90
90
90
90
91
92
93
Annual Report 2021
Management fee revenue
Performance fee revenue
Revenue from reimbursement of fund operating expenses
Revenue from provision of office space and services
Total revenue
Other income
Expenses
Results from operating activities
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the period
INCOME STATEMENT
For the year ended 30 June 2021
Note
3(a)
3(a)
3(a)
3(a)
3(b)
4
5(a)
5(a)
7(a)
Consolidated USD’000
2021
2020
75,571
13,532
17,027
1,828
87,511
5,576
7,068
1,354
107,958
101,509
3,661
(89,144)
22,475
22,692
(12,685)
32,482
(5,727)
26,755
-
(75,910)
25,599
1,234
(964)
25,869
(7,721)
18,148
Attributable to equity holders of the parent
26,755
18,148
Earnings per share
Basic earnings per share
Diluted earnings per share
Consolidated US cents
2021
14.97
10.86
2020
11.19
11.19
9
9
46
The accompanying notes form part of these consolidated financial statements
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
Navigator Global Investments Limited
Consolidated USD’000
Note
2021
2020
Profit attributable to equity holders of the parent
26,755
18,148
Other comprehensive income
Other comprehensive income not to be reclassified to profit and loss in
subsequent periods:
Change in fair value of financial assets at fair value through other
comprehensive income
Income tax on financial assets at fair value through other comprehensive
income
Other comprehensive loss for the year
Total comprehensive income for the year, net of tax
5(b)
5(b)
(1,237)
302
(935)
25,820
(3,799)
926
(2,873)
15,275
Attributable to equity holders of the parent
25,820
15,275
The accompanying notes form part of these consolidated financial statements
47
Annual Report 2021
Assets
Cash
Trade and other receivables
Current tax assets
Total current assets
Investments recognised at fair value
Plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Lease liabilities
Employee benefits
Total current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Non-share capital
Reserves
Accumulated losses
STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Note
6(a)
10
7(b)
11
12
13
7(c)
14
10
15
13
16
15
13
16
17
19(a)
19(b)
19(c)
Consolidated USD’000
2021
2020
52,097
20,955
53
73,105
252,151
6,255
13,700
40,620
94,418
6,331
413,475
486,580
11,492
3,260
917
15,669
243
18,802
1
81,264
100,310
115,979
370,601
320,146
99,818
33,006
(82,369)
370,601
27,032
16,047
19
43,098
14,734
7,389
19,280
45,972
94,513
2,503
184,391
227,489
2,944
2,377
485
5,806
218
20,783
90
-
21,091
26,897
200,592
257,355
-
13,682
(70,445)
200,592
Total equity attributable to equity holders of the parent
48
The accompanying notes form part of these consolidated financial statements
d
e
t
i
i
m
L
s
t
n
e
m
t
s
e
v
n
I
l
l
a
b
o
G
r
o
t
a
g
i
v
a
N
I
Y
T
U
Q
E
N
I
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
1
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
y
t
i
u
q
E
l
a
t
o
T
s
e
s
s
o
L
l
d
e
t
a
u
m
u
c
c
A
y
t
i
t
n
E
t
n
e
r
a
P
s
t
i
f
o
r
P
e
v
r
e
s
e
R
l
n
o
i
t
a
s
n
a
r
T
e
v
r
e
s
e
R
l
e
u
a
V
r
i
a
F
e
v
r
e
s
e
R
d
e
s
a
B
e
r
a
h
S
s
t
n
e
m
y
a
P
e
v
r
e
s
e
R
e
r
a
h
S
-
n
o
N
l
a
t
i
p
a
C
0
0
0
’
D
S
U
d
e
t
a
d
i
l
o
s
n
o
C
t
n
e
r
a
p
e
h
t
l
f
o
s
r
e
d
o
h
y
t
i
u
q
e
o
t
e
l
b
a
t
u
b
i
r
t
t
a
s
t
n
u
o
m
A
8
1
9
,
6
1
0
5
8
5
2
0
,
2
6
2
3
,
3
1
5
5
3
,
7
5
2
l
a
t
i
p
a
C
e
r
a
h
S
e
t
o
N
-
5
2
5
,
3
1
2
8
4
1
,
8
1
)
9
9
7
,
3
(
6
2
9
)
3
7
8
,
2
(
5
7
2
,
5
1
-
)
8
0
2
,
8
2
(
2
9
5
,
0
0
2
5
5
7
,
6
2
)
7
3
2
,
1
(
3
0
3
)
4
3
9
(
1
2
8
,
5
2
1
2
8
,
3
6
3
4
7
,
0
0
1
)
5
5
9
,
1
(
)
1
2
4
,
8
1
(
8
8
1
,
4
4
1
)
9
4
9
,
6
7
(
8
4
1
,
8
1
)
4
4
6
,
1
1
(
-
-
-
-
4
0
5
,
6
)
5
4
4
,
0
7
(
5
5
7
,
6
2
)
3
6
4
,
9
2
(
-
1
1
-
4
4
6
,
1
1
-
-
-
4
4
6
,
1
1
)
8
0
2
,
8
2
(
-
4
5
3
3
6
4
,
9
2
-
-
-
-
-
-
-
-
-
)
7
0
7
,
2
(
3
6
4
,
9
2
)
7
1
2
,
9
(
)
7
1
2
,
9
(
)
4
0
2
,
9
(
)
4
0
2
,
9
(
-
-
-
-
-
-
-
0
5
8
-
-
-
-
-
-
-
-
-
-
-
-
-
)
9
9
7
,
3
(
6
2
9
)
3
7
8
,
2
(
)
3
7
8
,
2
(
-
)
8
4
8
(
-
-
2
0
3
)
5
3
9
(
)
5
3
9
(
)
7
3
2
,
1
(
-
-
-
-
-
-
-
-
-
-
-
-
6
2
3
,
3
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
4
7
,
0
0
1
-
-
)
5
2
9
(
-
)
0
3
0
,
1
(
8
1
8
,
9
9
1
9
7
,
2
6
-
-
-
-
-
-
-
5
5
3
,
7
5
2
-
-
-
-
-
-
1
2
8
,
3
6
)
b
(
5
)
b
(
5
8
3
2
)
b
(
5
)
b
(
5
)
a
(
9
1
)
b
(
9
1
2
8
1
0
6
,
0
7
3
)
9
6
3
,
2
8
(
3
1
6
,
0
2
0
5
8
)
3
8
7
,
1
(
6
2
3
,
3
1
8
1
8
,
9
9
6
4
1
,
0
2
3
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
d
e
t
a
d
i
l
o
s
n
o
c
e
s
e
h
t
f
o
t
r
a
p
m
r
o
f
s
e
t
o
n
g
n
i
y
n
a
p
m
o
c
c
a
e
h
T
)
d
e
t
i
m
L
i
s
t
n
e
m
t
s
e
v
n
I
l
a
b
o
G
l
t
r
o
a
g
v
a
N
i
(
e
u
a
v
l
r
i
a
f
t
a
s
t
e
s
s
a
l
i
a
c
n
a
n
i
f
f
o
e
u
a
v
l
r
i
a
f
n
i
e
g
n
a
h
c
t
e
N
x
a
t
f
o
t
e
n
,
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
n
o
x
a
t
e
m
o
c
n
I
x
a
t
f
o
t
e
n
,
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
o
t
l
a
t
o
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
h
g
u
o
r
h
t
0
2
0
2
y
l
u
J
1
d
n
a
0
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
1
e
v
r
e
s
e
r
s
t
i
f
o
r
p
y
t
i
t
n
e
t
n
e
r
a
p
o
t
r
e
f
s
n
a
r
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
t
i
f
o
r
p
t
e
N
s
r
e
d
o
h
l
y
t
i
u
q
e
o
t
s
d
n
e
d
v
D
i
i
e
u
a
v
l
r
i
a
f
t
a
s
t
e
s
s
a
l
i
a
c
n
a
n
i
f
f
o
e
u
a
v
l
r
i
a
f
n
i
e
g
n
a
h
c
t
e
N
x
a
t
f
o
t
e
n
,
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
n
o
x
a
t
e
m
o
c
n
I
x
a
t
f
o
t
e
n
,
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
o
t
l
a
t
o
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
h
g
u
o
r
h
t
1
e
v
r
e
s
e
r
s
t
i
f
o
r
p
y
t
i
t
n
e
t
n
e
r
a
p
o
t
r
e
f
s
n
a
r
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
9
1
0
2
l
y
u
J
1
t
a
e
c
n
a
l
a
B
r
a
e
y
e
h
t
r
o
f
t
i
f
o
r
p
t
e
N
s
e
t
o
n
e
b
l
i
t
r
e
v
n
o
c
f
o
e
u
s
s
I
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
T
s
r
e
d
o
h
l
y
t
i
u
q
e
o
t
s
d
n
e
d
v
D
i
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
1
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
y
t
i
t
n
e
t
n
e
r
a
p
e
h
t
f
o
t
i
f
o
r
p
t
e
n
e
h
t
o
t
l
s
e
t
a
e
R
1
49
l
a
t
i
p
a
c
e
r
a
h
s
f
o
e
u
s
s
I
STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Consolidated USD’000
Note
2021
2020
Annual Report 2021
Cash flows from operating activities
Cash receipts from operating activities
Cash paid to suppliers and employees
Cash generated from operations
Bank interest received
Lease interest received
Lease interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Distributions received from investments
Acquisition of plant and equipment
Proceeds from disposal of investments
Acquisition of investments
6(b)
Acquired cash through business combination
2
Transaction costs associated with business combination
Acquisition of other non-current assets
Net cash from/(used in) investing activities
Cash flows from financing activities
Transaction costs associated with the issue of shares and notes
Lease payments received from finance leases
Payment of principal portion of lease liabilities
Dividends paid to equity holders
Net cash used in financing activities
Net increase in cash
Cash balance at 1 July
Effect of exchange rate fluctuations on cash balances held in foreign currencies
Cash balance as at 30 June
6(a)
103,613
(80,408)
23,205
4
9
(912)
(107)
22,199
13,357
(1,499)
3,250
(210)
16,028
(5,101)
(32)
25,793
(1,969)
112
(2,498)
(18,421)
(22,776)
25,216
27,032
(151)
52,097
106,509
(71,483)
35,026
166
13
(823)
(21)
34,361
1
(4,204)
561
(414)
-
(1,799)
(916)
(6,771)
-
108
(1,536)
(28,208)
(29,636)
(2,046)
29,029
49
27,032
50
The accompanying notes form part of these consolidated financial statements
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Results for the year
This section of the notes to the financial statements focuses on the results and performance of the Navigator Global Investments Limited
Group. On the following pages you will find disclosures explaining the Group’s results for the year, segment information, taxation and
earnings per share.
Where an accounting policy or key estimate is specific to a single note, the policy or estimate is described in the note to which it relates.
Operating segments
As at 30 June 2021, the Group had two reportable segments:
Lighthouse Group, which operates as a global absolute
return funds manager for investment vehicles; and
NGI Strategic Group, was established during the
financial year following the business combination
outlined in Note 2. This division holds several strategic
investments on a minority basis in a number of
alternative asset management entities.
Corporate includes assets, liabilities and corporate expenses
relating to the parent entity, Navigator Global Investments Limited,
and balances that are eliminated on consolidation of the Group.
Corporate is not considered to be an operating segment.
No operating segments have been aggregated to form the above
reportable operating segments.
The CEO is responsible for day-to-day operations and the
implementation of the Group’s business strategy. Internal
management reports are provided to the CEO on a monthly basis
including separate analysis for the Lighthouse and NGI Strategic
groups to monitor the operating results of its business for the
purpose of making decisions about resource allocation and
performance assessment.
Business unit performance is evaluated based on the financial
information as set out below, as well as other key metrics such as
Assets under Management and the average management fee rate.
