A N N U A L
R E P O R T
2 0 2 1
FULLY FRANKED DIVIDEND
0.65CENTS
FULLY FRANKED DIVIDEND YIELD
2.5%
DIVIDENDS PAID SINCE INCEPTION
$44m
ANNUALISED PORTFOLIO RETURN SINCE INCEPTION
10.7%
FINANCIAL
YEAR
HIGHLIGHTS
2021
* As at 30 June 2021
*
*
OZGROWTH LIMITED | ANNUAL REPORT 2021
2
CONTENTS
PAGE
CORPORATE DIRECTORY
3
CHAIRMAN’S REPORT
4
INVESTMENT MANAGER’S REPORT
6
FINANCIAL REPORT 2021
9
CORPORATE DIRECTORY
REGISTERED OFFICE
Level 18, Alluvion
58 Mounts Bay Road
PERTH WA 6000
Telephone:
(08) 9321 7877
Facsimile:
(08) 9321 8288
Website:
www.ozgrowth.com.au
AUDITORS
Ernst & Young
11 Mounts Bay Road
PERTH WA 6000
BANKERS
Westpac Banking Corporation
109 St George’s Terrace
PERTH WA 6000
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WA 6000
Telephone: 1300 732 012
BOARD OF DIRECTORS
Jay Hughes
Non-Executive Chairman
Simon Joyner
Independent Non-Executive Director
Michael Jefferies
Independent Non-Executive Director
Anthony Hewett
Company Secretary
OZGROWTH LIMITED | ANNUAL REPORT 2021
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RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
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RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
RMAN’S REPORT CHAIRMAN’S REPORT CHAI
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On behalf of my fellow Directors,
I am pleased to provide the 2021
Annual Report for the Company.
Significant results of the year include:
•
A net profit after tax of $24,857,167.
This compares to a net profit after
tax in the prior year of $3,095,216.
•
A 8.3% increase in the annual
dividend to 0.65 cents per share.
•
A final dividend of 0.35 cents per
share has been provided for in
respect of the 2021 financial year.
An interim dividend of 0.3 cents per
share was paid in February 2021.
•
The Company ended the 2021
financial year with $37,718,748 in
profit reserve.
•
At 30 June 2021, net assets of the
Company were $94,792,309, or 27.0
cents per share¹.
For more detailed information on the
investment performance and portfolio
of the Company, I refer you to the
Investment Manager’s Report on page 6.
The 2021 financial year was a strong one
for financial markets. This strength was
driven by a faster than expected rebound
of the global economy, complimented
by the most accommodative fiscal and
monetary policies we are ever likely to
witness. This strong backdrop propelled
the ASX All Ordinaries Accumulation
Index to a 30.2% gain for FY2021. Equity
market strength was more broad-based
than the initial bounce back experienced
in the latter part of FY2020 but still
heavily influenced by: COVID mobility and
supply restrictions; and, the very benign
interest rate environment. Market volatility
remained low but we would expect this
will increase over the forward period as
liquidity declines in line with less generous
Government and Central Bank policy
settings.
The Ozgrowth investment portfolio
outperformed the market to record a
very strong return of 62.9% over the 2021
financial year, calculated on a comparable
basis to the market indices. Pleasingly, our
portfolio has also made a great start to
the new financial year, rising 14.2% to the
end of August. Our investment strategy
remains consistent as we continue to
focus on identifying attractive investment
opportunities from our base in Western
Australia.
¹ This figure is calculated by dividing the net assets as set out in the Statement of Financial Position by the number of ordinary
shares on issue as at the reporting date and is after allowance for dividends and all costs.
OZGROWTH LIMITED | ANNUAL REPORT 2021
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RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
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’S REPORT CHAIRMAN’S REPORT CHAIRMAN
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RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
RMAN’S REPORT CHAIRMAN’S REPORT CHAI
RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
RMAN’S REPORT CHAIRMAN’S REPORT CHAI
RT CHAIRMAN’S REPORT CHAIRMAN’S REPOR
RMAN’S REPORT CHAIRMAN’S REPORT CHAI
JAY HUGHES
Non-Executive Chairman
Western Australia has to date successfully
managed to contain the spread of
coronavirus which has been hugely
beneficial for the State and Australia as a
whole. Resurgent commodity prices, with
iron ore somewhat surprisingly to the fore,
have provided further impetus for the
local economy and significantly boosted
the State’s budget. We expect ongoing
strength in the local economy in FY2021,
but the path forward is likely to be more
difficult to manage as the inevitable
reopening of borders and reality of living
with coronavirus is navigated.
The financial statements in this report
demonstrate our Company’s reserves
and franking credit balance. With these
in mind the Ozgrowth Directors have
released a target dividend of 0.7 cents per
share for the 2022 financial year.
I encourage shareholders and other
interested parties to participate in our
shareholder communication program.
If you have not already done so, you can
register for our regular email updates
at our website: www.ozgrowth.com.au.
We hope to provide useful information
on our activities throughout the year and
welcome feedback to enhance this.
I look forward to reporting on results as
we move forward.
Yours sincerely
•
Ozgrowth Limited is a listed
investment company (ASX code:
OZG) that focuses on producing a
positive return on funds invested.
•
The Company was formed on 9 July
2007 and raised its initial capital for
investment in December 2007. As at
30 June 2021, it had $102,830,485 of
assets in its investment portfolio.
•
Ozgrowth Limited intends on paying
a consistent stream of dividends to
shareholders. The level of dividend
payments will be set after considering
the level of realised net profits after
tax, retained earnings and availability
of franking credits. To date, the
Company has paid cumulative fully
franked dividends of $0.12.
•
The Company has appointed Westoz
Funds Management Pty Ltd as
manager to oversee the investment of
its portfolio of assets. This manager
is a wholly owned subsidiary of Euroz
Limited, a listed company that also
operates as a diversified financial
services company based in Western
Australia.
•
The investment mandate is to identify
undervalued companies listed on the
Australian Securities Exchange and
to invest to produce a positive return.
Because of the geographic location
of the manager, it is anticipated that
the majority of situations identified
will have a connection to Western
Australia.
•
Ozgrowth Limited will consider
investments in small companies, as
well as suitable unlisted opportunities.
•
The manager is paid a base fee of
1% per annum of funds managed.
In addition, a performance fee is
payable where the increase in the
portfolio value exceeds 7% over a
twelve month period to the end of
June and is calculated at 20% of the
increase exceeding the threshold.
The starting point for the calculation
of the threshold is the greater of
the starting portfolio value and the
number of shares on issue multiplied
by $0.20.
ABOUT
OZGROWTH
OZGROWTH LIMITED | ANNUAL REPORT 2021
5
Portfolio Return
The Company invests in small to mid-
sized companies, generally listed on the
Australian Securities Exchange and with
some connection to Western Australia. The
portfolio of assets is managed to generate
a positive return regardless of movements
in the broader equity market.
To assist in an assessment of performance,
the rate of return before fees and taxes
is calculated. The figure is calculated by
dividing the gain (or loss) in value of the
portfolio, net of external flows, by the
average portfolio value over the period of
measurement. Portfolio value is determined
by reference to current market value of
underlying investments. Monthly periods
are used and then geometrically linked
to arrive at an annual return. This figure is
not audited.
The last twelve months of investment
activity generated an investment return
of 62.9% before allowance for fees and
taxes (2020: 7.0%). Since inception in
2007, the portfolio has generated an
average geometric annual return of 11.6% to
August 2021.
It is the objective of the manager to
produce positive investment returns over
the medium to long term, thereby boosting
the net asset backing per share (NTA) and
allowing for the payment of dividends.
The figures presented for information
regarding NTA are on a per share basis
and after allowance for all realised and
unrealised costs, dividends and deferred
tax assets. These figures are included
as they provide an indication of the
underlying impact of the investment
strategy on shareholders after all costs
associated with the corporate structure.
At 30 June 2021, the net assets per share
was 27.0 cents (2020: 20.2 cents).
On 14 July 2021, the Board of Directors
approved the payment of a 0.35 cents
per share final dividend. Payment for this
dividend occurred on 27 August 2021.
At 30 June 2020, a provision for a 0.30
cents per share dividend was made.
Asset Allocation
Cash levels decreased over the 2021
financial year, closing at 2% of assets
from a starting point of 12%. Resources
exposure remains the largest allocation,
closing the year at 70% of total assets.
At year end, investments were held in
25 separate companies. One of these
holdings was unlisted at 30 June 2021.
Outlook
Financial markets have performed very
strongly since bottoming out in March
2020, including a +30% return for the
local equity market in FY2021. We are
living in a time of unique co-ordinated
supernormal liquidity, courtesy of
the stimulatory fiscal and monetary
policies currently being exercised by
Governments and Central Banks around
the globe. Volatility in markets has also
been low versus historical standards.
These conditions cannot and will not last
forever.
We would expect that over FY2022
we will see a very gradual decrease
in stimulatory global policy settings.
Indeed, we have already seen a decline in
stimulatory Government policies at home
and abroad. Monetary policies are likely to
follow a similar path in due course, albeit
at a more measured pace. As less ‘fuel
is thrown on the fire’ of market liquidity
we would expect equity returns to be
more muted and less broad-based going
forward versus those experienced last
year. In this environment, as ever, there
will be pockets of undervaluation and
overvaluation to navigate from which to
source potential returns.
Continued and widening commodity
market strength, combined with effective
COVID containment measures, have
strengthened the performance of the
Western Australian economy over the
last year. We expect, in the absence of
substantial COVID driven lockdowns,
that the Western Australian economy will
continue to grow strongly over FY2022.
