A
Annual Report
2021
Platinum Asset Management Limited
ABN 13 050 064 287
Platinum Asset Management Limited Annual Report 2021PAGE HEADINGPAGE SUB HEADING B
Directors
Guy Strapp (appointed on 27 August 2020)
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Andrew Clifford
Kerr Neilson
Elizabeth Norman
Andrew Stannard
Michael Cole (retired on 20 November 2020)
Shareholder Liaison
Elizabeth Norman
Company Secretary
Joanne Jefferies
Registered Office
Level 8, 7 Macquarie Place
Sydney NSW 2000
Phone 1300 726 700 (Australia only)
Phone 0800 700 726 (New Zealand only)
Phone +61 2 9255 7500
Share Registrar
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
Sydney NSW 2000
Phone 1300 855 080 (Australia only)
Phone +61 3 9415 4000
+61 3 9473 2500
Fax
Auditor and Taxation Advisor
Ernst & Young
The EY Centre
Level 34, 200 George Street
Sydney NSW 2000
Securities Exchange Listing
Platinum Asset Management Limited shares are listed on the
Australian Securities Exchange (ASX code: PTM)
Website
www.platinum.com.au/Shareholder-information/
Corporate Governance Statement
The Corporate Governance Statement can be viewed at
www.platinum.com.au/PlatinumSite/media/About/
ptm_corp_gov.pdf
Platinum Asset Management Limited Annual Report 2021PAGE HEADINGPAGE SUB HEADING Contents
Chairperson’s Report
Managing Director’s Letter
Shareholder Information
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
The history of money and its role in the modern world
article by Julian McCormack
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IV
Platinum Asset Management Limited Annual Report 2021 2
CHAIRMAN’S REPORT 2021
November 2020 turned out to be a somewhat unusual time to be appointed Chair, with
COVID-19 restrictions leading to many remote (rather than physical) board meetings and a
generally more challenging process to get to know Platinum’s people and business. I am
pleased to say that, despite this, I was still able to hold face-to-face meetings with the entire
investment team and all the business leaders. Whether in person or online, those early
discussions reinforced my early perceptions about Platinum as being a place where the
competitive advantage of the business resides largely in the breadth and depth of a talented
team. This team is united by a common investment philosophy, one that is focused on
generating long-term absolute returns through a contrarian and index-agnostic approach
to stock selection.
Importantly, Platinum’s business has continued to operate to its full capability while
staff were working from home. The management team also adapted Platinum’s business
development and research processes so that they could continue uninterrupted by the
COVID-19 travel restrictions, while continuing to focus on developing Platinum’s business
and delivering several product enhancements during the year, which I will describe later in
this report.
Funds Under Management (“FUM”)
The last year was an exceptional period for equity investors, with the global stock market up 28%1
for the year ended 30 June 2021. Platinum’s strategies all delivered strong absolute investment
returns, with Platinum’s flagship International and Asian equity funds both providing investment
returns of circa 26% for the year ended 30 June 2021. The strongest-performing Platinum Trust®
funds included the Platinum International Brands Fund (C Class +51%) and the Platinum
International Health Care Fund (C Class +32%), which both significantly exceeded the returns
of their nominated indices.2
FUM as at 30 June 2021 was $23.5 billion, an increase of 10% from the 30 June 2020 closing
FUM of $21.4 billion. The change in FUM was driven primarily by investment performance
of $5.5 billion. However, this was offset by net fund outflows of $2.3 billion. Although net
outflows continued through 2021, despite strong absolute investment returns, they were
down from the prior financial year (2020: $3.0 billion).
Average FUM for the year decreased by 1.6% to $23.4 billion from an average FUM of
$23.7 billion for the previous year.
1
2
MSCI AC World Net Index (A$).
MSCI AC World Net Index (A$) and MSCI AC World Health Care Net Index (A$).
References to “Platinum” are to Platinum Investment Management Limited.
Source: Platinum. Fund returns are pre-tax, net of fees and costs and assume the reinvestment of distributions.
Past performance is not a reliable indicator of future returns.
Platinum Asset Management Limited Annual Report 2021 3
Operating Performance
Profit before tax increased by 6.1% to $234.2 million for the year ended 30 June 2021
(2020: $220.8 million). Earnings per share for the 2021 financial year were up 1.4 cents
to 28.2 cents per share (2020: 26.8 cents).
Total revenue and other income increased by 5.9% to $316.4 million for the year ended
30 June 2021 (2020: $298.7 million). The significant increase in gains from Platinum’s seed
investments was partially offset by a decrease in management and performance fee income.
The 3.8% decrease in investment management fees (excluding performance fees) was
primarily driven by the 1.6% decline in average FUM.
Costs
Included in the Remuneration Report on page 28 of the Company’s 2021 Annual Report is
a letter from the Chair of the Nomination and Remuneration Committee. I encourage all
shareholders to read this letter, which outlines the remuneration policy of the Company
and the link between investment performance and variable remuneration.
Total employee expenses (including share-based payment expenses) increased by $6.8 million
on the prior year. This primarily reflects an increase in variable compensation from the
relatively lower level in the previous financial year. Total expenses for the financial year
increased by $4.3 million to $82.2 million, on the prior year with employee expenses being
the main contributor to this increase. Notwithstanding this, no member of the investment
team received variable awards under the Profit Share Plan and Platinum’s Chief Executive
Officer (CEO)/Co-Chief Investment Officer (CIO), Andrew Clifford, did not receive any variable
awards for the 2021 financial year, either under the CEO Plan or the Investment Team Plan.
Other costs decreased by $2.5 million compared to the previous financial year. The cost
decrease is primarily due to negotiated cost savings with key suppliers. In addition, COVID-19
continued to restrict some marketing activities and business travel, however, those costs
are likely to increase as restrictions ease.
Dividends
The Directors have declared a 2021 final fully franked ordinary dividend of 12 cents per share.
This will be paid on 16 September 2021.
A 2021 interim fully franked ordinary dividend of 12 cents per share was paid during the year.
Whilst the Company has a Dividend Reinvestment Plan in place, it has not been activated.
Platinum Asset Management Limited Annual Report 2021 4
CHAIRPERSON’S REPORT 2021
CONTINUED
Business Development
Platinum’s broad range of business development activities continued throughout 2021, albeit
with some modifications due to COVID-19. Importantly, we also delivered two significant
enhancements to our product range.
First, we launched the fixed cash distribution option, which allows investors in the Platinum
Trust® funds to elect to receive a fixed (currently 4%) annual cash distribution yield. Many
investors rely on the annual distribution as a way to supplement their income. However,
because distributions comprise dividends, interest, and realised capital gains or losses on
the sale of investments, the distribution in any financial year can be unpredictable. The fixed
cash distribution option has been designed to provide investors with access to more certain
cash flow outcomes.
We also launched the Platinum Investment Bond (Bond) in March 2021. The Bond is an
investment vehicle that offers unique tax treatment, which is not available through many
other savings and investment products. The Bond is a collaboration between Platinum (the
investment manager) and Australian Unity (through its subsidiary Lifeplan Australia Friendly
Society Limited - the issuer and administrator of the Bond). The Bond provides investors with
access to two investment options, the Platinum International Fund established in 1995 and the
Platinum Asia Fund established in 2003.
Environmental, Social & Governance (“ESG”)
Platinum has a deep and consistent commitment to sustainable business practices and
responsible investment management. Since 2013, Platinum has been purchasing carbon
credits to offset its carbon emissions. Mindful of the need to reduce carbon emissions, from
April 2021 our Sydney office began sourcing 100% of its electricity needs from renewable
energy sources.
This year, we also strengthened our commitment to ESG by becoming a signatory to the
United Nations Principles for Responsible Investment (UN PRI), and in February 2021, we
appointed a dedicated investment specialist focused on ESG matters to work with the
investment team and the broader organisation on the continued development, integration
and communication of our ESG practices and policies.
Lastly, during the financial year we improved our carbon disclosure by publishing our
estimates of the carbon emissions generated by our funds’ investment portfolios. We hope
that investors will use this information to consider ways in which they can offset the carbon
emissions generated by their investments in our funds.
For further information on ESG, please read Platinum’s ‘Corporate Responsibility and
Sustainability Report’ available on our website.
Platinum Asset Management Limited Annual Report 2021 5
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will be held as a virtual event whereby
shareholders can join online. The AGM Notice, including details of how to join the meeting,
will be dispatched to shareholders in the coming weeks.
The Board and its Associated Committees
Platinum’s Audit, Risk and Compliance Committee (ARCC) has had a busy year, reviewing
Platinum’s risk management framework and internal audit plan, receiving regular reporting
on risk management matters and the results of internal audits, and monitoring the impact of
changes to the legal and regulatory environment affecting Platinum.
The ARCC also oversaw an external audit tender process, resulting in Ernst & Young’s
appointment being approved by the Company’s shareholders at the last AGM. Furthermore,
with the introduction of the new Modern Slavery Act 2018 (Cth), the ARCC reviewed PTM’s
first modern slavery statement, which was filed with the Australian Border Force in March
this year. This statement can be found on Platinum’s website.
Lastly, as this is the first financial year that PTM is required to disclose against the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations
– 4th Edition, the ARCC also reviewed and uplifted PTM’s corporate governance policies and
procedures to address any gaps arising as a result of the revised requirements.
Platinum’s Nomination and Remuneration Committee (NRC) similarly had a busy year.
The NRC recommended the aggregate 2021 variable remuneration pool and awards for the
CEO, Executive Directors and other senior managers within Platinum. In addition, the NRC
continued with the Company’s program of succession planning, resulting in the appointment
of myself to the Board and Kerr Neilson’s orderly transition into a non-executive director
role, both in August 2020.
Lastly, the NRC also dedicated much of its time to the development and introduction of a new
long-term incentive plan which aims to retain key investment personnel and encourage an
orderly transition to the next generation of leaders in the years to come. More details of this
plan can be found in the Remuneration Report.
Finally
After the strong returns across Platinum’s investment product range during the year ended
30 June 2021, I expect that the future outlook for equity markets will be on the minds of many
investors. I encourage you to read the Managing Director’s letter to shareholders by Andrew
Clifford, which explains the basis of our investment philosophy and discusses Platinum’s
investment outlook.
Guy Strapp
Chairman
25 August 2021
Platinum Asset Management Limited Annual Report 2021 6
MANAGING DIRECTOR’S LETTER 2021
At the time of writing, a large proportion of Australia’s population is in lockdown as the country
endures another wave of COVID-19 infections, just as it was a year ago when I was writing last
year’s letter to shareholders. In many respects, Australia has travelled through this period
relatively well, though this is of little comfort to families that have been directly impacted
by the disease and the loss of love ones. Nor to those who have suffered serious financial
consequences, or to those simply impacted by the transformations of their daily lives and the
loss of time with family and friends that cannot be regained. There appears to be light at the end
of the tunnel, as our governments ramp up their vaccination efforts, and there are good reasons
to hope that 2022 will gradually return to some sense of normalcy. It has clearly been a very
difficult time for many of our clients and shareholders and we extend our best wishes to all.
As I reported last year, the business handled the initial lockdown in March 2020 well, with a
successful team effort to get the business fully operational on a work-from-home (WFH)
basis immediately. As such, when Sydney was subject to lockdowns again in late June 2021,
the transfer back to a WFH basis was seamless. In the intervening period, it was good to see
the team back in the office from late last year, as we tested hybrid office – WFH arrangements.
Our London team was particularly happy to be back in the office after WFH for a full 12 months.
From the experience of this period, there are undoubtedly significant benefits to our employees
and the business from greater flexibility in our working arrangements. There are also costs as
well, most notably, the loss of social connection across the team, which is important in building
a cohesive workplace. Finding the right balance in the post-COVID era is likely to be an iterative
process and once we are back in the office, we will continue to experiment.
Investment Performance
Investment performance of the Platinum Trust Funds to 30 June 2021
FUND
International Fund
Global Fund (Long Only)1
Asia Fund
European Fund
Japan Fund
International Brands Fund
International Health Care Fund
International Technology Fund
1-YEAR P.A.
5-YEAR
COMPOUND
P.A.
10-YEAR
COMPOUND
P.A.
26%
33%
26%
26%
18%
51%
32%
29%
11%
14%
15%
11%
10%
18%
20%
18%
11%
13%
13%
11%
14%
13%
19%
15%
Source: Platinum Investment Management Limited.
Fund returns are annualised, calculated using the relevant fund’s NAV unit price for C Class and represent the
combined income and capital returns over the specified period. Fund returns are net of accrued fees and costs,
pre-tax, and assume the reinvestment of distributions. Past performance is not a reliable indicator of future
performance.
1
The Platinum Unhedged Fund was renamed Platinum Global Fund (Long Only) on 14 May 2021.
Platinum Asset Management Limited Annual Report 2021
7
Investment performance is a critical driver of the future performance of our business.
Over the last 12 months, clients have experienced strong absolute returns, with almost all our
funds producing returns in the mid-20% range or better, for our Australian clients, and in the
mid-30% range in US dollar terms for our offshore clients. This has been achieved in an
investment environment that remains highly uncertain.
The internet continues to enable new e-commerce businesses that are impacting a wide
range of traditional business models, from retail (Amazon, Alibaba), to banking and finance
(PayPal, Afterpay), travel and leisure (Priceline, Airbnb, Uber), and media (Google, Facebook,
TikTok, Tencent). The biotech revolution promises to make similar far-reaching changes to
all the component parts of our healthcare system in the years ahead. There is also the rising
urgency for the world to deal with climate change, which is redirecting investment globally
toward reducing carbon emissions and away from fossil fuels. Additionally, the global
political environment continues to be problematic, with tensions between China and the
West remaining at high levels. A raft of regulatory changes over the last year in China have
caused uncertainty across a range of industries, including e-commerce and property
development, both important drivers of economic growth. Of course, one cannot fail to
mention the uncertainty for businesses and consumers induced by the COVID-19 pandemic
and the waves of infections that have spread across the world. With this, there have also
been extraordinary levels of government spending and money printing in response to the
crisis, particularly in the US, resulting not only in dramatic increases in indebtedness in the
major economies, but also the highest rates of inflation that have been seen, in some cases,
for decades. All this, of course, has occurred at a time when investors can earn miniscule
rates of interest on their bank deposits and fixed interest investments.
If one was to describe this highly uncertain environment to investors of a decade ago,
who had not experienced the intervening 10 years, it is likely that they would have assumed
a highly depressed stock market trading on crisis-level valuations.
Instead, we have one of the most exciting bull markets with some of the most extraordinary
valuations seen in history, at least in some segments of the market. One could readily explain
the phenomenon to a degree. Investors, pushed into the market by low interest rates on their
savings, decided to back the companies that were winners in this environment, whether that
be the fast-growing e-commerce, payments, and software companies, or in biotech companies
revolutionising healthcare and helping to fight COVID-19. Alternatively, investors sought out
highly defensive businesses selling consumer staples, such as household products and food
and beverages. Investors, naturally, avoided anything exposed to the wild swings in the global
economy, or potentially impacted by the tensions between China and the US.
Platinum Asset Management Limited Annual Report 2021 8
MANAGING DIRECTOR’S LETTER 2021
CONTINUED
This all makes intuitive sense. Unfortunately, it misses the most critical variable in investing,
and that is, the return you receive in the long run will be determined by the price you pay for
your investment and the future earnings or cashflows that it produces. Today, the prices
being paid for the obvious beneficiaries of the current environment are high by any standard
of history, even when adjusted for today’s low interest rates. Perhaps more importantly,
there are risks for today’s market darlings that are possibly not given enough attention by
investors. One risk is the potential for higher interest rates if inflation remains more persistent
than otherwise expected. Another risk is the extraordinary sums of capital being attracted
into these fast-growing areas, setting the scene for a more competitive environment in the
future. Netflix faces numerous new players in video streaming, as does Afterpay in the buy
now, pay later (BNPL) sector. Facebook now has to share user’s attention with TikTok. It is not
unusual for disruptors in fast-growing sectors to be disrupted! Finally, there is the attention
of the competition authorities around the world, that are carefully examining the business
practices of the largest e-commerce players.
Does the rapid change in technology the world is experiencing, together with permanently
low interest rates, mean that “this time is different”? Or is it just like any other bull market in
history, where excess liquidity and a good story propel prices ever higher? Only time will tell,
but the one feature of the investing landscape that is likely to remain permanent, is the role
of human psychology. Investors’ intuitive responses, driven by their cognitive biases, lead
them to be systematically overly optimistic when times are good, and similarly overly
pessimistic when they are not. These biases are at the core of Platinum’s investment
approach of looking amongst the out-of-favour stocks for opportunities and avoiding the
popular stocks. As such, our conclusion is that it is likely that we are in a traditional bull
market, that will end at some point, with painful consequences for those who remain
invested in the hottest parts of the market when the music stops!
Platinum Asset Management Limited Annual Report 2021 9
Funds Under Management – Retention and Growth
Funds Under Management ($ million, to 30 June 2021)
OPENING
BALANCE
(1 JULY
2020) FLOWS PERFORMANCE
INVESTMENT DISTRIBUTION
AND OTHER
% OF
2021) TOTAL
CLOSING
BALANCE
(30 JUNE
13,241
(1,323)
3,389
(759)
14,548
62%
FUNDS
Retail offerings
Platinum Trust Funds
(excluding funds fed
from PIXX and PAXX)
and Platinum Global
Fund (mFund)
Quoted Managed Funds
2,144
(277)
559
PIXX and PAXX
453
(18)
Listed Investment
Companies PMC and PAI
837
-
MLC Platinum
Global Fund
Institutional mandates
Management Fee
Mandates
UCITS Platinum
World Portfolios
Cayman Funds
656
(109)
448
30
(111)
-
“Absolute” Performance
Fee Mandates
352
(71)
“Relative” Performance
Fee Mandates
3,224
(346)
TOTAL
21,385
(2,255)
Source: Platinum Investment Management Limited.
112
213
185
110
8
77
798
5,451
(29)
518
2%
(62)
988
4%
-
-
-
-
-
732
3%
2,426
10%
447
38
2%
0%
358
2%
(209)
3,467
15%
(1,059)
23,522
100%
The ‘Distribution and Other’ figure is comprised of the distribution from the Platinum Trust Funds/PGF/PIXX/
PAXX (as applicable). The balance also includes dividend and tax payments made by the Listed Investment
Companies = Platinum Capital Limited (ASX code: PMC) and Platinum Asia Investments Limited (ASX code: PAI).
Past performance is not a reliable indicator of future returns.
Platinum Asset Management Limited Annual Report 2021
10
MANAGING DIRECTOR’S LETTER 2021
CONTINUED
Funds under management were up 10% for the year to $23.5 billion, despite net outflows
from the funds of $2.3 billion and a cash distribution at year end of a further $1 billion.
These net outflows were more than offset by strong absolute investment performance
that added $5.5 billion to the value of the funds. While we would usually see strong
investment performance as a prelude to better funds flow in the future, there are a number
of other variables to consider. Firstly, there has been a proliferation of new global managers
in the Australian market in recent years, of which many have so-called growth investment
styles. While we suspect this investment style will be seriously challenged at some point in
the future, the behaviour of investors to follow past returns will likely see these managers
take a significant share of fund flows for the moment.
A longer-term issue is the trend towards the use of exchange-traded funds (ETFs). Hand in
hand with this trend, has been the acceleration of the DIY investor during the pandemic,
as highlighted by the success of the free trading program Robinhood in the US, and similar
platforms elsewhere. While ETFs are traditionally associated with passive or index investing,
increasingly, ETF providers are preying on investors’ fear of missing out, by packaging up
neat parcels of stocks that tap into favourite investment themes, such as cloud computing
or clean energy. A bear market may create a setback for the DIY investor and ETFs, though
we suspect over the longer term, this trend will be ongoing. Our quoted managed fund (QMF)
versions of the Platinum International Fund and Platinum Asia Fund were launched in 2017
to address this market (along with providing direct market access to our funds for our
existing client base) and have been successful with $512 million under management (as at
31 July 2021). However, our assessment is that the DIY ETF investor has somewhat different
requirements to our traditional client base, and accordingly, we are currently exploring
the possibility of developing products to better target this market.
Of increasing importance for our clients is their fund manager’s focus on the sustainability
of their investee companies with respect to environmental, social and governance (ESG)
issues. As long-term investors, a focus on the sustainability of our investments, across a
range of issues, including those relating to ESG, has always been central to our process.
Today’s market requires us to clearly demonstrate this to our clients, and as such, we have
made the consideration of ESG issues an explicit part of our process. Additionally, we are in
the early stages of increasing our engagement with our investee companies on ESG issues.
Our goal is to set the standard in ESG integration in investing, which we can comfortably do
without changing our fundamental approach to investing. We have recruited a dedicated
ESG analyst to work with the investment team on delivering an approach to ESG that is deeply
integrated in our investment analysis, and clearly communicated to our clients. Early initiatives
include publishing the underlying carbon emissions of our investee companies in our funds,
and providing clients with an ability to offset these emissions via the purchase of carbon
credits. Additionally, we have become a signatory to the United Nations Principles of
Responsible Investing (UN PRI).
Platinum Asset Management Limited Annual Report 2021 11
We continued to evolve the communications effort with regard to financial advisers and
our direct investors. This was evidenced through the regular rollout of enhanced webinars,
virtual meetings and in some instances, a return to face-to-face meetings. Investment
content was timely, accessible via a number of mediums, and widely distributed – not only
through Platinum’s website, social media and advertising, but through several external content
distributors. For the second year, we held our annual investor and adviser roadshow as a
virtual event for Australian and New Zealand clients, as well as for our overseas UCITS clients.
On our product and service offerings, we launched the Platinum Investment Bond in
collaboration with Australian Unity. The product allows investors to access our global and
Asian equity investment capabilities through the structure of a tax-effective investment
bond. The attraction also lies in the ease of attaining long-term savings goals, estate
planning benefits, as well as a product that caters for those who may have reached the upper
limit of their superannuation contributions. We also introduced a fixed cash distribution
option for the Platinum Trust Funds that offers investors the convenience of a stable cash
flow. This removes the uncertainty for clients around the distribution amount, which is a
particularly appealing feature for retirees.
One of the biggest impacts of COVID-19 has been on our ability to expand our offshore
businesses in Europe and the US, with our London office and the AccessAlpha Worldwide
team in the US, limited by the extended periods of lockdowns in their respective countries
and their inability to travel to meet prospective clients. Additionally, our investment
specialists and investment team members have been unable to lend the usual support
to the effort. While we have, of course, taken to virtual client interactions and attended
numerous virtual conferences and events, both locally and offshore, our experience has
been that, while this approach has been effective in maintaining contact with existing
clients, it has been less effective in engaging with new prospects. Given the uncertainty
of the last 12 months, it is our assessment that many prospective clients have been
unwilling to make substantial changes to their manager line-ups.
Building on Platinum’s continued progression of team members, a number of investment
analysts and portfolio managers transitioned to new roles and opportunities. This included
the appointment of Clay Smolinski to the role of co-Chief Investment Officer, alongside
myself. Clay’s appointment will greatly assist in embedding the investment fundamentals
across the team, as well as assisting with the client-facing communications that go hand
in hand with the role.
Platinum continuously focuses on the growth and development of the investment team
and we pride ourselves on the long tenure of its members. Our portfolio managers have
an average of 17 years of investment management industry experience (as at 30 June 2021),
with 15 years at Platinum. Other members of the investment team on average have been with
Platinum for more than seven years. We recognise that not everyone will spend their entire
career at Platinum, and so our focus is on ensuring that the team continues to perform at a
high level and there is a smooth succession when individuals depart.
Platinum Asset Management Limited Annual Report 2021 12
MANAGING DIRECTOR’S LETTER 2021
CONTINUED
Costs
Costs remain well controlled, coming in at 26% of total revenue, in line with the previous
financial year. Within these, employee costs rose $7.2 million to $44.4 million in 2021
(2020: $37.2 million). As previously discussed, the 2021 financial year saw strong investment
performance across our funds. It should therefore be of no surprise to shareholders that
variable compensation increased on the prior year. This increase was further accentuated
by the full-year impact of 2020 salary increases and higher leave and on-cost expenses
(partly COVID related).
Share-based payment expenses totalled $6.4 million in 2021, roughly in line with the prior
year. The current year charge reflected the combined cost of our deferred short-term
remuneration plan (which defers a portion of each year’s short-term incentive over four
years and is payable in Platinum shares) and our new Platinum Partners Long Term Incentive
Plan, which has an eight-year service period and total shareholder return vesting conditions.
The introduction of the Partners Plan is an important step in both aligning the interests of
key staff with shareholders and also enhancing our remuneration structure to attract and
retain. I expect the plan to become a more significant part of senior staff members’ total
compensation in future years, with a commensurate impact on share-based payment
expense. More information on this initiative can be found in the Remuneration Report.
Non-employee costs reduced 7%, from $33.9 million in 2020 to $31.4 million in 2021. This was
due to strong cost control across all expense categories (partly COVID related), as well as the
turnaround effect of one-off 2020 legal expenses and office fit-out charges. It is a measure
of Platinum’s culture of thrift that 2021 non-employee costs were actually lower than they
were in 2018, with the additional costs of offshore office and product expansion being more
than offset by savings in other areas of the business.
Outlook
It is highly likely that over the next 12 months, as progress is made in vaccinating large
portions of the populations in the major economies, that the world will continue to progress
toward a full reopening. This should underwrite ongoing improvements in economic activity.