51
0
2
0
2
1
2
0
2
d
e
t
a
d
i
l
o
s
n
o
C
0
0
0
’
$
S
U
j
s
t
n
e
m
t
s
u
d
A
&
e
t
a
r
o
p
r
o
C
0
0
0
’
$
S
U
c
i
g
e
t
a
r
t
S
I
G
N
0
0
0
’
$
S
U
e
s
u
o
h
t
h
g
L
i
0
0
0
’
$
S
U
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
g
e
s
g
n
i
t
a
r
e
p
O
1
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
I
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
E
H
T
O
T
S
E
T
O
N
I
1
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
0
2
0
2
7
8
0
,
3
9
2
2
4
,
8
1
2
0
2
3
0
1
,
9
8
5
5
8
,
8
1
-
1
6
6
,
3
9
0
5
,
1
0
1
8
5
9
,
7
0
1
0
2
0
2
4
3
1
-
-
4
3
1
1
2
0
2
1
4
3
-
-
1
4
3
)
4
4
3
,
9
6
(
)
1
7
9
,
8
7
(
)
2
3
3
,
1
(
)
8
0
4
,
3
(
1
2
9
5
6
1
,
2
3
)
8
6
5
,
2
(
8
1
5
,
0
3
4
7
1
)
5
2
8
(
)
8
9
9
,
3
(
9
6
8
,
5
2
)
1
2
7
,
7
(
8
4
1
,
8
1
8
4
6
,
2
3
3
0
8
,
0
1
)
8
4
6
,
5
(
3
0
8
,
7
3
3
4
1
)
9
3
9
(
)
5
2
5
,
4
(
2
8
4
,
2
3
)
7
2
7
,
5
(
5
5
7
,
6
2
4
3
)
9
9
7
,
1
(
)
1
5
1
(
)
5
9
(
)
8
9
1
,
1
(
)
7
6
0
,
3
(
)
3
6
9
,
2
(
)
3
1
3
,
3
(
6
1
1
)
1
(
)
7
1
(
-
)
5
2
(
)
6
3
(
-
-
)
5
6
8
,
2
(
)
4
7
3
,
3
(
)
5
6
8
,
2
(
)
4
7
3
,
3
(
9
8
4
,
7
2
2
)
7
9
8
,
6
2
(
6
7
8
,
0
7
4
)
2
4
8
,
7
0
1
(
6
0
5
,
1
1
)
2
1
9
(
7
8
6
,
2
1
)
5
5
2
,
3
(
2
9
5
,
0
0
2
1
0
6
,
0
7
3
4
9
5
,
0
1
2
3
4
,
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
6
6
,
3
)
7
9
3
(
4
6
2
,
3
6
2
0
,
8
)
5
0
0
,
5
(
5
8
2
,
6
1
-
-
8
9
7
6
8
2
,
6
4
8
0
,
7
0
2
0
2
3
5
9
,
2
9
2
2
4
,
8
1
2
0
2
2
6
7
,
8
8
5
5
8
,
8
1
e
u
n
e
v
e
r
r
e
h
t
O
e
u
n
e
v
e
R
5
7
3
,
1
0
1
7
1
6
,
7
0
1
s
r
e
m
o
t
s
u
c
h
t
i
w
s
t
c
a
r
t
n
o
c
m
o
r
f
e
u
n
e
v
e
r
l
a
t
o
T
-
-
)
2
1
0
,
8
6
(
)
6
6
1
,
5
7
(
)
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
i
n
o
i
t
a
c
e
r
p
e
d
i
g
n
d
u
c
x
e
(
l
s
e
s
n
e
p
x
e
g
n
i
t
a
r
e
p
O
e
m
o
c
n
i
r
e
h
t
O
3
6
3
,
3
3
1
5
4
,
2
3
7
8
8
)
9
6
7
(
8
2
9
,
2
)
8
4
5
(
)
t
s
e
r
e
t
n
i
i
g
n
d
u
c
x
e
(
l
)
s
t
s
o
c
(
/
e
m
o
c
n
i
e
c
n
a
n
i
f
t
e
N
s
e
i
t
i
v
i
t
c
a
g
n
i
t
a
r
e
p
o
m
o
r
f
t
l
u
s
e
R
s
e
s
n
e
p
x
e
g
n
i
t
a
r
e
p
o
-
n
o
n
r
e
h
t
O
1
8
4
,
3
3
1
3
8
,
4
3
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
i
c
e
r
p
e
d
,
x
a
t
,
t
s
e
r
e
t
n
i
e
r
o
f
e
b
s
g
n
n
r
a
E
i
8
5
)
4
2
8
(
2
4
1
)
4
1
9
(
)
1
8
9
,
3
(
)
9
8
4
,
4
(
4
3
7
,
8
2
)
1
2
7
,
7
(
0
7
5
,
9
2
)
5
2
5
,
6
(
x
a
t
e
m
o
c
n
i
e
r
o
f
e
b
)
s
s
o
l
(
/
t
i
f
o
r
p
t
n
e
m
g
e
s
l
e
b
a
t
r
o
p
e
R
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
i
a
c
e
r
p
e
D
e
u
n
e
v
e
r
t
s
e
r
e
t
n
I
e
s
n
e
p
x
e
t
s
e
r
e
t
n
I
3
1
0
,
1
2
5
4
0
,
3
2
x
a
t
e
m
o
c
n
i
r
e
t
f
a
)
s
s
o
l
(
/
t
i
f
o
r
p
t
n
e
m
g
e
s
l
e
b
a
t
r
o
p
e
R
9
7
6
,
7
6
2
3
8
9
,
5
1
2
4
1
2
,
6
0
2
)
5
1
8
,
0
9
(
)
5
8
9
,
5
2
(
)
9
0
9
,
1
2
(
4
6
8
,
6
7
1
8
9
9
,
9
8
1
5
0
3
,
4
8
1
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
s
t
e
s
s
a
t
n
e
m
g
e
S
s
t
e
s
s
a
t
e
N
52
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Business Combination
NGI Strategic Portfolio investments
On 1 February 2021, the Group acquired six minority ownership interests in leading established alternative asset managers (‘the portfolio’ or
‘portfolio investments’). The portfolio represents a well-diversified group of established firms with strong leadership and track records of
delivering results to their clients through multiple market cycles.
As part of the transaction, the Group acquired controlling interest in two partnerships; 71% of NGI Strategic Holdings (A) LP and 56% of NGI
Strategic Holdings (B) LP. These partnerships house five of the investments with the vendors retaining a minority interest which will be
mandatorily redeemed in 5 years for an agreed redemption price (treated as deferred consideration). One of the investments is held through a
newly formed Australian subsidiary; NGI Strategic Australia Pty Ltd. Minority interest holders are entitled to an ongoing profit share for
distributions received over an agreed minimum level. For the five months ended 30 June 2021, the portfolio of investments contributed revenue
of $13.1 million and profit of $20.7 million prior to profit share arrangements or $11.2 million after profit share arrangements. A portion of the
$9.4 million profit share owing to minority interests included distributions relating to 2020 calendar year which the Group received as cash on
acquisition.
If the acquisition had of occurred on 1 July 2020, management estimates that contributed revenue would have been $28.9 million and profit of
$34.8 million prior to profit share arrangements or $25.4 million attributable to the Group.
a) Consideration transferred
The following summarises the acquisition date fair value of each class of consideration transferred:
Upfront consideration
Equity instruments (40,524,306 ordinary shares) (i)
Convertible notes (102,283 notes @ $1,000 face value) (ii)
Deferred consideration
Redemption payment for Class II shares (iii)
Total consideration transferred
(i) The fair value of ordinary shares issued was based on the listed
share price of the Company at 31 January 2021 of $1.57 per share
(A$2.06 per share).
(ii) The fair value of convertible notes issued was based on a
conversion price of $1.51 being the USD equivalent of the 20-day
VWAP of Company shares. The convertible notes represent
67,574,292 shares.
(iii) Deferred consideration represents the fair value of the
redemption payment the Group has agreed to pay in 2025 to
acquire the non-controlling interest in the two partnerships
acquired.
The expected payment is determined as the average relevant
gross earnings of the six portfolio investments (ownership
adjusted) over a minimum distribution threshold.
Note
19(a)
17(a)
17(b)
US$’000
63,821
102,283
69,071
235,175
The consideration is calculated over two discrete measurement
periods; Calendar year 2021-2023 and calendar years 2024-2025,
with the average relevant gross earnings multiplied by 2.25x up to
a maximum undiscounted amount of $200 million.
The fair value of deferred consideration at acquisition date involves
the estimation of future cash flows and align with earnings
estimates utilised to determine the fair value of the corresponding
fair value of investment assets acquired. Amounts are discounted
by 12% to present value, comprising of the cost of debt plus a risk
premium to reflect variability in earnings. Refer to Note 20 for
further details on fair value measurement.
53
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Business Combination (continued)
b) Assets acquired and liabilities assumed
The provisionally determined fair values of the identified assets and liabilities of the NGI Strategic Portfolio at the date of acquisition are as
follows:
Cash
Receivables
Investments
Payables
Fair value of net assets acquired
Analysis of cash flows at acquisition
Transaction costs of the acquisition (included in cash flows from investing activities)
Net cash acquired at acquisition date including distributions owing (included in cash flows from
investing activities)
Transaction cost directly attributable to the issue of shares and notes as consideration
(included in cash flows from financing activities)
Provisional
Note
Fair value at
acquisition US$’000
11
13,234
2,794
219,396
(249)
235,175
US$’000
(5,101)
16,028
(1,969)
8,958
Net cash flows on acquisition
Business combinations
The acquisition method of accounting is used to account for all
business combinations regardless of whether equity instruments or
other assets are acquired. Consideration transferred for the
acquisition of an entity comprises the:
fair values of the assets transferred
liabilities incurred to the former owners of the acquired
business
equity interest issued by the group
fair value of asset or liabilities resulting from a contingent
consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions
measured at their fair values at the acquisition date. The group
recognises any non-controlling interest in the acquired entity on an
acquisition-by-acquisition either at fair value or at the non-
controlling interest’s proportionate share of the acquired entity’s
net identifiable assets.
If the consideration transferred, amount of non-controlling interest
(if any) and the fair value of any previously held equity interests in
the acquired entity, exceeds the fair value of assets acquired, a
goodwill is recorded on the balance sheet. If consideration
amounts are less than the fair value of the net identifiable assets of
the business acquired, the bargain difference is recorded in profit
and loss.
54
Where deferred consideration is agreed, the amounts payable in
the future are discounted to their present value as at the date of
exchange. Contingent consideration is classified as either equity or
a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value
recognised in the profit and loss.
For business combinations achieved in stages, the acquisition date
carrying value of the acquirer’s previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date.
Any gains or losses arising from a remeasurement is recognised in
the profit and loss.
Transaction costs associated with the acquisition are expensed as
incurred.
Non-controlling interests
When a business combination involves an agreement to purchase
the non-controlling interest at a later date (referred to as a put
arrangement), the Group will consider it as a discrete transaction.
When the Group does not have a present ownership interest in the
non-controlling interest shares, the Group has elected not to
account for the non-controlling interest on initial acquisition. As a
result, the redemption payment is recorded as a financial liability
and the shares subject to the put are accounted for when acquired.
Changes in the put liability is subsequently recognised in profit and
loss, and if the option expires, is treated as a disposal of a portion
of a business.
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Revenue
a) Revenue from contracts with customers
Consolidated US$’000
Operating revenue
Management fees from commingled funds
Management fees from customised solutions clients
Management fees from managed account services clients
Performance fees
Total operating revenue
Other revenue
Revenue from reimbursement of fund operating expenses
Revenue from provision of office space and services
Total other revenue
Total revenue from contracts with customers
2021
43,731
22,914
8,926
13,532
89,103
17,027
1,828
18,855
107,958
2020
49,917
33,052
4,542
5,576
93,087
7,068
1,354
8,422
101,509
Management fees
Performance fees
Management fees are received from customers for providing:
investment management / advice and related services to
commingled funds; and
investment management / advice and / or managed account
services to customised solutions clients.
Management fee revenue is based on a percentage of the
customer’s portfolio value and is calculated in accordance with the
applicable document or agreement which creates the contractual
relationship with the customer. The management fee is a single
fee which covers all of the individual components which make up
the management service. Management fee revenue is variable in
nature as it is based on a percentage of the customer’s portfolio
value.
The Group’s obligation to provide management services to
customers is satisfied as and when the customer receives and
consumes the services on a continuous basis. The Group
recognises revenue for the services performed at the end of each
month.
Performance fees may be received from some commingled fund
share classes and some customised solutions clients.
The amount of the performance fee is calculated in accordance
with the terms of the applicable contract with the customer. The
entitlement to performance fees for any given performance period
is dependent on the customer’s portfolio achieving a positive
performance, and in some cases in outperforming an agreed
hurdle. Performance fees are generally also subject to a high
watermark arrangement which ensures that fees are not earned
more than once on the same performance.
The Group satisfies its obligations to provide services in exchange
for the performance fee revenue on a continuous basis, however
the right to receive the revenue is constrained by achieving the
required performance hurdles and/or high watermark. As such,
performance fee revenue is only recognised to the extent that it is
probable that a significant reversal of the revenue will not occur.
Due to the uncertainty associated with the estimate of performance
fees prior to the end of the performance period, this revenue is not
recognised in the income statement until the entitlement to receive
the fee becomes certain, which is at the end of the relevant
performance period. At all times prior to this, there is a high
probability of any revenue recognised being reversed.
Performance periods for performance fee arrangements range
from between 1 month to 1 year.
55
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Revenue (continued)
Revenue from reimbursement of fund operating
expenses
The Group is entitled to reimbursement for fund expenses that it
has paid on behalf of the funds. While the funds generally pay
their own operating expenses directly, there are some expenses,
such as financial data services, software and technology
expenses, where it is more practical for the Group to incur and pay
the expense and then be reimbursed by the funds.
The Group enters into contracts for the relevant good or service
directly with the third party service providers, and hence the Group
controls the good or service until it subsequently directs the good
or service to be transferred to the fund.
As the Group controls the good or service before it is transferred,
the Group is not acting in a capacity as agent for the fund. The
Group is required to recognise both:
the expense incurred under the contract with the third-party
service providers (see note 4) to receive the good or service;
and
the revenue to which it expects to be entitled from the fund in
exchange for transferring the good or service.
The revenue and expense in relation to these reimbursed costs
directly off-set as the Group does not add a margin to the original
cost of the good or service transferred to the fund.
Revenue from the provision of office space and
services
The Group has a number of agreements with external parties to
license office space at its New York and London offices. As part of
these agreements, licensees are charged license fees and service
charges on a monthly basis.
b) Other income
Distribution income
Share of profits to non-controlling interest holders
Net strategic investment income
Distribution income
Distributions are received from investments the Group holds in
unquoted securities in externally managed entities. Income is
recognised on the date that the Group’s right to receive payment is
established.
56
The Group has two obligations in relation to these agreements:
to provide office space to licensees, including services in
connection with licensees’ use and occupancy of the office
space; and
to provide other on-going business services.
The Group’s obligation to provide office space services and its
obligation to provide business services to licensees are satisfied
as and when the customer receives and consumes the services on
a continuous basis. The Group recognises revenue as the amount
to which it has a right to invoice for the period.
The Group is entitled to:
a license fee and an occupancy-related service charge as per
the terms of the applicable contract with each licensee as it
satisfies its obligations to provide office space and related
services; and
a service charge as per the terms of the applicable contract
with each licensee as it satisfies its obligations to provide
business services.