We would encourage shareholders and
prospective shareholders to utilise our
shareholder communications channels,
which include: weekly emails; monthly
video updates and periodic presentations.
MANAGER’S REPORT INVESTMENT MANAG
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MANAGER’S REPORT INVESTMENT MANAG
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MANAGER’S REPORT INVESTMENT MANAG
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MANAGER’S REPORT INVESTMENT MANAG
R’S REPORT INVESTMENT MANAGER’S REP
MANAGER’S REPORT INVESTMENT MANAG
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OZGROWTH LIMITED | ANNUAL REPORT 2021
6
INVESTMENT PORTFOLIO
Industrials
Number of
Shares
Fair value at
30 June 2021
Empired Limited
10,000,000
$8,700,000
Finbar Group Limited
8,615,000
$7,322,750
Autosports Group Limited
2,400,000
$6,048,000
Duratec Limited
6,600,000
$2,508,000
Swick Mining Services Limited
12,000,000
$2,460,000
Tempo Australia Limited
20,000,000
$1,320,000
Botanix Pharmaceuticals
Limited
5,000,000
$400,000
$28,758,750
Resources
Number of
Shares
Fair value at
30 June 2021
Orecorp Limited
14,900,000
$11,771,000
Emerald Resources NL
12,800,000
$11,328,000
New Century Resources Limited
40,000,000
$8,400,000
Centaurus Metals Limited
8,600,000
$6,407,000
Firefinch Limited
14,000,000
$5,460,000
Warrego Energy Limited
23,714,266
$5,317,139
Kingsgate Consolidated Limited
4,600,000
$3,864,000
Equatorial Resources Limited
11,050,000
$3,259,750
Boab Metals Limited
6,020,000
$2,558,500
Neometals Limited
5,000,000
$2,400,000
Rex Minerals Limited
6,500,000
$2,242,500
Red Hill Iron Limited
2,110,000
$1,941,200
Oklo Resources Limited
16,000,000
$1,760,000
Stanmore Resources Limited
2,230,000
$1,549,850
Comet Ridge Limited
16,500,000
$1,006,500
Apollo Consolidated Limited
3,290,000
$954,100
Starling Energy Group Pty Ltd
5,806,454
$900,000
Lunnon Metals Limited
1,910,000
$869,050
$71,988,589
Cash, outstanding settlements and funds due
from accrued dividends
$2,083,146
Total
$102,830,485
Dividends
Franking Credits
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Jun 2018
Jun 2019
Jun 2020
Jun 2021
ASSET ALLOCATION
Cash
Resources
Industrials
PORTFOLIO PERFORMANCE
Jun 2018
0%
-5%
-10%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
Jun 2019
Jun 2020
Jun 2021
DIVIDEND AND FRANKING CREDIT RETURN
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
18c
16c
14c
12c
10c
8c
6c
4c
2c
0c
5.2c
12.0c
OZGROWTH LIMITED | ANNUAL REPORT 2021
7
OZGROWTH LIMITED | ANNUAL REPORT 2021
8
FINANCIAL
REPORT
2021
For the year ended 30 June 2021
CONTENTS
PAGE
DIRECTORS’ REPORT
10
AUDITOR’S INDEPENDENCE DECLARATION
15
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
16
STATEMENT OF FINANCIAL POSITION
17
STATEMENT OF CASH FLOWS
18
STATEMENT OF CHANGES IN EQUITY
19
NOTES TO THE FINANCIAL STATEMENTS
20
DIRECTORS’ DECLARATION
36
INDEPENDENT AUDITOR’S REPORT
37
OZGROWTH LIMITED | ANNUAL REPORT 2021
9
Your Directors submit their report for the year ended 30 June 2021.
DIRECTORS
The names of the Directors of the Company in office during the financial period and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Jay Hughes
Michael Jefferies
Simon Joyner
Mr Jay Hughes, Non-Executive Chairman
Mr Hughes is Non-Executive Chairman of the Company and serves on the Company’s Audit Committee. He is an Executive Director
of Euroz Limited, Euroz Hartleys Limited, Euroz Hartleys Securities Limited, Prodigy Investment Partners Limited and Non-Executive
Chairman of Westoz Investment Company Limited and Westoz Funds Management Pty Ltd. Mr Hughes holds a Graduate Diploma in
Applied Finance and Investment from FINSIA. He was recognised as an affiliate of ASX in December 2000 and is a Master Member
(MSAFAA) of the Stockbrokers and Financial Advisors Association of Australia (SAFAA).
Mr Michael Jefferies, Independent Non-Executive Director
Mr Jefferies is a Non-Executive Director of the Company and serves on the Company’s Audit Committee. He was formerly a Non-
Executive Director of Afterpay Touch Group Limited (resigned 16 January 2018) having been Chairman of Touchcorp Holdings
Limited (appointed 28 June 2004) prior to its merger with Afterpay Holdings Limited. He was also formerly Non-Executive Chairman
of Pantoro Limited (appointed 5 October 2016, resigned 4 August 2020) and a Non-Executive Director of Resimac Group Limited
(appointed November 2016, resigned 26 November 2019), and Afterpay Holdings Limited (appointed 26 August 2015, resigned 6
April 2017). Mr Jefferies is a Chartered Accountant and holds a Bachelor of Commerce Degree.
Mr Simon Joyner, Independent Non-Executive Director
Mr Joyner was appointed as an Independent Non-Executive Director of the Company on 5 July 2016 and serves on the Company’s
Audit Committee. He is also a Non-Executive Director of Westoz Investment Company Limited. Mr Joyner has a Bachelor of
Commerce Degree, a Graduate Diploma in Applied Finance and Investment and a Diploma of Financial Planning. He is also a Fellow
of FINSIA, the Financial Services Institute of Australia. Mr Joyner has been involved in the Financial Services Industry since 1985. He
established Keysbrook Financial Services which was a founding firm of Shadforth Financial Group that was subsequently purchased
by IOOF in 2014. Mr Joyner is now Managing Director of management consulting firm Aberfoyle Partners, assisting businesses across
the financial services industry.
Mr Anthony Hewett, Company Secretary
Mr Hewett was appointed as Company Secretary on 20 June 2017. Mr Hewett is a Chartered Secretary and holds a Master of
Business Law (MBusLaw) from Curtin University and a Graduate Diploma in Applied Corporate Governance (GradDipACG) from
the Governance Institute of Australia. Mr Hewett is a Fellow of the Institute of Chartered Secretaries and Administrators, a Fellow of
the Governance Institute of Australia, a Master Member (MSAFAA) of SAFAA and a member of the Australian Institute of Company
Directors (AICD).
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the year ended
30 June 2021 and the numbers of meetings attended by each Director were as follows:
DIRECTORS’ MEETING
AUDIT COMMITTEE MEETINGS
Director
NUMBER ELIGIBLE
TO ATTEND
NUMBER ATTENDED
NUMBER ELIGIBLE
TO ATTEND
NUMBER ATTENDED
Jay Hughes
10
10
2
2
Simon Joyner
10
10
2
2
Michael Jefferies
10
10
2
2
Due to the size of the Board and the nature of the Company’s operations, it does not have a separate Remuneration Committee or
Nomination Committee. Matters normally considered by these committees are addressed by the full board.
Board of Directors’ and Audit Committee meetings require that any two Directors or members be present to form a quorum.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
10
PRINCIPAL ACTIVITY AND NATURE OF OPERATIONS
During the year, the principal activity of the Company was as an investment company.
OPERATING RESULTS
For the year ended 30 June 2021, the Company made an operating profit after tax of $24,857,167 (2020: $3,095,216).
DIVIDENDS
An interim dividend of $1,066,799 (0.30 cents per share) was paid on 19 February 2021 (2019: $1,061,982).
REVIEW OF OPERATIONS
The financial results of the Company are driven by the gain or loss on its investment portfolio, which consists primarily of securities
listed on the Australian Securities Exchange and short term cash deposits. Whilst the investment objective for the portfolio is to
generate positive returns over the medium to long term, short term fluctuations in the broader equity market will influence results.
Apart from movements in the broader equity market, the key driver of income for the Company is the manager’s ability to select
appropriate investments. The majority of expenses are directly linked to the value of the portfolio managed and the level of
return achieved.
There has been negligible impact on the working operations of the Company from the Coronavirus (COVID-19) pandemic.
STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Company.
SUBSEQUENT EVENTS
On 14 July 2021 the Board of Directors approved the payment of a final dividend for $1,227,326 (0.35 cents per share) be paid in
respect of the 2021 financial year. The payment of the final dividend will occur on 27 August 2021.
There has not been any other matter or circumstance that has arisen since the balance date that has affected or may significantly
affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent periods.
LIKELY DEVELOPMENTS AND FUTURE RESULTS
Future results will be driven by the outcome of the Company’s investment strategy, which will in turn be influenced by the overall
direction of equity markets. These returns are uncertain and are expected to vary significantly from year to year. The key risk to
market returns will be influenced by a range of factors that cannot be predicted with any certainty and include the outlook for
growth, inflation, commodity prices, interest rates, general economic conditions, natural disasters and government regulation. Market
risk is managed by periodically moving into and out of equity positions.
Our investment strategy remains consistent and is to identify investment opportunities from our base in Western Australia. We
believe this focus will continue to deliver attractive returns.