Whether this translates into good performance for stock markets is far from clear, given the
many uncertainties outlined earlier. Nevertheless, it is a market environment that we would
expect will provide many opportunities to investors. The investment team is focused on
ensuring our funds are well positioned to take advantage of such opportunities as they arise.
Platinum Asset Management Limited Annual Report 2021 13
Concluding Remarks
There are many elements to the funds management business that happen behind the
scenes. The daily processing of fund applications and redemptions, answering our client
phone calls and emails, the settlement of our purchases and sales of shares for the funds,
ensuring we meet the complex regulatory requirements for this industry, and keeping our IT
systems up to date. We are fortunate to have a team of dedicated professionals in all these
roles who do a tremendous job in ensuring that our business runs efficiently, and in
navigating the past 12 months, I would like to thank them for their hard work.
Finally, I would like to thank our clients and shareholders for their continued support during
a challenging year, and again extend our best wishes to all to stay safe and keep well.
Andrew Clifford
Managing Director
Platinum Asset Management Limited Annual Report 2021 14
Platinum Asset Management Limited Annual Report 2021PAGE HEADINGPAGE SUB HEADING 15
Financial Statements 2021
Platinum Asset Management Limited
General Information
The financial statements were authorised for issue, in accordance with a resolution of
Directors, on 25 August 2021. The Directors have the power to amend and reissue the
financial statements.
Platinum Asset Management Limited Annual Report 2021PAGE HEADINGPAGE SUB HEADING 16
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 20 August 2021.
Distribution of ordinary shares
Analysis of number of ordinary shareholders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel (less than $500)
NUMBER
OF HOLDERS
OF ORDINARY
SHARES
5,067
10,909
3,319
2,282
80
21,657
480
Platinum Asset Management Limited Annual Report 2021
17
Ordinary shareholders
Twenty largest ordinary shareholders
The names of the twenty largest shareholders of the Company are listed below:
ORDINARY SHARES
% OF TOTAL
NUMBER HELD SHARES ISSUED
J Neilson
K Neilson
HSBC Custody Nominees (Australia) Limited
Platinum Investment Management Limited (nominee)
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Pacific Custodians Pty Limited
National Nominees Limited
Jilliby Pty Limited
J Clifford
BNP Paribas Nominees Pty Limited
BKI Investment Company Limited
BNP Paribas Nominees Pty Limited
Xetrov Pty Limited
Mrs Michele Martinez
Starbrook Enterprises Pty Limited
Brispot Nominees Pty Limited
BNP Paribas Nominees Pty Limited Six SIS Limited
First Samuel Limited
Citicorp Nominees Pty Limited
126,037,421
126,037,420
89,069,072
29,364,201
26,899,699
24,765,534
8,018,094
7,263,124
6,500,000
5,000,000
3,825,232
1,738,000
1,697,637
1,500,000
1,072,309
1,000,000
953,405
816,913
803,066
760,381
21.48
21.48
15.18
5.01
4.59
4.22
1.36
1.24
1.1 1
0.85
0.65
0.30
0.29
0.26
0.18
0.17
0.16
0.14
0.14
0.13
463,121,508
78.94
Unquoted ordinary shares
There are no unquoted ordinary shares, however the Company has shares based payment
arrangements through which a total of 15,202,506 deferred rights have been allocated to
eligible employees of Platinum Investment Management Limited, and on vesting and
exercise of these rights, an equivalent number of PTM shares (that will have already been
acquired on-market) will be allocated to these employees (please refer to the Remuneration
Report and Note 17 for further details).
Platinum Asset Management Limited Annual Report 2021
18
SHAREHOLDER INFORMATION
CONTINUED
Substantial shareholders
The following parties have notified the Company that they have a substantial relevant
interest in the ordinary shares of Platinum Asset Management Limited in accordance with
section 671B of the Corporations Act 2001:
J Neilson, K Neilson
J Clifford, Moya Pty Limited, A Clifford
^ Based on the last substantial shareholder notice lodged.
ORDINARY SHARES
% OF TOTAL
NUMBER HELD SHARES ISSUED
252,074,841^
32,831,449^
42.97
5.60
Distribution of Annual Report to shareholders
The law allows for an "opt in" regime through which shareholders will receive a printed "hard
copy" version of the Annual Report only if they request one. The Directors have decided to
only mail out an Annual Report to those shareholders who have “opted in”.
Financial Calendar
Ordinary shares trade ex-dividend
Record date (books close) for dividend
Dividend payment date
These dates are indicative and may be changed.
2 September 2021
3 September 2021
16 September 2021
Notice of Annual General Meeting
The Annual General Meeting (AGM) of Platinum Asset Management Limited will be held
on Friday 17 November 2021. Details of how to attend the meeting will be included in the
AGM Notice.
Questions for the AGM
If you would like to submit a question prior to the AGM to be addressed at the AGM, you may
email your question to invest@platinum.com.au.
Platinum Asset Management Limited Annual Report 2021
DIRECTORS’ REPORT
19
The Directors present their report, together with the financial statements, on the
consolidated entity (referred to hereafter as the ‘consolidated entity’, ‘group’ or ‘Platinum’)
consisting of Platinum Asset Management Limited (referred to hereafter as the ‘Company’
or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended
30 June 2021.
Directors
The following persons were Directors of Platinum Asset Management Limited during the
whole of the financial year and up to the date of this report, unless otherwise stated:
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Kerr Neilson
Andrew Clifford
Elizabeth Norman
Andrew Stannard
Michael Cole
Chairman (from 21 November 2020) and Non-Executive Director
(appointed on 27 August 2020)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (Executive Director until 31 August 2020)
Chief Executive Officer/Managing Director
Executive Director and Director of Investor Services
and Communications
Executive Director and Chief Financial Officer
Chairman and Non-Executive Director (retired on 20 November 2020)
Principal Activities
The Company is the non-operating holding company of Platinum Investment Management
Limited (“PIML”) and its controlled entities. Platinum Investment Management Limited
(“Platinum”), trading as Platinum Asset Management, operates a funds management business.
Operating and Financial Review
Fund Under Management (“FUM”) at 30 June 2021 was $23.5 billion and this represented an
increase of 10% from the 30 June 2020 closing FUM of $21.4 billion. The closing FUM figure
at 30 June 2021 was reduced by the annual net distribution outflow of $997 million. Average
FUM for the year of $23.4 billion was similar to the average FUM of $23.7 billion for the
previous year. The change in closing FUM was driven by absolute investment returns of
$5.5 billion offset by net fund outflows of $2.3 billion and the 30 June 2021 net distribution.
The Group’s profit before tax was $234 million for the year ended 30 June 2021, which is
a 6.1% increase from the previous year. The increase in profit before tax was primarily due
to gains on investments.
Platinum Asset Management Limited Annual Report 2021
20
DIRECTORS’ REPORT
CONTINUED
The Group earned performance fee revenue of $4.0 million (2020: $9.1 million). Absolute
investment performance contributed to the value of PIML’s seed investments which made
a net gain for the year of $43.9 million (2020: $8.7 million). Staff costs (including share-based
payments and related on-costs) were higher compared to the prior period, primarily due to
higher variable compensation expenses. Non-staff expenses reduced by $2.5 million
compared with the prior year primarily due to a decrease in custody costs that was partially
offset by increased insurance expense.
The Chairperson’s report and Managing Director’s Letter to shareholders provide further
discussion and analysis of the group’s financial results and investment performance.
Platinum continues to implement measures to maintain the ongoing safety and well-being
of employees including allowing employees to work from home. COVID-19 has not had
a direct impact on Platinum’s ability to perform core business activities or on Platinum’s
revenues. Accordingly, Platinum has not received any COVID-19 related financial assistance
or support.
Platinum believes it is well positioned for growth because:
•
•
•
It maintains a highly differentiated product and maintains a strong position in the
Australian retail market;
Our offshore initiatives provide a platform for growth over the medium-term; and
Our investment team continues to deliver high research quality and a large idea base.
The Company is in a strong financial position, with a strong balance sheet. However, the
most significant driver of sustainable future growth is, and will always be, the delivery of
superior, long-term, investment returns for our clients.
Likely developments
Information about the business strategies and prospects for future financial years of the
consolidated entity are included in the Operating and Financial Review. Further information
about likely developments in the operations of the consolidated entity and the expected
results of those operations in future financial years has not been included in this report
because disclosure of the information would be likely to result in unreasonable prejudice to
the consolidated entity because the information is commercially sensitive.
Dividends
The Company has limited capital requirements and generally expects that most, if not all,
future profits will continue to be distributed by way of dividends, subject to ongoing
capital requirements.
Since the end of the financial year, the Directors have declared a 2021 final fully franked
dividend of 12 cents per share ($70,401,468 including dividend paid on treasury shares),
with a record date of 3 September 2021 and payable to shareholders on 16 September 2021.
A 2021 interim fully franked dividend of 12 cents per share ($70,401,468 including dividend
paid on treasury shares) was paid on 18 March 2021. A 2020 final fully franked dividend of
11 cents per share ($64,534,679) including dividend paid on treasury shares) was paid on
22 September 2020.
Platinum Asset Management Limited Annual Report 2021 21
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the consolidated entity during
the financial year and up to the date of this report.
Environmental, Social & Governance (“ESG”) Reporting
Shareholders are encouraged to read Platinum’s Corporate Responsibility and Sustainability
Report which is available at www.platinum.com.au/About-Platinum/ptm-shareholders.
It is noted that the consolidated entity is not subject to any significant environmental
regulation under Commonwealth, State or Territory laws.
Information on Directors
Guy Strapp BCOM, DIP AF&I, CFA
Independent Non-Executive Director since 27 August 2020. Chairman (since 21 November
2020) and member of the Audit, Risk & Compliance and Nomination & Remuneration
Committees (since 27 August 2020).
Mr Strapp has over 35 years’ experience having worked in a variety of roles in Australia
and abroad at Bank of America, JP Morgan Investment Management, Citigroup Asset
Management and BT Financial Group. More recently, he held the positions of CIO and CEO
of Eastspring Investments (formerly Prudential Asset Management) in Hong Kong. Guy brings
to the Board his extensive local and international experience in asset management, gained
on both the investment and distribution side of the business. Mr Strapp is also the Chair for
the Australian wealth manager, First Samuel Limited.
Stephen Menzies BECON, LLB, LLM
Independent Non-Executive Director since 11 March 2015. Chair of the Nomination &
Remuneration Committee and member of the Audit, Risk & Compliance.
Mr Menzies is Chairman of Silicon Quantum Computing Pty Limited and is a past Chairman
of the Centre for Quantum Computation & Communication Technology. Mr Menzies retired
as a partner at Ashurst law firm in 2015 and until his retirement was consistently ranked
as one of Australia’s leading corporate lawyers. As Head of China Practice for Ashurst,
Mr Menzies oversaw the Shanghai and Beijing offices of that firm. Mr Menzies is a director of
Platinum World Portfolios Plc. Former directorships include Freedom Insurance Group Ltd
until 29 April 2019 and Century Australia Investments Limited until 5 March 2019.
Platinum Asset Management Limited Annual Report 2021 22
DIRECTORS’ REPORT
CONTINUED
Anne Loveridge BA (HONS), FCA (AUSTRALIA), GAICD
Independent Non-Executive Director since 22 September 2016. Chair of the Audit,
Risk & Compliance Committee and member of the Nomination & Remuneration Committees.
Ms Loveridge has over 35 years’ of experience in the financial services industry including as
a Committee Chairperson and Non-Executive Director for three ASX-listed organisations.
Formally trained as a Chartered Accountant, Anne has a breadth of experience in financial
reporting, auditing, risk, ethics and regulatory affairs following a 30 year career at PwC
Australia, where she retired as Partner and Deputy Chair in 2015. Through various senior
leadership roles, Anne also has experience and a focus on leadership, performance and
culture. Ms Loveridge is entitled to receive payments from PwC as part of a retirement plan.
The payments are based on a set formula relating to her partnership and tenure with PwC.
The amount is fixed and is not dependent on the revenues, profits or earnings of PwC.
The Board is satisfied that this does not affect Ms Loveridge’s independence as a non-executive
Director, nor does it constitute a conflict of interest and complies with the Corporations Act.
The Board has, however, put in place appropriate safeguards to address any perceived
conflicts of interest if they were to arise from time to time.
Brigitte Smith B.CHEM ENG (HONS), MBA, MALD, FAICD
Independent Non-Executive Director since 31 March 2018. Member of the Audit,
Risk & Compliance and Nomination & Remuneration Committees.
Ms Smith was co-founder and Managing Director of GBS Venture Partners for twenty years
and has worked with Australian and US fast growth companies as an investor and board
member, supporting business strategy, human resources and operations. Prior to GBS
Ms Smith worked in the US and Australia in operating roles with fast growth technology
based businesses, and at Bain & Company as a strategic management consultant.
Tim Trumper MBA, UNE
Independent Non-Executive Director since 1 August 2018. Member of the Audit,
Risk & Compliance and Nomination & Remuneration Committees.
Mr Trumper is Chair of the NRMA, advisor and shareholder in Quantium, Australia’s leading
data and analytics company and holds interests in several private high growth innovative
companies. He is an authority on the utilisation of data to drive innovation, and corporate
strategy. Mr Trumper is an experienced non-executive director, former CEO, and advisor
for high-performance global and Australian companies. His career has spanned diverse
categories including artificial intelligence and machine learning, big data, digital
transformation, mobility and transport, financial services and media.
Along with fellow directors and the then Chairman the late Hon. R J Hawke, Tim helped to
establish The Bestest Foundation. This charity has raised over $4 million for disadvantaged
Australian children.
Platinum Asset Management Limited Annual Report 2021 23
Andrew Clifford BCOM (HONS)
Managing Director since 1 July 2018 and Chief Investment Officer since 8 May 2013.
Mr Clifford joined Platinum as a co-founding member in 1994 in the capacity of director of
Platinum Investment Management Limited and Deputy Chief Investment Officer. In May 2013,
Mr Clifford was appointed Chief Investment Officer. Effective 1 July 2018, Andrew Clifford
was appointed as the Chief Executive Officer/Managing Director of the Platinum group.
Previously he was a Vice President at Bankers Trust Australia covering Asian equities and
managing the BT Select Market Trust - Pacific Basin Fund.
Kerr Neilson BCOM, ASIP
Non-Executive Director from 1 September 2020 (Executive Director from 12 July 1993
to 31 August 2020). Member of the Audit, Risk & Compliance and Nomination & Remuneration
Committees (since 1 September 2020).
Mr Neilson founded Platinum in 1994 and was the Managing Director of the Company
from incorporation to 30 June 2018. Prior to Platinum, Mr Neilson was an Executive Vice
President at Bankers Trust Australia. Previously he worked in both the UK and South Africa
in stockbroking.
Elizabeth Norman BA, GRADUATE DIPLOMA IN FINANCIAL PLANNING
Director of Investor Services and Communications since 8 May 2013.
Ms Norman joined Platinum in February 1994 in a role of Investor Services and
Communications Manager. Previously she worked at Bankers Trust Australia in product
development and within the retail funds management team.
Andrew Stannard BMS(HONS), GRADUATE DIPLOMA IN APPLIED FINANCE AND INVESTMENT, CA
Director and Chief Financial Officer since 10 August 2015.
Mr Stannard joined Platinum from AllianceBernstein where he held the position of Chief
Financial Officer for the Asia-Pacific region. Mr Stannard has 30 years of finance experience
with expertise in audit, financial control, operations, funds management, financial services
regulation and corporate governance.
Platinum Asset Management Limited Annual Report 2021 24
DIRECTORS’ REPORT
CONTINUED
Information on Company Secretary
Joanne Jefferies, BCOM, LLB
Company Secretary since 17 October 2016.
Ms Jefferies is an English law qualified solicitor with more than 25 years of legal experience
in asset management and banking, in England and across Asia Pacific.
Ms Jefferies joined Platinum from BNP Paribas Securities Services, where she was Head
of Legal, Asia Pacific and Company Secretary of all Australian subsidiaries. Prior to this
Ms Jefferies held senior legal positions with Russell Investments, Morley Funds Management
(Aviva Investors) and Lord Abbett. She also served as the General Counsel for the UK’s funds
management industry association, the Investment Association.
Meetings of Directors
The number of meetings of the Company’s Board of Directors (“the Board”) and of each Board
committee held during the year ended 30 June 2021, and the number of meetings attended
by each Director were:
BOARD (HELD 6)
ATTENDED
NOMINATION &
REMUNERATION
COMMITTEE (HELD 6)
ATTENDED*
AUDIT, RISK &
COMPLIANCE
COMMITTEE (HELD 4)
ATTENDED*
Guy Strapp**
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Kerr Neilson***
Andrew Clifford
Elizabeth Norman
Andrew Stannard
Michael Cole**
5
6
6
6
6
6
6
6
6
3
5
6
6
6
6
5
–
–
–
2
4
4
4
4
4
3
–
–
–
2
Executive Directors may be invited to attend committee meetings as guests.
*
** Mr Strapp and Mr Cole attended all meetings held during the time they were Directors.
*** Mr Neilson was appointed a non-executive director as of 1 September 2021. Mr Neilson has attended all
Committee meetings since 1 September 2021.
Platinum Asset Management Limited Annual Report 2021
25
Interests in Registered Schemes
The relevant interest in units of registered schemes managed by PIML for each Director is
set out below.
REGISTERED SCHEME
Platinum Asia Fund
DIRECTOR
30 JUNE 2021
30 JUNE 2020
Andrew Clifford
5,504,435
4,596,001
Kerr Neilson
47,323,794
70,032,218
Elizabeth Norman
1,271,902
Tim Trumper
27,268
933,746
27,268
Platinum International Fund
Andrew Clifford
30,502,697
29,623,555
Kerr Neilson
14,817,222
36,530,841
Elizabeth Norman
Stephen Menzies
512,480
62,530
497,709
62,530
Platinum Global Fund
Andrew Clifford
6,017,357
5,566,437
Kerr Neilson
5,000,000
5,000,000
Elizabeth Norman
696,663
644,457
Platinum European Fund
Kerr Neilson
15,399,420
11,725,650
Elizabeth Norman
283,112
–
Platinum Japan Fund
Kerr Neilson
34,029,763
37,515,151
Elizabeth Norman
239,591
235,287
Platinum Global Fund (Long Only)
Kerr Neilson
27,691,013
27,542,508
Elizabeth Norman
171,193
153,677
Platinum International Brands Fund
Kerr Neilson
2,533,841
2,518,798
Platinum International Healthcare Fund
Kerr Neilson
12,723,287
12,650,427
Platinum International Technology Fund
Kerr Neilson
14,504,419
9,173,625
Elizabeth Norman
182,975
–
Platinum International Fund
(Quoted Managed Hedge Fund)
Anne Loveridge
15,721
12,454
Platinum Asia Fund
(Quoted Managed Hedge Fund)
Anne Loveridge
Brigitte Smith
Stephen Menzies
15,252
60,358
24,398
12,356
59,093
23,886
Platinum Asset Management Limited Annual Report 2021
26
DIRECTORS’ REPORT
CONTINUED
Indemnity and Insurance of Directors and Officers
During the year, the Company incurred a premium in respect of a contract for indemnity
insurance for the Directors and Officers of the Company named in this report.
Indemnity of Auditor
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst &
Young Australia, as part of the terms of its audit engagement agreement against claims by
third parties arising from the audit (for an unspecified amount). No payment has been made
to indemnify Ernst & Young Australia during or since the financial year.
Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during
the financial year by the auditor are outlined in Note 24 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year,
by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in Note 24 to the financial
statements do not compromise the external auditor’s independence requirements of the
Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed and approved by the PTM Audit, Risk and
Compliance Committee to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence
as set out in APES 110: Code of Ethics for Professional Accountants issued by the
Accounting Professional and Ethical Standards Board.
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in
accordance with that Instrument to the nearest thousand dollars, or in certain cases,
the nearest dollar.
Managing Tax Risk
The Board is committed to acting with integrity and transparency in all tax matters.
The Company aims to meet all of its obligations under the law and pay the appropriate
amount of tax to the relevant authorities.
Platinum Asset Management Limited Annual Report 2021 27
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C
of the Corporations Act 2001 is set out on page 53.
This report is made in accordance with a resolution of Directors, pursuant to
section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Guy Strapp
Chairman
25 August 2021
Sydney
Andrew Clifford
Director
Platinum Asset Management Limited Annual Report 2021
28
DIRECTORS’ REPORT
CONTINUED
Remuneration Report
A Message from the Chair of the Nomination and Remuneration Committee
On behalf of the Board, I am pleased to present the 2021 Remuneration Report.
The core purpose of the Company is to deliver strong investment returns to clients over
the medium to long-term, consistent with a risk profile that seeks to preserve clients’ capital
during market downturns. Platinum believes that strong medium to long-term investment
performance is the primary driver of fund inflows, profit growth and ultimately long-term
value creation for shareholders. As such, Platinum’s remuneration policy is shaped around
this core purpose. Importantly, Platinum can only achieve strong investment performance
if it is able to attract and retain strong investment talent, supported by a team of similarly
talented client service, business development and operational staff, since the key to the
success of any asset management company lies in the skill and tenure of its team.
Accordingly, Platinum’s remuneration program has three key elements, being fixed
remuneration (salary and superannuation), short term variable awards, and long term
variable awards.
To ensure the alignment of Platinum’s investment team with investment returns for clients,
the size of the short term variable remuneration pool for the investment team generally
varies with the extent of relative investment performance generated for our clients,
measured over both 1 and 3 year periods. That said, as Platinum’s investment approach
builds portfolios from the bottom up on an index agnostic basis, periods of underperformance
relative to the broader market are inevitable. During such periods, the Board retains the
right to make discretionary awards as it deems appropriate having regard to a number of
quantitative and qualitative measures. The Committee focussed this year’s discretionary
awards on the need to recognise and reward good performance by those individuals who
need to be retained by the Company.
Furthermore, to ensure a strong alignment with shareholders, this year Platinum introduced
the new Platinum Partners Long Term Incentive Plan (the “Partners Plan”), with awards this
year being granted to a number of Platinum’s investment team members. These awards have
an eight year service period (more than double the typical industry standard) and vesting of
the awards is dependent on certain total shareholder return (“TSR”) hurdles being achieved.
The objective of this new plan is to attract and retain key talent by providing an opportunity
to share in the firm’s future value creation.
Platinum Asset Management Limited Annual Report 2021 29
Platinum’s Nomination and Remuneration Committee has been active in the 2021 financial
year and up to the date of this report. In particular, we have:
•
•
•
•
Introduced the new Partners Plan with initial awards being made under the plan
to key investment team members as part of Platinum’s broader succession and
retention policy;
Continued to push forward our program of Board renewal with the appointment
of a new Chairman;
Reviewed and updated the CEO’s remuneration arrangements and KPIs;
Reviewed and recommended to the Board the aggregate 2020/2021 variable
remuneration pool as well as the individual awards for the CEO, executive directors
and senior managers; and
•
Approved Platinum’s revised diversity and inclusion policy and objectives.
We will continue to refine and review our remuneration arrangements to ensure that
they align with Platinum’s core purpose and we welcome your feedback.
Stephen Menzies
Chair of Nomination & Remuneration Committee
Platinum Asset Management Limited Annual Report 2021 30
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Introduction
The Company’s Directors present the Remuneration Report prepared in accordance with
section 300A of the Corporations Act 2001 for the Company and consolidated entity for the
year ended 30 June 2021. The Remuneration Report forms part of the Directors’ Report.
The information provided in this Remuneration Report has been audited by the Company’s
auditor, Ernst & Young, as required by section 308 (3C) of the Corporations Act 2001.
Summary of Remuneration Outcomes for 2021
The Board remains focussed on ensuring there is a robust and rigorous process in place to
determine remuneration outcomes. The Board applied significant oversight and judgement
to ensure remuneration outcomes were fair, appropriate and competitive having regard to
both individual and company-wide performance.
In determining remuneration outcomes this year, the Board specifically:
•
•
•
•
Sought to reward selected individuals within our client service, business development
and operational teams who made outstanding contributions during the year. The Board
recognises that it is critical that the Company retain talented non-investment staff to
incentivise future innovation and business growth.
Acknowledged that there were a number of investment professionals who delivered
strong investment outcomes across a number of Platinum’s sector funds and who were
consequently worthy of recognition.
Considered the current level of staff ownership in the Company and the alignment
of remuneration with shareholders’ return experience.
Took into account the need to balance shareholder outcomes against key staff
retention risk.
The outcomes were as follows:
•
•
Staff expenses increased by $7.2m on the prior year. Short term incentive payments
accounted for $3.2m of this increase, with the remainder of the increase reflecting
salary rises, termination payments, increased leave related accruals (largely due to
COVID-19) and payroll tax related accrual adjustments. The underperformance of the
international fund, relative to its index, was countered by significant outperformance
in several of our sector funds. In comparison to the prior year, short term variable
remuneration for the investment team (as a whole) increased, as did variable
remuneration for non-investment staff (as a whole).
There were no awards made under the Profit Share Plan (“PSP”), largely due to the
under-performance of our international fund versus its index. However, the Investment
Team Plan and General Employee Plan cash pools were increased. With the exception of
a small group of employees who each made outstanding contributions to the business,
increases in cash variable awards for non-investment staff members were generally
modest, as were salary increases.
Platinum Asset Management Limited Annual Report 2021 31
•
•
A total of $8.9m (2020: 8.7m) of short term variable remuneration was deferred for four
years via the issuance of deferred rights under the existing Deferred Remuneration Plan.