Major revenue source
11% (2020: 14%) of the Group’s operating revenue relates to
management fees and performance fees earned on the Lighthouse
Diversified commingled funds.
18% (2020: 13%) of the Group’s operating revenue relates to
management fees and performance fees earned on the Lighthouse
Global Long/Short commingled funds.
18% (2020: 13%) of the Groups operating revenue relates to
management fees and performance fees earned on the North
Rock funds.
The Group’s largest individual client represents 10% of operating
revenue (2020: 11%).
The Group’s three largest individual clients combined represent
22% of operating revenue (2020: 22%).
Consolidated US$’000
2021
13,105
(9,444)
3,661
2020
-
-
-
Share of profits to non-controlling interest holders
Non-controlling interest holders associated with the business
combination completed during the period are entitled to a share of
profits above a minimum level of distributions received from the six
investments acquired.
As a redemption payment to acquire non-controlling interests is
recorded as a liability (refer Note 17(b)), the share of profits to non-
controlling interest holders is recorded through the profit and loss.
Expenses
Operating expenses
Employee expense
Professional and consulting expenses
Information and technology expense
Reimbursable fund operating expenses
Occupancy expense
Distribution expense
Insurance
Travel expense
Other expenses
Total operating expenses
Non-operating expenses
Transaction costs associated with business combination
Depreciation of plant and equipment
Lease depreciation
Amortisation of intangible assets
Impairment losses
Loss on disposal of plant and equipment
Total non-operating expenses
Total expenses
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Consolidated US$’000
2021
2020
(47,916)
(5,036)
(3,372)
(17,027)
(1,180)
(1,788)
(629)
(48)
(1,975)
(78,971)
(5,101)
(2,084)
(2,345)
(95)
-
(548)
(10,173)
(89,144)
(44,216)
(6,345)
(3,540)
(7,068)
(1,583)
(2,798)
(542)
(785)
(2,468)
(69,345)
(1,799)
(1,606)
(2,018)
(374)
(769)
-
(6,565)
(75,910)
Employee expense
Reimbursable fund operating expenses
The largest operating expense is employee expense which
includes salaries and wages, together with the cost of other
benefits provided to employees such as contributions to
superannuation and retirement plans, health care benefits,
educational assistance and cash bonuses. It also includes
associated payroll costs such as payroll tax and payroll processing
fees.
Employee expense for the year ended 30 June 2021 includes
contributions to defined contribution superannuation and pension
plans of $1.2 million (2020: $1.2 million).
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions to a separate entity
and will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined contribution
plans are recognised as an employee benefit expense in profit and
loss in the periods during which services are rendered by
employees.
The Group is entitled to reimbursement for fund expenses that it
has paid on behalf of the funds. While the funds generally pay
their own operating expenses directly, there are some expenses,
such as financial data services, software and technology
expenses, where it is more practical for the Group to incur and pay
the expense and then be reimbursed by the funds.
From January 2021 new cost sharing arrangements were
negotiated with a fund whereby additional operating expenses
such as employee costs including salaries, wages and cash
bonuses are passed through for reimbursement.
A corresponding amount of revenue from reimbursement of fund
operating expenses has also been recognised for the year (see
Note 3).
Occupancy expense
Under AASB 16 Leases, occupancy expense relates to short-term
leases, common area maintenance costs and low value leases.
Distribution expense
Lease depreciation
Distribution expenses are paid to external intermediaries for
marketing and investor servicing, largely in relation to commingled
funds. Distribution expenses are variable in line with AUM and the
associated management fee revenue. This expense is recognised
on an accrual basis.
Lease depreciation has been recognised in accordance with AASB
16 Leases. The Group’s right-of-use assets are depreciated using
the straight-line method over the term of each lease
57
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Finance income and costs
a) Recognised directly in profit and loss
Finance income
Unrealised fair value changes in financial assets
Finance income on net investment in finance lease
Interest income on bank deposits
Net foreign exchange gain
Total finance income
Finance costs
Unrealised fair value changes in financial liabilities
Lease interest expense
Net foreign exchange loss
Bank charges
Other interest expense
Total finance costs
Net finance costs recognised in profit and loss
Consolidated US$’000
2021
2020
22,549
142
1
-
727
13
162
332
22,692
1,234
(10,646)
(912)
(955)
(145)
(27)
(12,685)
10,007
-
(823)
-
(139)
(2)
(964)
270
Fair value movements
Finance costs
Lease interest expense relates to the Group’s lease liabilities and
is charged to profit and loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the
liability for each period. Refer to Note 13 for additional detail.
Other interest expense reflects the current period finance cost
associated with unwinding the discount recognised on the Group’s
office lease make good provision and financial liabilities recorded
at amortised cost at Note 17 (a).
Financial assets (Note 11) and financial liabilities (Note 17 (b)) at
fair value through profit and loss are remeasured at each reporting
date. Fair value movements (unrealised) are reported in the profit
and loss on as either finance income or finance costs depending
on whether the fair value movements result in a net gain or net
loss position for the reporting period.
Finance income
Finance income on net investment in finance lease is recognised
over the term of the lease based on a pattern reflecting a constant
rate of return on the lessor’s net investment in the lease. Refer to
Note 13 for additional detail.
Interest income is recognised in profit and loss as it accrues.
Foreign currency gains and losses are reported on a net basis as
either finance income or finance costs depending on whether
foreign currency movements result in a net gain or net loss
position for the reporting period.
58
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
5. Finance income and costs (continued)
b) Recognised directly in other comprehensive income
Unrealised fair value changes in financial assets
Income tax expense recognised directly in equity
Finance income attributable to equity holders recognised directly in equity
Recognised in:
Fair value reserve
Consolidated US$’000
2021
(1,237)
302
(935)
2020
(3,799)
926
(2,873)
(935)
(2,873)
Financial assets at fair value through other comprehensive income
are carried in the statement of financial position at fair value, with
changes in fair value reported in other comprehensive income and
presented in the fair value reserve in equity (refer Note 11).
Upon sale or derecognition of these investments, any gain or loss
will be transferred to retained earnings.
6. Cash
a) Cash
Cash at bank
Term deposits less than 90 days
Consolidated US$’000
2021
52,097
-
52,097
2020
16,232
10,800
27,032
At balance date, AUD cash accounts earn interest of 0.01% (2020:
0.05%); USD cash accounts earn 0% (2020: between 0% and
0.73%).
The carrying amount of these assets is a reasonable
approximation of fair value. The Group’s exposure to interest rate
and foreign currency risk on cash is disclosed in Note 20.
59
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Cash (continued)
b) Reconciliation of cash flows from operating activities
Cash flows from operating activities
Note
Profit for the period
Adjustments for:
Income tax expense, less income tax paid
Depreciation of plant and equipment
Lease depreciation
Amortisation of intangible assets
Impairment losses
Distributions from financial assets
Finance income (non-cash)
Unrealised fair value changes in financial assets
Unrealised fair value changes in financial liabilities
Other interest expense (non-cash)
Net foreign exchange (gain) / loss
Loss on disposal of plant and equipment
Transaction costs associated with business combination
Profit share to non-controlling interest holders
Operating cash flow before changes in working capital and provisions
(Increase) / decrease in receivables
(Increase) / decrease in other current assets
Increase / (decrease) in payables
Increase / (decrease) in employee benefits
Net cash from operating activities
4
4
4
4
5(a)
5(a)
5(a)
5(a)
5(a)
4
4
3(b)
Consolidated US$’000
2021
26,755
5,620
2,084
2,345
95
-
(13,357)
(133)
(22,549)
10,646
27
955
548
5,101
9,444
27,581
(4,343)
(446)
(890)
297
22,199
2020
18,148
7,700
1,606
2,018
374
769
(1)
-
(727)
-
2
(332)
-
1,799
-
31,356
5,005
(1,562)
(315)
(123)
34,361
60
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Income tax
The Group has an Australian tax consolidated group and two separate US tax consolidated groups; one for the Lighthouse segment and one
which includes US entities within the NGI Strategic segment. Several entities within the NGI Strategic segment are incorporated in the Cayman
Islands including the partnership entities which receive distribution income from portfolio investments acquired in the current year.
Income tax expense comprises current and deferred tax and is recognised in profit and loss, except to the extent that it relates to items
recognised directly in equity or in other comprehensive income.
a) Reconciliation of effective tax rate
Profit before income tax
Income tax using the Company’s domestic tax rate of 30% (2020: 30%)
Effect of tax rates in foreign jurisdictions
Non-deductible / non-assessable amounts included in accounting profit
Amounts not included in accounting profit
Tax losses (generated)/utilised for which no deferred tax asset is recognised
Changes in estimates related to prior years
Consolidated US$’000
2021
32,482
(9,745)
4,404
(220)
359
(325)
(200)
2020
25,869
(7,760)
1,026
(886)
(320)
330
(111)
Total income tax expense reported in profit and loss
(5,727)
(7,721)
b) Current tax assets and liabilities
Current tax assets
Current tax liabilities
Current tax assets and liabilities represent the amount of income
taxes receivable or payable to the relevant tax authority, using
rates current at reporting date. As the group has significant carried
forward tax losses, these amounts are not significant.
Consolidated US$’000
2021
53
-
2020
19
-
61
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
7. Income tax (continued)
c) Deferred tax assets
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for temporary differences related to
investments in wholly-owned subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by reporting
date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset, and they relate to income taxes levied
by the same tax authority on a tax consolidated group of entities.
In determining the amount of current and deferred tax, the Group
takes into account the impact of uncertain tax positions and
whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve
interpretations of tax law and judgements about future events. New
information may become available that causes the Group to
change its judgement regarding the calculation of tax balances,
and such changes will impact the profit and loss in the period that
such a determination is made.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will
be realised.
The carrying value of both recognised and unrecognised deferred
tax assets are reassessed at each reporting date.
Deferred tax assets (net) – US Tax Groups
Net deferred tax assets have been recognised for both US tax groups in respect of the following items:
Consolidated US$’000
Carried forward tax losses
Goodwill and intangible assets
Employee benefits
Financial assets at fair value through profit and loss
Financial assets at fair value through other comprehensive income
Foreign tax credits
Other items
As at 30 June 2021 it is considered more likely than not that the
carried forward tax losses and deductible temporary differences
recorded by both US tax group’s will be fully recovered. This
position is supported by the current profitability of the US
Lighthouse Group which is expected to continue into the future and
taxable profits earned in the NGI Strategic US tax group following
a full year of earnings.
2021
36,251
3,074
71
(1,329)
581
608
1,364
40,620
2020
32,455
11,448
92
(432)
264
679
1,466
45,972
Carried forward tax losses relating to the US Group which existed
prior to 1 January 2018 have a life of 20 years, and will expire
during the period from 2029 to 2038. Any tax losses incurred after
1 January 2018 will have an indefinite life.
62
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
7. Income tax (continued)
c) Deferred tax assets (continued)
Deferred tax assets – Australian Group
Deferred tax assets have not been recognised in respect of the following items:
Deductible temporary differences
Tax losses
Consolidated US$’000
2021
88,653
3,561
92,214
2020
80,623
2,962
83,585
Unrecognised deferred tax assets relating to the Australian Group
of AUD$122.7 million equivalent (2020: AUD$121.8 million) consist
of deductible temporary differences (including impairment losses
recognised in previous financial years), and carried forward
operating tax losses.
As at 30 June 2021, it is not probable that the Australian Group will
produce sufficient taxable profits or capital gains against which
these deferred tax assets can be utilised and therefore the
deferred tax assets remain unrecognised.
Of the deductible temporary differences not recognised
USD$88.3 million (2020: USD$80.6 million) relate to impairment
write-downs from financial years ended 30 June 2009 and 30 June
2020 on the carrying value of the Lighthouse Group. The
realisation of this tax asset is subject to the application of relevant
tax legislation and the structure of any future business transactions
in relation to the Lighthouse Group, if and when any such
transaction was to occur. The movement in the current year is a
result of foreign currency exchange.
Tax losses relating to the Australian Group and deductible
temporary differences do not expire under current tax legislation.
63
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Dividends
a) Dividends paid
The following dividends were paid by the Company:
Interim ordinary dividend for the year ended 30 June 2021 of USD 3.5 cents
Interim dividend for the year ended 30 June 2021 of USD 3.5 cents paid to convertible
noteholders
Final ordinary dividend for the year ended 30 June 2020 of USD 5.5 cents
Interim ordinary dividend for the year ended 30 June 2020 of USD 8.5 cents
Final ordinary dividend for the year ended 30 June 2019 of USD 9.0 cents
The Directors have determined a final unfranked dividend of USD
6.0 cents per share (with 100% conduit foreign income credits).
The dividend will be paid on 10 September 2021.
The dividends were not determined or provided for as at 30 June
2021, and there are no income tax consequences.
b) Dividend franking account
Amount of franking credits available to shareholders of Navigator
Global Investments Limited for subsequent financial years
Dividends paid and declared during the 2021 financial year have
been unfranked. The movement in the franking account balance
relates to foreign currency movements only.
Consolidated US$’000
2021
6,839
2,365
9,217
-
-
18,421
2020
-
-
13,668
14,540
28,208
Consolidated US$’000
2021
774
2020
707
64
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
9. Earnings per share
Basic earnings per share
Diluted earnings per share
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share (EPS)
Profit attributable to ordinary equity holders of the Company
used in calculating basic and diluted EPS
Weighted average number of shares used in calculating basic and diluted EPS
Weighted average number of ordinary shares used in calculating basic
EPS (i)
Adjustment for calculation of diluted EPS:
Convertible notes (ii)
Weighted average number of ordinary shares used in calculating diluted
EPS
Consolidated US$’000
2021
14.97
10.86
2020
11.19
11.19
Consolidated US$’000
2021
26,755
2020
18,148
’000 shares
2021
178,736
67,574
246,310
2020
162,148
-
162,148
(i) The weighted average number of shares takes into account the
weighted average effect of shares issued as part of the business
combination on 1 February 2021.