The West Australian economy has proven relatively resilient to the current challenging economic circumstances. This resilience,
and economic stimulus initiatives by Governments, leaves the local economy well positioned to grow once the global economic
environment normalises.
Subsequent to 30 June 2021, Ozgrowth Limited Directors have determined to target a dividend payment of 0.70 cents per share
in respect of the 2022 financial year. It is anticipated that the payment of this dividend would occur in February (0.35 cents) and
August (0.35 cents) of the 2022 calendar year.
DIRECTORS’ INTERESTS
At the date of this report the interests of the Directors in the shares and options of the Company and related bodies corporate are:
DIRECTOR
ORDINARY SHARES
Jay Hughes
Held directly or indirectly
3,750,000
Simon Joyner
Held directly or indirectly
1,611,891
Michael Jefferies
Held directly or indirectly
500,000
DIRECTORS’ REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
11
OZGROWTH LIMITED | ANNUAL REPORT 2021
DIRECTORS’ REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
SHARE OPTIONS
As at 30 June 2021, the Company had no options on issue.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Ozgrowth Limited has a Deed of Indemnity for all the Directors and Officers of the Company against all losses or liabilities incurred by
each Director and Officer in their capacities as Directors and Officers of the Company. The Company agreed to indemnify and keep
indemnified the Directors and Officers against all liabilities by the Directors and Officers as a Director and Officer of the Company to
the extent permitted under the Corporations Act 2001.
During the financial year, the Company paid an insurance premium in respect of a contract insuring each of the Directors and Officers
of the Company. The amount of the premium is, under the terms of the insurance contract, confidential. The liabilities insured include
costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their
capacity as Directors and Officers of the Company.
REMUNERATION REPORT (AUDITED)
The Board of Directors is responsible for determining and reviewing compensation arrangements for the executive team. The Board
will assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high
quality Board and executive team.
The Company had no employees during the year ended 30 June 2021 or 30 June 2020. Details of Key Management Personnel (KMP)
are as follows:
Jay Hughes
Chairman (Non-Executive)
Appointed 9 July 2007
Simon Joyner
Director (Non-Executive)
Appointed 5 July 2016
Michael Jefferies
Director (Non-Executive)
Appointed 31 October 2007
Westoz Funds Management Pty Ltd provides services in the nature of the role of Key Management Personnel to Ozgrowth Limited as
it has the authority for the management of the investment portfolio of Ozgrowth Limited.
The share and option holdings of KMP as at 30 June 2021 are as follows:
BALANCE 1 JULY 2020
NET CHANGE
BALANCE 30 JUNE 2021
DIRECTOR
SHARES
OPTIONS
SHARES
OPTIONS
SHARES
OPTIONS
Jay Hughes
Held directly or indirectly
3,750,000
-
-
-
3,750,000
-
Simon Joyner
Held directly or indirectly
1,345,353
-
266,538
-
1,611,891
-
Michael Jefferies
Held directly or indirectly
500,000
-
-
-
500,000
-
The share and option holdings of KMP as at 30 June 2020 are as follows:
BALANCE 1 JULY 2019
NET CHANGE
BALANCE 30 JUNE 2020
DIRECTOR
SHARES
AUG 2019
$0.19
OPTIONS 1
SHARES
AUG 2019
$0.19
OPTIONS 1
SHARES
AUG 2019
$0.19
OPTIONS 1
Jay Hughes
Held directly or indirectly
3,550,000
355,000
200,000
(355,000)
3,750,000
-
Simon Joyner
Held directly or indirectly
1,345,353
134,535
-
(134,535)
1,345,353
-
Michael Jefferies
Held directly or indirectly
500,000
50,000
-
(50,000)
500,000
-
¹ The Aug 2019 $0.19 options were issued pursuant to the Bonus Issue prospectus issued on 29 September 2017 to all shareholders and
were exercisable up until 31 August 2019. The offer made a bonus issue of one Option for every 10 Shares held by shareholders at the record date.
OZGROWTH LIMITED | ANNUAL REPORT 2021
12
DIRECTORS’ REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (AUDITED) (CONT’D)
A Director’s services may be terminated by them at any time and otherwise by shareholder vote. Details of remuneration for the
years ended 30 June 2021 and 30 June 2020 is as follows:
SHORT-TERM
FEE
($)
POST-EMPLOYMENT
SUPERANNUATION
($)
TOTAL
($)
S Joyner
2021
50,228
4,772
55,000
2020
50,228
4,772
55,000
M Jefferies
2021
50,228
4,772
55,000
2020
50,228
4,772
55,000
The elements of emoluments have been determined on the basis of the cost to the Company. Emoluments of Directors are not
directly related to the performance of the Company. The maximum remuneration paid to Directors’ is currently set to not exceed
$250,000 per annum.
The Directors of Ozgrowth Limited during the year were Mr Jay Hughes, Mr Simon Joyner and Mr Michael Jefferies. Mr Simon Joyner
and Mr Michael Jefferies were the only paid Directors of the Company.
Westoz Funds Management Pty Ltd, a company of which Mr Hughes is a Director, provides Key Management Personnel services
to Ozgrowth Limited as it has the authority for the management of the investment portfolio of Ozgrowth Limited. Westoz Funds
Management Pty Ltd received management fees from the Company for the management of its assets. Total management fees
(inclusive of performance fees where applicable) of $8,985,143 (2020: $753,017) were charged in the period for these services. A
$8,002,402 performance fee was paid in respect of the 2021 financial year (2020: $15,375). There is $102,131 (2020: $65,349) accrued
for management fees payable as at 30 June 2021.
These fees were charged in accordance with a management agreement. The management fee is calculated at 1% per annum of funds
managed. The performance fee as specified in the management agreement is payable where performance exceeds 7% over a twelve
month period to end of June and is calculated at 20% of the performance exceeding the threshold. The manager is required to give
three months written notice to terminate the agreement. The performance fee is based on the above performance condition to be
able to link the performance of the Company to the services provided by the fund manager.
No amount is paid by Ozgrowth Limited directly to the Directors of Westoz Funds Management Pty Ltd.
Euroz Hartleys Securities Limited (formally Euroz Securities Limited) and Euroz Hartleys Limited, companies of which Mr Hughes is a
Director, received brokerage fees for transactions undertaken by the Company in respect of its investments. An amount of $246,137
(2020: $243,423) was paid in the year as brokerage to Euroz Hartleys Securities Limited and an amount of $92,219 (2020: $nil) was
paid in the year as brokerage to Euroz Hartleys Limited. Of this brokerage, $nil was outstanding as at 30 June 2021 (2020: $468). The
above transactions were entered into on normal commercial terms.
The short term incentive provided by the performance fee is payable once a nominated level of profitability is achieved in a financial
year. The level of profitability is ultimately determined by the investment return on funds invested and is reflected in the earnings per
share figure. The following table shows the link between company performance and shareholder wealth over the last 5 years:
FINANCIAL YEAR
EARNINGS PER SHARE
(cents)
DIVIDEND PER SHARE
(cents)
SHARE PRICE AT BALANCE DATE
(cents)
2017
2.1
0.5
16.0
2018
3.4
0.5
18.0
2019
(1.5)
0.5
15.0
2020
0.9
0.6
17.0
2021
7.0
0.65
24.0
There are no long term incentives payable.
(End of Remuneration Report)
13
OZGROWTH LIMITED | ANNUAL REPORT 2021
DIRECTORS’ REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Ozgrowth Limited
support and have adopted a corporate governance plan. Details of the Corporate Governance Practices can be found at
www.ozgrowth.com.au.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, 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 during or since the financial year.
AUDITOR INDEPENDENCE
The auditor’s independence declaration under section 307C of the Corporations Act 2001 is included on page 15 and forms part of
the Ozgrowth Limited’s Directors’ report for the year ended 30 June 2021.
NON- AUDIT SERVICES
The following non-audit services were provided by the Company’s auditor, Ernst & Young. The Directors are satisfied that the
provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
$
Tax compliance services
11,000
Signed for and on behalf of the Directors in accordance with a resolution of the Board.
JAY HUGHES
Non-Executive Chairman
Dated: 19 August 2021
Perth, Western Australia
OZGROWTH LIMITED | ANNUAL REPORT 2021
14
AUDITOR’S INDEPENDENCE DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FD:LC:OZG:015
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of Ozgrowth Limited
As lead auditor for the audit of the financial report of Ozgrowth 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.
Ernst & Young
Fiona Drummond
Partner
19 August 2021
15
OZGROWTH LIMITED | ANNUAL REPORT 2021
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Note
2021
2020
$
$
Revenue
Interest revenue
37,559
38,004
Dividend revenue
2,288,503
945,110
Other
37,499
10,600
Total Revenue
2,363,561
993,714
Changes in the fair value of investments at fair value through profit or loss
4
41,553,068
4,157,292
Total Income
43,916,629
5,151,006
Expenses
Management and performance fees
15(b)
(8,985,143)
(753,017)
Director fees
15(a)
(110,000)
(110,000)
Professional fees
(75,860)
(78,587)
ASX fees
(49,590)
(49,285)
Other expenses
6
(94,267)
(84,948)
Total Expenses
(9,314,860)
(1,075,837)
Profit before income tax expense
34,601,769
4,075,169
Income tax expense
7
(9,744,602)
(979,953)
Net profit attributable to members of the company
24,857,167
3,095,216
Other comprehensive income
-
-
Total comprehensive income for the period
24,857,167
3,095,216
Earnings per share (cents)
Basic and diluted
16
7.1
0.9
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
OZGROWTH LIMITED | ANNUAL REPORT 2021
16
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Note
2021
2020
$
$
ASSETS
Cash and cash equivalents
19(a)
3,242,386
8,362,936
Other assets
9
661,160
157,038
Financial assets at fair value through profit or loss:
•
Listed equities
•
Unlisted equities
5
5
99,847,339
900,000
62,929,118
-
Deferred tax assets
7
-
1,130,376
TOTAL ASSETS
104,650,885
72,579,468
LIABILITIES
Trade and other payables
10
1,244,350
166,456
Dividend payable
-
1,057,646
Deferred tax liabilities
7
8,614,226
-
TOTAL LIABILITIES
9,858,576
1,224,102
NET ASSETS
94,792,309
71,355,366
EQUITY
Contributed equity
11
71,845,531
72,198,956
Profit reserve
12
37,718,748
24,846,450
Accumulated loss
13
(14,771,970)
(25,690,040)
TOTAL EQUITY
94,792,309
71,355,366
The above statement of financial position should be read in conjunction with the accompanying notes.