These rights will vest in June 2025 subject to continued service and non-forfeiture
conditions. The accounting impact of the awards will be expensed through the profit and
loss statement over the five year service period of the awards, so the expense impact
will be apportioned over time.
A total of 8.2m rights (2020: Nil) were awarded to select investment team members
(excluding KMP) under the new Platinum Partners Long Term Incentive Plan (“Partners
Plan”). Vesting of the rights is subject to Total Shareholder Return (TSR) conditions being
met and other non-forfeiture conditions. The rights have a June 2029 exercise date.
The awards will be expensed through the profit and loss statement over their nine
year accounting service period, so the expense impact will be apportioned over time.
The Committee intends that the operation of the Partners Plan will be extended more
broadly in the future (including to KMP and non-investment team key leaders) to promote
a greater alignment between the teams and with shareholders.
•
As was the case in 2020, the Chief Executive Officer/Chief Investment Officer,
Mr Andrew Clifford, did not receive any variable awards in 2021.
The allocation of the 2021 profits attributed to both shareholders and staff (in the form of
remuneration) is outlined in the first graph below. It shows that the compensation awarded
to staff was modest, relative to the returns to shareholders, with shareholders receiving a
share of profits more than three times greater than staff.
The second graph shows that alignment between director/staff shareholders and non-
related shareholders remains strong. That said, with the transition of Mr Kerr Neilson into
a non-executive directorship in September 2020, the Board is cognisant of the need to
increase the equity ownership of key personnel over time, subject to the creation of
shareholder value. The awards made this year under the new Partners Plan mark an
important first step in this journey.
Graph 1: Share of 2021 Profit
(pre tax and pre staff costs)
Graph 1: Share of 2021 Profit
(pre tax and pre staff costs)
Graph 2: Composition of PTM
share ownership
Graph 2: Composition of PTM
share ownership
Staff costs and
Staff costs and
share-based
share-based
payments expense
payments expense
18%
18%
57%
57%
Shareholders
Shareholders
25%
25%
Tax
(community)
Tax
(community)
Non
Non
related
related
shareholders
shareholders
50%
50%
Executive Directors
and staff
Executive Directors
and staff
7%
7%
43%
43%
Non
Non
Executive
Executive
Directors
Directors
Platinum Asset Management Limited Annual Report 2021
32
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Guiding Principles of KMP and Staff Remuneration
The core purpose of the Company is to deliver strong investment returns to clients over
the medium to long-term, consistent with a risk profile that seeks to protect clients’ capital
against downside market risk. The Company can only achieve this by attracting and retaining
superior investment talent, supported by a team of similarly talented client service, business
development and operational staff.
The success of our remuneration program is best measured by our long-term investment
performance outcomes and the retention rate of key staff members.
Platinum’s remuneration program has three1 key elements:
1.
2.
Fixed Remuneration: This is set at a level sufficient to attract exceptional talent.
It includes salary, benefits and statutory entitlements. Fixed remuneration is
benchmarked to market at least annually and reflects the nature of the role and
the required levels of skills and experience.
Short Term Variable Remuneration (cash and deferred equity): Each employee is assessed
annually across a range of quantitative and qualitative factors, as well as appropriate risk
management and behavioural criteria. Variable award recommendations are generally
made annually on a discretionary basis following rigorous review by senior management
and the Nomination & Remuneration Committee (comprised entirely of non-executive
directors), before ultimately being approved by the Board. Variable awards can be made in
the form of cash or by an award of deferred rights that vest after a four year period, subject
to continuous service during that period and other non-forfeiture conditions. This deferral
element is designed to align employee’s interests with shareholders’, retain talent and
foster sound financial, operational and risk management practices.
3.
Long Term Variable Remuneration: key members of staff will be periodically invited
by the Nomination & Remuneration Committee (upon the recommendation of the CEO),
to participate in the new Partners Plan in order to directly align their compensation with
shareholder value creation. These awards take the form of deferred rights and have an
eight year service period. Vesting of the rights is dependent on certain total shareholder
return hurdles being achieved.
1
Platinum also has two inactive long-term Remuneration Plans, being an “Options and Performance Rights
Plan” (OPRP) and a “Fund Appreciation Rights Plan” (FARP).
Platinum Asset Management Limited Annual Report 2021 33
1. Fixed
Remuneration
Fixed Remuneration
– Set to attract exceptional talent
– Benchmarked to market
– Rewards each employee for their skills,
attributes and role accountabilities
Reward
Framework
2. Short Term
Variable
Remuneration
(Cash & Deferred
Equity)
Variable Remuneration (Cash)
– Performance goals set annually at the
beginning of each performance period
– Awards made annually with reference
to individual performance
– Other performance considerations include:
• Company performance
• Risk management factors
• Leadership and behavioural factors
• Competition for key staff
Variable Remuneration
(Deferred equity)
– Improves alignment of
employees and shareholders
– Significant deferral element
to foster sustainable growth
and sound financial,
operational and risk
management practices
3. Long Term
Variable
Remuneration
(Deferred
equity)
Long Term Variable
Remuneration
(Deferred equity)
– On an invitation
only basis
– Improves alignment
of employees and
shareholders to
future value creation
– Vesting subject to
performance hurdles
– Significant deferral period
to encourage a long term
commitment to the firm
Short Term Variable Remuneration Plans
There were three short term variable cash remuneration plans in operation during the
2021 financial year, each of which operated in conjunction with the short term Deferred
Remuneration Plan. Each plan is overseen by the Nomination & Remuneration Committee.
The investment team has access to the Investment Team Plan and the Profit Share Plan.
All other staff are covered by the General Employee Plan. Each variable remuneration award
is then apportioned between a cash amount, which is generally paid in June and a deferred
award the value of which is linked to the PTM share price, which will vest four years after the
grant date so long as the employee remains employed by Platinum during that time.
Platinum Asset Management Limited Annual Report 2021 34
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
The table below summarises the main characteristics of the Investment Team Plan and the
Profit Share Plan, each of which are then discussed in more detail in the following section.
PLAN
SUMMARY
Investment
Team Plan
PARTICIPANTS
POOL FORMULA
CAP
Investment team Weighted
average 1
and 3 year
performance2
2x salary of
investment team
(caps out at 5%
outperformance)
AWARD
TYPE
HURDLE
MSCI3
Profit Share
Plan
Investment team Weighted
average 1
and 3 year
performance
5% of adjusted
net profit
(caps out at 6%
outperformance)
MSCI +1%
Cash and/
or deferred
equity
award
Investment Team Plan (applies to members of the investment team only)
Under this plan, in a period where there is aggregate weighted average outperformance
(relative to a weighted benchmark comprised of nominated market indices) the annual
investment team award pool is calculated as a percentage of the aggregate base salary
of the investment team. The percentage level relates to the weighted average of 1 year
and 3 year rolling outperformance of all funds and mandates under management (relative
to a weighted benchmark comprised of nominated market indices). The pool starts at 100%
of the aggregate of the base salaries of the investment team. For each 1% increase in this
average outperformance, the pool is increased by 20% and is then capped at 2 times
aggregate base salaries when average outperformance is 5% or more.
The pool is allocated across the investment team based on performance assessments that
are based on both quantitative and qualitative measures. Quantitative measures used to
assess individual performance include the performance of any portfolios under the
management of an individual and the performance of the individual investment ideas that
the person has proposed. Individual investment performance is usually assessed over a
rolling 1 year and 3 year time frame and is relative to a nominated market index.
The total remuneration outcome (comprising both fixed and variable components) for each
investment professional is also benchmarked to appropriate external market data.
2
3
The Board can elect to make discretionary awards in excess of the pool amount should it be required. In this
case, annual awards for investment team members may then be determined by an individual assessment of
each employee’s contribution.
MSCI refers to the relevant MSCI index applicable to each strategy.
Platinum Asset Management Limited Annual Report 2021 35
In a period where there is aggregate weighted average underperformance or where
performance is uneven across different funds or fund managers, annual awards for
investment team members will then be determined by an individual assessment of each
employee’s contribution to the investment team during the period. Individual awards will
generally range from 0% to 120% of base salary and reflect the business necessity of
retaining high performing talent during the inevitable short term dips in weighted 1 and
3 year investment performance.
Profit Share Plan (“PSP”) (applies to selected members of the investment team only)
The PSP is designed to reward key members of the investment team for their contribution
to the development of Platinum’s business through the generation of strong investment
performance (relative to a weighted benchmark comprised of nominated market indices).
Eligible members of the investment team are issued notional units in the PSP. The notional
units have no capital value and cannot be sold or transferred to a third party. Notional units
of an eligible member of the PSP are adjusted each year based upon a prospective assessment
of each such member’s long-term contribution potential to the future development of
Platinum. Each year the profit share percentage pool is determined based upon the weighted
average 1 year and 3 year rolling outperformance of all funds and mandates under
management (relative to a weighted benchmark comprised of nominated market indices).
There is no profit share until weighted average 1 year and 3 year rolling outperformance is
greater than 1%. So, for example, if the average of the 1 and 3 year rolling performance of our
funds and mandates exceeded the weighted benchmark by 2.5%, then 1.5% of the Company’s
management fee-based4 net profit before tax would be made available to the PSP pool.
The profit share figure is limited each year to 5% of profit before tax, though the Nomination
& Remuneration Committee may elect to carry over investment outperformance to future
periods if investment returns indicate a profit share in excess of the 5% level.
General Employee Plan (applies to non-investment team staff)
Performance is assessed against pre-determined operational performance indicators
relevant to each employee. These performance indicators take into account the
responsibilities, skills and experience of each employee and their contribution during
the year. Total remuneration outcomes (comprising both fixed and variable components)
are also benchmarked to appropriate external market data.
4
Excluding investment related revenue and expenses.
Platinum Asset Management Limited Annual Report 2021 36
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Deferred Remuneration Plan (applies to all staff)
In June 2016, the Nomination & Remuneration Committee approved the implementation of
the Deferred Remuneration Plan. The main objectives of the plan are to foster sustainable
growth, as well as sound financial, operational and risk management practices, and to retain
talent. Eligible employees are selected by the Nomination & Remuneration Committee (upon
the recommendation of the CEO), generally during the annual award cycle. The proportion of
each short term variable award that is allocated as deferred rights under the plan will vary by
employee. The number of deferred rights awarded is determined by dividing the discretionary
deferred award amount by the PTM share price, using a volume weighted average price
(“VWAP”) at which PTM shares were traded on the ASX over the seven trading days prior to
the award date. If an eligible employee remains employed at Platinum after the four year
vesting period, the employee then has a further five years to exercise their deferred rights.
If an employee resigns from Platinum before the four year vesting period, in most
circumstances, the deferred rights will be forfeited.
In order to satisfy the obligations of the Company that arise from the granting of deferred
rights, the Company currently intends to purchase PTM shares on-market and hold these
shares within an employee share trust. Upon the exercise of a deferred right, eligible
employees will receive one PTM ordinary share from the employee share trust in satisfaction
of the right. No amount is payable by any eligible employee on either grant or exercise of the
right. There is flexibility within the plan for the Committee to award cash or some other
instrument rather than deferred rights, but the Committee currently envisages awarding
rights over shares only.
Eligible employees will have no voting or dividend rights until their deferred rights have been
exercised and their shares have been allocated. However, the deferred rights also carry an
entitlement to a dividend equivalent payment. Upon the valid exercise of a deferred right
(or deemed exercise), an eligible employee will be entitled to receive an amount approximately
equal to the amount of dividends that would have been paid to the eligible employee had they
held the share from the grant date to the date that the deferred rights are exercised.
Platinum Partners Long Term Incentive Plan (applies to selected staff only)
In July 2021, the Nomination & Remuneration Committee approved the new Platinum
Partners Long Term Incentive Plan (“Partners Plan”). The objective of the Partners Plan is to
directly align employees’ compensation with shareholder value creation, foster sustainable
growth, sound financial, operational and risk management practices, and to retain key
talent. In its first year of operation the Committee approved allocations in the Partners Plan
to members of the investment team.
Platinum Asset Management Limited Annual Report 2021 37
Eligible employees are invited to participate in the Partners Plan by the Nomination &
Remuneration Committee (upon the recommendation of the CEO), generally during the
annual award cycle following a robust selection process that takes into account the
performance of the individual, their contribution to the broader business and their likely
contribution to future shareholder value creation. This approach is deliberately not
formulaic but instead reflects the best judgement of Directors. The amount of each award
will vary by employee, taking account the factors noted above. The number of deferred rights
awarded is determined by dividing the discretionary award amount by the PTM share price,
using a volume weighted average price (“VWAP”) at which PTM shares were traded on the
ASX over the seven trading days prior to the grant date.
The vesting of the deferred rights is conditional upon the Company meeting minimum
Total Shareholder Return (“TSR”) performance hurdles as set forth in the table below
(“TSR Hurdle”). Alternative criteria to TSR (for example financial growth or Investment
performance measures) were considered by the Board but ultimately rejected as either
not being fully aligned to shareholder outcomes, that could then generate perverse award
outcomes (potentially applicable if individual investment performance was used as a
criteria), or already employed as a criteria for short term awards (in the case of aggregate
investment performance), or substantially correlated to TSR (in the case of EPS or Revenue
growth). Each award that is granted, is divided into four tranches, with one quarter of the
award being tested against the TSR Hurdle at the end of each year following the award grant
date (“Performance Period”), for four years. The start price for the TSR Hurdle calculation
will be the VWAP at which PTM shares were traded on the ASX over the seven trading days
prior to the first trading day of the relevant Performance Period, and the end price will be
the VWAP at which PTM shares were traded on the ASX over the seven trading days up to and
including the last trading day of the relevant Performance Period. The number of PTM shares
that an employee will be entitled to receive upon exercise of a deferred right within a
tranche, will depend on the annualised TSR achieved by the Company during the relevant
Performance Period (see table below). If the minimum TSR Hurdle (i.e. 7.5%) for a Performance
Period is not met, then that tranche of deferred rights will not meet the vesting condition and
will be forfeited.
AWARD
PERFORMANCE PERIOD
PROPORTION OF
AWARD THAT IS TESTED
AGAINST THE TSR HURDLE
Year 1
Year 2
Year 3
Year 4
25%
25%
25%
25%
TSR
1 Year TSR
2 Year annualised TSR
3 Year annualised TSR
4 Year annualised TSR
Platinum Asset Management Limited Annual Report 2021 38
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
TSR HURDLE
(VESTING CONDITION)
TSR < 7.5%
ENTITLEMENT TO RESULTING PTM
SHARES PER DEFERRED RIGHT
Nil
TSR between 7.5% and 10% (target)
Between 0.75 and 1 (on a pro-rata straight line basis)
TSR between 10% and 15%
Between 1 and 2 (on a pro-rata straight line basis)
TSR at or above 15%
2
The exercise of deferred rights that have vested i.e. those deferred rights that have met or
exceeded the TSR Hurdle for a Performance Period, is also subject to an eight year continuous
service condition. In order to protect shareholders from the dual risks of loss of revenue and
the loss of other key staff, Platinum has introduced certain “bad leaver” provisions under the
Partners Plan rules. Under these rules, if an eligible employee leaves Platinum prior to the
expiry of the eight year service condition, the employee will forfeit all deferred rights awarded
(both vested and unvested) if the Board determines, acting reasonably, that the employee is a
“bad leaver”. A bad leaver is defined under the Partners Plan rules, and includes a failure to
comply with Platinum’s non-compete / non solicit / non-poaching conditions. Furthermore,
awards of deferred rights may also be forfeited in accordance with any malus/clawback policy
as may be established by the Board from time to time.
Following the expiry of the eight year service condition, an eligible employee has a further
five years to exercise any vested deferred rights. In certain limited situations, as set forth in
the plan rules, the right to exercise deferred rights (both vested and those that subsequently
vest after the relevant leaving date) may be accelerated if an eligible employee leaves
Platinum prior to the expiry of the eight year service condition, provided that the Board has
not determined that the employee is a “bad leaver”.
In order to satisfy the obligations of the Company that may arise from the granting of
deferred rights, the Company currently intends to purchase PTM shares on-market and hold
these shares within an employee share trust. However, under the plan rules, the Company
may also issue shares to satisfy deferred rights that are exercised. No amount is payable by
any eligible employee on either grant or exercise of a deferred right.
Eligible employees will have no voting or dividend rights until their deferred rights have been
exercised and their shares have been allocated. However, the deferred rights carry an
entitlement to an alternative dividend equivalent payment. This entitlement arises once a
tranche of an award meets its TSR Hurdle for a Performance Period and continues until the
corresponding deferred rights are exercised (“Holding Period”). During the Holding Period,
an eligible employee will receive an amount approximately equal to the amount of dividends5
that would have been paid to the employee had they held the relevant resultant number of
shares from the date the TSR Hurdle was met.
Platinum has two inactive long-term remuneration plans, being an “Options and Performance
Rights Plan” (OPRP) and a “Fund Appreciation Rights Plan” (FARP). There were no allocations
under either plan in the current or prior year.
5
Adjusted for franking credits.
Platinum Asset Management Limited Annual Report 2021 39
Key Management Personnel (“KMP”)
For the purposes of this report, KMP of the consolidated entity in office at any time during the
financial year were:
NAME
POSITION
Guy Strapp
Chairman (appointed 21 November 2020) and
Non-Executive Director (appointed 27 August 2020)
Stephen Menzies Non-Executive Director
Anne Loveridge
Non-Executive Director
Brigitte Smith
Non-Executive Director
Tim Trumper
Non-Executive Director
Kerr Neilson
Non-Executive Director (Executive Director until 31 August 2020)
Andrew Clifford
Chief Executive Officer (CEO) and Managing Director
Elizabeth Norman Executive Director and Director of Investor Services and Communications
Andrew Stannard Executive Director and Chief Financial Officer
Michael Cole
Chairman and Non-Executive Director until retirement
on 20 November 2020
There were no other employees that held a KMP position within the Company
or consolidated entity.
Managing Director and other KMP Remuneration
Managing Director/CEO Remuneration
Mr Andrew Clifford is both the Managing Director/CEO and Chief Investment Officer (CIO)
of the Company.
Mr Clifford is eligible for discretionary awards under the CEO Plan (capped at A$1 million),
subject to meeting certain key performance indicators (KPIs), as set by the Board.
In addition, Mr Clifford is entitled to receive discretionary awards in relation to his role
as CIO via the Investment Team Plan (ITP) and the Profit Share Plan (PSP).
All amounts awarded to Mr Clifford under the CEO Plan, ITP or PSP will be provided to
Mr Clifford as an equivalent award of deferred equity rights issued pursuant to the
Deferred Remuneration Plan.
Despite the achievement of a number of his CEO KPI’s (see table on the following page),
having regard to the performance of the international fund relative to the index, Mr Clifford
did not wish to receive any variable remuneration either in his role as CEO or CIO. Accordingly,
although the Nomination and Remuneration Committee had initially intended for Mr Clifford
to receive a partial award under the CEO Plan, the Nomination and Remuneration Committee
ultimately recommended that Mr Clifford should not receive any variable remuneration
awards under the CEO Plan, or under any of the other variable remuneration plans
(Investment Team Plan and the Profit Share Plan).
Platinum Asset Management Limited Annual Report 2021
40
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
CEO PLAN:
SHORT TERM
REMUNERATION
KEY PERFORMANCE INDICATORS AND PERFORMANCE
PERFORMANCE
MEASURES
(EQUALLY WEIGHTED)
FY21 PERFORMANCE AGAINST KPI’S
Revenue and
Profit Growth
Average base fee revenue fell by 3.8%
(target increase was 10%)
MAXIMUM
AWARD: $1M
AWARDED: NIL
Delivery against
strategic plan –
diversification
of client base
Average base fee margins maintained.
Adjusted profit (excluding investment income
and performance fees) decreased by 7.5%
(target increase was 10%).
Overall Assessment: Did not meet target
Significant activity across Europe and US.
New Cayman Funds seeded.
Some new customer growth in UCIT funds.
However, overall growth in client assets was
disappointing in 2021.
Overall Assessment: Partially met target
People and
Culture Leadership
Generally well managed investment team cohesion
and stability, albeit with one regretted departure.
Risk Management
& Operational
Effectiveness
Strong results from staff culture survey.
Staff engagement and performance
successfully maintained after transition
to remote working due to COVID-19.
Overall Assessment: Partially Met target
No significant regulatory issues identified in 2021.
No significant errors or breaches of
investment guidelines.
Continued enhancement of risk management
framework and corporate governance
frameworks.
IT infrastructure was strengthened and
operational effectiveness maintained.
Overall Assessment: Met target
Platinum Asset Management Limited Annual Report 2021 41
The performance measures that will apply for Mr Clifford’s 2022 financial year scorecard are
as set forth below:
CEO PLAN:
SHORT TERM
INCENTIVE
MAXIMUM
AWARD: $1M
KEY PERFORMANCE INDICATORS AND PERFORMANCE
PERFORMANCE
MEASURES
(EQUALLY WEIGHTED)
Investment
Performance
Revenue and
Profit Growth
Diversification of
client base
People and
Culture Leadership
FY22 KEY PERFORMANCE INDICATORS
Investment performance improvement
Weighted average 1 & 3 year investment
performance above benchmark across
all portfolios.
Base fee revenue and operating profit growth
of 10% per annum, while having due regard to
the quality of that growth.
Diversification of client base
Ongoing diversification of client base from
Australia/NZ managed funds and the Australian
institutional market.
Investment team cohesion
Ensure strong cohesion and stability within the
investment team by attracting, retaining and
developing key staff.
Making Platinum a great place to work,
ensuring low turnover across the broader team
and the delivery of programs that aim to
improve culture.
Risk Management
& Operational
Effectiveness
Good corporate reputation maintained.
Effective implementation of operational risk
policies and procedures.
Ongoing regulatory compliance across all
applicable jurisdictions with no material
breaches or errors.
Strengthening of IT and operational
infrastructure.
Platinum Asset Management Limited Annual Report 2021 42
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Managing Director and other KMP Remuneration – continued
Other KMP Remuneration
The variable compensation paid to Elizabeth Norman reflected her role as Director of Investor
Services and Communications and her leadership and involvement in the development and
launch of several important business initiatives during the year including the new Platinum
Investment Bond product and fixed cash distribution option for the Platinum Trust® Funds.
There was an extensive development of the content and delivery of our communications
with both investors and advisers, expansion of client relationships, as well as ongoing work
associated with our European and US business development operations.
The variable compensation paid to Andrew Stannard reflected both his role as Chief
Operating Officer, his input into various strategic business issues and the provision of
technical support for a number of new business development opportunities. Highlights
included the delivery of the first phase of a multi-year project to upgrade Platinum’s
operational effectiveness, the provision of operational support for new onshore and
offshore business development, strong cost control, and working with the Board to
design and implement a new long term remuneration plan.
Platinum Asset Management Limited Annual Report 2021 43
Remuneration of Executive Key Management Personnel (KMP)
The table below presents disclosure of the remuneration provided by the consolidated
entity to executive KMP’s of the consolidated entity, based on the amounts awarded to
the individuals during the year. No awards were made to KMP under the Partners Plan
during the financial year. Any future awards made to KMP under the Partners Plan will
be subject to shareholder approval at the upcoming AGM.
SHORT
TERM
VARIABLE
REMUNER-
ATION
(CASH)
(2)
$
SUPER-
OTHER ANNUA-
TION
$
(1)
$
CASH
SALARY
$
2021
Andrew Clifford
450,000
–
21,694
Kerr Neilson
(until 31/8/20)
75,000 219,178
3,616
–
–
SHORT
TERM
VARIABLE
REMUNER-
ATION
(DEFERRED)
(3)
$
VARIABLE
REMUNER-
ATION AS A
% OF TOTAL
REMUNER-
ATION (4)
TOTAL
$
–
471,694
0%
–
297,794
Elizabeth Norman 425,000
Andrew Stannard 425,000
–
–
21,694 1,000,000
500,000 1,946,694
21,694
425,000
250,000
1,121,694
1,375,000 219,178 68,698 1,425,000
750,000 3,837,876
2020
Andrew Clifford
450,000
Kerr Neilson
450,000
Elizabeth Norman 425,000
Andrew Stannard 425,000
1,750,000
–
–
–
–
–
21,003
21,003
–
–
–
–
471,003
471,003
21,003
725,000
450,000
1,621,003
21,003
400,000
150,000
996,003
84,012
1,125,000
600,000 3,559,012
0%
77%
60%
57%
0%
0%
72%
55%
48%
(1)
“Other” represents a payment for accumulated annual and long service leave entitlements on retirement as
an Executive Director in the current year. During previous years, an estimate of the amount was provided for
in the consolidated entity’s statement of financial position and the annual increase in the provision was
included in the table on the following page.
(2) See the “Variable Remuneration Plans” section above for further details. Andrew Clifford received no cash
variable awards from either the Investment Team Plan or the Profit Share Plan. The cash awards made to
Elizabeth Norman and Andrew Stannard were made under the General Employee Plan.
(3) The “variable remuneration (deferred)” amount noted above reflects the award amounts attributed to each
individual in the current financial year. These awards vest 4 years after the award date.
(4) Fixed remuneration refers to salary and superannuation. Variable remuneration refers to both cash and
deferred components.
Platinum Asset Management Limited Annual Report 2021
44
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
The table below presents the remuneration provided by the consolidated entity to executive
KMP of the consolidated entity, in accordance with accounting standards.