There have been no other transactions involving ordinary shares
or potential ordinary shares between the reporting date and the
date of authorisation of these financial statements.
(ii) Diluted earnings per share includes potential shares associated
with the convertible notes issued as part of the business
combination on 1 February 2021. Shares are not weighted.
65
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Operating assets and liabilities
This section of the notes to the financial statements provides information on the operating assets and liabilities of the Navigator Global
Investments Limited Group, including explanations of the Group’s key assets used to generate operating results and the corresponding
liabilities. Information on other assets and liabilities can be found in the following sections:
Results for the year starting from page 51
Capital and risk starting from page 77
Where an accounting policy or key estimate is specific to a single note, the policy or estimate is described in the note to which it relates.
10. Trade and other receivables
Current
Trade receivables from contracts with customers
Prepayments
Finance lease receivable
Other receivables
Non-Current
Guarantees and deposits
Finance lease receivable
Note
Consolidated US$’000
2021
18,074
2,079
464
338
20,955
2,371
3,960
6,331
2020
13,674
2,180
112
81
16,047
2,338
165
2,503
12(b)
12(b)
Trade receivables from contracts with customers
Other receivables and prepayments
Trade receivables due from contracts with customers comprise
management service fees, performance fees, recoverable costs,
licence fees, outgoings and other operating expenses on-charged
under agreements with external parties to licence office space.
Trade receivables are non-interest bearing and are generally on
30 to 90 day terms. Trade receivables are initially recognised at
fair value, being the amount to which the Group has the right to
invoice for the period for the services or recoverable costs
provided.
Due to the short-term nature of the Group’s trade receivables and
the historically low default rate on payment by customers, there is
no credit allowance against trade receivables as at 30 June 2021
or 30 June 2020. In determining this credit allowance, the Group
has considered forward looking factors specific to the receivables
and the economic environment and determined that any allowance
would be insignificant.
Other receivables and prepayments relate to items such as
prepaid expenses (principally in relation to software licences and
insurance policies), short-term deposits, interest receivable on
cash deposits, pending redemptions from investments in Group
managed products, and the current portion of finance leases
receivable. Further details are provided for finance lease
receivables at Note 13.
The carrying amount of these assets is a reasonable
approximation of fair value. The Group’s exposure to credit risk,
currency risk and impairment losses related to trade and other
receivables is disclosed in Note 20.
66
11. Investments recognised at fair value
Financial assets at fair value through other comprehensive income
Financial assets at fair value through profit and loss
Financial assets at fair value through other
comprehensive income
Financial assets at fair value through other comprehensive income
comprise non-controlling equity holdings in unquoted securities of
US based companies over which the Group does not have
significant influence.
The Group has elected to account for these investments at fair
value with changes to fair value recognised through other
comprehensive income in the fair value reserve. Upon sale or
derecognition of these investments, any gain or loss will be
transferred to retained earnings.
Note 20 provides details on the methods used to determine fair
value for measurement and disclosure purposes.
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Consolidated US$’000
2021
-
252,151
252,151
2020
1,489
13,245
14,734
Financial assets at fair value through profit and loss
These assets have been classified as fair value through profit and
loss upon initial recognition with changes in fair value recognised
in profit and loss. These investments comprise of:
Investments in unquoted securities of Group managed
entities; and
Investments in unquoted securities of externally
managed entities which comprise of the six portfolio
investments acquired through a business combination
during the year. Fair value movements are recorded
through the profit and loss to better align with the fair
value movements expected in the corresponding
redemption payment liability to acquire non-controlling
interests in the acquired partnerships (see Note 17).
Note 20 provides details on the methods used to determine fair
value for measurement and disclosure purposes.
67
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
12. Plant and equipment
Cost
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June and 1 July 2020
Additions
Disposals
Balance at 30 June 2021
Depreciation
Balance at 1 July 2019
Depreciation for the year
Disposals
Balance at 30 June and 1 July 2020
Depreciation for the year
Disposals
Balance at 30 June 2021
Carrying amounts
At 1 July 2019
At 30 June and 1 July 2020
As at 30 June 2021
Consolidated US$’000
Furniture &
equipment
Computer
equipment &
software
Leasehold
improvements
Total
2,542
520
-
3,062
190
(685)
2,567
(1,218)
(188)
-
(1,406)
(195)
136
(1,465)
1,324
1,656
1,102
4,266
2,208
(5)
6,469
1,272
(3)
7,738
(3,146)
(1,110)
5
(4,251)
(1,442)
3
(5,690)
1,120
2,218
2,048
3,152
1,476
-
4,628
37
(3)
4,662
(805)
(308)
-
(1,113)
(447)
3
(1,557)
2,347
3,515
3,105
9,960
4,204
(5)
14,159
1,499
(691)
14,967
(5,169)
(1,606)
5
(6,770)
(2,084)
143
(8,712)
4,791
7,389
6,255
Recognition and measurement
Items of plant and equipment are measured at cost less
accumulated depreciation and impairment.
Cost includes expenditures that are directly attributable to the
acquisition of the asset. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that
equipment. Ongoing repairs and maintenance is expensed as
incurred.
An item of plant and equipment is derecognised upon disposal or
when no further future economic benefits are expected from its
use. Gains and losses on disposal of an item are determined by
comparing the proceeds from disposal with the carrying amount,
and are recognised in profit and loss.
Depreciation
Depreciation is recognised in the profit and loss on a straight-line
basis over the estimated useful life of the asset as follows:
Leasehold improvements:
Lease term
Computer software and equipment:
2-3 years
Furniture and equipment:
5-20 years
The residual value, the useful life and the depreciation method
applied to an asset are reassessed at least annually. The carrying
value of plant and equipment is reviewed for impairment when
events or changes in circumstances indicate the carrying value
may not be recoverable.
68
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Consolidated US$’000
Office premises
Total
14,101
7,197
(2,018)
19,280
620
(3,855)
(2,345)
13,700
14,101
7,197
(2,018)
19,280
620
(3,855)
(2,345)
13,700
13. Leases
a) Group as lessee
Amounts recognised in the balance sheet
Right-of-use assets
Balance at 1 July 2019
Additions
Depreciation for the period
Balance at 30 June 2020
Additions
Sub-leased during the period
Depreciation for the period
Balance at 30 June 2021
Lease liabilities
Consolidated US$’000
Balance at
30 June 2020
Cash flows
Foreign
exchange
New leases
Transfer to
current
Balance at
30 June 2021
Lease liabilities - current
Lease liabilities – non-current
2,377
20,783
23,160
(2,498)
-
(2,498)
-
780
780
399
221
620
2,982
(2,982)
-
3,260
18,802
22,062
Lease payments have been discounted using the following
incremental borrowing rates:
Office premises:
3.00% to 4.36%
The Group discounts lease payments using each leases
incremental borrowing rate and are determined for each lease
based on its maturity profile.
The rates for US based leases were determined in reference to the
1 month USD Swap Monthly Money rate to effectively swap the
Group’s current Line of Credit borrowing rate (1 month USD
LIBOR) to a fixed longer term borrowing. For non-US based
leases, comparable country specific reference rates were selected.
All rates were supplemented by a margin to reflect a leasing risk
premium.
The Group classifies interest paid as cash flows from operating
activities.
69
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Leases (continued)
Contractual cash flows
30 June 2020 Lease liabilities –
undiscounted
30 June 2021 Lease liabilities –
undiscounted
2021
Total
2020
Total
6 months
or less
6-12
months
1-2 years
2-5 years
More than
5 years
Consolidated US$’000
-
27,292
1,430
1,837
3,629
9,540
10,856
25,429
-
1,951
2,125
3,649
9,022
8,682
Future finance charges
(3,367)
(4,132)
Lease liabilities in the statement of
financial position
Current
Non-current
22,062
23,160
3,260
2,377
18,802
20,783
Amounts recognised in the statement of profit and loss
Lease interest expense (included in finance costs)
Expense relating to short-term leases (included in occupancy expense)
Expense relating to leases of low-value assets that are not shown above as short-term
leases (included in occupancy expense)
Income from subleasing right-of-use assets (included in finance income)
Total cash outflow for leases in 2021 was $3.6 million (2020: $2.8 million).
Consolidated US$’000
2021
2020
912
253
19
142
823
520
18
13
Lease accounting policies
At inception of a contract, the Group assesses whether a contract
is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Contracts may contain both lease and non-lease components. The
Group allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone prices.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group. Assets and liabilities arising from a
lease are initially measured on a present value basis.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus
any initial direct costs incurred or restoration obligations, less any
lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method over the term of the lease. An impairment
review is undertaken for any right-of-use lease asset that shows
indicators of impairment, and an impairment loss is recognised
against any right-of-use lease asset that is impaired.
70
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of office premises that have a
lease term of 12 months or less, and leases of low-value assets
comprising certain equipment. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
The lease liability is initially measured at the present value of the
remaining lease payments, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate. Generally, the Group uses
its incremental borrowing rate as the discount rate.
Lease liabilities include the net present value of fixed payments
(including in-substance fixed payments) less any lease incentives
receivable, variable lease payments (linked to an index or a rate),
and any expected residual value guarantee payments.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
Possible future cash outflows amounting to $14.1 million (2020:
$13.5 million) were not included in the lease liability because it is
not reasonably certain that the leases will be extended.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit and loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Leases (continued)
b) Group as sublessor
Amounts recognised in the balance sheet
Note
2021
Total
2020
Total
6 months
or less
6-12
months
1-2 years
2-3 years
More than
3 years
Consolidated US$’000
60
333
60
395
120
735
50
709
-
3,376
30 June 2020 Finance lease
receivable – undiscounted
30 June 2021 Finance lease
receivable – undiscounted
Unearned finance income
Finance lease receivable in the
statement of financial position
Current 10
Non-current 10
-
5,548
(1,124)
4,424
464
3,960
290
-
(13)
277
112
165
Amounts recognised in the statement of profit and loss
Finance income on net investment in the lease
142
13
Consolidated US$’000
2021
2020
Total cash inflows for subleases in 2021 was $121 thousand
(2020: $121 thousand). Rent received for the new sublease
arrangement will commence in August 2021 following a six month
rent abatement period.
The Group currently subleases one of its office premises. Under
AASB 16, this is classified as a finance lease as the sublease is for
the whole of the remaining term of the head lease.
When the Group is an intermediate lessor, it accounts for its
interests in the head lease and the sublease separately. At
inception of each sublease, the Group determines whether it is a
finance lease or an operating lease. It assesses the lease
classification with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset.
If an arrangement contains lease and non-lease components, the
Group applies AASB 15 to allocate the consideration in the
contract.
Finance income is recognised over the term of the sublease based
on a pattern reflecting a constant rate of return on the lessor’s net
investment in the lease. For purposes of calculating finance
income on the sublease, the Group has used the incremental
borrowing rate on the head lease.
71
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
14. Intangible assets
Cost
Balance at 1 July 2019
Additions
Balance at 30 June and 1 July 2020
Additions
Balance at 30 June 2021
Amortisation and impairment losses
Balance at 1 July 2019
Amortisation for the year
Impairment losses
Consolidated US$’000
Goodwill
Trademarks
Software
Client
relationships
Total
499,519
-
499,519
-
499,519
1,900
-
1,900
-
1,900
(405,718)
(1,093)
-
-
(95)
-
2,050
-
2,050
-
2,050
(1,925)
(125)
-
1,077
-
1,077
-
1,077
(154)
(154)
(769)
504,546
-
504,546
-
504,546
(408,890)
(374)
(769)
Balance at 30 June and 1 July 2020
(405,718)
(1,188)
(2,050)
(1,077)
(410,033)
Amortisation for the year
Impairment losses
-
-
(95)
-
-
-
-
-
(95)
-
Balance at 30 June 2021
(405,718)
(1,283)
(2,050)
(1,077)
(410,128)
Carrying amounts
At 1 July 2019
At 30 June and 1 July 2020
At 30 June 2021
93,801
93,801
93,801
807
712
617
125
-
-
923
-
-
95,656
94,513
94,418
Goodwill
Client relationships
Goodwill that arises upon the acquisition of subsidiaries is included
in intangible assets. For the Group’s accounting policy relating to
the measurement of goodwill at initial recognition, see Note 2.
Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses
Other intangible assets
Other intangible assets acquired by the Group, which have finite
lives, are measured at cost less accumulated amortisation and
accumulated impairment losses.
The Group’s United States subsidiary, Lighthouse Investment
Partners, LLC (Lighthouse) acquired the rights to manage assets
on behalf of clients from Mesirow Advanced Strategies (MAS). A
straight-line amortisation basis was selected over a period of 7
years.
During the 2020 financial year, due to a higher than anticipated
level of redemptions on the MAS assets, it was determined that the
economic benefits associated with the client relationships had
been materially consumed and the associated intangible asset was
impaired to $nil.
72
14.
Intangible assets (continued)
Amortisation
Except for goodwill, intangible assets are amortised on a straight-
line basis in profit and loss over their estimated useful lives, from
the date that they are available for use. The estimated useful lives
for the current and comparative periods are as follows:
Trademarks
Capitalised software development costs
20 years
5 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Impairment testing of intangible assets
The carrying amounts of the Group’s intangible assets which have
an indefinite life are reviewed at least annually, or when an
impairment indicator exists. An impairment loss is recognised if the
carrying amount of an asset or its related cash-generating unit
(CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs to sell. In assessing value
in use, the estimated future cash flows are discounted to their
present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset or CGU. For the purpose of impairment testing, assets
are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGU.