17
OZGROWTH LIMITED | ANNUAL REPORT 2021
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Note
2021
$
2020
$
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
37,558
38,004
Dividends received
2,306,253
891,360
Payments to suppliers (incl. of GST)
(9,828,763)
(1,340,068)
Income tax paid
-
(884,896)
Net cash flows used in operating activities
19(b)
(7,484,952)
(1,295,600)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments at fair value through profit or loss
61,083,682
38,587,891
Payments for purchases of investments at fair value through profit or loss
(56,241,410)
(32,023,056)
Net cash flows from investing activities
4,842,272
6,564,835
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares, net of issue cost
-
633
Share buyback
(353,425)
(532,855)
Dividends paid
(2,124,445)
(1,951,808)
Net cash flows used in financing activities
(2,477,870)
(2,484,030)
Net (decrease) / increase in cash held
(5,120,550)
2,785,205
Cash and cash equivalents at the beginning of the period
8,362,936
5,577,731
Cash and cash equivalents at the end of the period
19(a)
3,242,386
8,362,936
The above statement of cash flows should be read in conjunction with the accompanying notes.
OZGROWTH LIMITED | ANNUAL REPORT 2021
18
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
CONTRIBUTED
EQUITY
PROFIT
RESERVE
ACCUMULATED
LOSSES
TOTAL
EQUITY
$
$
$
$
AT 1 JULY 2020
72,198,956
24,846,450
(25,690,040)
71,355,366
Profit for the period
-
-
24,857,167
24,857,167
Total comprehensive income for the period
-
-
24,857,167
24,857,167
Transfer from retained earnings to profit reserve
-
13,939,097
(13,939,097)
-
Transactions with owners in their capacity as owners:
Share buyback
(353,425)
-
-
(353,425)
Dividends for the year
-
(1,066,799)
-
(1,066,799)
AT 30 JUNE 2021
71,845,531
37,718,748
(14,771,970)
94,792,309
CONTRIBUTED
EQUITY
PROFIT
RESERVE
ACCUMULATED
LOSSES
TOTAL
EQUITY
$
$
$
$
AT 1 JULY 2019
72,731,178
21,290,340
(23,109,518)
70,912,000
Profit for the period
-
-
3,095,216
3,095,216
Total comprehensive income for the period
-
-
3,095,216
3,095,216
Transfer from retained earnings to profit reserve
-
5,675,738
(5,675,738)
-
Transactions with owners in their capacity as owners:
Issued capital
633
-
-
633
Share buyback
(532,855)
-
-
(532,855)
Dividends for the year
-
(2,119,628)
-
(2,119,628)
AT 30 JUNE 2020
72,198,956
24,846,450
(25,690,040)
71,355,366
The above statement of changes in equity should be read in conjunction with the accompanying notes.
19
OZGROWTH LIMITED | ANNUAL REPORT 2021
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.
CORPORATE INFORMATION
The financial report of Ozgrowth Limited (the ‘Company’) for the year ended 30 June 2021 was authorised for issue in accordance
with a resolution of the Directors on 18 August 2021.
Ozgrowth Limited is a company limited by shares that is incorporated and domiciled in Australia whose shares are listed on the
Australian Securities Exchange. The registered office is located at Level 18, 58 Mounts Bay Road Perth, Western Australia 6000.
Ozgrowth Limited does not control any entities at 30 June 2021 (2020: None).
The Company had no employees as at 30 June 2021 (2020: None).
The nature of the operations and principal activities of the Company are as an investment company.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board.
For the purposes of preparing the financial statements the Company is a for-profit entity.
The financial report for the year ended 30 June 2021 has been prepared on a historical cost basis, except for certain
investments, which have been measured at fair value.
The Company’s functional and presentation currency is the Australian dollar ($) unless otherwise stated.
(b)
Statement of Compliance
The accounting policies adopted are consistent with those of the prior years except as follows:
The Company has adopted new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2020.
The nature and effect of the changes as a result of adoption of these new accounting standards are described below:
•
AASB 2019-1 Amendments to AASs – References to the Conceptual Framework
•
AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material
The adoption of these new and amended standards has not had any financial impact on the financial position or results of
the Company.
Compliance with International Financial Reporting Standards (IFRS)
The financial report also complies with IFRS as issued by the International Accounting Standards Board.
OZGROWTH LIMITED | ANNUAL REPORT 2021
20
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c)
New standards issued or amended but not yet effective
Applicable Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet effective have not been adopted for the financial reporting period ended 30 June 2021. These are included in the
following table:
REFERENCE
TITLE
SUMMARY OF THE NEW STANDARD OR
AMENDMENT
IMPACT ON
COMPANY
APPLICATION
DATE OF
STANDARD
APPLICATION
DATE FOR THE
COMPANY
AASB
2020-3
Amendment
to AASB-9
Fees in the
‘10 per cent’
Test for
Derecognition
of Financial
Liabilities
(Part of
Annual
Improvements
2018–2020
Cycle)
Under AASB 9, an existing financial liability that
has been modified or exchanged is considered
extinguished when the contractual terms of
the new liability are substantially different,
measured by the “10 per cent” test. That is,
when the present value of the cash flows under
the new terms, including any fees paid or
received, is at least 10 per cent different from
the present value of the remaining cash flows of
the original financial liability.
The amendment to AASB 9 clarifies that fees
included in the 10 per cent test are limited to
fees paid or received between the borrower and
the lender, including amounts paid or received
by them on the other’s behalf. When assessing
the significance of any difference between
the new and old contractual terms, only the
changes in contractual cash flows between the
lender and borrower are relevant. Consequently,
fees incurred on the modification or exchange
of a financial liability paid to third parties are
excluded from the 10 per cent test.
These amendments are applied prospectively.
Earlier application is permitted.
The
Company
does not
expect a
material
impact from
the adoption
of this
amendment.
1 January
2022
1 July 2022
AASB
2020-3
Amendments
to AASB 137
Onerous
Contracts
– Cost of
Fulfilling a
Contract
AASB 137 defines an onerous contract as a
contract in which the unavoidable costs of
meeting the obligations under the contract
exceed the economic benefits expected to be
received under it. Unavoidable cost is the lower
of the cost of fulfilling the contract and any
compensation or penalties arising from failure
to fulfil it.
AASB 137 does not specify which costs to
include in determining the cost of fulfilling a
contract. Consequently, AASB 137 was amended
to clarify that when assessing whether a
contract is onerous, the cost of fulfilling the
contract comprises all costs that relate directly
to the contract, which includes both the:
•
Incremental costs of fulfilling that
contract (e.g., materials and labour); and
•
An allocation of other costs that relate
directly to fulfilling contracts (e.g.,
depreciation of property, plant and
equipment)
An entity shall apply these amendments to
contracts for which it has not yet fulfilled all
its obligations at the beginning of the annual
reporting period in which it first applies the
amendments (the date of initial application).
Comparative information is not restated.
Instead, the cumulative effect of initially
applying the amendments is recognised as an
adjustment to the opening balance of retained
earnings or other component of equity, as
appropriate, at the date of initial application.
Earlier application is permitted.
The
Company
does not
expect a
material
impact from
the adoption
of this
amendment.
1 January
2022
1 July 2022
21
OZGROWTH LIMITED | ANNUAL REPORT 2021
REFERENCE
TITLE
SUMMARY OF THE NEW STANDARD OR
AMENDMENT
IMPACT ON
COMPANY
APPLICATION
DATE OF
STANDARD
APPLICATION
DATE FOR THE
COMPANY
AASB 2020-1 Amendments
to Australian
Accounting
Standards –
Classification
of Liabilities
as Current or
Non-current
A liability is classified as current if the entity
has no right at the end of the reporting period
to defer settlement for at least 12 months
after the reporting period. The AASB recently
issued amendments to AASB 101 to clarify
the requirements for classifying liabilities as
current or non-current. Specifically:
•
The amendments specify that the
conditions which exist at the end of the
reporting period are those which will
be used to determine if a right to defer
settlement of a liability exists.
•
Management intention or expectation
does not affect classification of
liabilities.
•
In cases where an instrument with
a conversion option is classified
as a liability, the transfer of equity
instruments would constitute settlement
of the liability for the purpose of
classifying it as current or non-current.
The
Company
is in the
process of
assessing the
impact of the
amendments.