SUPER-
OTHER ANNUA-
TION
$
(1)
$
VARIABLE
REMUNER-
ATION
(CASH)
(2)
$
CASH
SALARY
$
2021
Andrew Clifford
450,000
24,091
21,694
Kerr Neilson
(until 31/8/20)
75,000
6,285
3,616
–
–
VARIABLE
REMUNER-
ATION
(DEFERRED)
(3)
$
VARIABLE
REMUNER-
ATION AS A
% OF TOTAL
REMUNER-
ATION (4)
TOTAL
$
237,997
733,782
32%
–
84,901
Elizabeth Norman 425,000
8,758
21,694 1,000,000
409,100 1,864,552
Andrew Stannard 425,000
9,594
21,694
425,000
165,401 1,046,689
1,375,000 48,728 68,698 1,425,000
812,498 3,729,924
2020
Andrew Clifford
450,000
6,086
21,003
Kerr Neilson
450,000
(12,818) 21,003
–
–
174,000
651,089
–
458,185
Elizabeth Norman 425,000
6,061
21,003
725,000
343,500 1,520,564
Andrew Stannard 425,000
27,632
21,003
400,000
95,700
969,335
1,750,000
26,961
84,012
1,125,000
613,200 3,599,173
0%
76%
56%
60%
27%
0%
70%
51%
48%
(1)
“Other” represents the increase/(decrease) in the accounting provision for annual and long service leave.
These amounts were not received by the Executive Directors and represent provisions made in the
consolidated entity’s statement of financial position.
(2) See the “Variable Remuneration Plans” section above for further details. Andrew Clifford received no cash
variable awards from either the Investment Team Plan or the Profit Share Plan. The cash awards made to
Elizabeth Norman and Andrew Stannard were made under the General Employee Plan.
(3) The accounting fair value attributed to each deferred award is spread over the five year service period. The
accounting valuation of $237,997 attributable to Andrew Clifford represents the current year portion of the
2018 deferred award of $1,000,000. The accounting valuation of $409,100 attributable to Elizabeth Norman
represents the current year portion of the 2021 deferred award of $500,000, the 2020 award of $450,000,
the 2019 award of $350,000, the 2018 award of $350,000, the 2017 award of $300,000 and the 2016 award of
$300,000. The accounting valuation of $165,401 attributable to Andrew Stannard represents the current
year portion of the 2021 deferred award of $250,000, the 2020 award of $150,000, the 2019 award of
$150,000, the 2018 award of $150,000 and the 2017 award of $100,000.
(4) Fixed remuneration refers to salary, superannuation and provisions or payments made for annual and long
service leave. Variable remuneration refers to both cash and deferred components.
Platinum Asset Management Limited Annual Report 2021
45
Remuneration of Non-Executive Directors
Remuneration Policy
The Company’s remuneration policy for Non-Executive Directors is designed to ensure that
the Company can attract and retain suitably-qualified and experienced directors.
It is the policy of the Board to remunerate at market rates. Non-Executive Directors receive
a fixed fee and mandatory superannuation payments. Non-Executive Directors do not
receive variable compensation and are not eligible to participate in any variable
remuneration plans. The Executive Directors examine the base pay of the Non-Executive
Directors annually and may utilise the services of an external advisor to assist with this.
The Executive Directors determine the remuneration of the Non-Executive Directors within
the maximum approved shareholder limit. The aggregate amount of remuneration that can
be paid to the Non-Executive Directors, which was approved by shareholders at a general
meeting in April 2007, is $2 million per annum (including superannuation).
No other retirement benefits (other than mandatory superannuation) are provided to the
Non-Executive Directors. There are no termination payments payable on the cessation of
office and any Director may retire or resign from the Board, or be removed by a resolution of
shareholders. The Constitution of the Company specifies that any change to the maximum
amount of remuneration that can be paid to the Non-Executive Directors requires the
approval of shareholders.
Platinum Asset Management Limited Annual Report 2021 46
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Remuneration Structure
The following table displays the current Non-Executive Directors and their roles at
30 June 2021:
NON-EXECUTIVE
DIRECTOR
GUY MICHAEL
ANNE STEPHEN BRIGITTE
STRAPP*
COLE** LOVERIDGE MENZIES
KERR
**
SMITH TRUMPER NEILSON*
TIM
Board
Chair
Chair
Director Director Director Director Director
Audit, Risk &
Compliance
Committee
Nomination &
Remuneration
Committee
Member Member
Chair Member Member Member Member
Member Member
Member
Chair Member Member Member
The table below shows how the cash salary remuneration is allocated reflecting their roles at
30 June 2021.
NON-EXECUTIVE
DIRECTOR
GUY MICHAEL
ANNE STEPHEN BRIGITTE
STRAPP*
COLE** LOVERIDGE MENZIES
KERR
**
SMITH TRUMPER NEILSON*
TIM
Board
$230,000 $170,000
$130,000 $130,000 $130,000 $130,000 $130,000
Audit, Risk &
Compliance
Committee
Nomination &
Remuneration
Committee
$15,000
$15,000
$30,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$30,000
$15,000
$15,000
$15,000
Total
$260,000 $200,000
$175,000 $175,000 $160,000 $160,000 $160,000
*
Mr Strapp became a Non-Executive Director on 27 August 2020 and Chairman on 20 November 2020.
Having regard to the fact that the Chairman’s fee had not changed since listing, following a benchmarking
exercise, the Board approved an increase in the Chairman’s fee of $60,000 effective from Mr Strapp’s
appointment as Chairman.
** Mr Cole retired as Chairman and Non-Executive Director on 20 November 2020.
*** Mr Neilson became a Non-Executive Director on 1 September 2020.
Platinum Asset Management Limited Annual Report 2021 47
Remuneration of Non-Executive Directors
The table below presents actual amounts received by the Non-Executive Directors.
The increase in total remuneration is primarily due to the higher number of Non-Executive
Directors during 2021.
CASH
SALARY
$
SUPER-
ANNUATION
$
VARIABLE
REMUNER-
ATION
(CASH)
$
VARIABLE
REMUNER-
ATION
(DEFERRED)
$
TOTAL
$
2021
Guy Strapp
(from 27/8/20)
Michael Cole
(until 20/11/20)
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Kerr Neilson
(from 1/9/20)
2020
Michael Cole
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
205,590
16,27 1
78,204
175,000
175,000
160,000
160,000
7,429
16,625
16,625
15,200
15,200
133,333
12,667
1,087,1 27
100,0 1 7
200,000
175,000
175,000
160,000
160,000
870,000
1 9,000
1 6,625
1 6,625
1 5,200
1 5,200
82,650
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
221,86 1
85,633
191,625
191,625
175,200
175,200
146,000
1,187,144
2 1 9,000
1 91,625
1 91,625
175,200
175,200
952,650
Stephen Menzies is Platinum Investment Management Limited’s (PIML’s) nominee on the
Board of the offshore UCITS, Platinum World Portfolios Plc (PWP) and payments are made
directly by PWP. Amounts paid in the current year were €24,000 (equivalent to A$37,920)
(2020: €24,000 (equivalent to A$40,928)).
Platinum Asset Management Limited Annual Report 2021
48
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Managing Director and other Senior Executive employment agreements and Non-Executive
Directors’ services agreements
The key aspects of the KMP contracts are outlined below:
•
•
•
•
•
•
•
Remuneration and other terms of employment for Non-Executive Directors are
formalised in letters of appointment.
All contracts (both Executive and Non-Executive) include the components of
remuneration that are to be paid to KMP and provide for annual review, but do not
prescribe how remuneration levels are to be modified from year to year.
The tenure of all Directors, except for the Managing Director, Mr Andrew Clifford, is
subject to approval by shareholders at every third AGM or other general meeting
convened for the purposes of election of Directors.
In the event of termination, all KMP are entitled to receive their statutory leave
entitlements and superannuation benefits. In relation to variable remuneration plans,
upon resignation, variable remuneration is only paid if the Executive Director is still
employed at the date of payment. However, the Board retains discretion to make variable
remuneration payments (both cash and deferred) in certain exceptional circumstances,
such as bona-fide retirement.
Mr Andrew Clifford can terminate his employment by providing at least twelve months’
notice. All other Executive Directors can terminate their appointment by providing at
least six months’ notice.
Mr Andrew Clifford has entered into a post-employment restraint whereby he may not
solicit either employees or clients for a period of twelve months.
Non-Executive Directors may resign by written notice to the Chairman and, where
circumstances permit, it is desirable that reasonable notice of an intention to resign is
given to assist the Board in succession planning.
Mr Kerr Neilson retired as an employee of Platinum Investment Management Limited
(but remained a Director of the Company (albeit a Non-Executive Director)) with effect from
31 August 2020.
Platinum Asset Management Limited Annual Report 2021 49
Interests of Non-Executive and Executive Directors in shares
The relevant interest in ordinary shares of the Company that each Director held at balance
date was:
OPENING BALANCE
ADDITIONS
DISPOSALS
CLOSING BALANCE
–
22,000
–
22,000
Guy Strapp
(from 27/8/20)
Michael Cole
(until 20/11/20)
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Andrew Clifford (1)
Kerr Neilson
240,000
40,000
22,000
41,666
18,900
32,831,449
252,074,841
Elizabeth Norman (2)
766,748
Andrew Stannard (3)
–
–
–
–
–
–
–
–
–
–
(240,000) (4)
–
–
–
–
–
–
–
–
–
40,000
22,000
41,666
18,900
32,831,449
252,074,841
766,748
–
(1) Andrew Clifford also has contingent rights to receive up to 165,563 shares pursuant to awards made under
the Company’s deferred remuneration plan.
(2) Elizabeth Norman also has contingent rights to receive up to 356,987 shares and vested, but unexercised, rights
equivalent to 113,279 shares, both pursuant to awards made under the Company’s deferred remuneration plan.
(3) Andrew Stannard has contingent rights to receive up to 148,813 shares and vested, but unexercised, rights
equivalent to 21,552 shares, both pursuant to awards made under the Company’s deferred remuneration plan.
(4) Resigned during the year.
Platinum Asset Management Limited Annual Report 2021
50
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Oversight and Governance
The Board, through its Nomination & Remuneration Committee, provides oversight over
all fixed and variable remuneration policies. This particularly includes oversight of the
remuneration and employment packages and terms of employment for Executive Directors,
Non-Executive Directors (NEDs) and senior managers.
The role of the Nomination & Remuneration Committee is set out in its Charter.
Its responsibilities include the following functions that are relevant to remuneration:
•
•
•
•
•
•
•
•
To review and make recommendations to the Board in respect of the CEO, Executive
Director, and Non-Executive Director appointments;
To review and make recommendations to the Board in respect of the variable
remuneration awards in respect of the CEO/CIO, executive directors, senior managers
and portfolio managers;
To provide oversight on the overall aggregate variable remuneration outcome for
Platinum, ensuring appropriate alignment with all stakeholders;
To review significant changes in remuneration policy and structure, including deferred
remuneration plans and benefits;
To oversee the Company’s strategic human resources initiatives, including diversity
and inclusion;
To make ongoing assessments of the collective skills required to effectively discharge
the Board’s duties;
To review the composition, functions, responsibilities and size of the Board as well as
Director tenure; and
To ensure appropriate Board succession planning.
During the 2021 financial year, the Nomination & Remuneration Committee dealt with the
following significant items that relate to remuneration arrangements:
•
•
•
•
Introduced the new Partners Plan with initial awards being made under the plan to key
investment team members as part of Platinum’s broader succession and retention policy;
Continued to push forward our program of Board renewal, including the appointment
of a new Chairman;
Reviewed and updated the CEO’s remuneration arrangements and KPIs;
Reviewed and recommended to the Board the aggregate 2020/2021 variable
remuneration pool for Platinum as well as the individual awards for the CEO, executive
directors and senior managers; and
•
Approved Platinum’s revised diversity and inclusion policy and objectives.
Platinum Asset Management Limited Annual Report 2021 51
Remuneration services provided to management and the Committee
The firm utilised Financial Institutions Remuneration Group (FIRG) as the primary source of
remuneration benchmarking data and PricewaterhouseCoopers (PwC) as a consultant to the
remuneration and benefit plans both in Australia and also in the UK. In addition, certain KMP
roles were benchmarked to publicly available information at comparable companies.
Directors’ interests in contracts
The Directors received remuneration that is ultimately derived from net income arising
from Platinum Investment Management Limited’s investment management contracts.
Loans to KMP and their related parties
No loans were provided to KMP or their related parties during the year or at the date of
this report.
Other related party payments involving KMP
OneVue Services Pty Limited is a related party of the former Director Mr Cole. The consolidated
entity paid $25,000 (2020: $60,000) to OneVue between 1 July 2020 and 20 November 2020.
The services were provided on an arms length basis and Mr Cole was not involved in the
decision to utilise OneVue’s services.
Shareholders’ Approval of the 2020 (prior year) Remuneration Report
A 25% or higher “no” vote on the Remuneration Report at an AGM triggers a reporting
obligation on a listed company to explain in its next Annual Report how concerns are being
addressed. At the last AGM (held 20th November 2020), the Company’s Remuneration Report
was carried on a poll and received a vote in favour of 95.75%.
Platinum Asset Management Limited Annual Report 2021 52
DIRECTORS’ REPORT
CONTINUED
Remuneration Report – continued
Link between performance and KMP remuneration paid by the consolidated entity
The table below shows Platinum’s five year performance across a range of metrics and
corresponding KMP remuneration outcomes.
2021
2020
2019
2018
2017
Closing funds under
management ($m)
Average funds under
management ($m)
Net flows ($m)
Average base
management
fee (bps p.a.)
Base fee revenue ($m)
Total revenue and
other income ($’000)
Total expenses ($’000)
Operating profit
after tax ($’000)
Basic earnings per
23,522
21,385
24,769
25,699
22,713
23,363
(2,255)
23,749
(3,031)
25,394
26,528
23,443
(246)
1,034
(3,565)
114
265
316,419
82,207
116
276
116
295
116
307
127
296
298,666
299,320
353,290 333,549
77,897
76,421
84,966
62,971
163,258
155,611
158,336
191,594
192,647
share (cents per share)
28.17
26.76
27.03
32.36
31.74
Total dividends
(cents per share)
Share price at end of year
Total aggregate KMP fixed
remuneration paid ($) (1)
Total aggregate KMP variable
remuneration paid ($) (2) (3)
24
4.91
24
3.73
27
4.85
32
5.76
30
4.63
2,717,490
2,854,551
2,808,483
2,510,503 2,558,913
2,237,498
1,738,200
1,792,575
4,762,595 1,721,800
(1) Total aggregate fixed remuneration paid represents salaries and superannuation (and includes the Director’s
Fees disclosed and paid to Stephen Menzies for his Directorship of the UCITS fund). The amount is higher in
FY2021, FY2020 and FY2019 due to the appointment of additional Directors in FY2019 and FY2018.
(2) The increase in 2021 KMP variable remuneration reflected an increase in General Employee Plan awards
made to Elizabeth Norman and Andrew Stannard in that year.
(3) The increase in 2018 KMP variable remuneration reflected Investment Team and Profit Share Plan awards
made to the CIO related to the significant investment out-performance generated for clients in that year.
The level of aggregate KMP remuneration paid each year reflects a combination of factors,
including investment performance for clients, the operating performance of the firm,
individual and team performance and also the degree of competition for executive talent.
Platinum Asset Management Limited Annual Report 2021
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF PLATINUM ASSET MANAGEMENT LIMITED
53
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
As lead auditor for the audit of the financial report of Platinum Asset Management Limited
for the financial year ended 30 June 2021, I declare to the best of my knowledge and belief,
there have been:
(a)
No contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
(b)
No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Platinum Asset Management Limited and the entities it
controlled during the financial year.
Ernst & Young
Rita Da Silva
Partner
25 August 2021
Sydney
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 54
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenue
Management fees
Performance fees
Total revenue
Other income
Interest
Distributions and dividends
Share of profit of associates
Gains on financial asset at fair
value through profit or loss
Foreign exchange (losses)/gains
on overseas bank accounts
Total revenue and other income
Expenses
Employee expenses
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
3
3
6
265,290
3,950
269,240
275,902
9,078
284,980
541
3,437
30,974
12,955
(728)
1,707
1,855
7,426
1,237
1,461
316,419
298,666
Salaries and employee related expenses
44,395
37,207
Share-based payments
Custody and unit registry
Business development
Technology, research and data
Legal, compliance and other professional
Depreciation of right-of-use assets
Depreciation of fixed assets
Mail house, periodic reporting and share registry
Insurance
Rent and other occupancy
Finance costs on lease liabilities
Other
Total expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
17
9
9
15
7
6,413
9,569
6,025
5,247
3,768
1,926
1,272
1,166
1,482
392
197
355
82,207
234,212
70,954
163,258
6,803
11,274
6,579
5,340
3,998
1,926
1,870
1,123
847
463
239
228
77,897
220,769
65,158
155,611
Platinum Asset Management Limited Annual Report 2021
55
Other comprehensive income
Exchange rate translation impact of
foreign subsidiaries and associates
Other comprehensive income
for the year, net of tax
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
(5,399)
(1,040)
(5,399)
157,859
(1,040)
154,571
CENTS
CENTS
28.17
28.00
26.76
26.76
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
Platinum Asset Management Limited Annual Report 2021
56
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Assets
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Total current assets
Non-current assets
Equity investments in associates
Financial assets at fair value through profit or loss
Fixed assets
Right-of-use assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Lease liabilities
Income tax payable
Total current liabilities
Non-current liabilities
Provisions
Employee benefits
Lease liabilities
Net deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
12
6
10
9
9
14
13
15
13
13
15
7
143,277
49,876
27,612
220,765
107,622
44,340
2,777
6,767
161,506
382,271
6,178
3,920
1,871
9,804
21,773
1,311
718
5,239
11,206
18,474
40,247
342,024
105,333
49,876
34,682
189,891
125,019
27,626
4,007
8,669
165,321
355,212
5,575
3,757
1,744
10,825
21,901
1,009
628
7,085
5,628
14,350
36,251
318,961
Platinum Asset Management Limited Annual Report 2021
57
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
18
19
714,893
717,998
(575,834)
(572,082)
202,965
342,024
173,045
318,961
Equity
Issued capital
Reserves
Retained profits
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Platinum Asset Management Limited Annual Report 2021
58
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED
ISSUED
CAPITAL
$’000
RESERVES
$’000
RETAINED
PROFITS
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2020
717,998
(572,082)
173,045
318,961
Profit after income tax
expense for the year
Other comprehensive income
Exchange rate translation
impact of foreign subsidiaries
and associates
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners:
Treasury shares acquired
(net) (Note 18)
Share–based payments reserve
Dividends paid
–
–
–
–
163,258
163,258
(5,399)
–
(5,399)
(5,399)
163,258
157,859
(3,105)
–
–
–
1,647
–
–
–
(3,105)
1,647
(133,338)
(133,338)
Balance at 30 June 2021
714,893
(575,834)
202,965
342,024
Platinum Asset Management Limited Annual Report 2021
59
CONSOLIDATED
ISSUED
CAPITAL
$’000
RESERVES
$’000
RETAINED
PROFITS
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2019
723,490
(576,863)
174,461
321,088
Profit after income tax
expense for the year
Other comprehensive income
Exchange rate translation
impact of foreign subsidiaries
and associates
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners:
Treasury shares acquired
(net) (Note 18)
Share–based payments reserve
Dividends paid
–
–
–
–
155,611
155,611
(1,040)
–
(1,040)
(1,040)
155,611
154,571
(5,492)
–
–
–
5,821
–
–
–
(5,492)
5,821
(157,027)
(157,027)
Balance at 30 June 2020
717,998
(572,082)
173,045
318,961
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
Platinum Asset Management Limited Annual Report 2021
60
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
Cash flows from operating activities
Receipts from operating activities
Payments for operating activities
Finance costs paid
Income taxes paid
276,507
(71,661)
(197)
(64,139)
Net cash from operating activities
16
140,510
Cash flows from investing activities
Interest received
Proceeds on maturity of term deposits
Purchase of term deposits
Payments for purchases of fixed assets
Receipts from sale of financial assets
Payments of purchases of financial assets
Proceeds from sale of investments in associates
Dividends and distribution received
Net cash provided by investing activities
Cash flows from financing activities
Dividends paid
Payments for purchase of treasury shares
Payment of lease liability principal
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
Effects of exchange rate changes
on cash and cash equivalents
277,363
(68,389)
(239)
(57,903)
150,832
1,920
371,754
(339,753)
(2,261)
66
(26,167)
–
2,558
8,117
519
117,753
(117,753)
(41)
69,532
(75,514)
42,804
3,478
40,778
(133,337)
(157,027)
(7,326)
(1,744)
(8,143)
(1,855)
(142,407)
(167,025)
38,881
(8,076)
105,333
112,947
(937)
462
Cash and cash equivalents at the end of the year
143,277
105,333
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Platinum Asset Management Limited Annual Report 2021
61
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 1. Corporate information
Platinum Asset Management Limited (the “Company”) is a for-profit entity that is incorporated
and domiciled in Australia. The Company is listed on the Australian Securities Exchange
(ASX code: PTM). The principal activities of the Company and its subsidiaries (the “Group”)
are described in note 4 segment information. This financial report was authorised for issue in
accordance with a resolution of the Directors on 25 August 2021 and Directors have the power
to amend and reissue the financial report.
Note 2. Significant accounting policies
Basis of preparation
The consolidated financial statements are general purpose financial statements which have
been prepared in accordance with Australian Accounting Standards adopted by the Australian
Accounting Standards Board (“AASB”) and the Corporations Act 2001. The consolidated
financial statements comply with International Financial Reporting Standards (“IFRSs”)
adopted by the International Accounting Standards Board (“IASB”).
The consolidated financial statements are presented in Australian Dollars, which is also the
Company’s functional currency. with all values rounded to the nearest thousand dollars
(‘$000), in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, unless otherwise stated. The consolidated financial statements have
been prepared on a historical cost basis, except for the revaluation of financial assets at fair
value through profit or loss.
The principal accounting policies have been included in the relevant notes to which the
policy relates and have been consistently applied to all financial years presented in these
consolidated financial statements.
Critical accounting judgements, estimates and assumptions
The preparation of the consolidated financial statements requires management to make
judgements, estimates and assumptions. The areas where assumptions and estimates
are significant to the consolidated financial statements are outlined after the relevant
accounting policy in the relevant notes. The accounting impact of the treatment of the
products that PIML has seeded or invested in, is the most critical accounting judgement,
estimate or assumption within these consolidated financial statements. In particular,
the assessment of whether the Group has significant influence or control of those entities
impacts on how their financial results are presented within these financial statements.
Accounting standards and interpretations not yet mandatory or early adopted during
the year
There are no standards that are not yet effective that are expected to have a material impact
on the Group in the current or future reporting periods and on foreseeable future transactions.
The Company has not early adopted any standards, interpretations or amendments that have
been issued but are not yet effective.
Platinum Asset Management Limited Annual Report 2021 62
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 2. Significant accounting policies – continued
Accounting Standards adopted during the year
There are no standards that are effective for the first time in the current period that have
a material impact on the Group.
Note 3. Revenue & other income
The Group derived revenue (management and performance fees) from Australian and
offshore investment vehicles and mandates as follows:
Revenue breakdown by geographic region
Australia
Offshore: United States, Ireland and Cayman Islands
Distributions and dividends is comprised of:
Distribution received from investment in PAXX
Dividend received from investment in PAI
Dividend received from equity securities held
by the Cayman and other seed funds
Distribution received from investment in the
Platinum Trust Funds
Total distributions and dividends
2021
$’000
2020
$’000
261,323
7,917
269,240
279,520
5,460
284,980
2021
$’000
458
2,100
861
18
3,437
2020
$’000
562
1,200
82
11
1,855
Platinum Asset Management Limited Annual Report 2021
63
Note 3. Revenue & other income – continued
ACCOUNTING
POLICY
Revenue is measured at an amount the Group expect to be entitled to receive
in exchange for services provided to clients and recognised as performance
obligations to the client are satisfied.
Management fees are recognised over the period the service is provided.
Management fees are based on a percentage of portfolio value of the fund
or mandate and calculated in accordance with the Investment Management
Agreement or Constitution. The majority of management fees were derived
from the Platinum Trust Funds C Class. The management fee for this Class
was calculated at 1.35% per annum of each Fund’s daily Net Asset Value.
Performance fees are a form of variable consideration. Performance fees
are recognised as revenue only to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not
occur when the uncertainty associated with the variable consideration is
subsequently resolved.
Other income is measured at the fair value of the consideration received or
receivable and is recognised if it meets the criteria below:
–
–
–
–
Interest income: recognised in the consolidated statement of profit
or loss and other comprehensive income and is based on the effective
interest method.
Distributions: recognised when the Group becomes entitled to the income.
Dividends: brought to account on the applicable ex-dividend date.
Netgains/(losses)onfinancialassetsatfairvaluethroughprofitandloss:
relates to net gains/(losses) on financial assets held directly by the
consolidated investments, and recognised as and when the fair value of
these investments changes and if disposed, the proceeds less carrying
amount of financial assets disposed.
Note 4. Segment information
The Group is organised into two main operating segments being:
•
•
funds management: through the generation of management and performance fees from
Australian investment vehicles, its US-based investment mandates and Platinum World
Portfolios Plc. (“PWP”) and associated costs; and
investments and other: through the Group’s investment in the (a) ASX listed, Platinum
Asia Investments Limited (“PAI”) (b) PWP (c) unlisted Platinum Trust Funds (d) the ASX
quoted managed fund Platinum Asia Fund (Quoted Managed Hedged Fund) (“PAXX”) and
(e) other seed funds. Also included in this category are Australian dollar term deposits as
well as associated interest derived from these.