Impairment losses are recognised in profit and loss. An impairment
loss recognised in respect of a CGU is allocated first to reduce the
carrying amount of any goodwill allocated to the CGU and then to
reduce the carrying amount of the other assets in the CGU on a
pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, an impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation and amortisation, if no impairment loss had been
recognised.
Cash Generating Units
The Group has two CGU’s; the US Lighthouse Group (US CGU)
and NGI Strategic Group (Strategic CGU) which was formed in the
current period following business combination. Corporate costs,
assets and liabilities associated with the Australian corporate
business are allocated accordingly between each CGU.
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Impairment testing as at 30 June
Intangible assets subject to impairment testing, remain within the
US based funds management cash generating unit (US CGU). Nil
intangibles are associated with the NGI Strategic CGU, and with
no indicators of impairment at 30 June 2021 an impairment
assessment is not required.
Consolidated US$’000
Carrying Amount
2021
2020
93,801
93,801
617
-
712
-
US CGU
Goodwill
Trademarks
Software
US CGU intangibles
94,418
94,513
NGI Strategic CGU
-
-
Total intangibles
94,418
94,513
The carrying value of the CGU tested at 30 June 2021 includes
$6.2 million of directly attributable plant and equipment (2020: $7.3
million).
Impairment testing carried out on the US CGU as at 30 June 2021
and 30 June 2020 did not result in the recognition of any
impairment losses.
Recoverable amount
The recoverable amount of the CGU was determined based on a
value-in-use calculation.
The calculation utilises five years of cash flow projections. The first
three years of these projections are based on financial forecasts
approved by the board of directors, which are then extrapolated
over an additional two years.
Revenue for the additional two years is extrapolated using an
industry long term growth rate. Investment management costs and
operating expenses are extrapolated based on ratios consistent
with the third year of the approved financial forecasts.
Key assumptions used in the calculation are discount rates and
terminal value growth rates:
Key assumption
Discount rate
Long term & terminal value growth
rate
2021
12.1%
2.2%
2020
12.2%
1.6%
The discount rate is a post-tax measure calculated based on US
risk factors as well as other risk factors specific to the industry and
operational nature of the business, including an assumed debt
leveraging of 10% (2020: 20%) at a market interest rate of 3.59%
(2020: 3.58%). The terminal growth rate is based on the forecast
long-term growth rate for Open-End Investment Funds in the
United States.
A reasonably possible change in these assumptions would not
result in an implied impairment of this CGU.
73
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
15. Trade and other payables
Current
Trade creditors
Distribution costs payable
Accruals
Profit share payable to non-controlling interest
Other payables
Non-current
Other long-term liabilities
Consolidated US$’000
2021
2020
288
472
1,122
9,444
166
11,492
243
243
152
750
1,476
-
566
2,944
218
218
Trade creditors are non-interest bearing and normally settle on
30 to 90 day terms.
The carrying amount of these liabilities is a reasonable
approximation of fair value. The Group’s exposure to currency and
liquidity risk related to trade and other payables is disclosed in
Note 20.
16. Employee benefits
Current
Short-term incentives
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
Consolidated US$’000
2021
2020
696
129
92
917
1
371
114
-
485
90
Short-term benefits
Long-term benefits
Short-term employee benefit obligations are expensed as the
related service is provided. A liability is recognised for the amount
expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to
pay this amount as a result of past service provided by the
employee, and the obligation can be measured reliably. These
liabilities are not discounted.
The Group’s obligation in relation to long-term employee benefits
is the amount of future benefits that employees have earned in
return for their service in the current and prior periods. That benefit
is discounted to determine its present value. The discount rate
used is the relevant corporate bond rate at reporting date.
Once benefits become entitled they are transferred to short-term
benefits on the basis they can be taken at the employee’s
request. Amounts are not discounted once reclassified.
74
17. Other financial liabilities
Non-current
Financial liabilities at amortised cost
Convertible notes (a)
Financial liabilities at fair value
Redemption payment liability (b)
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Consolidated US$’000
2021
2020
1,547
79,717
81,264
-
-
-
Financial liabilities at amortised cost
Compound instruments
Component parts of a compound instrument are classified
separately as financial liabilities and equity in accordance with the
substance of contractual arrangements and the definitions of a
financial liability and equity instrument. A conversion option that
will be settled by the exchange of a fixed amount of cash or
another financial asset is considered the financial liability
component. This amount is recorded as a liability on an amortised
cost basis using the effective interest rate method until
extinguished upon conversion or at the instruments maturity date.
The conversion option classified as equity is determined by the
deducting the amount of the liability component from the fair value
of the compound instrument as a whole, net of tax and not
remeasured. The equity component will remain in equity until the
conversion option is exercised when it is transferred to share
capital or retained earnings if unexercised at maturity date.
Classified at initial recognition, financial liabilities are initially
recorded at fair value net of directly attributable transaction costs.
Subsequently the liability is measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in
the profit and loss for the amortisation process and on
derecognition.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and associated transaction costs. The
effective interest rate amortisation is included as finance costs in
the statement of profit and loss.
Financial liabilities at fair value through profit and loss
Financial liabilities are classified as fair value through profit and
loss when it is (i) contingent consideration of an acquirer in a
business combination, (ii) held for trading or (iii) its designated at
fair value through profit and loss. Measurement is at fair value at
initial recognition and at each balance date with any gains or
losses arising on changes in fair value recognised as finance costs
in the statement of profit and loss.
Note 20 provides details on the methods used to determine fair
value for measurement and disclosure purposes.
a) Convertible Notes
Issue of convertible notes through business combination
Transaction costs
Note
2
Consolidated US$’000
2021
102,283
(939)
101,344
(99,818)
21
1,547
2020
-
-
-
-
-
-
Amount classified as equity (net of transaction costs $925,227)
19(b)
Accreted interest
Navigator Global Investments Limited issued 102,283 convertible
notes for $102.3 million on 1 February 2021 as part consideration
to acquire minority interests in six asset managers (refer Note 2).
Each note has a face value of $1,000 and is convertible into fully
paid ordinary shares of the parent of the Group. Total notes on
issue equate to 67,574,292 shares and are converted at the option
of the holder at any time and at the option of the issuer after two
years (subject to maximum ownership limits).
The notes are required to be converted on their 10 year maturity
date. To the extent regulatory requirements prohibit conversion
into Navigator Global Investment securities by maturity date,
alternative options are available to both parties to allow
conversion. In the remote instance this cannot occur by the 10
year maturity date a provision is available for unconverted notes to
be redeemed for cash at the prevailing share price. The
convertible notes are considered a compound instrument with the
presentation of the equity portion explained in Note 19
The convertible notes are non-interest bearing and entitled to
participate in discretionary dividends declared by the company.
No voting rights are associated with the convertible notes.
.
75
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
17. Other financial liabilities (continued)
b) Redemption payment liability
Fair value of redemption payment liability at acquisition
2
Unrealised fair value changes recognised in profit and loss
Fair value at 30 June
2021
69,071
10,646
79,717
2020
-
-
-
Note
Consolidated US$’000
The Group has a written put arrangement over the non-controlling
interest in acquired partnerships; NGI Strategic Holdings (A)
Limited Partnership and NGI Strategic Holdings (B) Limited
Partnership. The deferred consideration relating to the business
combination completed during the period (Refer Note 2),
represents the fair value of non-controlling interest held by the
vendor which the Group has an obligation to acquire in 2025.
Once this redemption payment is made, the two acquired
partnerships will be wholly owned entities by the Group.
The fair value of estimated consideration is calculated over two
discrete measurement periods; Calendar year 2021-2023 and
calendar years 2024-2025, and payable in financial year ending
2026. The amount is determined as the average relevant gross
earnings of the six portfolio investments (ownership adjusted) over
a minimum distribution threshold with the average relevant gross
earnings multiplied by 2.25x up to a maximum undiscounted
amount of $200 million.
The fair value at balance date involves the estimation of future
cash flows and align with earnings estimates utilised to determine
the fair value of the corresponding fair value investment assets.
Amounts are discounted by 12% to present value, comprising of
the cost of debt plus a risk premium to reflect variability in
earnings.
As the redemption payment is considered contingent
consideration, fair value movements are recorded through profit
and loss and discounted to determine its present value. Further
details on fair value measurement including sensitivities is outlined
in Note 20.
76
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Capital and risk
This section of the notes to the financial statements provides information on how Navigator Global Investments Limited manages its capital and
financial risk. On the following pages you will find disclosures explaining the Group’s:
•
•
capital management, including structure, policies, and related accounts balances; and
exposure to financial risks, including market risks, credit risk, liquidity risk, and the risk arising from financial instruments.
Where an accounting policy or key estimate is specific to a single note, the policy or estimate is described in the note to which it relates.
18. Capital management
Capital management of the Group focuses on aiming to ensure:
Regulatory Capital Requirements
that the Group continues as a going concern;
there is sufficient cash flow to meet operating
requirements;
flexibility is maintained for future business expansion;
and
that the payment of dividends is supported in
accordance with the Group’s dividend policy.
The Company’s capital comprises ordinary shares and convertible
notes on issue.
Line of Credit
The Group maintains a $15 million Line of Credit which matures on
27 July 2022. The facility is secured by a charge over certain
Group assets. This Line of Credit has not been drawn during the
year ended 30 June 2021 and remains undrawn at the date of this
report.
19. Capital and reserves
a) Share capital
Ordinary shares
Opening balance 1 July
The following capital requirements were complied with throughout
the year:
LHP Ireland Fund Management Limited, a wholly owned
subsidiary, is required by Central Bank of Ireland to
maintain a prescribed capital amount, determined as:
a base requirement of 125 thousand Euros
o
plus .02% of excess over 250 million Euros in
o
assets under management,
plus an additional .01% of the assets under
management for potential liability risk.
o
LH NR UK (Management) LLP, a wholly owned
partnership is required by Financial Conduct Authority to
have capital requirements in three forms:
o
o
Permanent minimum capital requirement;
Fixed overhead requirement of 25% of fixed
overheads; and
o Risk responsive computation for potential liability
risk.
Note
Shares ‘000
US$’000
2021
2020
2021
2020
162,148
162,148
257,355
257,355
Shares issued through a business combination
2
40,524
Less: Transaction costs arising on share issue
-
-
-
63,821
(1,030)
-
-
Total share capital at 30 June
202,672
162,148
320,146
257,355
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects. The
Company does not have authorised capital or par value in respect
of issued shares. All ordinary shares rank equally with regard to
the Company’s residual assets. Ordinary shares have the right to
receive dividends as declared and are entitled to one vote per
share at general meetings of the Company.
77
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
19. Capital and reserves (continued)
b) Non-share capital
Non-share capital of $99.8 million represents the equity
component of 102,283 convertible notes issued as part
consideration to acquire minority interests in six asset managers
(refer Note 2). The liability component is included in Other financial
liabilities (refer Note 17) including the Group’s accounting policy for
compound instruments.
The fair value of conversion obligation relating to convertible notes
is $100.7 million, offset by $0.9 million directly attributable
transaction costs.
c) Nature and purpose of reserves
Parent entity profits reserve
Translation reserve
Fair value reserve
Share-based payments reserve
Consolidated US$’000
2021
20,613
850
(1,783)
13,326
33,006
2020
354
850
(848)
13,326
13,682
The parent entity profits reserve comprises the balance of
accumulated profit for the Company not yet distributed as
dividends and represents profits available for distribution to
shareholders as dividends in future years.
The translation reserve is used to record foreign currency
differences arising from the translation of the financial statements
of operations which have a functional currency that is different to
the Group’s presentation currency.
The fair value reserve comprises of the increase or decrease in the
fair value of financial assets at fair value through other
comprehensive income above or below their original purchase
value. Cumulative fair value adjustments are transferred to
retained earnings upon derecognition, $nil were transferred in the
current period (2020: $nil).
The share-based payments reserve records share based
payments associated with historical performance rights and share
options.
78
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Financial risk management
Classes of financial instruments
The Group held the following non-derivative financial assets and liabilities:
Classification
Description
Assets
Financial assets at amortised
cost
Financial assets at fair value
through profit and loss
The carrying amount of these assets is a reasonable approximation of fair value
Cash
Trade and other receivables
Investments in unquoted securities of Group managed entities
Investments in unquoted securities of externally managed entities. The Group does not
have significant influence over any of the six investments acquired as a portfolio during the
period. Fair value movements in these assets through profit and loss align with the
corresponding movements in financial liability (see below).
Fair value movements in these assets are recognised through profit and loss.
Financial assets at fair value
through other comprehensive
income
Non-controlling equity holdings in three US based companies over which the Group does
not have significant influence.
Fair value movements in these assets are recognised through other comprehensive income.
Liabilities
Financial liabilities at
amortised cost
Financial liability at fair value
through profit and loss
The carrying amount of these assets is a reasonable approximation of fair value
Trade and other payables
Lease liabilities
Convertible note liability
Redemption payment liability which represents the obligation to acquire the remaining
partnership shares in NGI Strategic Holdings (A) LP and NGI Strategic Holdings (B) LP.
These partnerships hold minority interest investments in a portfolio of six external asset
managers in the US and France.
Fair value movements including the unwinding of discounts are recognised through profit and
loss.
Note
6
10
11
11
11
15
13
17
17
Derecognition of financial instruments
Fair value of financial instruments
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows on the financial asset in
a transaction in which control, or substantially all the risks and
rewards of ownership are transferred.
The Group derecognises a financial liability when its obligations
under the liability is discharged or cancelled or expire.