1 January
2023
1 July 2023
(d)
Financial assets and liabilities
(i)
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of a financial assets not at fair value through
profit or loss, transaction costs. Financial assets within the scope of AASB 9 are classified as debt instruments at
amortised cost or financial assets at fair value through other comprehensive income or financial assets at fair value
through profit or loss as appropriate. The Company determines the classification of its financial assets at initial
recognition. The classification of debt instruments is based on two criteria: the Company’s business model for
managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and
interest’ on the principal amount outstanding. The assessment of whether contractual cash flows on debt instruments
are solely comprised of principal and interest was made based on the facts and circumstances as at the initial
recognition of the assets.
The Company may make short sales in which borrowed security is sold in anticipation of a decline in the market value
of the security. Short sales are classified as current financial liabilities at fair value through profit and loss.
(ii)
Subsequent measurement
The subsequent measurement of financial assets and financial liabilities depends on their classification as
described below:
Financial assets and liabilities at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets mandatorily required to be measured at
fair value. Financial assets with cash flows that are not solely payments of principal and interest are classified and
measured at fair value through profit or loss, irrespective of the business model.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with
net changes in fair value recognised in the statement of profit or loss. These are listed equity investments which the
Company had not irrevocably elected to classify at fair value through OCI.
Financial liabilities designated upon initial recognition at fair value through profit and loss are designated at their initial
recognition date only if the criteria under AASB 9 are satisfied.
All financial assets and liabilities at fair value through profit or loss are equity instruments that are managed through
making purchase and sales decisions based on their fair value in accordance with the Company’s investment strategies.
The financial information about these financial assets and liabilities is provided internally on that basis to the Investment
Manager, Westoz Funds Management Pty Ltd and to the Board of Directors.
For investments that are actively traded in organised financial markets, fair value is determined by reference to the
Securities Exchange quoted market bid prices (offer prices for liabilities) at the close of business on the Statement of
Financial Position date, without any deduction for transaction costs.
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c)
New standards issued or amended but not yet effective (cont’d)
OZGROWTH LIMITED | ANNUAL REPORT 2021
22
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d)
Financial assets and liabilities (cont’d)
(ii)
Subsequent measurement (cont’d)
When the fair value of financial assets and financial liabilities recorded in the Statement of Financial Position cannot
be derived from active markets, they are determined using a variety of valuation techniques that include the use of
mathematical models. The inputs to these models are taken from observable markets where possible, but where this is
not feasible, a degree of judgment is required in establishing fair values.
The judgments include considerations of liquidity and model inputs such as credit risk (both own and counterparty’s),
correlation and volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments. The models are calibrated regularly and tested for validity using prices from any observable current
market transactions in the same instrument (without modification or repackaging) or based on any available
observable market data.
Gains and losses on investments at fair value through profit and loss are recognised in the Statement of Comprehensive
Income.
Purchases and sales of financial assets that require delivery of assets within the time frame generally established by
regulation or convention in the market place are recognised on the trade date i.e. the date that the Company commits
to purchase/sell the asset.
Changes in the fair value of investments – net gains or losses on investments at fair value through profit or loss are
calculated as the difference between the fair value at sale (or purchase in the case of liabilities) or fair value at reporting
date and the fair value at the previous valuation point. This includes both realised and unrealised gains and losses but
does not include dividend.
Financial assets at amortised cost (debt instruments)
The Company measures financial assets at amortised cost if both of the following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets to collect
contractual cashflows; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Expected credit losses (ECL’s) on financial assets at amortised costs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Company
expects to receive, discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within
the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the
exposure, irrespective of the timing of the default (a lifetime ECL). This is further discussed in note 20.
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in
certain cases, the Company may also consider a financial asset to be in default when internal or external information
indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account
any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.
Gains and losses are recognised in the Statement of Comprehensive Income when the asset is derecognised, modified
or impaired.
(iii)
De-recognition of financial assets and liabilities
A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
•
The rights to receive/contribute cash flows from the asset/liability have expired; or
•
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and either
(a)
the Company has transferred substantially all the risks and rewards of the asset, or
(b)
the Company has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
23
OZGROWTH LIMITED | ANNUAL REPORT 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(e)
Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and short term deposits, including
bank bills with a maturity of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consists of cash and cash equivalents as
defined above.
(f)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted by the balance date.
Deferred income tax is recognised on all temporary differences at the balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all temporary differences except where the deferred income tax liability
arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax assets and unused tax losses can be utilised except where the deferred
income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to
be utilised.
Unrecognised deferred tax assets are re-assessed at each balance date and are recognised to the extent that it has become
probable that future taxable profit will allow all or part of the deferred income tax to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or liability is settled, based on tax rate (and tax laws) that have been enacted or substantively enacted at the
balance date.
Income taxes relating to items recognised directly in other comprehensive income are recognised in other comprehensive
income and not in profit or loss.
(g)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
•
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the
taxation authority.
(h)
Revenue recognition
Interest revenue
Interest is recognised as interest accrues using the effective interest rate method which is the rate that exactly discounts
estimated future cash flows through the expected life of the financial investment to the gross carrying amount of the
financial asset.
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
24
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h)
Revenue recognition (cont’d)
Dividend revenue
Dividend is recognised when the Company’s right to receive the payment is established. This is taken to be the date the share
is quoted ex-dividend.
Other
The Company recognises revenue from sub-underwriting services on completion of the service.
This revenue from contract with customers is recognised when control of the services is transferred to the customer at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. These
fees are recognised as the related services are performed.
(i)
Trade and other payables
Liabilities for trade creditors and other amounts are initially measured at fair value of the consideration to be paid on goods
and services received and then subsequently carried at amortised cost, whether or not billed to the entity. They represent
liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise
when the Company is obliged to make future payments in respect of the purchase of these goods and services.
Payables include outstanding settlements on the purchase of investments and dividends payable. The carrying period is
dictated by market conditions and generally less than 30 days.
Payables to related parties are carried initially measured at fair value of the consideration to be paid on goods and services
received and then subsequently carried at amortised cost. Interest, when charged by the lender, is recognised as an expense
on an accrual basis.
(j)
Contributed equity
Ordinary share capital is recognised at the fair value of the consideration received by the Company and is classified as equity.
Any incremental costs that are directly attributable to the issue of ordinary shares are recognised directly in equity as a
reduction of the share proceeds received.
(k)
Earnings Per Share
Basic earnings per share (EPS) is calculated as net profit attributed to ordinary equity holders divided by the weighted
average number of ordinary shares outstanding during the year adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to ordinary equity holders, adjusted for:
•
costs of servicing equity (other than dividends);
•
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised; and
•
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus element.
(l)
Receivables
Receivables are recognised at fair value and subsequently measured at amortised cost using the effective interest rate
method, less any allowance for uncollectible debts. Bad debts are written off when identified. Amounts are normally received
within 30 days of being recorded as receivable. An estimate of expected credit loss is made when there is objective evidence
that the Company will not be able to collect the debt.
Under AASB 9, the Company recognises an allowance for ECL for receivables using a general approach. Refer to note 2(d) for
the accounting policy on measurement of ECL.
(m) Dividends
Provision is made for the amount of any dividend declared by the Directors on or before the end of the financial year, but not
distributed at balance date.
(n)
Management fees
Management fees, including performance fees, are calculated in accordance with contractual arrangements and are payable
in the year in which the returns are generated.
25
OZGROWTH LIMITED | ANNUAL REPORT 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(o)
Due to and from brokers
Amounts due to brokers are payables for securities purchased (in a regular way transaction) that have been contracted for
but not yet delivered on the reporting date. Refer to the accounting policy for ‘trade and other payables’ for recognition and
measurement of these amounts.
Amounts due from brokers include margin accounts and receivables for securities sold (in a regular way transaction)
that have been contracted for but not yet delivered on the reporting date. Refer to accounting policy for ‘Receivables’ for
recognition and measurement of these amounts.
(p)
Presentation of comparative information
Prior year amounts in the financial report have been reclassified to ensure consistency with presentation of current
year amounts.
(q)
Significant Accounting Judgements, Estimates and Assumptions
Taxes
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the losses
can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Deferred tax assets relate to unrealised losses on investments in financial assets and recognised tax losses.
Future taxable profits depend on the success of the Company’s investment strategy which in turn will be influenced by the
overall direction of equity markets. The markets are influenced by a number of factors such as outlook for growth, inflation,
commodity prices, interest rates, general economic conditions, natural disasters & government regulation. Management has
estimated future taxable profits based on an analysis that historic returns (per annum, since inception) on the investment
portfolio of Ozgrowth Limited. Market estimates of long term Australian equity market returns are anticipated to be higher
than the return that will be required to be generated by Ozgrowth Limited in order to utilise the deferred tax asset. Changes
in assumptions & estimates may affect the ability to recognise deferred tax assets.
There are no other significant accounting judgments, estimates and assumptions during the financial year.
3.
SEGMENT INFORMATION
For management purposes, the Company is organised into one operating segment, which invests in equity securities on the
Australian Securities Exchange. All of the Company’s activities are interrelated, and each activity is dependent on the others.
Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from
this segment are equivalent to the financial statements of the Company as a whole.
The Company operated in one geographical area being Australia.
4.
CHANGES IN FAIR VALUE OF INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
2021
2020
$
$
Net realised gain/(loss) on disposal of investments
9,839,471
(2,019,534)
Net unrealised gain on investments
31,713,597
6,176,826
41,553,068
4,157,292
The total number of contract notes that were issued for transactions during the financial year was 691 (2020: 635). The total
brokerage paid on these contract notes was $353,150 (2020: $246,137).
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
26
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
5.