Platinum Asset Management Limited Annual Report 2021 64
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 4. Segment information – continued
The segment financial results, segment assets and liabilities are disclosed below:
30 JUNE 2021
30 JUNE 2020
FUNDS INVESTMENTS
AND OTHER
$’000
MANAGEMENT
$’000
TOTAL MANAGEMENT
$’000
$’000
FUNDS INVESTMENTS
AND OTHER
$’000
TOTAL
$’000
Revenue and
other income
Management and
performance fees
269,240
- 269,240
284,980
- 284,980
Interest
Net gains on
financial assets
and equity in
associates
Distributions
and dividends
Net foreign
exchange
(losses)/ gains
on overseas
bank accounts
Total revenue and
288
253
541
482
1,225
1,707
-
-
-
43,929
43,929
3,437
3,437
(728)
(728)
-
-
-
8,663
8,663
1,855
1,855
1,461
1,461
other income
269,528
46,891 316,419
285,462
13,204 298,666
Expenses
82,018
189
82,207
77,506
391
77,897
Profit before income
tax expense
187,510
46,702 234,212
207,956
12,813 220,769
Income tax expense
57,607
13,347
70,954
61,699
3,459
65,158
Profit after income
tax expense
129,903
33,355
163,258
146,257
9,354
155,611
Other comprehensive
income
34
(5,433)
(5,399)
(10)
(1,030)
(1,040)
Total comprehensive
income
129,937
27,922
157,859
146,247
8,324
154,571
Total assets
131,590
250,681 382,271
47,900
307,312 355,212
Total liabilities
31,764
8,483 40,247
Net assets
99,826
242,198 342,024
33,180
14,720
3,071
36,251
304,241 318,961
Platinum Asset Management Limited Annual Report 2021
65
Note 4. Segment information – continued
ACCOUNTING
POLICY
Operating segments are presented using the ‘management approach’, where the
information presented is on the same basis as the internal reports provided to
the Chief Operating Decision Makers (“CODM”). The CODM refers to the Executive
Directors of the Company, who are responsible for the allocation of resources to
operating segments and assessing their performance.
Note 5. Group information
The consolidated financial statements of the Group include:
OWNERSHIP INTEREST
NAME
McRae Pty Limited
Platinum Asset Pty Limited
Platinum Investment
Management Limited (“PIML”)
Platinum Employee Share Trust^
Platinum GP Pty Limited
Platinum Arrow Trust*
PRINCIPAL PLACE OF
BUSINESS / COUNTRY
OF INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Platinum UK Asset Management Limited**
United Kingdom
Platinum Management Malta Limited**
Malta
Platinum Asia Ex-Japan
Opportunities Master Fund Ltd
Cayman Islands
Platinum Asia Ex-Japan
Opportunities Fund Ltd
Platinum Global Opportunities
Master Fund Ltd
Cayman Islands
Cayman Islands
Platinum Global Opportunities Fund Ltd
Cayman Islands
Platinum Europe Opportunities
Master Fund Ltd***
Cayman Islands
Platinum Europe Opportunities Fund Ltd***
Cayman Islands
Platinum Japan Opportunities
Master Fund Ltd***
Cayman Islands
Platinum Japan Opportunities Fund Ltd***
Cayman Islands
2021
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2020
%
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
^
Platinum Employee Share Trust holds PTM shares on behalf of employees selected to participate in the
Deferred Remuneration Plan and Partners Plan (see Note 17 for further details).
Platinum Arrow Trust started trading on 1 September 2020.
*
** Platinum UK Asset Management Limited and Platinum Management Malta Limited both act as sales and
servicing centres for the Group, predominantly with the objective of generating additional fund inflows
into PWP.
*** Dormant entities.
Platinum Asset Management Limited Annual Report 2021
66
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 5. Group information – continued
ACCOUNTING
POLICY
Foreign currency translation
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the date of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at balance date exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated
statement of profit or loss and other comprehensive income.
The results and financial position of foreign operations that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
–
–
–
assets and liabilities for each financial position presented are translated
at the balance date;
income and expenses included in the consolidated statement of profit or
loss and other comprehensive income are translated at average exchange
rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive
income in the foreign currency translation reserve.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of
all subsidiaries of Platinum Asset Management Limited (“Company” or “parent
entity”) as at 30 June 2021 and the results of all subsidiaries for the financial
year. Platinum Asset Management Limited and its subsidiaries together are
referred to in these consolidated financial statements as the ‘consolidated
entity’ or ‘group’.
Subsidiaries are all those entities over which the consolidated entity has
control. The consolidated entity controls an entity when the consolidated entity
is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns, through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the consolidated entity. They are deconsolidated
from the date that control ceases.
In preparing the consolidated financial statements, all intercompany
transactions, balances and unrealised gains arising within the consolidated
entity are eliminated in full.
Note 6. Equity investments in associates
At 30 June 2021, the Group’s investment(s) in PAI, PWP and PAXX represent interests in
associates which are accounted for using the equity method of accounting. Information
relating to this is shown on the next page:
Platinum Asset Management Limited Annual Report 2021 67
Note 6. Equity investments in associates – continued
a.
Interests in associates
ENTITY COUNTRY
OF INCOR-
PORATION
EQUITY
INTEREST
%
FAIR
VALUE
$’000
CARRYING
AMOUNT
$’000
REASON FOR
ASSESSMENT
OF SIGNIFICANT
INFLUENCE
2021 2020
2021
2020
2021
2020
PAI
Australia
8.2
8.2
36,900 30,300 38,694 34,549 Ownership interest was
8.2% at 30 June 2021;
PIML acts as Investment
Manager (IM) in
accordance with the
Investment Management
Agreement; PIML
provides performance
and exposure reports to
the PAI Board.
PWP
Ireland
16.3
14.8
66,324 64,265
66,324 64,265 Ownership interest was
16.3% at 30 June 2021;
PIML acts as IM in
accordance with the
Investment Management
Agreement; the
Company provides
performance and
exposure reports to the
PWP Board and Stephen
Menzies is a Director of
PWP and a Director
of Platinum Asset
Management Limited.
PAXX
Australia
1.7
18.3
2,604 26,205
2,604 26,205 Ownership interest was
1.7% at 30 June 2021;
PIML acts as IM for PAXX
and its underlying fund,
Platinum Asia Fund.
Management has
assessed that significant
influence remains after
the decrease in equity
interest.
105,828 120,770 107,622 125,019
Platinum Asset Management Limited Annual Report 2021 68
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 6. Equity investments in associates – continued
Interests in associates – continued
a.
The fair value of PAI reflects the 30 million shares held multiplied by the PAI closing share
price at 30 June 2021 of $1.23 (2020: $1.01).
The fair value of PWP is approximated by the shares held in the sub-funds multiplied by
their respective closing share prices at 30 June 2021.
The fair value of PAXX reflects units held multiplied by the PAXX’s 30 June 2021
ex-redemption price of $5.05 (2020: $4.71).
The carrying value reflects the Group’s share of each associate’s net assets, including
assessment of any impairment (see Note 6c for further details).
b. Associates’ statement of financial position
30 June 2021
Associates financial position
PAI
PWP
PAXX
Total associates’ statement of financial position
Group’s share of associate
PAI
PWP
PAXX
Total Group’s share of associate
TOTAL
ASSETS^
$’000
TOTAL
LIABILITIES*
$’000
NET
ASSETS
$’000
498,661
447,174
180,624
27,270
610
26,522
40,838
66,461
3,052
2,144
137
448
471,391
446,564
154,102
1,072,057
38,694
66,324
2,604
107,622
Platinum Asset Management Limited Annual Report 2021
69
Note 6. Equity investments in associates – continued
b. Associates’ statement of financial position – continued
30 June 2020
Associates financial position
PAI
PWP
PAXX
Total associates’ statement of financial position
Group’s share of associate
PAI
PWP
PAXX
Total Group’s share of associate
TOTAL
ASSETS^
$’000
TOTAL
LIABILITIES*
$’000
NET
ASSETS
$’000
432,120
454,211
146,220
13,343
5,370
3,022
35,650
65,034
26,758
1,101
769
553
418,777
448,841
143,198
1,010,816
34,549
64,265
26,205
125,019
^
*
All assets held by associates are current assets.
Associates total liabilities include non-current liabilities of $17,698,000 (2020: $9,236,000).
c. Carrying amount of investment using the equity method
Opening balance
Sale of PAXX units
Redemption of PWP units
Share of associates’ profit (see Note 6d)
Exchange rate translation impact
Dividends paid and dilution of unitholding (see Note 6d)
2021
$’000
125,019
(29,869)
(12,935)
33,517
(5,567)
(2,543)
2020
$’000
117,593
–
–
9,188
–
(1,762)
Closing balance (see Note 6a)
107,622
125,019
Platinum Asset Management Limited Annual Report 2021
70
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 6. Equity investments in associates – continued
d. Associate’s net income
PAI
$’000
PWP
$’000
PAXX
$’000
TOTAL
$’000
30 June 2021
Associates’ net income
Total investment income
Total expenses
Profit/(loss) before tax
Income tax expense
Total profit/(loss) after tax
Group’s share of associate
Total investment income
Total expenses
Profit/(loss) before tax
Income tax expense
Total profit/(loss) after tax
115,040
7,313
107,727
(31,801)
75,926
9,445
600
8,845
(2,615)
6,230
Dividend received and dilution
of unitholding
(2,085)
–
Undistributed profit in the period
4,145
20,560
152,174
5,508
146,666
–
37,577
–
37,577
–
304,791
12,821
291,970
(31,801)
146,666
37,577
260,169
21,460
900
20,560
–
20,560
6,727
–
6,727
–
6,727
(458)
6,269
37,632
1,500
36,132
(2,615)
33,517
(2,543)
30,974
Platinum Asset Management Limited Annual Report 2021
71
Note 6. Equity investments in associates – continued
d. Associate’s net income – continued
PAI
$’000
PWP
$’000
PAXX
$’000
TOTAL
$’000
30 June 2020
Associates’ net income
Total investment income
Total expenses
Profit/(loss) before tax
Income tax benefit
Total profit/(loss) after tax
Group’s share of associate
Total investment income
Total expenses
Profit/(loss) before tax
Income tax expense
Total profit/(loss) after tax
Dividend received and dilution
of unitholding
63,942
8,664
55,278
(16,669)
38,609
5,275
715
4,560
(1,375)
3,185
(1,202)
Undistributed profit in the period
1,983
32,319
7,828
24,491
–
19,464
–
19,464
–
24,491
19,464
1,083
262
821
–
821
1,812
2,633
3,562
–
3,562
–
3,562
(752)
2,810
115,725
16,492
99,233
(16,669)
82,564
9,920
977
8,943
(1,375)
7,568
(142)
7,426
Platinum Asset Management Limited Annual Report 2021
72
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 6. Equity investments in associates – continued
ACCOUNTING
POLICY
Investments in associates are accounted for using the equity method. The share
of profit recognised under the equity method is the consolidated entity’s share
of the investment in associate’s profit or loss based on the ownership interest
held. Associates are entities in which the consolidated entity, as a result of its
voting rights and other factors, has significant influence, but not control or joint
control, over its financial and operating policies.
Investments in associates are carried at the lower of the equity accounted
carrying amount and the recoverable amount. When the consolidated entity’s
share of losses exceeds the carrying amount of the equity accounted
investment (including assets that form part of the net investment in the
associate), the carrying amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the consolidated entity has
obligations in respect of the associate.
Dividends from associates represent a return on the consolidated entity’s
investment and, as such, are applied as a reduction to the carrying value of the
investment. Unrealised gains arising from transactions with equity accounted
investments are eliminated against the investment in the associate to the extent
of the consolidated entity’s interest in the associate. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there
is no evidence of impairment. Other movements in associates’ reserves are
recognised directly in the consolidated entity’s consolidated reserves.
Critical accounting judgements, estimates and assumptions
Assessmentofsignificantinfluence: At 30 June 2021, the consolidated entity was
assessed as having significant influence over PAI, PWP and PAXX, as a result of
its direct investment and investment management activities and other factors
outlined in Note 6a.
We have conducted an impairment assessment of the carrying amount of the
investment in associates, including a look-through of each of the underlying
assets and liabilities. Our assessment is that at 30 June 2021, no impairment
was identified for PAI, PWP and PAXX. The carrying amount for PAI is equal to
the fair value of PAI’s underlying net assets.
Platinum Asset Management Limited Annual Report 2021 73
Note 7. Income tax
Income tax expense
(a)
The income tax expense attributable to profit comprises:
Current tax payable
Deferred tax
Income tax expense
Numerical reconciliation of income tax expense:
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/
(taxable) in calculating taxable income:
Tax rate differential on offshore business income
Non–taxable losses/(gains) on investments
Share–based payments
Other non–deductible expenses
Franking credits received
Income tax expense
(b) Non–current liabilities – net deferred tax liabilities
Deferred tax liabilities comprise temporary
differences attributable to:
Unrealised foreign exchange gains on cash
Share–based payments
Employee provisions
Unrealised gains on investments
Capital expenditure on fixed assets not immediately deductible
Expense accruals
Net deferred tax liabilities
2021
$’000
63,151
7,803
70,954
2020
$’000
63,682
1,476
65,158
234,212
70,264
220,769
66,231
(855)
1,076
389
798
(664)
(488)
(1,476)
334
942
(385)
70,954
65,158
2021
$’000
2020
$’000
6
4,747
(1,274)
8,477
(359)
(391)
11,206
243
4,747
(1,618)
2,877
(184)
(437)
5,628
Platinum Asset Management Limited Annual Report 2021
74
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 7. Income tax – continued
(b) Non-current liabilities - net deferred tax liabilities – continued
The net deferred tax liability figure is comprised of $2,024,000 (2020: $2,239,000)
of deferred tax assets and $13,230,000 (2020: $7,867,000) of deferred tax liabilities.
The deferred tax assets that will be recovered or settled within 12 months are estimated
to be $2,003,000 at 30 June 2021 (2020: $2,055,000).
ACCOUNTING
POLICY
Current tax
The income tax expense or benefit for the period is the tax payable on that
period’s taxable income based on the applicable income tax rate for each
jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable.
Deferred tax
Deferred tax is accounted for in respect of temporary differences between the
tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised for all deductible
temporary differences to the extent that it is probable that taxable profit will be
available against which the asset can be utilised.
Tax consolidation
The Company and its wholly-owned Australian controlled entities are part of
a tax consolidated group under Australian tax legislation. The Company is the
head entity of the tax-consolidated group.
Offshore Banking Unit (“OBU”) Legislation
In June 2010, the Australian Taxation Office declared that the consolidated
group is an Offshore Banking Unit (OBU) under Australian Taxation Law. This
allows the consolidated group to apply a concessional tax rate of 10% to net
income it derives from its offshore mandates. The concession was applied
from 1 July 2010 and is expected to cease after 30 June 2023.
Critical accounting judgements, estimates and assumptions
Recovery of deferred tax assets: Deferred tax assets are recognised for
deductible temporary differences only if the consolidated entity considers
it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Platinum Asset Management Limited Annual Report 2021 75
Note 8. Earnings per share
Profit after income tax attributable to the owners
of Platinum Asset Management Limited
163,258
155,611
2021
$’000
2020
$’000
Weighted average number of ordinary shares
used in calculating basic earnings per share
Adjustment for deferred rights
Weighted average number of ordinary shares
used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
NUMBER
NUMBER
579,542,631
581,507,729
3,587,674
13,929
583,130,305
581,521,658
CENTS
28.17
28.00
CENTS
26.76
26.76
ACCOUNTING
POLICY
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the
owners of Platinum Asset Management Limited, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year. The weighted average number of
ordinary shares used to calculate basic (and diluted) earnings per share does not
include treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the weighted average number of shares used
to determine basic earnings per share to take into account any potential
ordinary shares that have a dilutive impact.
Platinum Asset Management Limited Annual Report 2021
76
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 9. Depreciable assets
Fixed assets - at cost
Less: Accumulated depreciation
Right-of-use asset - at cost
Less: Accumulated depreciation
2021
$’000
6,018
(3,241)
2,777
10,620
(3,853)
6,767
2020
$’000
9,735
(5,728)
4,007
10,595
(1,926)
8,669
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and
previous financial year are set out below:
Balance at 1 July 2019
AASB 16 adjustment on 1 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Depreciation expense
Balance at 30 June 2021
FIXED RIGHT-OF-USE
ASSET
$ ’000
ASSETS
$’000
3,616
–
2,261
(1,870)
4,007
42
(1,272)
2,777
-
10,595
–
(1,926)
8,669
24
(1,926)
6,767
ACCOUNTING
POLICY
Fixed assets are stated at historical cost less depreciation. Fixed assets
(other than in-house software and applications in the course of construction
and development) are depreciated over their estimated useful lives of 2.5 to
8 years using the diminishing balance method.
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each reporting date. A fixed asset is derecognised
upon disposal or when there is no future economic benefit to the consolidated
entity. Gains and losses between the carrying amount and the disposal proceeds
are taken to profit or loss.
Right-of-use assets are measured at cost comprising the amount of the
measurement of the lease liability adjusted for any lease payments made before
commencement date. Right-of-use assets are depreciated over the lease term
on a straight-line basis.
Platinum Asset Management Limited Annual Report 2021
77
Note 10. Financial assets at fair value through profit or loss
Platinum Trust Fund investments
Equity securities held by the seeded investments
2021
$’000
220
44,120
44,340
2020
$’000
184
27,442
27,626
ACCOUNTING
POLICY
The classification of financial assets at initial recognition depends on the
financial asset’s contractual cash flow characteristics and the consolidated
entity’s process for managing them. The consolidated entity’s investments are
measured at fair value through profit or loss.
The consolidated entity has applied AASB 13: Fair Value Measurement as the
basis to value its financial assets at fair value through profit or loss. AASB 13
defines fair value as “the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date”.
The standard prescribes that the most representative price within the bid-ask
spread should be used for valuation purposes. With respect to the consolidated
entity, the last-sale or “last” price is the most representative price within the
bid-ask spread, because it represents the price that the unit last changed hands
from seller to buyer.
The fair value includes the impact of the 30 June distribution.
Note 11. Fair value measurement
Fair value hierarchy
AASB 13: Fair Value Measurement requires the consolidated entity to classify those assets
measured at fair value using the following fair value hierarchy model:
(i)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(ii)
inputs other than quoted prices included within level 1 that are observable for the asset
or liability either directly (as prices) or indirectly (derived from prices) (level 2); and
(iii) inputs for the assets or liabilities that are not based on observable market data
(unobservable inputs) (level 3).
At 30 June 2021, the investments in PAXX, PAI and PWP have not been measured at fair value
because they have been classified as equity investments in associates. If these were to be
measured at fair value, PWP would be classified as level 2 whilst PAI and PAXX would be
classified as level 1. Further details of the fair value of investments in associates is provided
in note 6.
Platinum Asset Management Limited Annual Report 2021
78
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 11. Fair value measurement – continued
Fair value hierarchy – continued
The following table analyses within the fair value hierarchy model, the consolidated entity’s
assets and liabilities, measured or disclosed at fair value, using the three level hierarchy
model at 30 June 2021 and 30 June 2020.
2021
Assets
LEVEL 1
$’000
LEVEL 2
$ ’000
LEVEL 3
$ ’000
TOTAL
$ ’000
Equity securities held by
wholly owned seed funds
43,649
Platinum Trust Fund investments
–
43,649
211
220
431
260
–
260
44,120
220
44,340
2020
Assets
LEVEL 1
$ ’000
LEVEL 2
$ ’000
LEVEL 3
$ ’000
TOTAL
$ ’000
Equity securities held by
wholly owned seed funds
27,442
Platinum Trust Fund investments
–
27,442
–
184
184
–
–
–
27,442
184
27,626
Valuation techniques used to classify assets as level 2
The direct investments in the Platinum Trust Funds are valued using their respective
Net Asset Values (adjusted for the buy-sell spread) and include the impact of the 30 June
distribution. Accordingly, management has assessed the fair value investments as being
level 2 investments.
Valuation techniques used to classify assets as level 3
Unlisted investments held by wholly owned seed funds are classified as level 3. These assets
are valued in accordance with a valuation policy established by PIML as the investment
manager. Level 3 assets were 0.1% of net assets at 30 June 2021 (2020: 0%).
Platinum Asset Management Limited Annual Report 2021
Note 12. Trade and other receivables
Management fees receivable
Performance fees receivable
Prepayments
Distribution receivable from PAXX
and Platinum Trust Funds
Sundry debtors
79
2021
$’000
24,892
128
1,902
476
214
2020
$’000
23,047
9,042
1,914
573
106
27,612
34,682
Management and performance fees receivable(s) are received between three to 30 days
after balance date.
ACCOUNTING
POLICY
Trade receivables represents amounts receivable for services that have been
delivered. These amounts are initially recognised at fair value. An analysis is
performed at each balance date to measure any expected credit loss. Expected
credit losses are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the group
expects to receive, discounted at an approximation of the original effective
interest rate. No adjustment was required for expected credit losses during the
year or prior period.
Distributions are recognised when the consolidated entity becomes entitled to
the income.
Platinum Asset Management Limited Annual Report 2021
80
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 13. Provisions & employee benefits
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
Provision for payroll tax on Deferred Remuneration Plan
2021
$’000
2,220
1,700
3,920
718
1,311
2,029
2020
$’000
1,826
1,931
3,757
628
1,009
1,637
ACCOUNTING
POLICY
Employee benefit liabilities represents accrued annual and long-service leave
entitlements and other incentives (including any provision for estimated staff
incentive payments and related on-costs), that are recognised in respect of
employee services up to balance date and are measured at the amounts
expected to be paid when the liabilities are settled and include related on-costs,
such as payroll tax.
Note 14. Trade and other payables
Trade payable
GST payable
2021
$’000
3,934
2,244
6,178
2020
$’000
3,830
1,745
5,575
ACCOUNTING
POLICY
Payables represent amounts owing at balance date. Trade payables relate to
services provided to the consolidated entity at balance date, which are unpaid.
Due to their general short-term nature, they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within
14 to 30 days of being invoiced.
Platinum Asset Management Limited Annual Report 2021
81
Note 15. Leases
PIML has entered into lease agreements for the Sydney and London premises it occupies
and pays rent on a monthly basis.
Set out below are the carrying amounts of lease liabilities and the movements during
the period:
Balance at 1 July
AASB 16 adjustment on 1 July
Payments
Accretion of interest
Balance at 30 June
Current
Non–current
2021
$’000
8,829
–
(1,916)
197
7,110
1,871
5,239
2020
$’000
–
10,444
(1,854)
239
8,829
1,744
7,085
The following amounts are recognised in the statement of profit or loss in respect of leases:
Rent and other occupancy
Depreciation of right of use asset
Finance costs on lease liabilities
30 JUNE
2021
$’000
30 JUNE
2020
$’000
392
1,926
197
2,515
463
1,926
239
2,628
Future minimum rentals payable under short–term leases are as follows:
Within one year
30 JUNE
2021
$’000
30 JUNE
2020
$’000
96
89
Platinum Asset Management Limited Annual Report 2021
82
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 15. Leases – continued
ACCOUNTING
POLICY
Assets and liabilities arising from the premises lease are initially measured on a
present value basis. Lease liabilities include the net present value of the future
lease payments, less any lease incentives receivable. The lease payments used
to determine the lease liability were discounted using an estimated incremental
borrowing rate of 2.5% at the date of initial application.
The consolidated entity is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in the lease liability
until they take effect. When adjustments to lease payments based on an index or
rate take effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period.
The lease payments for short-term leases are be charged to the consolidated
statement of profit or loss and other comprehensive income.
Note 16. Reconciliation of profit after income tax to net cash from operating activities
2021
$’000
2020
$’000
Profit after income tax expense for the year
163,258
155,611
Adjustments for:
Share-based payments expense
Foreign exchange differences on foreign bank account
Distributions and dividends received
Depreciation of fixed assets
Depreciation of right-of-use asset
Interest income
Gain on investments
Movement in operating assets and liabilities:
Movement in trade and other receivables
Movement in income tax payable
Movement in trade and other payables
Movement in deferred tax assets
Movement in deferred tax liabilities
Movement in provisions
6,413
728
(3,437)
1,272
1,926
(541)
(43,929)
7,070
(1,021)
413
215
7,588
555
6,803
(462)
(1,855)
1,870
1,926
(1,707)
(8,664)
(7,716)
5,743
(2,218)
77
1,399
25
Net cash from operating activities
140,510
150,832
Platinum Asset Management Limited Annual Report 2021
83
Note 17. Share based payments
Deferred Remuneration Plan
In June 2016, a “Deferred Bonus Plan” (now known as a “Deferred Remuneration Plan” or
“DRP”) was approved by the Nomination & Remuneration Committee of the Company.
The main objective of the Deferred Remuneration Plan is to recognise the contributions
made by key employees and to retain their skills within the firm.
Vesting is conditional on continuous employment for a period of four years from the date
of grant. Upon vesting and exercise of the deferred rights, employees will receive ordinary
shares in the Company.
The deferred rights also carry an entitlement to a dividend equivalent payment. Upon the
valid exercise of a deferred right, or deemed exercise, of a deferred right, an eligible
employee will be entitled to receive an amount approximately equal to the amount of
dividends that would have been paid to the eligible employee had they held the share from
the grant date to the date that the deferred rights are exercised.
The number of rights granted and the accounting expense for the current and comparative
year is shown below. The trust will generally purchase an equivalent number of the
Company’s shares on market and will hold these shares until the vesting date (four years
from each grant) and subsequent exercise.