Offset of financial instruments
Financial assets and liabilities are offset and the net amount
reported in the statement of financial position if there is a currently
enforceable legal right to offset the recognised amounts and there
is an intention to either to settle on a net basis or to realise the
asset and settle the liability simultaneously
Fair value hierarchy
The Group classifies fair value measurements using a fair value
hierarchy that reflects the subjectivity of the inputs used in making
the measurements. The different levels of fair value hierarchy are:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data.
79
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Financial risk management (continued)
Fair value measurements
The following table shows the fair values of financial assets and their levels in the fair value hierarchy.
Note
Level 1
Level 2
Level 3
Total
30 June 2020
Financial assets at fair value through other comprehensive income
Investment in unquoted securities of externally managed entities
Financial assets at fair value through profit and loss
Investments in unquoted securities of Group managed entities
Financial assets at fair value through other comprehensive income
Investment in unquoted securities of externally managed entities
Financial assets at fair value through profit and loss
Investments in unquoted securities of externally managed entities
Investments in unquoted securities of Group managed entities
Financial liabilities
11
11
11
11
11
Redemption payment liability
17(b)
-
-
-
-
-
-
There were no transfers between levels during the financial years ended 30 June 2021 or 30 June 2020.
Valuation techniques used to derive level 2 and level 3 fair values
-
1,489
1,489
-
-
13,245
30 June 2021
-
-
238,068
14,083
-
13,245
-
238,068
14,083
-
79,717
79,717
The fair value of financial instruments that are not in an active
market are determined using valuation techniques. These
valuation techniques maximise the use of observable market data
where it is available. If the significant inputs required to fair value
an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3, as is the case for
unlisted equity securities.
Specific valuation techniques used to value level 2 and level 3
financial assets are outlined below. Valuation techniques used to
value level 3 financial liabilities as well as detailed movements in
fair value is detailed in Note 17(b).
Share in unquoted securities of Group managed entities
The Group holds investments in Group managed entities. Each
investment entity has an external administrator who is responsible
for determining the fair value of the underlying investments of each
entity and using this to calculate the net asset value per share at
which any investor in the entity can redeem their investment
holding (‘the exit price’). The fair value of these investments as at
30 June 2021 and 30 June 2020 is the exit price as calculated and
provided by the external administrator of the investment entities.
All significant inputs required to fair value the investments are
therefore observable.
Unquoted securities of externally managed entities
The shares held in other externally managed entities are unquoted
and are considered level 3 as the inputs to the fair value are not
based on observable market prices.
80
Operator of an online marketplace for alternative investments
This investment remains at $nil fair value as no further evidence
suggests and improvement in the future viability of this investment.
Alternative asset managers
During the period the Group acquired a portfolio of six investments
in alternative asset managers, each operating within their own
niche market. Fair values as at acquisition date and balance date
have been estimated using a discounted cash flow model. The
valuation requires management to make certain assumptions
about the model inputs including forecasted cash flows, growth
rates and the discount rate on management and performance fee
income streams. The probabilities of various estimates within the
range can be reasonably assessed and are used in management’s
estimate of fair value for these investments where movements are
recorded in profit and loss. Further details and sensitivities for
significant unobservable inputs are outlined in the next section.
Boutique asset managers
Due to significant uncertainty as to the on-going viability of this
investment, the carrying value of this investment continues to be
$nil after it was revalued to $nil during the 2020 financial year.
Text analytics platform provider
The fair value of this investment was previously based on the
transaction price per share from a historical capital raise. The
entity has diminishing cash reserves and is reliant upon a further
successful capital raise to continue as a going concern. Due to the
significant uncertainty on the ability to raise cash, the carrying
value of the investment was revalued to $nil at 30 June 2021
(2020: $1.5 million).
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20. Financial risk management (continued)
Movement in Level 3 financial instruments
The following table presents the change in level 3 assets for the financial years ended 30 June 2021 and 30 June 2020. Movement in level 3
financial liabilities are outlined in Note 17. There were no transfers between categories.
Note
Investment in unquoted securities
Through other
comprehensive
income
Through
profit and loss
Opening balance 1 July 2019
Increase/(Decrease) in fair value through other comprehensive income
Closing balance 30 June 2020
Acquisition through business combination at fair value
2
Increase/(Decrease) in fair value
Closing balance 30 June 2021
Significant unobservable inputs to valuation:
-
-
-
219,396
18,672
238,068
5,288
(3,799)
1,489
-
(1,489)
-
The significant unobservable inputs used in the fair valuation measurements categorised within level 3 of the fair value hierarchy, together with a
quantitative sensitivity analysis as at 30 June 2021 are shown below:
Fair value at
Description
Valuation
technique
30 June
2021
30 June
2020
Unobservable inputs
Sensitivity of the input to fair
value
Unlisted equity
securities in externally
managed asset
management entities,
recorded at fair value
through profit and loss
DCF
238,068
-
Growth rate for cash flows for subsequent
years ranged from
5 -7.5%
A 1% increase/(decrease) in the
growth rate would result in a
$20.1 million increase/(decrease) in the
fair value
WACC applied to management fee income
stream ranged from
13 – 15% depending on the perceived
entity specific risk applicable to each
investment
A 0.5% increase/(decrease) in the
WACC would result in a $7.1 million
(decrease)/increase in the fair value
Discount rate of 24.92% applied to
performance fee income stream which
considered significant variability in earnings
A 0.5% increase/(decrease) in the
discount rate would result in a
$1.5 million (decrease)/increase in the
fair value
A discount of 30% was applied to account
for the lack of marketability on the small
ownership percentages held in these
entities
A 5% increase/(decrease) in the lack of
marketability discount would result in a
$17.0 million (decrease)/increase in the
fair value
Unlisted equity
securities in externally
managed entities
recorded at fair value
through other
comprehensive income
Redemption payment
liability recorded at fair
value through profit and
loss
Market
approach
-
1,489
A share price from a historical capital raise
was utilised as an indicative fair value price
for equity held
2020: A 5% increase/(decrease) in the
price per share would result in a
$52 thousand (decrease)/increase in
the fair value
DCF
(79,717)
-
Growth rate for cash flows for subsequent
years ranged from
5 -7.5%
A 1% increase/(decrease) in the
growth rate would result in a
$4.9 million increase/(decrease) in the
fair value
Discount rate of 12% was applied
incorporating a risk premium for variability in
future cashflows which determine the
redemption payment owing
A 1% increase/(decrease) in the
discount rate would result in a
$3.7 million (decrease)/increase in the
fair value of the liability
81
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20. Financial risk management (continued)
Financial Risk Management
The Group has direct and indirect exposure to credit risk, liquidity
risk and market risk (including currency risk, interest rate risk and
equity price risk) arising from its activities.
These risks can impact the Group’s net profit and total equity value
through:
fluctuations in the value of the Group’s investments and other
financial assets and liabilities;
the effect of market risks on the Group’s Assets Under
Management (AUM), which can impact management and
performance fees; and
the amount of interest earned on the Group’s cash balances.
Interest rate risk
As at 30 June 2021, the Group’s exposure to interest rate risk
relates primarily to the Group’s cash and term deposits which
mature in less than 90 days.
A change in interest rates at reporting date would not have
impacted the carrying value of the Group's variable rate deposits,
and would therefore not have impacted the Group's equity or profit
and loss.
The redemption payment liability is also exposed to interest rate
risk in the form of the cost of debt included within the discount rate.
Refer to sensitivities for level 3 unobservable inputs performed
above for impact on the Group’s profit and loss.
Credit risk
Price risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s cash deposits
and receivables. The carrying amount of these financial assets
represents the Group’s maximum credit risk exposure.
The Group is exposed to price risk in relation to the value of its
investments, and indirectly through the impacts on management
and performance fees earned from the fluctuations in the value of
the AUM in the investment products it manages due to market
price movements.
Cash and lease guarantee deposits
Management fees
Cash and lease guarantee deposits held in Australia are held with
bank counterparties which are rated A-1+ (Standard & Poor’s).
Cash and lease guarantee deposits held in the United States are
held in deposit accounts which are rated A / A-1 (Standard &
Poor’s).
Trade and other receivables
At reporting date, 60% of the Group's trade and other receivables
related to amounts receivable from products managed by the
Group (2020: 70%).
As at reporting date, the Group did not have any receivables which
were past due. Due to the short-term nature of the Group’s trade
receivables, the fact that the majority relate to Group managed
products, and the historically low default rates, the application of
the expected credit loss model has not resulted in the recording of
a material credit allowance as at 30 June 2021 or 30 June 2020.
In determining this credit allowance, the Group has considered
forward looking factors specific to the receivables and the
economic environment.
Market risk
Market risk is the risk that changes in market prices, such as
interest rates, foreign exchange rates and equity prices will affect
the Group’s income or the value of its holdings of financial
instruments.
The Group earns management fees as a percentage of the assets
it manages on behalf of its funds and clients. Management fees
will be impacted by changes in the value of these assets from
movements in the individual prices of the underlying securities held
as well as the fluctuations in exchange rates for assets which are
not denominated in USD. The following table summarises the
sensitivity of management fees to a change in AUM due to
movements in market prices:
Consolidated US$’000
2021
2020
Profit and loss (decrease) /
increase
Fair value + 5%, net of tax
2,834
3,070
Fair value - 5%, net of tax
(2,834)
(3,070)
The impact of any change to management fees due to changes in
AUM from inflows and outflows of assets by clients due to changes
in market prices has not been estimated.
Performance fees
The Group earns performance fees from some of its funds and
clients. The Group’s entitlement to performance fees varies
between the relevant funds and clients, and generally is dependent
on the relevant fund or client portfolio outperforming a high
watermark and in some cases a benchmark hurdle over a
performance period. Given the nature of performance fees, the
Group is subject to the risk that in any given financial year it may
earn no performance fees.
82
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20. Financial risk management (continued)
Investments
The Group’s investments comprise:
Unquoted securities of US based companies externally
managed which have been designated as fair value through
other comprehensive income. Refer above for level 3
significant unobservable inputs into fair values and
sensitivities for each.
Unquoted securities of externally managed entities in a
portfolio of alternative asset managers. Refer above for level
3 significant unobservable inputs into fair values and
sensitivities for each.
Unquoted securities of investment funds managed by the
Group. Fair value movements for these level 2 investments
are recorded through profit and loss. The following table
summarises the sensitivity of the fair value (after tax) of these
assets to movements in market prices:
Consolidated US$’000
2021
2020
Financial assets at fair value through
profit and loss – Level 2 investments
Profit and loss (decrease) /
increase
Fair value + 5%, net of tax
Fair value - 5%, net of tax
528
(528)
465
(465)
Currency risk
The Group is exposed to currency risk on revenue, expenses,
receivables, and payables that are denominated in a currency
other than the respective functional currencies of the Group
entities. The following significant exchange rates applied during
the year:
AUD/USD: Average rate
AUD/USD: 30 June spot rate
GBP/USD: Average rate
GBP/USD: 30 June spot rate
2021
0.7471
0.7518
1.3462
1.3819
2020
0.6713
0.6863
n/a
n/a
At reporting date, the Group’s direct exposure to currency risk
relates to:
AUD denominated balances recognised by Navigator Global
Investments Limited which has a functional currency of USD.
Due to Navigator Global Investments Limited’s position as the
parent entity of the Australian listed group, it retains a number
of working capital balances denominated in AUD which
include cash, current receivables, current trade and other
payables and employee benefits.
AUD & GBP denominated balances recognised by the
Lighthouse Group which has a functional currency of USD.
These balances comprise of trade receivables due from a
third party for management and performance fees on funds
for which Lighthouse performs investment services.
The following table summarises the sensitivity of these balances
held at reporting date to movement in the AUD/USD and
GBP/USD exchange rate, with all other variables held constant.
AUD/USD: appreciation of 10%,
net of tax
AUD/USD: depreciation of 10%,
net of tax
GBP/USD: appreciation of 10%,
net of tax
GBP/USD: depreciation of 10%,
net of tax
Consolidated US$’000
2021
2020
217
112
(217)
(112)
221
(221)
n/a
n/a
One of the investments acquired through the business combination
during the year is an entity based in France reporting in Euro. The
entity will be exposed to currency risk when this entity makes
distributions. As the investment held is a non-monetary asset,
sensitivity on the currency impact on recorded fair values is not
required.
83
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20. Financial risk management (continued)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in
meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The
Group’s approach to managing liquidity is to ensure, as far as
possible, that it has sufficient resources available to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group’s reputation.
The Group maintains 12 month rolling forecasts and 5 year cash
projections, which assist it in monitoring cash flow requirements.
The Group ensures that it has sufficient cash on demand to meet
operational requirements in the short term and has appropriate
strategies in place to satisfy long term obligations.
The Group also has access to a $15 million line of credit (refer
Note 18) which to date has not been required as it remains
undrawn. This approach excludes the potential impact of extreme
circumstances which cannot be predicted.
The following are the contractual maturities of non-derivative financial liabilities as at balance date:
Consolidated US$’000
Note
Carrying
value
Cont-
ractual
cash flows
6 months
or less
6-12
months
1-2 years
2-5 years
More than
5 years
30 June 2021
Trade and other payables –
current
Trade and other payables –
non-current
Convertible note
Redemption payment liability
30 June 2020
Trade and other payables –
current
Trade and other payables –
non-current
15
15
17
17
15
15
11,492
(11,492)
(11,492)
50
(50)
1,547
(2,143)
79,717
(141,967)
-
-
-
92,806
(155,652)
(11,492)
2,944
(2,944)
(2,944)
50
(50)
-
2,994
(2,994)
(2,944)
-
-
-
-
-
-
-
-
-
(50)
-
-
-
-
-
-
-
(2,143)
(141,967)
-
(50)
(141,967)
(2,143)
-
-
-
-
(50)
(50)
-
-
-
Refer to Note 13 for contractual maturities of the Group’s lease liabilities.