FAIR VALUE OF FINANCIAL INSTRUMENTS
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
•
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
•
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
The following table shows financial instruments recorded at fair value, analysed between those whose fair value is based on quoted
market prices, those involving valuation techniques where model inputs are observable in the market and those where the valuation
technique involves the use of non-market observable inputs.
30 JUNE 2021
VALUED AT
QUOTED MARKET
PRICE
(LEVEL 1)
VALUATION
TECHNIQUE
MARKET
OBSERVABLE
INPUTS
(LEVEL 2)
VALUATION
TECHNIQUE
NON – MARKET
OBSERVABLE
INPUTS
(LEVEL 3)
TOTAL
$
$
$
$
Financial assets at fair value through profit or loss
(i) Listed equities
99,847,339
-
-
99,847,339
(ii) Unlisted Equities – Starling Energy Group
-
-
900,000
900,000
99,847,339
-
900,000
100,747,339
30 JUNE 2020
VALUED AT
QUOTED MARKET
PRICE
(LEVEL 1)
VALUATION
TECHNIQUE
MARKET
OBSERVABLE
INPUTS (LEVEL 2)
VALUATION
TECHNIQUE
NON – MARKET
OBSERVABLE
INPUTS
(LEVEL 3)
TOTAL
$
$
$
$
Financial assets at fair value through profit or loss
(i) Listed equities
62,929,118
-
-
62,929,118
(ii) Unlisted Equities
-
-
-
-
62,929,118
-
-
62,929,118
The level in which instruments are classified in the hierarchy is based on the lowest level input that is significant to the fair value
measurement in its entirety. Assessment of the significance of an input requires judgement after considering factors specific to
the instrument.
The fair value of listed equity is based on quoted market prices at the reporting date (bid price for long positions), without any
deduction for transaction costs.
For instruments for which there is currently no active market, the Company uses valuation methods generally accepted in the
industry. Some of the inputs to those method may not be market observable and are therefore estimated based on assumptions.
In the case of unlisted equities, recent transactional evidence has been obtained that supported the current valuation. If, in the future,
similar transactions occur at significantly different values, the fair value of unlisted equities will be revised appropriately.
27
OZGROWTH LIMITED | ANNUAL REPORT 2021
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
6.
OTHER EXPENSES
2021
2020
$
$
Marketing
-
9,433
Share registry costs
21,826
25,172
Other
72,441
50,343
94,267
84,948
7.
INCOME TAX
The major components of income tax expense are:
Statement of comprehensive income
Current Income Tax
Current income tax charge
-
-
Prior year under / (over accrual)
-
(1,998)
Deferred income tax
Relating to origination and reversal of temporary differences
9,744,602
981,951
Income tax expense reported in statement of
comprehensive income
9,744,602
979,953
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Company’s
applicable tax rate is as follows:
Accounting profit before tax
34,601,769
4,075,169
Tax at the statutory income tax rate of 30% (2020: 30%)
10,380,531
1,222,551
Tax effect of franking credits
(633,731)
(237,600)
Prior year under / (over accrual)
-
(1,998)
Non-taxable income
(2,198)
(3,000)
Income tax expense / (benefit)
9,744,602
979,953
Deferred income tax at 30 June relates to the following:
STATEMENT OF
FINANCIAL POSITION
STATEMENT OF
COMPREHENSIVE INCOME
2021
2020
2021
2020
Deferred Tax Assets
$
$
$
$
Tax loss utilised/(recognised)
646,665
871,097
230,522
(871,097)
Unrealised loss on investments in financial assets
-
259,279
259,279
1,853,048
Total DTA
646,665
1,130,376
489,801
981,951
Deferred Tax Liabilities
Unrealised gain on investments in financial assets
(9,260,891)
-
9,260,891
-
Total DTL
(9,260,891)
-
9,260,891
-
Net (DTL)/DTA
(8,614,226)
1,130,376
9,750,692
981,951
Deferred tax assets relate to unrealised losses on investments in financial assets and current year tax losses. Based on long term
movements in the Australian market equity returns, it is probable that the Company will make future taxable profits and such losses
will be utilised.
OZGROWTH LIMITED | ANNUAL REPORT 2021
28
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
8.
DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
2021
2020
$
$
Ordinary Shares
Interim dividend of 0.30 cent per share has been declared
and paid for on 31 December 2020 (2020: 0.30 cents per
share)
1,066,799
1,061,982
No final dividend has been declared and provided for as
at 30 June 2021 (2020: 0.30 cents per share per fully paid
ordinary share).
Fully franked based on tax paid or payable at 30%
-
1,057,646
1,066,799
2,119,628
Franking Credit Balance
Franking credits available at the end of the financial year at
30% (2020: 30%)
1,443,931
1,472,897
Franking debits that will arise by the payment of dividends
as at the end of the financial year
-
(453,277)
1,443,931
1,019,620
9.
OTHER ASSETS
Outstanding sale settlement
-
68,689
Accrued dividends
36,000
53,750
Bank refund
-
7,920
GST receivable
625,160
26,679
661,160
157,038
Note: GST receivable is non-interest bearing and is generally claimed from the Australian Tax Office on a quarterly basis.
The carrying value of other assets is approximately equal to its fair value.
10. TRADE AND OTHER PAYABLES
Trade payables
157,277
118,119
Outstanding purchase settlements
1,087,073
48,337
1,244,350
166,456
Total trade payables are non-interest bearing and normally settled on 30 day terms. Purchase settlements are normally settled on
2 day terms.
The carrying value of trade and other payables is approximately equal to its fair value.
11.
CONTRIBUTED EQUITY
(a)
Contributed equity
350,664,543 fully paid ordinary shares
(2020: 352,548,713)
71,845,531
72,198,956
29
OZGROWTH LIMITED | ANNUAL REPORT 2021
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
11.
CONTRIBUTED EQUITY (CONT’D)
(b)
Movements in ordinary shares on issue
2021
2020
Number of Shares
$
Number of Shares
$
Beginning of the financial period
352,548,713
72,198,956
355,930,586
72,731,178
•
Option exercise
•
Share buyback
-
(1,884,170)
-
(353,425)
3,325
(3,385,198)
633
(532,855)
350,664,543
71,845,531
352,548,713
72,198,956
(c)
Terms and conditions of contributed equity
The Company does not have an authorised capital nor par value in respect of its issued capital.
Ordinary fully paid shares have the right to receive dividends as declared and, in the event of winding up the Company,
to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
shares held.
Ordinary fully paid shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(d) Options
As at 30 June 2021, the Company had no options on issue. (2020: At the beginning of the period, the Company had
35,466,231 options on issue with a strike price of 19.0 cents and an expiry date of 31 August 2019. The 2019 19.0 cent options
were granted pursuant to the Bonus Issue prospectus issued on 29 September 2017 to all shareholders. The offer made a
bonus issue of one option for every 10 shares held by shareholders at the record date. These options were exercisable into
new ordinary shares in the Company that rank equally with other ordinary shares by the payment of 19.0 cents per option at
any time up until expiry date of 31 August 2019. Of these options, 3,325 were exercised during the period resulting in 3,325
new ordinary shares and the remaining options expired. As at 30 June 2020, the Company had no options on issue).
(e)
Capital Management
For the purpose of the Company’s capital management, capital includes issued equity share capital, accumulated losses and
profit reserve.
The primary objective of the Company’s capital management is to produce positive return on funds, regardless of the
general direction of the listed share market and that is consistent with acceptable risk parameters in order to maximise the
shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders
or issue new shares.
As far as possible, the Company intends to pay out a consistent stream of dividends to investors, having regard to availability
of franking credits and the balance in the profit reserve.
The Company was ungeared at year end and not subject to any externally imposed capital requirement.
OZGROWTH LIMITED | ANNUAL REPORT 2021
30
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
12.
RESERVES
2021
2020
$
$
Profit reserve
37,718,748
24,846,450
37,718,748
24,846,450
The profit reserve is made up of amounts allocated from retained earnings that are preserved for future dividend payments.
Movement in profit reserve
Balance at beginning of the year
24,846,450
21,290,340
Transferred from retained earnings (a)
13,939,097
5,675,738
Dividend paid
(1,066,799)
(2,119,628)
37,718,748
24,846,450
(a) The amount transferred to profit reserve in the 2021 financial year is the is the profit for the period 1 July 2020 to 30
November 2020 in accordance with resolutions of the Board of Directors dated 19 November 2020. (30 June 2020: The
amount transferred to profit reserve in the 2020 financial year is the profit for the period 1 July 2019 to 30 September 2019 in
accordance with resolutions of the Board of Directors dated 30 October 2019
13.
ACCUMULATED LOSS
Balance at beginning of the year
(25,690,040)
(23,109,518)
Transferred to profit reserve
(13,939,097)
(5,675,738)
Profit / (loss) for the year attributable to members
24,857,167
3,095,216
(14,771,970)
(25,690,040)
14. AUDITOR’S REMUNERATION
Total of all remuneration received or due and receivable by Ernst & Young in
connection with:
•
Category 1: an audit or review of a financial report of the Company
52,000
57,900
•
Category 4: services in relation to tax compliance for the Company
11,000
12,000
63,000
69,900
15.
RELATED PARTY DISCLOSURES
(a)
Remuneration of Directors and Executives
The Board of Directors is responsible for determining and reviewing compensation arrangements for the executive team.
The Board will assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high quality Board and executive team.