NUMBER OF DEFERRED RIGHTS
2020
$’000
2021
$’000
Opening balance
Granted during the year
Forfeited during the year
7,115,680
1,810,880
(1,682,250)
Vested, exercised and then transferred to eligible employees
(271,171)
5,095,797
2,341,845
(34,233)
(287,729)
Closing balance
Exercisable at the end of the period
6,973,139
7,115,680
734,408
352,516
Long-Term Remuneration Plan
Whilst the Nomination & Remuneration Committee approved the new Platinum Partners
Long Term Incentive Plan (“Partners Plan”) in July 2021, services were received from
employees from date of communication during the year ended 30 June 2021. The objective
of the Partners Plan is to directly align employees’ compensation with shareholder value
creation, foster sustainable growth, sound financial, operational and risk management
practices, and to retain key talent.
Platinum Asset Management Limited Annual Report 2021
84
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 17. Share based payments – continued
Long-Term Remuneration Plan – continued
The vesting of the deferred rights is conditional upon the Company meeting minimum Total
Shareholder Return (“TSR”) performance hurdles as set forth in the table below (“TSR
Hurdle”). Each award that is granted, is divided into four tranches, with one quarter of the
award being tested against the TSR Hurdle at the end of each year following the award grant
date (“Performance Period”), for four years. The start price for the TSR Hurdle calculation
will be the VWAP at which PTM shares were traded on the ASX over the seven trading days
prior to the first trading day of the relevant Performance Period, and the end price will be the
VWAP at which PTM shares were traded on the ASX over the seven trading days up to and
including the last trading day of the relevant Performance Period. The number of PTM shares
that an employee will be entitled to receive upon exercise of a deferred right within a
tranche, will depend on the annualised TSR achieved by the Company during the relevant
Performance Period (see table below). If the minimum TSR Hurdle (i.e. 7.5%) for a Performance
Period is not met, then that tranche of deferred rights will not meet the vesting condition and
will be forfeited.
AWARD
PERFORMANCE PERIOD
PROPORTION OF
AWARD THAT IS TESTED
AGAINST THE HURDLE
Year 1
Year 2
Year 3
Year 4
25%
25%
25%
25%
HURDLE
1 Year TSR
2 Year annualised TSR
3 Year annualised TSR
4 Year annualised TSR
TSR HURDLE
(VESTING CONDITION)
TSR < 7.5%
ENTITLEMENT TO
RESULTING PTM SHARES
PER DEFERRED RIGHT
Nil
TSR between 7.5% and 10% (target)
Between 0.75 and 1 (on a pro-rata straight line basis)
TSR between 10% and 15%
Between 1 and 2 (on a pro-rata straight line basis)
TSR at or above 15%
2
The exercise of deferred rights that have vested (i.e. those deferred rights that have met
or exceeded the TSR Hurdle for a Performance Period) is also subject to an eight year
continuous service condition.
Platinum Asset Management Limited Annual Report 2021 85
Note 17. Share based payments – continued
Long-Term Remuneration Plan – continued
Eligible employees will have no voting or dividend rights until their deferred rights have been
exercised and their shares have been allocated. However, the deferred rights carry an
entitlement to an alternative dividend equivalent payment. This entitlement arises once a
tranche of an award meets its TSR Hurdle for a Performance Period and continues until the
corresponding deferred rights are exercised (“Holding Period”). During the Holding Period,
an eligible employee will receive an amount approximately equal to the amount of dividends
that would have been paid to the employee had they held the relevant resultant number of
shares from the date the TSR Hurdle was met.
In the current year, the total fair value of rights arising from the June 2021 allocation awards
was $27,568,379 (2020: $0), which was based on the 8,229,367 additional rights (2020: 0)
granted. The fair value of rights was estimated at $3.35 based on the share price at grant
date of $4.36 adjusted for the fair value of dividends forfeited and graded vesting based
on the TSR Hurdle. The fair value was estimated using a Monte Carlo model with expected
volatility of 35%, expected dividend yield of 5.2% and risk free rate of 0.01%.
Expenses Arising from Share-Based Payment Transactions (DRP & Partner Plan)
ACCOUNTING EXPENSE
Deferred rights granted in 2021: Partners Plan
Deferred rights granted in 2021: DRP
Deferred rights granted in 2020: DRP
Deferred rights granted in 2019: DRP
Deferred rights granted in 2018: DRP
Deferred rights granted in 2017: DRP
Deferred rights granted in 2016: DRP
Total share–based payments expense
Associated payroll tax expense
Total
2021
$’000
2,665
1,442
925
566
736
79
–
6,413
366
6,779
2020
$’000
–
–
1,520
1,267
2,131
831
1,054
6,803
371
7,174
Platinum Asset Management Limited Annual Report 2021
86
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 17. Share based payments – continued
ACCOUNTING
POLICY
AASB 2: Share-based Payments requires an organisation to recognise an
expense for equity provided for services rendered by employees. The amount
that is recognised as an expense for share-based payments is derived from the
fair value of the equity instruments granted. Deferred incentives to be settled in
the Company’s shares are considered to be a share-based payments award.
The fair value of the equity instruments granted and measured at grant date is
recognised over the term of the service period. The accounting expense will
commence when there is a “shared understanding” of the terms and conditions
of the offer. The service period may commence prior to grant date. In this case,
the expense is estimated and trued-up at grant date.
The fair value of the rights granted is recognised in the consolidated financial
statements as an expense with a corresponding entry to reserves. The fair
value is measured at grant date and amortised on a straight-line basis over the
vesting period that an employee becomes unconditionally entitled to the share.
In measuring the share-based payment expense, an allowance has been made
for the risk or probability of forfeiture, which measures the risk of selected
eligible employees leaving Platinum and forfeiting their rights.
At each balance date, the Company reviews the number of deferred rights
granted. Adjustments are made to the share-based payments expense, if the
number of deferred rights has changed (e.g. through forfeitures). The impact
of any revision to the original estimate will be recognised in the consolidated
statement of profit or loss and other comprehensive income with the
corresponding entry to reserves.
The purchase of shares on-market by the Company through an Employee
Share Trust for future allocation to key employees is shown in the consolidated
statement of financial position as a debit entry to the “treasury shares” account
with the corresponding credit entry to “cash”.
Platinum Asset Management Limited Annual Report 2021 87
Note 18. Issued capital
2021
SHARES
2020
SHARES
Ordinary shares - fully paid (a) 586,678,900
586,678,900
Treasury shares (b)
(8,018,094)
(6,687,403)
Total issued capital
578,660,806
579,991,497
2021
$’000
751,355
(36,462)
714,893
2020
$’000
751,355
(33,357)
717,998
(a) Ordinary shares: entitles shareholders to participate in dividends as declared and in the
event of winding up of the Company, to participate in the proceeds in proportion to the number
of and amounts paid on the ordinary shares held. Ordinary shares entitle the shareholder to
one vote per share, either in person or by proxy, at a meeting of the Company’s shareholders.
All ordinary shares issued have no par value. On 13 September 2016, the Company announced
an on-market share buy-back program, in which shares will be bought-back if the Company’s
shares trade at a significant discount to its underlying value. No shares have been bought-back.
(b) Treasury shares: are shares that have been purchased by the Employee Share Trust,
pursuant to the Deferred Remuneration Plan (Refer to Note 17). Treasury shares are held by
the Employee Share Trust for future allocation to employees. Details of the balance of
treasury shares at the end of the financial year were given below:
2021
SHARES
2020
SHARES
2021
$’000
2020
$’000
Opening balance
6,687,403
5,095,797
33,357
27,865
Shares acquired by the
Employee Share Trust
Shares transferred
to employees
Balance at the end
of the financial year
1,779,817
1,879,335
7,326
7,105
(449,126)
(287,729)
(4,221)
(1,613)
8,018,094
6,687,403
36,462
33,357
ACCOUNTING
POLICY
Ordinary shares
Ordinary shares are recognised as the amount paid per ordinary share, net of
directly attributable issue costs.
Treasury shares
Where the consolidated entity purchases shares in the Company, the
consideration paid is deducted from total shareholders’ equity and the shares
are treated as treasury shares. Treasury shares are recorded at cost and when
restrictions on employee shares are lifted which is dependent on vesting and
exercise of the rights, the cost of such shares will be adjusted to the share-
based payments reserve.
Platinum Asset Management Limited Annual Report 2021
88
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 19. Reserves
Foreign currency translation reserve
Capital reserve
Share-based payments reserve
2021
$’000
(6,334)
2020
$’000
(935)
(588,144)
(588,144)
18,644
16,997
(575,834)
(572,082)
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities and associates are
recognised in other comprehensive income and accumulated as a separate reserve within
equity. The movement in the current year relates primarily to translating the net assets of
PWP and the Cayman Funds.
Capital reserve
In 2007, in preparation for listing, a restructure was undertaken in which the Company sold or
transferred all of its assets, other than its beneficial interest in shares in Platinum Asset Pty
Limited and sufficient cash to meet its year to date income tax liability.
The Company then split its issued share capital of 100 shares into 435,181,783 ordinary
shares. It then took its beneficial interests in PIML to 100%, through scrip for scrip offers,
in consideration for the issue of 125,818,217 ordinary shares in the Company.
As a result of the share split and takeover offers, the Company had 561,000,000 ordinary
shares on issue and beneficially held 100% of the issued share capital of PIML. Subsequently,
140,250,000 shares on issue representing 25% of the issued shares of the Company were
sold to the public by existing shareholders.
The amount of $588,144,000 was established on listing as a result of the difference between
the consideration paid for the purchase of non-controlling interests and the share of net
assets acquired in the minority interests.
Share-based payments reserve
In June 2016, the consolidated entity established the Deferred Remuneration Plan. The amount
in the share-based payments reserve is comprised of the amortisation of the rights granted
and any associated future tax deduction.
Platinum Asset Management Limited Annual Report 2021
89
Note 19. Reserves – continued
Movements in reserves
Movements in each class of reserve during the current and previous financial year are
set out below:
SHARE-
BASED
PAYMENTS
$’000
FOREIGN
CURRENCY
$’000
CAPITAL
$’000
TOTAL
$’000
Balance at 30 June 2019
11,176
105
(588,144)
(576,863)
Exchange rate
translation impact
Movement in share–based
payments reserve
Balance at 30 June 2020
–
(1,040)
5,821
16,997
(935)
(588,144)
(572,082)
–
–
(1,040)
5,821
–
–
(5,399)
1,647
–
–
Exchange rate translation impact
–
(5,399)
Movement in share–based
payments reserve
Balance at 30 June 2021
1,647
18,644
(6,334)
(588,144)
(575,834)
Note 20. Dividend made and proposed
Dividends paid
Dividends paid during the financial year were as follows:
Final dividend paid for the 2020
financial year (11 cents per share)
Interim dividend paid for the 2021
financial year (12 cents per share)
Final dividend paid for the 2019
financial year (14 cents per share)
Interim dividend paid for the 2020
financial year (13 cents per share)
2021
$’000
2020
$’000
63,799
69,538
–
–
133,337
–
–
81,421
75,606
157,027
Platinum Asset Management Limited Annual Report 2021
90
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 20 Dividend made and proposed – continued
Dividends not recognised at year-end
Since 30 June 2021, the Directors declared to pay a 2021 final fully franked dividend of
12 cents per share, payable out of profits for the 12 months to 30 June 2021. The dividend has
not been provided for at 30 June 2021, because the dividend was declared after year-end.
Franking credits
Franking credits available at reporting date based
on a tax rate of 30%
Franking credits/(debits) that will arise from the
payment/(refund) of the provision for income tax
at the reporting date based on a tax rate of 30%
Franking credits available for subsequent
financial years based on a tax rate of 30%
2021
$’000
2020
$’000
61,767
54,583
9,029
10,431
70,796
65,014
ACCOUNTING
POLICY
A provision is made for the amount of any dividend declared by the Directors
before or at the end of the financial year but not distributed at balance date.
Note 21. Financial risk management
Financial risk management objectives
The Group’s activities expose it to both direct and indirect financial risk, including: market
risk, credit risk and liquidity risk. Material direct exposure to financial risk occurs through
the impact on profit of movements in funds under management (“FUM”) and through its
direct investments in:
•
•
PAI, PWP and PAXX; and
Equity and other securities held by the seeded investments, being the offshore Cayman
Island domiciled funds Platinum Global Opportunities Fund Ltd and Platinum Asia
Ex-Japan Opportunities Fund Ltd (the “Cayman Funds”) and other seed funds.
Indirect exposure occurs because PIML is the Investment Manager for various investment
vehicles, including:
•
•
•
•
investment mandates;
various unit trusts, namely the Platinum Trust Funds, Platinum Global Fund, Platinum
International Fund (Quoted Managed Hedge Fund) (“PIXX”) and PAXX;
its ASX-listed investment companies, Platinum Capital Limited (“PMC”) and PAI; and
PWP.
The Group does not derive any management fees or performance fees directly from PIXX and
PAXX. Management and performance fees are borne at the Platinum International Fund/
Platinum Asia Fund level and are paid directly by these funds to the Group.
Platinum Asset Management Limited Annual Report 2021
91
Note 21. Financial risk management – continued
Financial risk management objectives – continued
This note mainly discusses the direct exposure to risk of the Group. The Group’s risk
management procedures focus on managing the potential adverse effects on financial
performance caused by volatility of financial markets.
Market risk
The key direct risks associated with the Group are those driven by investment and market
volatility and the resulting impact on FUM or a reduction in the growth of FUM. Reduced
FUM will directly impact on management fee income and profit because management fee
income is calculated as a percentage of FUM. FUM can be directly impacted by a range of
factors including:
(i)
poor investment performance: absolute negative investment performance will reduce
FUM and relative under performance to appropriate market benchmarks could reduce
the attractiveness of Platinum’s investment products to investors, which would impact
on the growth of the business. Poor investment performance could also trigger
redemptions from Platinum’s investment products and the termination of investment
mandate arrangements;
(ii)
market volatility: Platinum invests in global markets. It follows that a decline in overseas
stock markets, adverse exchange rates and/or interest rate movements will all impact
on FUM;
(iii) a reduction in the ability to retain and attract investors: that could be caused by a decline
in investment performance, but also a range of other factors, such as the high level of
competition in the funds management industry;
(iv) a loss of key personnel; and
(v)
investor allocation decisions: investors constantly re-assess and re-allocate their
investments on the basis of their own preferences. Investor allocation decisions could
operate independently from investment performance, such that funds outflows occur
despite positive investment performance.
A decline in investment performance will also directly impact on performance share fees
and performance fees earned by the Group. Historically, the amount of performance fees
earned by the Group has fluctuated significantly from year to year and has been a material
source of fee revenue.
For those funds or investment mandates that pay a performance fee, the fee is calculated
either semi-annually or annually and is based on an absolute or relative outperformance.
Performance fees may be earned by the Group, if the investment return of a Platinum Trust
Fund, PMC, PAI, PWP or any other applicable investment mandate exceeds their hurdle rates.
Should the actual performance of one or more of these entities be higher than the applicable
hurdle rate, a performance fee would be receivable. As at 30 June 2021, performance fees of
$127,517 (2020: $9,042,000) were receivable.
Platinum Asset Management Limited Annual Report 2021 92
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 21. Financial risk management – continued
Market risk – continued
If global equity markets fell 10% over the course of the year and consequently the Group’s
FUM fell in line with global equity markets, it follows that management fees would fall by 10%.
If there was a 10% decrease in the performance of investment funds or mandates over the
course of the year that resulted in negative absolute performance for the year, then no
performance fee would be earned.
The above analysis assumes a uniform 10% fall across all global equity markets. This is
extremely unlikely as there is a large degree of variation and volatility across markets. For
example, it is quite feasible for the Chinese market to fall whilst other Asian markets go up.
PIML may employ strategies to manage the impact of adverse market and exchange rate
movements on the funds it manages. Market risk may be managed through derivative
contracts, including futures, options and swaps. Currency risk may be managed through the
use of forward currency contracts.
The section below mainly discusses the direct impact of foreign currency risk, price risk and
interest rate risk on the Group’s financial instruments held at 30 June 2021.
Foreign currency risk
The Group is exposed to foreign currency risk, because it holds foreign currency cash, as
well as securities which are denominated in foreign currencies, either directly or through its
direct investments in PWP, PAI, PAXX, Cayman Funds and other seed funds and receivables/
payables dominated in USD.
The following tables demonstrate the sensitivity to a reasonably possible change in USD and
HKD exchange rates, with all other variables held constant. The impact on the Group’s profit
before tax is due to changes in the fair value of financial assets and liabilities. The Group’s
exposure to foreign currency changes for all other currencies is not material.
Platinum Asset Management Limited Annual Report 2021 93
Note 21. Financial risk management – continued
Foreign currency risk – continued
FINANCIAL ASSETS
AND LIABILITIES
IMPACT ON NET PROFIT BEFORE TAX OF 10%
INCREASE/(DECREASE) IN AUSTRALIAN DOLLAR
USD
$’000
INCREASE/(DECREASE)
HKD
$’000
INCREASE/(DECREASE)
30 JUNE 2021
30 JUNE 2020
30 JUNE 2021
30 JUNE 2020
Cash and cash equivalents
(725)/(886)
(1,340)/1,637
(237)/289
(2,382)/2,912
(6,029)/7,369
(5,842)/7,140
–
–
(3,355)/4,100
(2,518)/3,077
–
–
–
–
–
–
Investments in:
PAXX
PWP
PAI
Equity securities held
by the seeded investments
(4,012)/4,904
(2,755)/3,367
Platinum Trust Funds
(20)/24
(17)/21
Receivables
Payables
(40)/49
30/(37)
(299)/365
11/(14)
–
–
–
–
–
–
–
–
US Dollar fees
If the Australian Dollar had been 10% higher/lower against the US Dollar than the prevailing
exchange rate used to convert the US mandate and PWP fees, with all other variables held
constant, then net profit before tax would have been A$752,202 lower/A$846,683 higher
(2020: A$759,713 lower/A$928,511 higher).
Price risk
At 30 June 2021, the Group is exposed to indirect price risk through its equity-accounted
investments in PAI, PWP, PAXX, Platinum Trust Funds and equity securities held by seeded
investments. The impact of price risk is summarised in the table below:
ENTITY
PAI
PWP
PAXX
Equity securities held by
seeded investments
Platinum Trust Funds
IMPACT ON NET PROFIT BEFORE TAX OF 10%
INCREASE/(DECREASE) IN 30 JUNE NET ASSET VALUES
2020
$’000
INCREASE/(DECREASE)
2021
$’000
INCREASE/(DECREASE)
3,869/(3,869)
6,632/(6,632)
260/(260)
4,411/(4,411)
2/(2)
3,455/(3,455)
6,427/(6,427)
2,620/(2,620)
3,030/(3,030)
1/(1)
Platinum Asset Management Limited Annual Report 2021
94
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 21. Financial risk management – continued
Price risk – continued
Interest rate risk
At 30 June 2021, cash and term deposits are the only significant assets with potential
exposure to interest rate risk held by the Group . A movement of +/-1% in Australian interest
rates occurring throughout the year ended 30 June 2021 would cause the Group’s net profit
before tax to be $1,432,769 higher/lower (2020: $1,053,334 higher/lower), based on the
impact on its interest-bearing cash balances. An interest rate movement at 30 June 2021
will not impact the profit earned from term deposits, as term deposit interest rates are
determined on execution.
Credit risk
Credit risk relates to the risk of a counterparty defaulting on a financial obligation resulting
in a loss to the Group (typically “non-equity” financial instruments). Credit risk arises from
the financial assets of the Group that include: cash and term deposits and trade and other
receivables.
The maximum exposure to direct credit risk at balance date is the carrying amount
recognised in the consolidated statement of financial position. No assets are past due
or impaired.
Any default in the value of a financial instrument held within any of the entities for which
PIML is the investment manager, will result in reduced investment performance. There is no
direct loss for the Group other than through the ensuing reduction in FUM, as noted above in
the section on “market risk”.
The credit quality of cash and term deposits held by each entity in the Group, by
counterparty, can be assessed by reference to the counterparty’s external credit ratings.
All term deposits are held with Australian banks that have a credit rating of AA- (2020: AA-)
or higher. At 30 June 2021 and 30 June 2020, the relevant credit ratings were as follows:
RATINGS
AA-
A+
A
2021
$’000
2020
$’000
185,342
151,636
6,955
856
2,910
663
193,153
155,209
Platinum Asset Management Limited Annual Report 2021
95
Note 21. Financial risk management – continued
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations
associated with its liabilities. The Group manages liquidity risk by maintaining sufficient cash
reserves to cover its liabilities and receiving management fees to meet operating expenses
on a regular basis. Management monitors its cash position on a daily basis and prepares
forecasts on a weekly basis.
Remaining contractual maturities
The following table details the Group’s remaining contractual maturity for its liabilities.
The table has been drawn up based on the undiscounted cash flows of liabilities based on
the earliest date on which the liabilities are required to be paid.
2021
Trade and
other payables
Lease liabilities
Total
2020
Trade and
other payables
Lease liabilities
Total
AT CALL
$’000
WITHIN
30 DAYS
$’000
BETWEEN
1 AND 3
MONTHS
$’000
OVER
3 MONTHS
$’000
–
–
–
6,178
165
6,343
–
331
331
–
6,929
6,929
AT CALL
$’000
WITHIN
30 DAYS
$’000
BETWEEN
1 AND 3
MONTHS
$’000
OVER
3 MONTHS
$’000
–
–
–
5,575
159
5,734
–
477
477
–
8,704
8,704
TOTAL
$’000
6,178
7,425
13,603
TOTAL
$’000
5,575
9,340
14,915
Financial liabilities at fair value through profit or loss
The Group had no financial liabilities at fair value through profit or loss at 30 June 2021
or 30 June 2020.The Group does not have a significant direct exposure to liquidity risk.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflects their
fair value.
Platinum Asset Management Limited Annual Report 2021
96
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 21. Financial risk management – continued
Capital risk management
(i) Capital requirements
The Company has limited capital requirements and generally expects that most, if not all,
future profits will continue to be distributed by way of dividends, subject to ongoing capital
requirements.
(ii) External requirements
PIML is required to hold an Australian Financial Services Licence (“AFSL”) issued by the
Australian Securities and Investments Commission (“ASIC”). The AFSL authorises PIML to
provide deal in certain financial products, provide general financial product advice in respect
of certain financial products and to operate registered managed investment schemes.
PIML has complied with all financial conditions of its AFSL during the financial year.
Note 22. Related party transactions
Subsidiaries and associates
Interests in subsidiaries and associates are set out in Note 5 and Note 6.
Key management personnel
Disclosures relating to key management personnel are set out in Note 23 and the
Remuneration Report in the Directors’ Report.
Tax consolidation and dividend transactions
Platinum Asset Management Limited is the head entity of the Australian consolidated tax
group and is also parent entity, and consequently, is the entity that ultimately pays out
dividends to shareholders. The amounts paid are disclosed in the consolidated statement of
cash flows. Tax payable by the Australian consolidated group and dividends to shareholders
are paid using income sourced from the main operating subsidiary, PIML.
Fees received
PIML provides investment management services to:
(i)
the Platinum Trust Funds and Platinum Global Fund;
(ii)
the Irish domiciled, PWP;
(iii) two ASX-listed investment companies, PMC and PAI;
(iv) two ASX quoted managed funds, PIXX and PAXX; and
(v)
the Cayman Funds.
Platinum Asset Management Limited Annual Report 2021 97
Note 22. Related party transactions – continued
Tax consolidation and dividend transactions – continued
Fees received – continued
PIML is entitled to receive a monthly management fee, either directly or indirectly, from each
of these entities and a performance fee based on the relative investment performance of the
Platinum Trust Funds, PWP, PMC and PAI. The Group does not derive any management fees or
performance fees directly from PIXX and PAXX. Management and performance fees are
borne at the Platinum International Fund/Platinum Asia Fund level and are paid directly by
these funds to the Group. The total related party fees and receivables were as follows:
Recognised in the statement of profit or
loss and other comprehensive income
2021
$
2020
$
219,609,966
234,373,871
Receivable in the statement of financial position
19,031,105
24,910,151
Investment transactions
During the year, the subsidiary PIML received a final 2021 fully franked dividend of $900,000
(2020: $600,000) and an interim 2021 fully franked dividend of $1,200,000 (2020: $600,000)
from its investment in PAI.
PIML also received the 30 June 2021 distribution of $457,686 (2020: $561,997) from PAXX and
$17,862 from the Platinum Trust Funds (2020: $10,980).
During the year, PIML invested $10,000,000 into the Platinum Arrow Trust.
Other related party transactions
Mr Stephen Menzies is PIML’s nominated representative on the Board of PWP. PIML
reimburses Stephen Menzies for any incidental travel and accommodation associated with
attendance at PWP Board meetings in Ireland. During the year, the amount reimbursed was
Nil (2020: $11,042).
PIML incurred a fee of $2,537,378 (2020: $2,530,695) for general marketing and distribution
services provided by Platinum UK Asset Management Limited. PIML incurred a fee of $62,755
(2020: $0) for general marketing and distribution services provided by Platinum Management
Malta Limited.
The Company allocated additional rights to eligible employees under the Deferred
Remuneration Plan. In the current year, the amount transferred to the Platinum Employee
Share Trust was $4,600,000 (2020: $8,710,000).