Trade and other payables
Redemption payment liability
It is not expected that the cash flows included in the maturity
analysis for these liabilities could occur significantly earlier, or at
significantly different amounts.
Convertible note
The undiscounted cash flows included in the maturity analysis for
the convertible note is management’s estimate of the conversion
option that will be settled by the exchanged of cash for those notes
unable to be converted to Navigator Global Investment securities
by the maturity date. The timing of these cash flows would not
occur earlier, however may be for a differing amount depending on
the volume of unconverted notes as at maturity date.
The undiscounted cash flows associated with the redemption
payment liability is an estimate of the contingent consideration
payable based on unobservable inputs into the fair value
calculation as at 30 June 2021. The future payment to redeem
non-controlling interests in acquired partnerships may be
significantly higher or lower based on revised estimates. The
timing of such payments is not expected to occur significantly
earlier than indicated.
84
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Group structure
This section of the notes to the financial statements outlines how the Navigator Global Investments Limited’s group structure affects the financial
position and performance of the Group as a whole. On the following pages you will find disclosures explaining the Group’s composition and key
parent entity disclosures.
Where an accounting policy or key estimate is specific to a single note, the policy or estimate is described in the note to which it relates.
Group entities
The Group’s consolidated financial statements include the financial statements of Navigator Global Investments Limited and its subsidiaries:
Name
Country of incorporation
% Equity interest
2021
2020
HFA Lighthouse Holdings Corp
HFA Lighthouse Corp
LHP Investments, LLC
Lighthouse Investment Partners, LLC
Lighthouse Partners NY, LLC1
Lighthouse Partners UK, LLC
North Rock Capital Management LLC
NR Technology Group, LLC
NGI Strategic Holdings I, Inc 2
NGI Strategic Holdings II, Inc 2
NGI Strategic Australia Pty Ltd2
NGI Strategic Holdings Ltd2
NGI Strategic Holdings (A) LP2
NGI Strategic Holdings (B) LP2
Lighthouse Partners Limited (HK)
LHP Ireland Fund Management Limited
LH NR UK (Management) LLP
LH NR UK Limited
1
2
Lighthouse Partners NY, LLC wound up on 31 December 2020.
Entities formed or acquired from business combination during the year
Basis of consolidation
The consolidated financial statements are those of the Group,
comprising Navigator Global Investments Limited and all entities
that Navigator Global Investments Limited controlled during the
period and at reporting date.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement in the investee and has the
power to affect those returns through its power over the investee.
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
Australia
Cayman Islands
Cayman Islands
Cayman Islands
Hong Kong
Ireland
United Kingdom
United Kingdom
100
100
100
100
-
100
100
100
100
100
100
100
71
56
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
100
100
-
-
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses
control of the subsidiary. The assets, liabilities, income and
expenses of a subsidiary are included in the consolidated financial
statements from the date the Group gains control, until the date
the Group ceases to control the subsidiary.
All intra-group assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
85
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Parent entity disclosures
As at, and throughout the financial year ended 30 June 2021, the parent company of the Group was Navigator Global Investments Limited.
Company US$’000
2021
2020
29,463
29,463
(80,876)
(80,876)
20,926
353,369
(1,499)
(3,255)
350,114
320,146
99,818
(99,341)
20,613
5,070
3,808
12,213
177,375
(697)
(911)
176,464
257,355
-
(90,123)
354
5,070
3,808
350,114
176,464
Result of the parent entity
(Loss) / profit for the year
Total comprehensive (loss) / income for the year
Financial position of the parent at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent comprising of
Share capital
Non-share capital
(Accumulated losses) / Retained earnings
Parent entity profits reserve
Translation reserve
Share based payments reserve
Total equity
86
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Other disclosures
This section includes information that the Directors do not consider to be significant in understanding the financial performance and position of
the Group, but must be disclosed to comply with the Accounting Standards, the Corporations Act 2001 or the Corporations Regulations.
Related parties
Key management personnel remuneration
The key management personnel remuneration included in ‘employee expense’ (see note 3) is as follows:
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Detailed remuneration disclosures are provided in the remuneration report on pages 32 to 41.
Consolidated US$
2021
2020
5,434,556
4,762,879
3,661
104,440
9,780
102,434
5,542,657
4,875,093
Individual directors’ and executives’
remuneration disclosure
Apart from the details disclosed in this note, no director has
entered into a material contract with the Group since the end of the
previous financial year and there were no material contracts
involving directors' interests existing at year-end.
Other related party transactions
Revenue from group managed products
During the financial year Group entities recognised management
fees, performance fees and fund reimbursement revenue received
or receivable of $98,558,533 (2020: $91,780,976) from investment
products for which group entities act as general partner,
investment manager or managed account service provider.
Amounts receivable from these products at 30 June 2021 were
$14,504,363 (2020: $11,254,984).
Investment in products
As at 30 June 2021, Group entities hold $14,082,887 of
investments in products for which they act as investment manager
or managed account service provider (2020: $13,245,015). Refer
note 11 for additional detail.
During the financial year, the Group recognised distributions from
its investments in these products of $nil (2020: $669).
For the years ended 30 June 2021 and 30 June 2020, the Group
has not recorded a credit allowance relating to amounts owed by
related parties. Additional information regarding the Group’s
assessment of credit risk in relation to related party receivables
and investments is disclosed in Note 20.
Other
There have been no guarantees provided or received for any
related party receivables.
87
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Auditors’ remuneration
Fees to Ernst & Young
EY (Australia):
Audit and review of financial reports for the Group and controlled entities
Other non-audit services (advisory)
Overseas member firms of EY (Australia):
Audit and review of financial reports for the Group and controlled entities
Total fees to Ernst & Young
Audit fees to other audit firms
Other audit firms (Australia):
Other non-audit services (taxation)
Other non-audit services (advisory)
Total fees to other audit firms (Australia)
Overseas member firms of other auditors:
Audit and review of financial reports for controlled entities
Other non-audit services (taxation)
Other non-audit services (advisory)
Total fees to overseas member firms of other auditors
Total fees to other audit firms
Consolidated US$
2021
2020
258,617
59,308
232,094
550,019
58,833
5,004
63,837
17,017
185,979
275,290
478,286
542,123
94,351
-
151,484
245,835
20,422
143,107
163,529
19,244
-
450,000
469,244
632,773
Total auditor’s remuneration
1,092,142
878,608
Commitments
At 30 June 2021 the Group had commitments of $249 thousand
(2020: nil) relating to the completion of lease fit outs for a new
leased premises in Chicago.
Contingent liabilities
Investment fund related obligations
Guarantees
The Company’s subsidiary Lighthouse Investment Partners, LLC
acts as the Investment Manager for certain private investment
funds under Delaware Law, Cayman Islands Law and Irish
Law. Due to its role as Investment Manager the subsidiary may be
subject to contingent liabilities as a result of its obligations to the
funds. The directors of Lighthouse Investment Partners, LLC
consider that all obligations have been met to 30 June 2021.
During the period, the Group provided a guarantee to one of the
externally managed entities for its share in a banking facility. In the
event of default this guarantee may be called upon which would be
incurred jointly with other investors. At 30 June 2021 the facility for
which the guarantee is provided is undrawn.
88
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Subsequent events
Events occurring after reporting period
There has not arisen in the interval between the end of the
reporting period and the date of this report, any item, transaction or
event of a material nature, likely to affect significantly the
operations of the Group, the results of those operations, or the
state of affairs of the Group, in future financial years.
89
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Basis of preparation
This section sets out the basis upon which the Group’s financial statements are prepared as a whole. Specific accounting policies are described
in their respective notes to the financial statements. This section also shows information on new accounting standards, amendments and
interpretations, and whether they are effective for the current or later years. We explain how these changes are expected to impact the financial
position and performance of the Group.
Corporate information
Basis of measurement
The financial report of Navigator Global Investments Limited (the
‘Company’) for the year ended 30 June 2021 was approved by the
board of directors on the 19th day of August 2021.
The consolidated financial statements have been prepared on a
going concern basis. The consolidated financial statements have
been prepared on a historical cost basis except for the following
items:
The consolidated financial statements of the Company as at and
for the year ended 30 June 2021 comprise the Company and its
subsidiaries (the ‘Group’) (see Note 21).
Items
The Company is a for profit company limited by shares
incorporated in Australia and is listed on the Australian Securities
Exchange. The registered office of the Company is Level 21, 10
Eagle Street, Brisbane QLD 4000.
Financial assets and liabilities at fair
value through profit and loss
Financial assets at fair value through
other comprehensive income
Measurement
basis
Fair value
Fair value
Statement of compliance
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance with
the requirements of the Corporations Act 2001, Australian
Accounting Standards (AASB) and other authoritative
pronouncements of the Australian Accounting Standards Board.
The consolidated financial statements also comply with the
International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
During the period, disclosures reflect changes to the comparative
period to conform to the current period’s presentation.
Details of the Group’s accounting policies, including changes
during the year, are included in Note 32 as well as within the
individual notes to the financial statements.
The methods used to measure fair value are discussed further in
Note 20.
Functional and presentation
currency
The consolidated financial statements are presented in US dollars
(‘USD’), which is the Company’s functional currency.
The amounts contained in this financial report have been rounded
to the nearest thousand dollars in accordance with the ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 dated 24 March 2016, unless otherwise stated.
Translation of foreign currency
Transactions in foreign currencies are translated to the respective
functional currency of Group entities at rates of exchange ruling on
the date of those transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions, and from the
translation at the year-end exchange rate of monetary assets and
liabilities denominated in foreign currencies, are recognised in
profit and loss.
90
Other accounting policies
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment within
the next financial year are included in the following notes:
Note 7 - recognition of deferred tax assets: availability of
future taxable profit against which carried forward tax losses
can be used;
Note 14 - impairment test: key assumptions underlying
recoverable amounts of intangible assets;
Note 11 - fair value measurement of investments; and
Note 17 – other liabilities which includes a redemption
payment for non-controlling interests in two partnerships
acquired during the year.
Measurement of fair values
A number of the Group’s accounting policies and disclosures
require the determination of fair value. The methods used to
determine fair values for measurement and / or disclosure
purposes are included in the following notes:
notes 11 and 20 - investments in financial assets at fair value
through profit and loss;
notes 11 and 20 - investment in financial assets at fair value
through other comprehensive income; and
notes 17 and 20 – financial liabilities measured at fair value
with changes recorded through profit and loss.
Changes in accounting policies
New and amended standards
The Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards
Board (the AASB) that are relevant to its operations and effective
for the current reporting period:
AASB 2018-6 Amendments to Australian Accounting
Standards – Definition of a business (AASB 3)
AASB 2018-7 Amendments to Australian Accounting
Standards – Definition of Material (AASB 101 and AASB
108)
AASB 2019-3 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform
AASB 2019-1 Amendments to Australian Accounting
Standards – References to the Conceptual Framework
AASB 2019-5 Amendments to Australian Accounting
Standards – Disclosure of the Effect of New IFRS Standards
not yet issued in Australia (AASB 1054)
Other than applying the new definition of a business to the current
year business combination, the amendments listed above did not
have any impact on the Group’s financial statements.
Navigator Global Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
Accounting standards and interpretations issued but
not yet effective
The following Australian accounting standards and interpretations
that are relevant to the Group’s operations have been issued but
are not yet effective and have not been adopted by the Group for
the year ended 30 June 2021. These standards are not expected
to have a significant impact on the Group’s consolidated financial
statements:
AASB 2014-10 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture (Amendments to
IFRS 10 and IAS 28)
AASB 2020-3 Reference to the conceptual framework
amending the following standards:
-
-
-
-
AASB 3 Business Combinations – referencing the
conceptual framework
AASB 16 Property, Plant and Equipment relating to
the proceeds before intended use
AASB 137 Provisions, Contingent liabilities and
Contingent Assets relating to costs associated with
onerous contracts
AASB 9 Financial Instruments relating to fees
included in assessing a modified liability.
AASB 2020-1 Amendments to AASB 101 regarding the
classification of Liabilities as Current or Non-current
AASB 2021-2 Amendments to Disclosure of Accounting
Policies and definition of Accounting Estimates
AASB 2021-56 Amendments to Deferred Tax related Assets
and Liabilities arising from a single transaction.
91
Annual Report 2021
DIRECTORS’ DECLARATION
In the opinion of the directors of Navigator Global Investments Limited (the ‘Company’):
(a)
the consolidated financial statements and notes that are set out on pages 46 to 91, and the Remuneration report on pages 32 to 41 of
the Directors' report, are 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 performance for the financial year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. The 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.
3. The directors draw attention to note 29 to the consolidated financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
Signed in accordance with a resolution of the directors.
Michael Shepherd, AO
F P (Andy) Esteban
Chairman and Non-Executive Director
Non-Executive Director
Sydney, 19 August 2021
92
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor's Report to the Members of Navigator Global
Investments Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Navigator Global Investment Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the statement of financial position as at 30 June
2021, the income statement, statement of comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended, 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:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Business Combination
Refer to Note 2 of the financial report
Why significant
How our audit addressed the key audit matter
During the year ended 30 June 2021, the Group
completed a significant transaction to acquire six
minority interests in a portfolio of asset
managers. The total consideration transferred
was US$235 million, comprising both upfront
and deferred elements.
We consider the acquisition accounting related
to this business combination to be a key audit
matter because of the complexity and
judgement required in accounting for the various
components of the purchase consideration and
the estimation required in the measurement of
the fair value of the assets acquired and the
liabilities assumed at completion date. Valuation
of investments recognised at fair value are
inherently complex and judgmental.
Note 2 to the financial statements provides a
summary of the business combination and the
Group’s accounting policies relating to the
acquisition.