Mr Jefferies and Mr Joyner were the only paid Directors of the Company. The total remuneration payable for the financial year
is $110,000 (2020: $110,000) of which $100,456 was a short term benefit (2020: $100,456) and $9,544 was post-employment
benefit (2020: $9,544).
(b)
Transactions with Directors or Director Related Entities
The Directors of Ozgrowth Limited during the year or part thereof were Mr Simon Joyner, Mr Jay Hughes and
Mr Michael Jefferies.
Westoz Funds Management Pty Ltd, a company of which Mr Hughes is a Director, is considered to be providing Key
Management Personnel (“KMP”) services as it has the authority for the management of the investment portfolio of Ozgrowth
Limited. Westoz Funds Management Pty Ltd received management fees from the Company for the management of its
assets. Total management fees (inclusive of performance fees where applicable) of $8,985,143 (2020: $753,017) were charged
in the period for these services. A $8,002,402 performance fee was paid in respect of the 2021 financial year (2020: $15,375).
There was $102,131 (2020: $65,349) accrued for management fees payable as at 30 June 2021.
31
OZGROWTH LIMITED | ANNUAL REPORT 2021
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
15.
RELATED PARTY DISCLOSURES (CONT’D)
(b)
Transactions with Directors or Director Related Entities (cont’d)
These fees were charged in accordance with a management agreement. The Management fee is calculated at 1% per annum
of funds managed. A Performance fee is payable where performance exceeds 7% over a twelve month period to end of June
and is calculated at 20% of the performance exceeding the threshold. The starting point for the calculation of the threshold is
the greater of the starting portfolio value and the number of shares on issue multiplied by $0.20.
No amount is paid by Ozgrowth Limited directly to the Directors of Westoz Funds Management Pty Ltd.
Euroz Hartleys Securities Limited (formerly Euroz Securities Limited) and Euroz Hartleys Limited, companies of which Mr
Hughes is a Director received brokerage fees for transactions undertaken by the Company in respect of its investments. An
amount of $246,137 (2020: $243,423) was paid in the year as brokerage to Euroz Hartleys Securities Limited and an amount
of $92,219 (2020: $nil) was paid in the year as brokerage to Euroz Hartleys Limited. Of this amount, $nil of this brokerage
was outstanding as at 30 June 2021 (2020: $468). Euroz Hartleys Limited (previously Euroz Hartleys Securities Limited) also
provide nominee and custodial services for the Company. No fees were paid in relation to these services in the period (2020:
nil).
The above transactions were entered into on normal commercial terms.
(c)
Ultimate Parent
Ozgrowth Limited is the ultimate Australian parent company.
(d)
Other Related Party Transactions
There are no other related party transactions other than those discussed above.
16. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares outstanding during the year.
The Company has no dilutive securities on issue.
2021
2020
$
$
Net profit / (loss) attributable to ordinary equity holders of the Company used in
calculating basic earnings per share
24,857,167
3,095,216
Weighted average number of ordinary shares on issue used in the calculation of basic
and diluted earnings per share
351,344,998
354,536,680
Basic and diluted earnings per share (cents)
7.1
0.9
At the date of this report, the Company has no options on issue.
17.
SUBSEQUENT EVENTS
On 14 July 2021 the Board of Directors approved the payment of a final dividend for $1,227,326 (0.35 cents per share) be paid in
respect of the 2021 financial year. The payment of the final dividend will occur on 27 August 2021.
No other matters or events have occurred subsequent to 30 June 2021 which have significantly affected or may significantly affect
the operations of the Company, the results of its operations or the state of affairs of the Company in subsequent financial periods.
18.
CONTINGENT LIABILITIES
The Company has no contingent liabilities as at 30 June 2021 (2020: $nil).
OZGROWTH LIMITED | ANNUAL REPORT 2021
32
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
19. NOTES TO THE STATEMENT OF CASH FLOWS
(a)
Reconciliation of Cash
For the purpose of the financial report, cash and cash equivalents are expressed as follows:
2021
2020
$
$
Cash at bank and in hand
3,242,386
8,362,936
3,242,386
8,362,936
Cash at bank and in hand earns interest at floating rates based on daily deposit rates.
The fair value of cash and cash equivalents is $3,242,386 (2020: $8,362,936). Of the total cash and cash equivalents held
at 30 June 2021, $3,134,219 (2020: $8,303,484) was held in the investment portfolio.
(b)
Reconciliation from the Net Profit after Income Tax to Net Cash flows (Used In)/Generated
from Operating Activities
Net profit after tax
24,857,167
3,095,216
Adjustment for Non-Cash Items:
Items classified as Investing
Unrealised gain on shares
(31,713,597)
(6,176,826)
Realised (gain) / loss on shares
(9,839,471)
2,019,534
Changes in Assets and Liabilities:
Increase/(Decrease) in trade and other payables
39,158
(815)
(Increase)/Decrease in other assets
(572,811)
(2,150)
Increase/(Decrease) in tax payable
-
(1,212,510)
Movement in deferred tax
9,744,602
981,951
Net Cash Flows used in Operating Activities
(7,484,952)
(1,295,600)
(c)
Financing Facilities Available
At balance date, no financing facilities had been negotiated and none were available.
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Risks arising from holding financial instruments are inherent in the Company’s activities, and are managed through a process of
ongoing identification, measurement and monitoring. The Company is exposed to credit risk, liquidity risk and market risk.
The Company’s principal financial instruments comprise listed equities, cash, short term deposits and outstanding sale and purchase
settlements. All securities investments present a risk of loss of capital. The maximum loss of capital on long equity securities is
limited to the fair value of those positions. On equities sold short, the maximum loss of capital can be unlimited. The Company has
other financial instruments such as trade creditors and distributions payable which arise directly from its operations. The Company
may also transact in other financial instruments, including derivatives, to achieve its target rate of return on assets. No derivatives are
held at 30 June 2021 (2020: $nil).
The Investment Manager is responsible for identifying and controlling the risks that arise from these financial instruments. The
Company has an established investment policy in place. Information about the total fair value of financial instruments exposed to
risk, as well as compliance with established investment policy, is monitored by the Investment Manager.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. This
risk is controlled by the Company investing in financial instruments, which in normal market conditions can be easily liquidated. In
addition, the Company maintains sufficient cash and cash equivalents to meet normal operating requirements.
Maturity Analysis for Financial Liabilities
Financial liabilities of the Company comprise trade, other payables, amounts due to brokers and distribution payable, which
contractually mature within 30 days.
33
OZGROWTH LIMITED | ANNUAL REPORT 2021
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
Credit Risk
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause
the Company to incur a financial loss. The Company’s maximum credit exposure is the carrying amounts in the statement of
financial position.
The Company applies a general approach to calculating ECLs, except for those financial assets that apply the low credit risk
exemption. Following the adoption of AASB 9, the Company considers the probability of default upon initial recognition of a
financial asset and whether there has been a significant increase in credit risk on an ongoing basis throughout the reporting period.
The general approach is described in the accounting policy section 2(d). To assess whether there is a significant increase in credit
risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date
of initial recognition. In making this assessment, the Company considers information that is reasonable and supportable, including
historical experience and forward-looking information. Forward-looking information considered includes consideration of external
sources of economic information. In particular, the Company takes into account the counterparties external credit rating (as far as
available), actual or expected significant changes in the operating results of the counterparty and macroeconomic when assessing
significant movements in credit risk.
The Company holds financial instruments with credit worthy third parties and as such applies the low credit risk simplification. At
each reporting period the Company evaluates whether the debt instrument is considered to have low credit risk using all reasonable
and supportable information that is available without undue cost or effort. In making this evaluation, the Company considers
whether there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
At 30 June 2021, the Company held significant equities, cash balances and other current receivables in relation to outstanding sale
settlements. Cash deposits were held on an at call basis and term deposits have nominated maturity dates not greater than three
months forward with an institution covered under the Banking Act 1959 with a rating from Standard & Poors of AA- (long term)
and A-1+ (short term). Listed equities were held under a nominee arrangement with Euroz Hartleys Limited which operates and
maintains required prudential matters under an Australian Financial Services Licence. As at 30 June 2021, all receivables are current
with no balances that are past due nor credit-impaired.
Market Risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables
such as interest rates and equity prices. The Company has delegated the management of these risks to Westoz Funds Management
Pty Ltd (AFSL No 285607) who has expertise in the management of such risk.
The following risk control features are in place:
•
No one stock will represent more than 20% of the total portfolio value at the time of acquisition;
•
The portfolio usually consists of between 10 and 25 securities, although more or less may be held depending on the
number of securities identified that are expected to meet the performance expectations;
•
Where suitable stocks cannot be identified, the portfolio may invest in cash. Whilst unlikely over the medium term, the
portfolio may consist from time to time of significant cash deposits;
•
Any short positions will not represent more than 20% of the total portfolio value; and
•
Leverage may be employed in the Portfolio, but total exposure will not exceed 120% of the portfolio value.
•
Any breach of these risk control measures will be reported to the Company by the Investment Manager and the
Company will determine the appropriate action to remedy the breach.
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
34
NOTES TO FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial
instruments.
The Company’s exposure to market risk for changes to interest rate risk relates primarily to its earnings on cash and short term
deposits, which have variable interest rates. The total cash balance at 30 June 2021 was $3,242,386 (2020: $8,362,936). The
Company manages interest rate risk by ensuring that cash balances are always deposited in interest-bearing accounts that provide
competitive interest rates.
As at 30 June 2021, cash deposits of $3,242,386 (2020: $8,362,936) were held at call. No term deposits with maturities of more than
three months (2020: $nil) were held. No interest was recorded as receivable (2020: $nil).