Loan Agreements with related parties
There were no formal loan agreements executed with related parties at the current and
previous reporting date, but there are intercompany receivables and payables.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
There are no guarantees entered into by the parent entity in relation to debts of its
subsidiaries, no contingent liabilities and no capital commitments.
Platinum Asset Management Limited Annual Report 2021
98
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 23. Key management personnel
The aggregate remuneration that the Group provided to Executive and Non-Executive
Directors was as follows:
Cash salary, Directors’ fees and
short-term incentive cash awards
Accounting expense related to the
KMP allocation under the Deferred
Remuneration Plan^
Superannuation
Increase in the Group’s annual
and long service leave provision
2021
$’000
2020
$’000
3,887
3,745
812
169
49
4,917
613
167
27
4,552
^ Andrew Clifford, Elizabeth Norman and Andrew Stannard are the only members of KMP who have received an
allocation of rights under the Deferred Remuneration Plan.
The expense attributable to KMP are based on the allocation of deferred rights in the current
and prior years is as follows:
2021
GRANT
(UN-
VESTED)
2020
GRANT
(UN-
2019
GRANT
(UN-
VESTED) VESTED)
2018
GRANT
(UN-
VESTED)
2017
GRANT
(VESTED)
2016
GRANT
(VESTED)
TOTAL
Number of rights
allocated to KMP
during the year
Accounting
expense
attributed
to KMP
153,462
160,859
108,696
248,346
86,208
48,623
806,194
$130,500 $104,400 $99,000 $356,998 $121,600
– $812,498
Platinum Asset Management Limited Annual Report 2021
99
Note 23. Key management personnel – continued
Interests of Non-Executive and Executive Directors in shares
The relevant interest in ordinary shares in the Company that each Director held at balance
date was:
Michael Cole (until 20/11/20)
240,000
–
(240,000)*
OPENING
BALANCE
ADDITIONS
DISPOSALS
Guy Strapp (from 27/8/20)
–
22,000
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Andrew Clifford
Kerr Neilson
Elizabeth Norman
Andrew Stannard
* Resigned during the year.
40,000
22,000
41,666
18,900
32,831,449
252,074,841
766,748
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CLOSING
BALANCE
–
22,000
40,000
22,000
41,666
18,900
32,831,449
252,074,841
766,748
–
Platinum Asset Management Limited Annual Report 2021
100
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
Note 24. Remuneration of auditors
During the financial year, the following fees were paid or payable for services provided by
the auditor of the Company, Ernst & Young Australia (“EY”) (2020: PricewaterhouseCoopers
Australia (“PwC”)), and its overseas network firms as indicated below:
Audit services
Audit and review of the financial
statements and AFSL audit
Audit and review of the financial
statements and AFSL audit
Audit of financial statements
Audit services for managed funds that
PIML acts as responsible entity
Audit and review of the financial
statements and compliance plan audit
Audit of financial statements
Total audit and review of financial statements
Compliance and assurance services
Compliance and assurance services
PwC
Total audit, compliance and assurance services
Taxation services
Compliance services
Compliance services
Compliance services
Taxation services for managed funds for
which PIML acts as responsible entity
Fund distribution compliance services
Other taxation services
Taxation services
Foreign tax agent fees
Total taxation services
Other services
Other services
Other services
Total other services
AUDITOR
2021
$
2020
$
EY
156,000
–
PwC
Overseas EY
–
6,325
121,125
–
PwC
Overseas PwC
EY
Overseas EY
PwC
PwC
PwC
Overseas PwC
EY
PwC & Overseas PwC
–
–
162,325
–
162,325
50,750
1,227
–
–
–
–
51,977
7,500
–
7,500
237,660
58,259
417,044
108,591
525,635
–
205,639
350,130
67,408
114,962
738,139
–
108,355
108,355
Total fees paid and payable to the
auditors and their related practices
221,802
1,372,129
Platinum Asset Management Limited Annual Report 2021
101
Note 25. Parent entity information
Set out below is supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
PARENT
2021
$’000
134,936
134,936
2020
$’000
158,096
158,096
2021
$’000
126,250
756,738
9,023
9,023
PARENT
2020
$’000
126,232
756,720
10,431
10,431
747,715
746,289
714,893
31,481
1,341
717,998
26,950
1,341
747,715
746,289
ACCOUNTING
POLICY
The accounting policies of the parent entity are consistent with those of the
consolidated entity except for the following:
–
–
Investments in subsidiaries are accounted for at cost in the parent entity; and
Dividends received from subsidiaries are recognised as other income by the
parent entity.
Note 26. Events after the reporting period
Apart from the dividend declared on 25 August 2021, no other matter or circumstance has
arisen since 30 June 2021 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the Group’s state of affairs in future
financial years.
Platinum Asset Management Limited Annual Report 2021
102
DIRECTORS’ DECLARATION
30 JUNE 2021
In the Directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001,
the Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
the attached financial statements and notes comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board as
described under Basis of Preparation to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated
entity's financial position as at 30 June 2021 and of its performance for the financial year
ended on that date; and
there are reasonable grounds to believe that the Company and consolidated entity will be
able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations
Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the Directors
Guy Strapp
Chairperson
25 August 2021
Sydney
Andrew Clifford
Director
Platinum Asset Management Limited Annual Report 2021
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
103
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Platinum Asset Management Limited (the Company)
and its subsidiaries (collectively the Group), which comprises the consolidated statement of
financial position as at 30 June 2021, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, notes to the financial statements, including
a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a)
Giving a true and fair view of the consolidated financial position of the Group as at
30 June 2021 and of its consolidated financial performance for the year ended on
that date; and
(b)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 104
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
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
thefinancialreport section of our report. We are independent of the Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code
of Ethics for Professional Accountants (including Independence Standards) (the Code) that
are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional 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
thefinancialreport 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
105
Revenue recognition of management and performance fees
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
The Group’s key revenue streams are
management and performance fees
earned by Platinum Investment
Management Limited (PIML), a
consolidated subsidiary, through the
Investment Management Agreements in
place with Platinum Funds and other
investment vehicles.
For the year ended 30 June 2021,
management fees were $265,290,000 and
performance fees were $3,950,000, which
made up of 84% and 1% of total revenue
and other income respectively.
Due to the quantum of these revenue
streams and the impact that the variability
of market-based returns can have on the
recognition and earning of performance
fees, this was considered a key audit matter.
Disclosures relating to these revenue
streams are included in Note 3 to the
financial report.
Our procedures included:
–
–
Recalculating management fees,
on a sample basis, in accordance
with contractual arrangements;
Assessing the performance fees
recognised for the period to 30 June
2021 from investments vehicles on a
sample basis, and assessing whether
they met the relevant revenue
recognition criteria. This included
assessing the inputs into the calculation
model and examining the methodology
applied in accordance with contractual
arrangements; and
–
Assessing the adequacy of the
disclosures in Note 3 to the financial
report in accordance with Australian
Accounting Standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021
106
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
Accounting for investments in associates
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
Investments may be accounted for by
consolidation, equity accounting, joint
venture or as investments at fair value.
The determination of the appropriate
accounting depends upon the ability of
the Group to exercise control or
significant influence.
The Group’s investments in associates
where significant influence was deemed
to be present as at 30 June 2021 was
$107,622,000.
This matter was considered a key audit
matter as judgement is required in
determining the appropriate accounting,
particularly due to the Group’s practice of
seeding investment products, resulting in
ownership percentages changing over time.
Disclosures relating to investments in
associates are included in Note 6 to the
financial report.
Our procedures included:
–
–
–
Evaluating the Group’s assessment of
control or significant influence for each
investment vehicle, and accounting
treatment and presentation thereon;
Performing independent assessment of
control or significant influence over the
associate investments with consideration to:
• Equity ownership
• Representation on the Board of the
directors of the investee
• Participation and ability for the Group to
influence decision making of the investee
• Material transactions between the Group
and the investee
Obtaining external supporting evidence
of the Group’s ownership interest in the
investees, recalculated the carrying
amount by agreeing inputs such as net
asset value and share prices of the
investees, and assessing for any
impairment based on evidence obtained;
–
Assessing the adequacy of the disclosures in
Note 6 to the financial report in accordance
with Australian Accounting Standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
107
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises
the information included in the Company’s 2021 annual report, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly
we do not express any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 108
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as
a whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken
on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgment and maintain professional scepticism throughout the audit.
We also:
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in
the financial report or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
109
•
•
Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 110
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
REPORT ON THE AUDIT OF THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 28 to 52 of the directors’ report
for the year ended 30 June 2021.
In our opinion, the Remuneration Report of Platinum Asset Management Limited for the year
ended 30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Ernst & Young
Rita Da Silva
Partner
25 August 2021
Sydney
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2021 The history of money
and its role in the
modern world
Designed and produced by
3C Creative Agency,
3c.com.au
Article
The history of money
and its role in the modern world
By Julian McCormack
Investment Specialist,
Platinum Asset Management
Artwork by
Edmon de Haro
www.marlenaagency.com
© 2021 Platinum Asset Management Limited
“ Money is the most universal and most
efficient system of mutual trust ever devised.”
Yuval Hariri
II
The history of money and its role in the modern world
Preface
The last 18 months have certainly been a testing time. The global pandemic has
forced us to adjust our lives in ways we never imagined or thought possible.
We have endured lockdowns as well as restrictions on family visits, social
gatherings, exercise and holidays, not to mention the devastating health impact
and tragic loss of life.
We have for the most part adapted, shifting our work (where possible) and
shopping online, ‘Zooming’ our friends and family, and keeping the dream alive
of our next vacation. When able to venture out, we have kept our obligatory
1.5 metres distance and shunned cold hard ‘dirty’ cash in favour of ‘tap and go’.
Yet, money in many respects has become more important than ever.
At an individual level, the ‘value’ of money has undoubtedly increased, as many
employees were stood down and struggled to pay their mortgage, rent, utilities
and groceries. At a broader public level, the value of money has, however, been
somewhat distorted after governments around the world collectively spent an
unfathomable amount to protect their populations and rescue their economies.
With debts racking up into the trillions of dollars, funded largely by central
banks, and no hope of paying it off anytime soon, the mind boggles. It is difficult
to put a value on protecting humanity.
We are now seeing the impact of all this ‘money printing’ in rising inflation, with
a strong rebound in economic activity fuelling a surge in commodity, house and
share prices. With the service sector effectively ‘closed for business’ at various
stages during the pandemic, as we were unable to travel and dine out, there
has been strong demand for manufactured goods, as we improved our homes,
beefed up our technology and curiously, purchased more cars.
The strong demand, coupled with a temporary shut-down in manufacturing in
2020, has caused prices for some consumer goods to soar to decade highs.
Used car and truck prices, for example, rose 45% in the US in the 12 months to
June 2021, reflecting increased demand and supply constraints, such as the
global semiconductor shortage.1
As vaccination rates increase and more economies reopen, we expect this
recovery to gain momentum, particularly as employment grows, confidence
returns and consumers draw down on their accumulated savings. Those who
were able, chose to hold onto the generous government payments last year,
sending savings rates to record high levels of over 30% in the US and 20% in
Australia in 2020.2
1 Source: Federal Reserve Bank of St Louis.
2 Source: Federal Reserve Bank of St Louis; Reserve Bank of Australia.
Platinum Asset Management Limited Annual Report 2021
III
These savings are now making their way back into the economy as consumers
unleash pent-up demand. As this ‘velocity of money’ increases (i.e. how often
money is spent in the economy), inflation usually follows.
Higher inflation should theoretically translate to higher bond yields. However,
at the time of writing, after a brief spike to 1.7% p.a. in March 2021, yields on
US 10-year Treasuries continue to hover below 1.3% p.a. - as the market seems
to accept the premise that the rise in inflation will be ‘transitory’. 3 There is
always a danger in consensus thinking. We aren’t in the business of forecasting
economic variables, however, we believe there is a risk that price rises will be
more long-lasting than what is currently priced in by the markets, which may
see central banks increase official interest rates much earlier than expected.
Such extraordinary levels of money creation and signs of significant inflation
(after a long absence) begs the question of the role and value of money in
society. We place enormous trust in the value of money when we transact.
In our feature article, Investment Specialist Julian McCormack delves into the
origins of money over many centuries - from ‘barter’ and debt, to metal-backed
currencies, fiat currencies and the rise of the US dollar.
It’s a fascinating look at history and makes one
realise just how the form and function of money
has shifted over time – often driven by political and
economic motivations of governments. Central banks
have also played a role, notably their various interest
rate policies and bond-buying activities.
Reflecting on the past provides a valuable perspective on current events. With
inflation creeping up and extraordinarily large budget deficits that need to be
funded at some point, we suspect that change is afoot.
A low interest rate environment has been the primary driver of asset markets in
recent years, a change in that scenario could have significant implications for
equities, particularly high growth stocks, which have been a major beneficiary
of this trend.
Andrew Clifford,
Chief Executive Officer & Co-Chief Investment Officer,
Platinum Asset Management
August 2021
3 Source: FactSet Research Systems.
IV The history of money and its role in the modern world
Platinum Asset Management Limited Annual Report 2021
V
In recent years, we have
stretched the limits of any
traditional understanding of
money via radical policies,
such as negative interest rates,
quantitative easing and yield
curve control. As the global
financial crisis (GFC) saw the
re-writing of the monetary policy
rule book, so the COVID-19 crisis
saw the abandonment of any
pretence of ‘fiscal rectitude’
in every major economy.
The history of money
and its role in the
modern world
By Julian McCormack
In the rebound from the COVID-
induced disruption, inflation
and nominal growth have risen
sharply and debate has raged
about the transience of the
inflationary surge.
As we explored in last year’s
annual report, the defining
characteristic of populists
is that they spend money.1
Now, in order to grapple with
the question of incipient inflation,
we must grapple with defining
money itself.
VI The history of money and its role in the modern world
Money is a social institution whose rules are more like
religious edicts than physical laws. There is nothing
definite about money, save our understanding that it has
value and our trust in that value’s persistence. Money is in
essence a story – and that story is changing.
In this article, we will briefly examine the history of money
and demonstrate that its form and purpose have shifted
over time. Our contention is that another shift is underway
in the function and nature of money at present – with
central banks now effectively providing infinite funding,
which is being married to fiscal spending after 40 years
of austerity – a shift we examine briefly toward the
article’s close.
THE BARTER MYTH
A typical history of money usually starts with a story of
a world of barter transactions transformed into a world
of money-based transactions.2 This is almost certainly
wrong. Credit is, by an enormous margin, more common
than barter in every recorded traditional society.
It is vanishingly rare that any sociologist or
anthropologist has recorded an instance of
barter as a form of exchange – we repeat –
this has almost never been recorded.
Vastly more common is the building of ‘debt’ and its
expunging via social obligation. “I’ll scratch your back if you
scratch mine.” Or “I’ll give you these eggs, if at some time in
the future you help me erect a barn”.3
This may be confused for barter – but note the creation
of obligations that persist through time, not the discrete,
instantaneous exchanges of value described in economics
text books as barter.
Platinum Asset Management Limited Annual Report 2021
VII
MONEY AS CONGEALED TRUST
All societies are based on trust to some degree.
Historically, we developed money not to replace barter,
but to replace trust. Once dealing with large-scale
societies and members of different social groupings, a
unit of exchange becomes necessary. Historically, this did
not tend to emerge until large numbers of people moved
through areas in which they were strangers – particularly
as soldiers.
Having been rewarded with plunder, how might a soldier
transport the value of their loot home? Coins help,
particularly when the coins themselves are made from
precious metals – especially metal recently liberated from
its former owners.
Throughout the history of Europe and
Asia, in periods of relative peace, credit-
based systems of commerce predominate;
in periods of war and generalised violence,
coin-based systems predominate.4
Precious metal coins evolved as money in order to
substitute for prior exchanges of value based on trust
and reciprocity.
“ Money is the most universal and most efficient system of
mutual trust ever devised… Money isn’t a material reality –
it is a psychological construct... But why does it succeed?
People are willing to do such things when they trust the
figments of their collective imagination. Trust is the raw
material from which all types of money are minted.”5
VIII
The history of money and its role in the modern world
MONEY WAS RARELY A STATE-BACKED MONOPOLY
UNTIL RECENTLY
For most of its history, money has comprised varied
mediums of exchange with different issuers whose coins
and notes were in mixed circulation across multiple
jurisdictions. In antiquity, the value of coinage was based
on the content of the metal it was composed of, meaning
that a Persian coin, such as a Daric, was readily usable
in ancient Greece, as the purity of the metal content was
generally accepted.6
Ancient merchants issued certificates of deposit, which
could be transferred to third parties in different states.
These were specific and contractual, rather than general
bearer receipts representing specific, repeated, face-
values in coin or equivalent value.7
The first genuine ‘paper money’ was developed by the
Chinese, and again, it was not originally a state monopoly
system.8 In 9th century China, ‘exchange notes’ were
developed – these were negotiable certificates dubbed
‘flying money’. These precursors of banknotes were
widespread in China by the early 11th century.9
Later, in Europe, banknotes – literal IOUs claimable against
an individual bank or depositor at a bank – were in common
circulation alongside centrally issued notes and coins
for centuries. In more modern times, the acceptance
of Spanish silver coins was so widespread in the United
States in its early years, that its more important forms
were recognised as legal tender.
The dollar sign ‘$’ derives from the
superimposition of a ‘P’ and an ‘S’, which
was a symbol for peso. Spanish coins
remained in circulation until the middle of
the 19th century in the US.10 There was no
monopoly on the issue of currency within
nation states until relatively recently.11
Platinum Asset Management Limited Annual Report 2021
IX
X
The history of money and its role in the modern world
CENTRAL BANKS EMERGED SPECIFICALLY TO FINANCE
GOVERNMENTS, ESPECIALLY THEIR WARS
The foundation of the central bank par excellence, the
Bank of England, occurred in 1694, when the Bank was
established to assist William III in funding his ongoing war
with France. The Bank was private, with King William III
and Queen Mary among its original stockholders, and was
granted a royal charter enabling it to issue bank notes and
act as a banker to the government.
This was necessary largely because of the strength of
Parliament, which had responsibility for issuing supply
bills since the 15th century and whose power had been
increased by the Glorious Revolution of 1688-89, which
installed William III and Queen Mary.
The foundation of one of the world’s early12 and preeminent
central banks was necessary as a result of Parliament’s
intentional underfunding of a war.13 The Bank of England
was private and existed alongside other banks, each
issuing their own currency in the form of bank notes.
THE GOLD STANDARD WAS AN ACCIDENT
It was only by mistake that multi-metallism and
bimetallism slipped into gold-only backing for currency.
Prior to the late 17th century, the Royal Mint was managed
by the Company of Moneyers, whose members were
notorious for “self-dealing, corruption and drunkenness”.14
To deal with the situation, the British
government took the extraordinary step of
appointing Sir Isaac Newton to the post of
Warden of the Mint in 1696, which he gladly
accepted for its handsome salary.
Despite his genius, Newton was in some financial hardship
at the time.15 Newton’s initial responsibilities revolved
around assaying and the prevention of counterfeiting,
which was rife at the time. Eventually, he grappled with the
problem of an outflow of silver and sought to set the price
of gold and silver relative to each other in Britain.
Platinum Asset Management Limited Annual Report 2021
XI
In doing so, however, he set the price of silver relative to
gold too cheaply versus other European powers, causing
silver to flow offshore and over time, locking Britain into a
de facto monometallic gold standard.
This occurred by draining the Bank of England’s reserves
of silver and leaving gold alone to dominate the reserves
held in British banks.16
A similar dynamic occurred in the US. The country’s
first Treasury Secretary Alexander Hamilton, drawing
inspiration from Newton’s 1717 report on setting the ratio
of gold and silver, set this ratio for the metals in the US
at 15:1.
However, the market value of the metals relative to each
other changed – discoveries of huge, silver-rich mines in
Nevada helped to drive down the price of silver relative to
gold, such that the ratio of the prices in the open market
drifted out to 16:1 by the 1810s.
This effectively created an arbitrage
opportunity – a holder of silver could sell
silver for gold, take that gold to the Mint
to exchange it back into silver, sell that
silver for gold on the open market and
make a profit.
This resulted in gold being driven out of circulation – an
example of Gresham’s Law in operation – leaving gold as the
dominant reserve metal.17
Simply put – the gold standard arose by mistake.
XII The history of money and its role in the modern world
Platinum Asset Management Limited Annual Report 2021
XIII
The gold standard never implied that currency was actually
‘backed by gold’ in any literal sense – no country ever had
a currency fully backed by gold in the modern era, with
the proliferation of trade acceptances, bank notes and
other instruments ensuring that currency in circulation
was always multiples of gold backing and that the rate of
backing was not constant. As an example, in Britain, in
1913, currency in circulation was backed approximately
one-part-in-seven by gold.18
Gresham’s Law: ‘Good money’ leaves circulation,
leaving ‘bad money’ traded. Where people
mistrust the value of a currency, they seek to
hoard more trustworthy alternatives – leaving
the ‘bad money’ in circulation; and where an
arbitrage exists, the ‘cheap’ money will remain
in circulation, with the ‘dear’ money forced out
of circulation.19
THE HEADY BENEFITS OF GOLD
Adherence to at least a partial backing of currency by
gold, assisted states in gaining access to London capital
markets in the 18th and 19th centuries. Partial gold
backing gave creditors some confidence of repayment,
thus allowing credit to flow, paradoxically diminishing the
backing of gold to currency!
How the gold was acquired was irrelevant: for example,
Japan’s industrialisation was catalysed by the seizure
of gold from China following the 1894-95 Sino-Japanese
War via massive reparations, which facilitated Japanese
borrowing in London.20
For merchants and investors, trade credit and foreign
direct investment were catalysed by use of the gold
standard due to the tradability of merchants’ acceptances
and bank bills globally.
XIV The history of money and its role in the modern world
For merchants, there were huge financing advantages in
being able to borrow against future cargoes or revenue
streams. On the other hand, creditors were able to
on-sell credit risk in the form of discounted merchants’
acceptances.
Throughout the 19th and early 20th centuries this was
easiest in London by a wide margin, given the immense
depth of the market for acceptances there relative to any
other financial centre.21
GOLD’S COLOSSAL COSTS
The gold standard had two colossal costs. It was deeply,
cruelly regressive; and it was ferociously unstable.
The functioning of the classical gold standard allowed for
gold to function as a money supply equilibration tool, which
tended toward a shrinking money supply and deflation in
order to stem gold outflows caused by any rise in domestic
prices, as shown in the diagram on the right.22
The effect of this cycle, with specie (gold)
flowing out of economies in the presence
of trade deficits, was to induce periodic
bouts of deflation and deep recessions. One
effect of these recessions, in the absence of
social safety nets of the modern state, was
to steeply reduce life expectancy during and
in their aftermath. The gold standard was
brutal in its impacts on everyday people.23
The 19th century was racked by financial crises and a run
on banks roughly once every 10 years somewhere in major
financial centres globally.24
The reason is simple, and inherent to the gold standard
itself. The banking system created money in the form
of banknotes and merchants’ acceptances. These were
all exchangeable for gold, albeit usually at a discount.
However, the system itself was always multiple times
geared in terms of currency in circulation versus available
gold supply.
Platinum Asset Management Limited Annual Report 2021
XV
GOLD FUNCTIONED AS A MONEY SUPPLY EQUILIBRATION TOOL
GOLD INFLOW
(= INCREASED MONEY SUPPLY)
GOLD INFLOW
(= INCREASED MONEY SUPPLY)
TRADE SURPLUS
(EXCESS EXPORTS)
DOMESTIC PRICE
INFLATION
TRADE SURPLUS
(EXCESS EXPORTS)
DOMESTIC PRICE
INFLATION
LOWER DOMESTIC PRICES
ENCOURAGE EXPORTS,
HINDER IMPORTS
HIGHER DOMESTIC PRICES
ENCOURAGE IMPORTS,
HINDER EXPORTS
DOMESTIC PRICE
DEFLATION
TRADE DEFICIT
(EXCESS IMPORTS)
GOLD OUTFLOW
TO PAY FOR EXCESS IMPORTS
(= DECREASED MONEY SUPPLY)
LOWER DOMESTIC PRICES
ENCOURAGE EXPORTS,
HINDER IMPORTS
HIGHER DOMESTIC PRICES
ENCOURAGE IMPORTS,
HINDER EXPORTS
DOMESTIC PRICE
DEFLATION
TRADE DEFICIT
(EXCESS IMPORTS)
GOLD OUTFLOW
TO PAY FOR EXCESS IMPORTS
(= DECREASED MONEY SUPPLY)
XVI The history of money and its role in the modern world
At the first hint of instability or insolvency on the part of
one or more banks, all participants had both the incentive
to exchange currency for gold, and the legal right to do so.
The arbitrary assignment of a metal as the determinant of
value for currency, and as a limit to its supply, did nothing
to avert instability – indeed, it encouraged it.