Our audit procedures of the business combination
included the following:
• Assessed whether the transaction was
accounted for in accordance with applicable
Australian Accounting Standards;
• Assessed the Group’s determination of the
business combination accounting including
identification and fair value attributable to
assets acquired and liabilities (including
contingent liabilities) assumed;
• Evaluated the Group’s determination of fair
value of the deferred consideration;
• Assessed the reasonability of key
assumptions used in the valuation of the
assets acquired and liabilities (including
contingent liabilities) assumed; and
• Tested the mathematical accuracy of the
valuation models.
Our valuation specialists were involved in the
assessment of the valuation methodologies and key
assumptions used by the Group.
We assessed the adequacy of the Group’s disclosures
in Note 2 to the financial statements.
Investment Existence and Valuation
Refer to Note 11 and Note 20 of the financial report
Why significant
How our audit addressed the key audit matter
The Group has a significant investment portfolio
comprising primarily of six minority interests in
unlisted investment managers. As at 30 June
2021, the value of these unlisted investments
was US$231 million which equates to 49% of
total assets.
Our audit procedures relating to the valuation of the
investments included the following:
• Obtained an understanding of the key
processes adopted by management to
determine the fair value of the investments
at balance date;
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
As detailed in the Group’s accounting policy
described in note 11, these financial assets are
recognised at fair value through profit or loss in
accordance with Australian Accounting
Standards.
Key assumption such as the growth rates and
discount rates applied to the management fee
and performance fee income streams can have a
significant impact on the fair value of these
financial assets and amounts recorded in the
financial report. Accordingly, the valuation of
the investments was considered a key audit
matter.
Note 11 to the financial statements provides a
summary of the Group’s accounting policy
relating to the investments and note 20 include
the disclosures relating to the significant
unobservable inputs to the valuation.
• Obtained and considered the assurance
report on the internal controls of the
investment manager’s administrators in
relation to fund administration services for
the year ended 30 June 2021 and
considered the auditor’s qualifications and
objectivity and the results of their
procedures;
• Confirmed the ownership interest with the
respective investee fund managers at 30
June 2021;
• Obtained the most recent audited financial
statements of the underlying investment
funds, reviewing the nature of the underlying
investments held and the recorded fair
values of the investments including the
accounting basis adopted for such
valuations;
• Reviewed the independence, competence
and objectivity of the auditing firms of the
managers and reviewed the content of their
audit opinions; and
• Obtained from management their
assessment of the most recent unaudited
financial information of the asset managers
and evaluated the reasonableness of any
material fair value movements (or the lack
thereof) within the discounted cash flow
models supporting the fair value.
Our valuation specialists were involved in the
assessment of the valuation methodologies and
assumptions used by the Group.
We assessed the adequacy of the Group’s disclosures
in Note 11 and 20 to the financial statements.
Recoverability of the US cash generating unit
Refer to Note 14 of the financial report
Why significant
How our audit addressed the key audit matter
The recoverability of the US cash generating unit
(“ CGU”) was a key audit matter due to the value
of goodwill allocated to the CGU relative to total
assets and the degree of judgement involved in
determining the value-in-use (“VIU”) of the CGU.
Our audit procedures included the following:
• Tested the mathematical accuracy of the
CGU’s VIU model;
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
The model used by the Group to measure the
VIU of the CGU is complex due to the
assumptions and estimations used in forecasting
the future cash flows of the CGU.
• Evaluated the Group’s s assumptions and
estimates in relation to the forecast cash
flows based on most recent Board approved
forecasts by performing sensitivity analysis
and evaluating and testing the key
assumptions used to determine the VIU;
• Considered the accuracy of the Group’s cash
flow forecasts by comparing historic
forecasts to actual performance;
•
Involved our valuation specialists in
assessing growth rate, discount rate and
multiples used in the VIU model. Where
applicable, we corroborated key assumptions
with external information;
• Tested the forecast cash flows in the VIU
model were consistent with those used to
test recoverability of the CGU’d deferred tax
assets;
• Performed sensitivity analysis by varying key
assumptions and assessing the impact on the
recoverability of goodwill; and
• Assessed the adequacy of the related
disclosures in the financial report.
Recoverability of deferred tax assets
Refer to Note 7 of the financial report
Why significant
How our audit addressed the key audit matter
At 30 June 2021, the Group recorded deferred
tax assets of US$40.6 million, being9% of total
assets. This amount includes US$36.2 million of
deferred tax asset for carry forward tax losses,
which depending on the jurisdiction, may be
subject to expiry.
At 30 June 2021, the deferred tax asset for
carry forward tax losses of the US based
Lighthouse Group of US$36.2 million which
existed prior to 1 January 2018 have a life of 20
years and will expire during the period from
2029 to 2038. Any tax losses incurred after 1
February 2018 have an indefinite life.
Our audit procedures included the following:
• Assessed the mathematical accuracy of the
Group’s deferred tax asset utilisation model;
• Agreed the amount of unused tax losses
carried forward as deferred tax assets to
Group’s lodged income tax returns;
• Evaluated the Group’s assumptions and
estimates in relation to the likelihood of
generating sufficient future taxable income
based on most recent Board approved
forecasts by performing sensitivity analysis
and evaluating and testing the key
assumptions used to determine the amounts
recognised;
• Considered the accuracy of the Group’s
taxable income forecasts by comparing
historic forecasts to actual performance;
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Assessing the recoverability of the deferred tax
assets involves significant judgement, as it
requires forecasting future taxable income and
an assessment of the availability and expected
timing of utilising the deferred tax assets, in
accordance with tax laws in each applicable
jurisdiction.
Accordingly, the recoverability of the deferred
tax assets was considered a key audit matter.
• Tested the assumptions and estimates used
in preparing the Group’s taxable income
forecasts were consistent with those used to
assess the VIU of the Lighthouse cash
generating unit;
•
Involved our tax specialists to review the
existence and availability of the deferred tax
assets under tax laws in the applicable
jurisdictions;
• Assessed the Group’s determination of
availability and expected timing of utilisation
of deferred tax assets for consistency with
tax laws in each applicable jurisdiction; and
• Assessed the adequacy of the related
disclosures in the financial report.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 Annual Report, 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, with the exception of the Remuneration Report
and our related assurance opinion.
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.
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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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.
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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 Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of Navigator Global Investments 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.
Ernst & Young
Rebecca Burrows
Partner
Brisbane
19 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Annual Report 2021
SHAREHOLDER
INFORMATION
100
Navigator Global Investments Limited
ASX additional information
As at 12 August 2021
Additional information required by the Australian Securities Exchange Limited (ASX) Listing Rules and not disclosed elsewhere in this document
is set out below.
Number of security holders and securities on issue
Navigator has issued the following securities:
202,672,203 Ordinary Shares held by 3,928 shareholders; and
102,283 Convertible Notes held by 1 noteholder.
Substantial shareholdings
The following parties have a substantial relevant interest in ordinary shares of Navigator Global Investments Limited:
Category
Blue Owl Capital Inc. and its controlled entities
Navigator Global Investments Limited1
Perennial Value Management Limited
Sean McGould, his controlled entities and associates
Eley Griffiths Group
Number of ordinary
shares
40,524,306
40,524,306
23,837,421
19,438,083
13,472,096
%
19.99%
19.99%
11.78%
9.59%
6.65%
1
The Company lodged has a substantial relevant interest in its ordinary shares due to restrictions on disposal of the shares under a Shareholder Agreement
with entities associated with Blue Owl Capital Inc. A substantial shareholder notice setting out details of the Shareholder Agreement was lodged with the ASX
on 1 February 2021.
Twenty largest shareholders
Name
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Australian Executor Trustees Limited
Mr Shay Shimon Hazan-Shaked
Mr Mark Sheffield Hancock & Brig Ian Denis Westwood
CS Third Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited – GSCO ECA
UBS Nominees Pty Ltd
Winchester Global Trust Company Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Bond Street Custodians Limited
Brispot Nominees Pty Ltd
Krumpet No 16 Pty Limited
AMBEJO Pty Ltd
NSR Investments Pty Ltd
Mr Richard James Williams & Ms Jane Clare Frobisher Dunlop
Active Three Services Nominees Pty Ltd
Number of ordinary
shares held
Percentage of
capital held
58,574,844
54,941,731
17,913,556
16,388,454
10,432,259
1,350,580
1,350,000
1,030,834
1,021,402
737,262
735,196
655,158
581,191
500,000
1,642,727
448,250
356,255
350,000
300,000
280,000
28.90%
27.11%
8.84%
8.09%
5.15%
0.67%
0.67%
0.51%
0.50%
0.36%
0.36%
0.32%
0.29%
0.25%
1.01%
0.22%
0.18%
0.17%
0.15%
0.14%
101
Annual Report 2021
Distribution of shareholdings
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001 – 100,000
100,001 and over
Total
Number of holders
of ordinary shares
% of holders
Number of ordinary
shares
% of share
980
1,474
662
684
65
63
24.95%
37.53%
16.85%
17.41%
1.65%
1.60%
3,928
100.00%
516,549
4,070,453
5,043,478
14,446,875
4,721,762
173,873,086
202,672,203
0.25%
2.01%
2.49%
7.13%
2.33%
85.79%
100.00%
The number of shareholders holding less than a marketable parcel of ordinary shares is 230.
Convertible Notes
Noteholders do not have any voting rights on the Convertible
Notes held by them.
Voting rights
Ordinary Shares
The Company has 202,672,203 fully paid ordinary shares on
issue.
The fully paid ordinary shareholders of the Company are entitled to
vote at any meeting of the members of the Company and their
voting rights are:
on a show of hands – one vote per shareholder; and
on a poll – one vote per fully paid ordinary shares.
Restricted securities and voluntary escrow
There are no securities in voluntary escrow.
Affiliates of Blue Owl Capital Inc. have entered into a Shareholder Agreement with the Company which contains restrictions related to their
holding of Shares and Convertible Notes. Blue Owl Capital Inc and its affiliates may only dispose of Ordinary Shares and Convertible Notes
representing in aggregate up to 8,400,000 Ordinary Shares in the first two years to 31 January 2023, and representing in aggregate up to
40,524,306 Ordinary Shares in the first five years to 31 January 2026, other than where Blue Owl Capital Inc or its affiliates make a change of
control offer in connection with the Company receiving a third party change of control offer.
On-market buy-back
There is no current on-market buy-back.
Stock exchange listings
The Company’s securities are not listed on any other stock exchange.
Unquoted securities
Convertible Notes
The Company issued 102,283 Convertible Notes on 1 February 2021. No Convertible Notes have been converted or redeemed during the
period between issue and 30 June 2021.
Name
Number of Convertible
Notes held
Percentage held
J P Morgan Nominees Australia Pty Limited in its capacity as custodian for Neuberger
Berman Australia Ltd in its capacity as trustee for Dyal Trust I
102,283
100%
The 102,283 Convertible Notes will convert into 67,574,292 Ordinary Shares.
There is no price payable on conversion of the Convertible Notes.
102
The following sets out the key terms of the Convertible Notes:
Conversion number
The number of Shares to which a Convertible Noteholder will be entitled upon conversion of any of its
Convertible Notes is equal to the sum of the principal amount (being the face value) of those Convertible
Notes and any other amount owing to the Convertible Noteholder under that Convertible Note, divided by
the Conversion Price (as defined below), rounded to the nearest whole number (or, in the case of a
fraction of a Share that is exactly one half, down).
Potential Shares issued pursuant to Convertible
Notes
20-day VWAP at Completion
Conversion Price
Estimated value of Note Consideration
Face value of each Convertible Note
Number of Convertible Notes to be issued
67,574,292
AU$1.96046656
US$1.51363776
US$102.3 million
US$1,000
102,283
Ordinary shares issued on
conversion
Each Convertible Note will be convertible into Shares ranking equally with other existing fully paid
ordinary shares in the Company.
The Company must procure official quotation of the Shares issued on conversion.
Convertible Noteholder
conversion rights
A Convertible Noteholder may, at any time, require the conversion of all or some of its outstanding
Convertible Notes, subject to the following regulatory restrictions:
(a) where such conversion is a notifiable action for the Convertible Noteholder under the FATA and
that Convertible Noteholder has not received FIRB approval in respect of such conversion;
(b) where such conversion would contravene section 606 of the Corporations Act;
(c)
such conversion is subject to the expiration of a waiting period under the HSR Act, until the
expiration of such waiting period; or
(d) where such conversion is prohibited by any applicable law or regulation.
Company Conversion Rights
On an annual basis from the seventh anniversary of the issue date, the Company may require
conversion of all or some of the Convertible Notes. Where the Company requires the conversion for
some of the Convertible Notes:
(a)
(b)
the aggregate face value of all Convertible Notes to be converted on that date must be at least
US$1 million; and
if there is more than one Convertible Noteholder, the conversion must be pro rata for each
Convertible Noteholder based on the number of Convertible Notes held by that Convertible
Noteholder as a proportion of all Convertible Notes on issue.
Maturity Date
The Convertible Notes will mature on the1 February 2031, subject to extension where a regulatory
approval or consent in respect of the conversion of Convertible Notes is required.
On the Maturity Date the Convertible Notes will be converted or redeemed for cash in certain
circumstances.
Restrictions on transfer
The Convertible Notes are transferrable:
(a)
without the prior written consent of the Company, provided that if such transfer is a notifiable
action under the FATA, that the Convertible Noteholder has received FIRB approval in respect
of such transfer and such transfer is not or would not otherwise be prohibited or restricted
pursuant to any applicable law or regulation; or
(b)
otherwise, subject to the prior written consent of the Company (such consent may be given or
withheld at the absolution discretion of the Company).
US law transfer restrictions also apply to the transfer of Convertible Notes.
103