The following table demonstrates the sensitivity of the Company’s Statement of Comprehensive Income to a reasonably possible
change in interest rates, with all other variables constant. The change in basis points is derived from a review of historical movements
and management’s judgement of future trends. The analysis is performed on the same basis for 2020.
2021
2021
CHANGE IN BASIS POINTS
EFFECT ON PRE
TAX PROFIT
($)
EFFECT ON EQUITY
INCLUDING RETAINED EARNINGS
($)
INCREASE
DECREASE
INCREASE
DECREASE
INCREASE
DECREASE
50
50
16,212
(16,212)
11,348
(11,348)
2020
2020
CHANGE IN BASIS POINTS
EFFECT ON PRE
TAX PROFIT
($)
EFFECT ON EQUITY
INCLUDING RETAINED EARNINGS
($)
INCREASE
DECREASE
INCREASE
DECREASE
INCREASE
DECREASE
50
50
42,000
(42,000)
29,400
(29,400)
Equity Price Risk
Equity price risk is the risk that the fair value of equities decreases as a result of changes in market prices, whether those changes
are caused by factors specific to the individual stock or factors affecting all instruments in the market. Equity price risk arises from
the Company’s investment portfolio.
The effect on the statement of comprehensive income due to a reasonably possible change in market factors, as represented by
the equity indices, with all other factors held constant and assuming the Company’s equity portfolio moves in direct concert with
the equity indices, is indicated in the table below. The change in index level is derived from a review of historical movements. The
analysis is performed on the same basis for 2020.
2021
2021
INDEX
CHANGE IN INDEX
EFFECT
ON PRE
TAX PROFIT
($)
EFFECT ON EQUITY
INCLUDING RETAINED
EARNINGS
($)
ASX Small Ordinaries Index
Increase 10%/ (Decrease 10%)
9,984,734/ (9,984,734)
6,989,314/ (6,989,314)
2020
2020
INDEX
CHANGE IN INDEX
EFFECT
ON PRE
TAX PROFIT
($)
EFFECT ON EQUITY
INCLUDING RETAINED
EARNINGS
($)
ASX Small Ordinaries Index
Increase 10%/ (Decrease 10%)
6,290,000/ (6,290,000)
4,405,000/ (4,405,000)
35
OZGROWTH LIMITED | ANNUAL REPORT 2021
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
In accordance with a resolution of the Directors of Ozgrowth Limited, the Directors declare that:
1.
In the opinion of the Directors:
(a)
the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company's financial position as at 30 June 2021 and of its performance for the
year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(b); and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
(d)
this declaration has been made after receiving the declarations required to be made to the Directors in accordanc
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021.
On behalf of the Board
Jay Hughes
Non-Executive Chairman
Dated: 19 August 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
36
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FD:LC:OZG:014
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Ozgrowth Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Ozgrowth Limited (the Company), which comprises the
statement of financial position as at 30 June 2021, the statement of profit and loss and other
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 Company is in accordance with the
Corporations Act 2001, including:
a.
Giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its
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 Company 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 judgment, 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.
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.
37
OZGROWTH LIMITED | ANNUAL REPORT 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
1. Investment valuation
Why significant
How our audit addressed the key audit
matter
The Company has a significant investment portfolio
consisting primarily of listed equities. As at 30 June
2021, the value of these financial assets, as set out in
Note 5 of the financial report, was $99.8 million,
which represents 95% of the total assets held by the
Company at that date.
The Company’s accounting policy, described in Note
2(d) of the financial report, recognises these financial
assets at fair value through profit or loss in
accordance with Australian Accounting Standards.
Volatility and other market drivers can have a
significant impact on the value of these financial
assets; therefore, valuation of the investment
portfolio was considered a key audit matter.
We assessed the fair value of significant
investments in the portfolio held at 30
June 2021 by reference to independent
pricing sources.
We assessed the adequacy of the
associated disclosures in Note 5 of the
financial report.
2. Management and performance fees
Why significant
How our audit addressed the key audit
matter
Management and performance fees paid to the
investment manager, Westoz Funds Management Pty
Ltd, are the most significant expense for the
Company.
For the year ended 30 June 2021, management and
performance fees totalled $9.0 million which
represents 96% of total expenses.
The Company’s accounting policy for management
and performance fees is described in Note 2(n) of the
financial report. All expenses are recognised on an
accrual basis, with performance fees recognised in
the financial report if the performance hurdles for the
Company have been met at the end of the relevant
measurement period, which is the date where
certainty exists that the criteria has been met and the
liability has been crystallised.
The quantum of these expenses and the impact that
the volatility in the market prices of investments can
have on the recognition and payment of performance
fees resulted in this being a key audit matter.
We assessed the Company’s performance
fee eligibility calculations.
We recalculated management and
performance fees in accordance with
contractual arrangements, assessing
whether contract rates were correctly
applied.
We tested the inputs to the performance
fee calculation by ensuring the key inputs,
including the investment portfolio values
and the number of shares on issue at the
beginning of the performance period and
the movements in the investment portfolio
value during the year were consistent with
the financial report.
We assessed the adequacy of the
disclosures in Note 15(b) of the financial
report.
INDEPENDENT AUDITOR’S REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
38
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
Directors’ Report accompanying the financial 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 Company’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 Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
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.
INDEPENDENT AUDITOR’S REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
39
OZGROWTH LIMITED | ANNUAL REPORT 2021
INDEPENDENT AUDITOR’S REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
►
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 Company’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 Company’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 Company 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.
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.
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 pages 6 to 7 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Ozgrowth Limited for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
OZGROWTH LIMITED | ANNUAL REPORT 2021
40
INDEPENDENT AUDITOR’S REPORT (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 5
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
Fiona Drummond
Partner
Perth
19 August 2021
41
OZGROWTH LIMITED | ANNUAL REPORT 2021
A)
DISTRIBUTION OF SHAREHOLDERS
Analysis of number of shareholders by size of holding.
RANGE
TOTAL HOLDERS
UNITS
% UNIT
1 - 1,000
41
2,559
0.00
1,001 - 5,000
56
185,238
0.05
5,001 - 10,000
64
546,302
0.16
10,001 - 100,000
264
11,033,777
3.15
100,001 Over
151
338,692,477 96.64
Rounding
0.00
Total
576
350,460,353
100.00
Number of holders holding less than a marketable parcel: 43 at $0.265 per unit
B)
TOP HOLDERS
The twenty largest holders of ordinary fully paid shares are listed below.
ORDINARY SHARES
RANK
NAME
UNITS
%
1
ZERO NOMINEES PTY LTD
149,928,046
42.78
2
CAPE BOUVARD EQUITIES PTY LTD
40,000,000
11.41
3
GOLD TIGER INVESTMENTS PTY LTD
14,000,000
3.99
4
ACRES HOLDINGS PTY LTD
7,900,000
2.25
5
REDBROOK NOMINEES PTY LTD
6,900,000
1.97
6
CITICORP NOMINEES PTY LIMITED
6,868,783
1.96
7
ICE COLD INVESTMENTS PTY LTD
6,000,000
1.71
8
ICE COLD INVESTMENTS PTY LTD
5,410,151
1.54
9
YANDAL INVESTMENTS PTY LTD
4,885,000
1.39
10
ONYX (WA) PTY LTD
4,578,315
1.31
11
MR RICHARD HAMILTON BARTLETT
4,100,625
1.17
12
MR JAMES WILLIAM TONKIN + MRS SHARON KATHLEEN TONKIN
3,850,000
1.10
13
MR JAY HUGHES + MRS LINDA HUGHES
3,750,000
1.07
14
NICKSON PTY LTD
3,580,758
1.02
15
CARMANT PTY LTD
3,497,927
1.00
16
ROLLASON PTY LTD
3,000,000
0.86
17
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2,688,040
0.77
18
MR ANDREW MCKENZIE + MRS CATHERINE MCKENZIE
2,500,000
0.71
19
MR WILLEM BARTUS JOSEF SLOT
2,435,829
0.70
20
ACRES HOLDINGS PTY LTD
2,177,928 0.62
Total
278,051,402
79.34
Remainder
72,408,951
20.66
Grand Total
350,460,353
100
ADDITIONAL INFORMATION
AS AT 19 AUGUST 2021
OZGROWTH LIMITED | ANNUAL REPORT 2021
42
C)
SHAREHOLDERS WITH GREATER THAN 5%
As at 19 August 2021, the Company had 3 shareholders with greater than 5% of the issued ordinary share capital:
SHAREHOLDER
UNITS
%
Euroz Limited
144,713,502
40.58%
Cape Bouvard Equities Pty Ltd
40,000,000
11.36%
Acres Holdings Pty Ltd
21,442,030
6.09%
D)
ON-MARKET BUY-BACK
The Company has a current on-market buy-back.
E)
VOTING RIGHTS
The voting rights for each class of security on issue as at 19 August 2021 are:
Ordinary fully paid shares
Each ordinary shareholder is entitled to one vote for each ordinary fully paid share held.
ADDITIONAL INFORMATION
AS AT 19 AUGUST 2021
43
OZGROWTH LIMITED | ANNUAL REPORT 2021
BLACKBOX DESIGN 14437
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
PO Box Z5036
St Georges Terrace
Perth 6831
Western Australia
T: +61 8 9321 7877
F: +61 8 9321 8288
Ozgrowth.com.au
Ozgrowth Limited
ACN 126 450 271