US AND BRITISH BANKING CRISES UNDER THE GOLD STANDARD
1908
NEW YORK
BANKING CRISIS
1905
CHICAGO
BANKING CRISIS
1899
NEW YORK
BANKING CRISIS
1893
US BANKING
CRISIS
1821
MISSOURI
BANKING
CRISIS
1836-37
BRITISH
BANKING
CRISIS
1847
BRITISH
BANKING
CRISIS
1866
BRITISH
BANKING
CRISIS
1878
BRITISH
BANKING
CRISIS
1890
NEW YORK
BANKING
CRISIS
BRITISH
BANKING
CRISIS
1825
US BANKING
CRISIS AND
DEPRESSION
1837
BRITISH
BANKING
CRISIS
1857
US BANKING
CRISIS
1873
NEW YORK
BANKING
CRISIS
1884
BRITISH
BANKING
CRISIS
1891
MIDWESTERN
US BANKING
CRISIS
1896
MID-ATLANTIC
US BANKING
CRISIS
1903
US BANKING
CRISIS
1907
Source: https://www.federalreservehistory.org/essays/banking-panics-of-the-gilded-age
https://www.researchgate.net/publication/299890635_British_Financial_Crises_in_the_
Nineteenth_and_Twentieth_Centuries
https://www.stlouisfed.org/a-foregone-conclusion/chapter-one
Platinum Asset Management Limited Annual Report 2021
XVII
THE BRETTON WOODS SYSTEM – EXORBITANT PRIVILEGE,
NAKED POWER
In the final stages of World War II, with Allied victory
relatively certain, one of the world’s most influential living
economists faced off against a US Treasury functionary
to decide the fate of the non-communist world’s
monetary system.
John Maynard Keynes had been a leading economist for
30 years and the most exalted economist globally for over
a decade. He set forth his ideas for a global balance of
payments adjustment system using a new, international
unit of exchange known as the Bancor, to be administered
by an International Clearing Union. The system was
elegant, flexible, fair and sought to avoid risks caused by
extreme imbalances, both for deficit and surplus nations.
Squaring off against Keynes was a largely unknown
economist, Harry Dexter White. He was no slouch himself,
a PhD with degrees from Stanford and Harvard. He also
happened to represent the nation that accounted for
one-half of global industrial production at the time.25
Readers can likely guess what happened.
Despite a clearly articulated explanation
of a functional international balance of
payments system delivered by such an
esteemed economist, raw power won the day.
In July 1944, at a holiday resort named Bretton Woods in
New Hampshire, all key Allied powers agreed to install
the US dollar as the dominant unit of exchange in all
international transactions, and avoid any penalty or
self-balancing mechanism for inveterate surplus-
generating nations.
Why? Because the Americans were the preeminent
creditor nation globally, and in White’s words, they did not
want to be repaid in “funny money”.26
XVIII
The history of money and its role in the modern world
POST BRETTON WOODS – FROM CREDITOR TO DEBTOR
AND ONTO FUNNY MONEY
The flaw in the Bretton Woods System, similar to those
of the classical gold standard, is that it rested on the
commitment of one country to provide two reserve assets:
dollars, the supply of which is unlimited; and gold, the
supply of which is limited. The problem was articulated as
early as 1947 by Belgian born economist Robert Triffin –
indeed the paradox became known as the ‘Triffin Dilemma’.
This stated that should the US not provide
enough dollars to fund a growing global
economy, growth would be stifled and the
system would grind into a deflationary rut;
however, should the US provide ample dollar
funding to promote global growth, then
the backing of the dollar by gold would be
thrown into question. The dollar would then
become susceptible to the international
equivalent of a bank run.
American liabilities to foreigners first exceeded US gold
reserves as early as 1960. Rapidly growing and efficient
Germany and Japan found themselves posting large trade
and current account surpluses and thus accumulating
dollars throughout the 1950s and 1960s. Would these dollar
reserves hold their value, when clearly gold backing for
such large reserves was insufficient?
Speculation mounted against the dollar throughout
the 1960s and institutional responses included the
foundation of a Gold Pool to share the cost of meeting
gold redemptions, the issuance of Special Drawing Rights
by the International Monetary Fund (IMF) in an attempt to
provide an alternative reserve asset (Bancor anyone?) and
the use of exchange rate bands around the dollar known as
the ‘snake’. It was all too little too late.
In August 1971, after Britain requested a large redemption
of dollars for gold in order to meet redemptions against
the imperilled pound, US President Richard Nixon did the
inevitable and suspended the convertibility of gold for
dollars. It was never to be reinstated.27
Funny money indeed.
Platinum Asset Management Limited Annual Report 2021
XIX
% of
GDP
0
5
-5
-10
-15
-20
Gold inflow
(= increased money supply)
Trade surplus
(excess exports)
Domestic price
inflation
Lower domestic prices
encourage exports,
hinder imports
Higher domestic prices
encourage imports,
hinder exports
Domestic price
deflation
Trade deficit
(excess imports)
The history of money and its role in the modern world
Gold outflow to pay
for excess imports
(= decreased money supply)
XX
POST 1971: ADRIFT IN A FIAT OCEAN
%
annual
rate
Since 1971, global trade, investment and general economic
activity have come to rest on floating currencies, unbacked
by gold or any other ‘hard asset’ (i.e. fiat currencies). The
US dollar has retained dominance of global transactions
– it is used in approximately 85% of all foreign exchange
transactions, with US exports only representing 13% of the
global total and US foreign direct investment just 20%.28
4.0
0.0
2.0
3.0
1.0
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 2018
Germany
UK
USA
China
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
-1.0
The purchasing power of all currencies has
utterly collapsed versus any form of hard
asset – gold, commodities, real property
and so forth.
Japan
-3.0
-2.0
When charted beside the currency debasements of the
late Roman Empire – the collapse in the buying power
of the dollar since 1971 measured in gold looks similarly
cataclysmic. In gold terms, the dollar has lost roughly 98%
of its value in 50 years (see below).
However, the commercial world keeps turning. Economic
agents continue to accept and use state-issued, unbacked
fiat currency, the dominance of which is unchallenged,
with alternatives, such as gold or crypto currencies,
peripheral at best.29
ROMAN SILVER COINAGE
VALUE OF US DOLLAR IN GOLD
AVERAGE PERCENTAGE OF SILVER IN COINS MINTED
IN A.D. 1 - A.D. 300 (INCLUSIVE)
1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300
A.D.
%
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
Index,
Dec 1969
= 100
100
90
80
70
60
50
40
30
20
10
0
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
Source: https://warwick.ac.uk/fac/arts/classics/staff/butcher/debasement_and_decline.pdf;
Bloomberg.
Platinum Asset Management Limited Annual Report 2021
XXI
A WORLD IN A DAZE: THE POST-GFC PERIOD TO 2020
The post-GFC period to 2020 was replete with breathless
reporting about “unprecedented monetary policies” and
some amount of fear about “Keynesian” excesses and “big
government”.30 The trouble with that narrative was that it
was untrue.
There was little unprecedented about the monetary
response of policy officials globally – interest rate setting/
manipulation, zero rates and bond buying were all features
of the Depression-era monetary responses to the 1929
Wall Street Crash in many countries, notably in the US and
Japan – albeit slower in most major economies and with
highly unhelpful tariffs imposed globally.31
Far from there being a wave of huge Keynesian
policy responses, there was little fiscal
support for major economies after 2010.
Every major economy shrank their respective
budget deficits from 2010 onward.
In Europe, Germany seized the opportunity of the crisis
to discipline the spendthrift peripheral nations of the
European Union (EU). In the US, the 2010 Tea Party
revolution saw fiscal hawks become pivotal in the House,
advocating for spending cuts and lower deficits. China’s
initial stimulus came in the form of bank-directed credit
growth, which resulted in the deep financing reforms and
industrial slowdown of 2013-16.
This contrasts with massive fiscal support unleashed in
major economies in the 1930s by ‘populists’ in most major
economies of the day.32 Populists re-emerged toward
the end of the 2010s and fiscal restraint began to erode,
most notably in the form of the Trump tax cuts, which
entrenched ~5% of gross domestic product (GDP) budget
deficits as a permanent feature of US fiscal policy.33
There was also friction within Europe about the strictures
of the EU’s fiscal compact, which seeks to limit budget
deficits to 3% of GDP and government debt to 60%
of GDP.34
XXII The history of money and its role in the modern world
Platinum Asset Management Limited Annual Report 2021
XXIII
We have written for several years about
the emergence of populism and its largely
overlooked core definition: populists spend
money! Extraordinary shifts in public
opinion about trade policy, socialism and
nationalism have followed.35
However, the coup de grâce of 40 years of austerity in fiscal
policy may have come with the policy responses to the
2020 COVID-19 pandemic.
Gold inflow
Gold inflow
(= increased money supply)
(= increased money supply)
2020: THE COUP DE GRÂCE FOR AUSTERITY?
Trade surplus
Trade surplus
(excess exports)
(excess exports)
After 40 years of falling interest rates and declining/
low inflation in the developed world, investors have been
trained to believe that inflation is impossible. Central
banks globally begged elected officials to spend money
for a decade – and in general, they refused to do so in most
large economies.36 That was until 2020.
Lower domestic prices
Lower domestic prices
encourage exports,
encourage exports,
hinder imports
hinder imports
Domestic price
Domestic price
deflation
deflation
Just as the GFC saw the abandonment of monetary
rectitude among central bankers, so the reaction to
COVID-19 may have seen the abandonment of any
pretence of fiscal discipline among elected officials
in the developed world.
Gold outflow to pay
Gold outflow to pay
for excess imports
for excess imports
(= decreased money supply)
(= decreased money supply)
CENTRAL GOVERNMENT BUDGET BALANCES
5
5
0
0
% of
% of
GDP
GDP
-5
-5
-10
-10
-15
-15
-20
-20
1968
1968
1973
1973
1978
1978
1983
1983
1988
1988
1993
1993
1998
1998
2003
2003
2008
2008
2013
2013
2018
2018
Germany
Germany
UK
UK
USA
USA
China
China
Japan
Japan
2003
2003
2005
2005
2007
2007
2009
2009
2011
2011
2013
2013
2015
2015
2017
2017
2019
2019
2021
2021
Source: Bloomberg; OECD; Fitch. Annual data to 2020.
Average percentage of silver in coins minted in A.D. 1 to A.D. 300 (inclusive)
Average percentage of silver in coins minted in A.D. 1 to A.D. 300 (inclusive)
1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300
1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300
Index,
Dec 1969
Index,
Dec 1969
= 100
= 100
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
A.D.
A.D.
%
%
100
100
95
95
90
90
85
85
80
80
75
75
70
70
65
65
60
60
55
55
50
50
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
Domestic price
Domestic price
inflation
inflation
Higher domestic prices
Higher domestic prices
encourage imports,
encourage imports,
hinder exports
hinder exports
Trade deficit
Trade deficit
(excess imports)
(excess imports)
%
annual
%
annual
rate
rate
4.0
4.0
3.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
-1.0
-1.0
-2.0
-2.0
-3.0
-3.0
5
% of
GDP
0
-5
-10
-15
-20
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
2018
Germany
UK
USA
China
Japan
Gold inflow
(= increased money supply)
Trade surplus
(excess exports)
Domestic price
inflation
Lower domestic prices
encourage exports,
hinder imports
Higher domestic prices
encourage imports,
hinder exports
Domestic price
deflation
Trade deficit
(excess imports)
XXIV
The history of money and its role in the modern world
Gold outflow to pay
for excess imports
(= decreased money supply)
Correspondingly, inflation and inflation expectations
rose dramatically.
US 5-YEAR BREAKEVEN INFLATION RATE
%
annual
rate
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Source: Federal Reserve Bank of St. Louis. Data as at 18 August 2021.
At present, debate rages about the permanence or
transience of 2021’s inflation surge. The breakeven rates
for the US, currently project an inflation rate of 2.5% in five
years’ time, close to 20-year highs.
Average percentage of silver in coins minted in A.D. 1 to A.D. 300 (inclusive)
And we believe that inflation may well
prove more durable than many foresee.
However, more important is the insight
that there is nothing remotely resembling
a physical law that defines inflation.
1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300
A.D.
%
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
ON INFLATION
It is reasonably clear that no central bank, nor economic
observer, has a robust, predictive model of inflation. One
member of the Federal Reserve board is reported to have
described inflation modelling in the early 2010s as “crap in,
crap out”.37 US Federal Reserve (Fed) Chairs have shifted
between a core and headline consumer price index (CPI) as
their preferred measure of inflation.38 Additionally, robust
measures of inflation are rejected if they give problematic
modelling results.39 This is hardly a scientific approach.
Index,
Dec 1969
= 100
100
90
80
70
60
50
40
30
20
10
0
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
Platinum Asset Management Limited Annual Report 2021
XXV
It also seems reasonably clear that inflation is a multi-
variate phenomenon, with causation stemming from
diverse factors, such as wealth and income distribution,
savings rates, money supply, and interest rates as well
as institutional factors, such as the power of
organised labour.
What seems absolutely clear is that Milton Friedman’s
aphorism that “inflation is always and everywhere a
monetary phenomenon” is at best an oversimplification.
See below for Paul Volcker’s view:
“ …when we talk about credibility, I think
far, far, too much emphasis is put on these
monetary targets.”40
Perhaps most powerfully – inflation may be what we
expect it to be. This is the “rational expectations” school
of inflation causation: no policy tool can be employed
to fight (or encourage) inflation, unless it is expected to
work by enough economic agents within a system.41 It is
worth remembering that in the late 1970s, it was accepted
by virtually all serious economists that inflation was a
persistent feature of the system.42 This was on the cusp
of the “Volcker Shock” and the taming of inflation for
a generation.
Contrast this to the situation which presents itself now:
there is close to universal consensus that inflation is
transitory. Bond markets globally at the time of writing are
strengthening, with yields falling and curves flattening,
despite buoyant commodity prices, inflation expectations,
business survey results and consumer expectations.
Moreover, just as Volcker was explicit about the need to
tame inflation, today’s central bankers appear resolute
in their desire for increased inflation and perfectly
comfortable with rates of inflation above target for
periods of time.43
XXVI The history of money and its role in the modern world
MODERN MONETARY THEORY
For well over a decade, a series of ideas have percolated
around the fringes of mainstream economics, which
appear to describe the functioning of monetary systems
in the post-1971 fiat world well, those of Modern Monetary
Theory (MMT). MMT provides a description of pure fiat
monetary systems, which is sensible and robust, and
corresponds well to massive debt accumulations seen
by governments with deep capital markets and widely
accepted currencies.
To summarise:
•
•
•
•
•
•
There is little ‘debt like’ about government debt in its
own currency – it can be extinguished instantly and
is functionally an offset account to reserves in the
banking system;
Taxes are not solely collected in order to spend the
money, as money can be created instantly via issuance
of government bonds (remembering that these are
just offset accounts to bank reserves) as well as in
the banking system, where the vast majority of money
creation occurs;
Fiat currency maintains a value in part because citizens
must pay tax in that currency;
Taxes also have impacts on aggregate demand and by
extension inflation and wealth distribution, and can be
used to condition behaviour (e.g. ‘sin’ taxes);
There is no inter-generational burden of government
debt in a government’s own currency – remember, it can
be extinguished instantly;
The consequence of excessive government bond
issuance or direct money creation is currency weakness
and inflation – NOT insolvency or penury.44
This framework provides a reasonable
basis for understanding how Japan has
accumulated colossal government debt,
with no inflation, no currency collapse and
reasonable economic outcomes.
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XXVII
XXVIII
The history of money and its role in the modern world
Real per capita GDP in Japan has grown comparably or even
faster than that of the US since the peak of ‘Japan mania’ in
198945 and the country’s ratio of employed persons to total
population is higher than that of the US.46 This has also been
achieved with far lower income and wealth inequality than
in the US.47
This would seem to be inconsistent with classical
economics’ notions of ‘crowding out’ or the existence of an
inverse relationship between interest rates and inflation.
These are simply unobservable. An MMT explanation of the
role of money and debt in fiat economies appears to offer a
reasonable approximation of reality.
CONCLUSION
We would counsel against passive acceptance of
consensus when thinking about a phenomenon as
incredibly complex as inflation, especially in the face of
monetary policy tools that allow for effectively limitless
money creation, in combination with ambitious fiscal
targets globally.
However, more profoundly, we would highlight the central
point of this article – money is a fluid, social institution,
and the governing structures around it – centrals banks,
treasuries, monetary policy settings and tools – are all
subject to profound change.
There is every chance that we are living
through a period of such change, that
decades of no change have shifted to weeks
of decadal change.
Fed buying of corporate bonds, unprecedented peace-time
budget deficits, profound questioning of globalisation,
massive transfer payments, unprecedented savings
rates, and huge asset price surges, indicate there is ample
evidence to suggest this.
Platinum Asset Management Limited Annual Report 2021
XXIX
POST SCRIPT: MONEY IS POLITICAL
In the last two centuries, Britain and the US, both creditor
nations, embraced and expanded forms of a gold standard,
but when their trade and current account positions slipped
into deficit, they pushed for revaluations, and finally
abandoned their respective versions of a gold
standard altogether.
Britain lacked the economic and military power to retain
reserve currency status without gold backing. The US
remained the dominant military and industrial power
globally after 1971 and its power increased in subsequent
decades given the decline and fall of the Soviet Union
and related communist states. And of course, the dollar
retained reserve currency status.
The loudest voices clamouring for ‘hard money’ systems
tend to be creditors, or those ideologically aligned with
them. There is a distinct moral overtone to gold standard/
hard money arguments.
Take for example Jim Rickard’s view:
“ A gold standard is the ideal monetary
system for those who create wealth through
ingenuity, entrepreneurship, and hard work.
Gold standards are disfavored by those who do
not create wealth but instead seek to extract
wealth from others through inflation, inside
information, and market manipulation.”48
How, precisely, the use of gold in monetary policy
would avoid market manipulation and the use of inside
information escapes your humble author. Any passing
knowledge of the 1920s will suffice to dispel such
a notion.49
There is also a tendency to millennialism and dark
prophecy, such as Ronald Reagan’s statement before the
1982 election that:
“ No nation in history has ever survived fiat money, money
that did not have precious metal backing.”50
XXX
The history of money and its role in the modern world
The glaring logical fallacies here are that vanishingly
few nations in history have survived having any form of
currency, or anything for that matter – all nations fall
eventually – and that all nations in existence today have
unbacked currencies.
The delicious irony is that economic policies under US
President Reagan saw fiscal deficits, which increased the
level of national debt from 22% to 38% of GDP.51
So much for prophecy.
The Cantillon Effect: Money may not be
neutral. If money enters circulation at a
specific point, say the banking system, then
inflationary effects may have an outwardly
radiating effect, allowing early holders
of the ‘new’ money to benefit in terms of
spending power.52
To demonstrate – imagine that it is 1610, and a huge
shipment of gold arrives in Spain from the New World, and
that the influx of gold goes on to trigger inflation. Now,
imagine that prior to docking, one of the sailors takes
a tender and races to shore to spend his share of the
gold. He gets the advantage of spending the gold, before
the inflationary impact of the rest of the bullion on the
economy is felt, thus enjoying a possibly significant benefit
in terms of buying power versus other people in Spain
affected later by the increase in money supply.
Now, imagine that a hedge fund manager is a close
counterparty with a money centre bank, and that the
Federal Reserve injects huge levels of funding into the
banking system to shore it up in a period of volatility. The
hedge fund manager may benefit from that liquidity before
virtually anyone else in the economy given the rapidity
with which they can draw on credit via their banking
relationships, access to capital, and ability to deploy that
capital rapidly.
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XXXI
XXXII The history of money and its role in the modern world
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Julian McCormack, “The Dam has Broken”, Platinum Asset Management 2020 Annual Report, pp v-xxv, https://www.platinum.com.au/
PlatinumSite/media/Financial-Statements/ptm_0620.pdf
See for instance: https://www.forbes.com/sites/peterpham/2017/11/20/what-is-money/#3c2a124816ea
This set of ideas is taken from David Graeber’s excellent work “Debt: The First 5,000 Years”, Melville House, Brooklyn, 2011. See especially
pp22-28
Ibid, pp212-214
Yuval Hariri, “Sapiens: A Brief History of Humankind”, Vintage Books, 2011, p131
See for example: https://coinweek.com/ancient-coins/ancient-coins-wealth-persian-empire/
https://www.theibns.org/joomla/index.php?option=com_content&view=article&id=251&limitstart=1
https://www.theibns.org/joomla/index.php?option=com_content&view=article&id=251&limitstart=1
Heilbrunn Timeline of Art History. New York: The Metropolitan Museum of Art, http://www.metmuseum.org/toah/
ht/?period=07®ion=eac#/Key-Events, accessed 28 August 2015; Paper Money, http://www.silkroadfoundation.org/artl/papermoney.
shtml, accessed 2 July 2019
Barry Eichengreen, “Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System”, Oxford
University Press, 2011, p12
See for example: https://www.economist.com/briefing/2017/04/27/the-history-of-central-banks
Sweden’s Riksbank is recognised as the world’s first central bank, founded in 1664, https://www.clevelandfed.org/en/newsroom-and-
events/publications/economic-commentary/economic-commentary-archives/2007-economic-commentaries/ec-20071201-a-brief-
history-of-central-banks.aspx
https://www.parliament.uk/about/living-heritage/evolutionofparliament/parliamentaryauthority/revolution/overview/financialrevolution/;
https://www.bankofengland.co.uk/about/history ; https://www.economist.com/briefing/2017/04/27/the-history-of-central-banks
Eichengreen, pp14-15
Ibid. Also https://www.royalmint.com/discover/uk-coins/sir-isaac-newton/
Mark Metzler, “Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan”, University of California Press,
2006, p18
https://oll.libertyfund.org/titles/laughlin-the-history-of-bimetallism-in-the-united-states-1898/simple#lf0073_label_056; Milton
Friedman, “Bimetallism Revisited”, Journal of Economic Perspectives, Volume 4, Number 4, Fall 1990
Liaquat Ahamed, “Lords of Finance: 1929, The Great Depression and the Bankers Who Broke the World”, Random House, 2009, p168
See for example: https://www.economist.com/buttonwoods-notebook/2010/03/25/currency-controls-and-greshams-law
Metzler, pp29-33
Eichengreen, pp15-18
From Metzler, p19
See for example: “Long-Term Trends in Life Expectancy and the Consequences of Major Historical Disasters”, https://www.demogr.mpg.de/
books/drm/009/part1.pdf, p6
Edward Chancellor, “Devil Take the Hindmost: A History of Financial Speculation”, Plume, 2000, p121; https://www.federalreservehistory.
org/essays/banking-panics-of-the-gilded-age
Eichengreen, p39
See Eichengreen pp44-46; Takekazu Iwamoto, “The Keynes Plan for an International Clearing Union reconsidered”, Kyoto University
Economic Review, Vol. 65, No. 2, October 1995, pp 27-42; https://www.economist.com/the-economist-explains/2014/06/30/what-was-
decided-at-the-bretton-woods-summit
Eichengreen, pp49-57; William L Silber, “Volcker: The Triumph of Persistence”, Bloomsbury, 2012, pp48-105
Eichengreen, p2
See for example: https://www.platinum.com.au/Insights-Tools/The-Journal/Bitcoin-Primer
Danielle DiMartino Booth, “Fed Up: An Insider’s Take on Why the Fed is Bad for America”, p65, p88, p159
Ray Dalio, “Principles for Navigating Big Debt Crises”, Greenleaf, 2018; see also Chancellor, chapter 7; Richard J Smethurst, “Takahashi
Korekiyo, Japan’s Keynes: From Foot Soldier to Finance Minister”, Harvard, 2007
Note – the term populist is widely misused, versus its initial meaning – i.e. a member or supporter of the Populist Party in the US, which
arose in the 1890s and favoured policies like the use of silver to increase the money supply and alleviate debt for farmers and workers –
see Thomas Frank, “The People, No! A Brief History of Anti-Populism”, Metropolitan Books, 2020
https://www.cbo.gov/publication/55551
https://www.europarl.europa.eu/factsheets/en/sheet/89/the-eu-framework-for-fiscal-policies
See for example: https://www.independent.co.uk/news/world/americas/americans-socialism-positive-axios-poll-b1874049.html
See for example: https://www.bloomberg.com/news/articles/2019-11-11/ecb-s-mersch-adds-voice-in-call-for-more-fiscal-stimulus;
https://www.brookings.edu/blog/ben-bernanke/2020/01/04/the-new-tools-of-monetary-policy/; https://www.theguardian.com/australia-
news/2019/jul/02/reserve-bank-governor-calls-for-more-federal-spending-to-boost-economy; https://www.washingtonpost.com/
opinions/2019/03/07/risk-our-economy-secular-stagnation/; https://www.afr.com/topic/monetary-policy-5zu
This was James B Bullard, quoted in DiMartino Booth, p249
Ibid
Ibid
Silber, p172
See Silber, pp115-118
Silber, pp172-175
https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm; https://www.ecb.europa.eu/home/search/review/html/index.
en.html
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf; http://moslereconomics.com/wp-content/uploads/2018/04/Soft-
Curency-Economics-paper.pdf; Stephanie Kelton, “The Deficit Myth: How to Build Better Economy”, John Murray Press, 2020
https://ourworldindata.org/grapher/real-gdp-per-capita-pennwt?time=1989..2017&country=JPN~USA
https://data.worldbank.org/indicator/SL.EMP.TOTL.SP.ZS?locations=JP-US
https://www.weforum.org/agenda/2015/03/why-inequality-is-different-in-japan/;
https://data.oecd.org/inequality/income-inequality.htm
James Rickards, “The Death of Money: The Coming Collapse of the International Monetary System”, Penguin, 2015, p287. Also note the
American neologism – “disfavored”…really?
See for example: John Brooks, “Once in Golconda: A True Drama of Wall Street, 1920-1938”, Wiley, 1969
https://www.forbes.com/sites/johntamny/2015/11/18/ted-cruz-and-rand-paul-versus-critics-of-the-gold-standard/?sh=536365678238
https://www.econlib.org/library/Enc1/Reaganomics.html
See for example: https://www.aier.org/article/sound-money-project/cantillon-effects-and-money-neutrality
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