Annual
Report
2022
Platinum Asset Management Limited
ABN 13 050 064 287
B
Directors
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Kerr Neilson
Philip Moffitt (appointed on 17 December 2021)
Andrew Clifford
Elizabeth Norman
Andrew Stannard
Tim Trumper (resigned on 17 November 2021)
Company Secretary
Joanne Jefferies
Shareholder Liaison
Elizabeth Norman
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/About-Platinum/PTM-Shareholders
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 2022Page HeadingPAGE SUB HEADING Contents
Chairperson’s Report
Year in Review
Managing Director’s Letter
Our Journal
Shareholder Information
Directors’ Report
Remuneration 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
1
2
6
8
16
20
23
33
71
72
74
76
78
79
119
120
Platinum Asset Management Limited Annual Report 2022 2
Chairperson’s Report 2022
The FY22 year will be remembered as unusually volatile and dramatic.
For the full financial year, global equity markets (as measured by the
MSCI AC World Net Index (A$)) fell 8%, with a strong first half more
than offset by a 16% fall in the six months to 30 June 2022, as the
prolonged bull market came to an end. This fall reflected an unusually
broad raft of public health, political and economic challenges that
included the continued fight against COVID-19, the Russia-Ukraine war,
climate change, rising inflation and the consequential tightening of
monetary policies.
As a global equities fund manager that is heavily exposed to both rising and falling markets,
Platinum’s own share price decreased dramatically, closing the 2022 financial year at $1.74,
down from $4.91 at the start of the financial year. The decrease reflects a range of factors,
some of which were within our ability to control (most notably our investment performance
for clients and resultant net outflows) and some of which were not (the impact of general
market declines on our fee revenue and a broader de-rating of the whole industry sector
by investors).
In this challenging environment, it is important to consider Platinum’s long-term business
strategy. In summary, Platinum’s strategy is to maintain a strong team and culture, deliver
good investment returns over the long term, grow funds under management (FUM) both
domestically and by building offshore distribution capability, and ensure we have efficient
and scalable infrastructure. The Platinum team made good progress on delivering many
aspects of the strategic plan over the past year. However, it remains clear that consistently
good investment returns are crucial to achieving growth in FUM and, thereby, growth in
profits and shareholder returns.
Funds Under Management (FUM)
FUM as at 30 June 2022 was $18.2 billion, a decrease of 22.6% from the 30 June 2021 closing
FUM of $23.5 billion. Average FUM for the year decreased by 8.6% to $21.4 billion from an
average FUM of $23.4 billion for the previous year.
The change in FUM was driven by negative investment performance of $2.2 billion, net fund
outflows of $2.2 billion and the net distribution paid to investors of $0.9 billion.
Whilst no one is content with negative investment returns, we are pleased to see the recent
benefits of the downside protection provided by Platinum’s strategies. For example, the
Platinum International Fund was down 5.4% in the six months to 30 June 2022 but
outperformed the MSCI AC World Net Index (A$) by 10.2%, which fell by 15.6%. The flagship
Platinum International Fund and Platinum Asia Fund both outperformed their nominated
indices1 over six months, 1 year and 2 years. Indeed, the Platinum Asia Fund has now returned
to outperformance over 3-, 5- and 10-year periods to 30 June 2022, on an annualised basis.
This is a credit to the investment team.
1 MSCI AC World Net Index (A$) and MSCI AC Asia ex Japan Net Index (A$), respectively.
Platinum Asset Management Limited Annual Report 2022 3
Operating Performance
Profit before tax decreased by 37.4% to $146.7 million for the year ended 30 June 2022
(2021: $234.2 million). Earnings per share for the 2022 financial year were down 10.7 cents
to 17.5 cents per share (2021: 28.2 cents).
The main contributor to the decrease in profit and earnings per share was the largely unrealised
losses on seed investments, including the share of associates’ losses, which contributed losses
before tax for the year of $24.1 million (2021: gain before tax of $43.9 million). The unrealised
(‘mark-to-market’) loss during the year ended 30 June 2022 largely represents a partial
reversal of gains during the year ended 30 June 2021. Underlying profit after tax, which
excludes gains and losses on seed investments (net of tax), was down 10.9% to $118.2 million
(2021: $132.6 million).
Total revenue decreased by 6.2% to $252.7 million for the year ended 30 June 2022
(2021: $269.2 million). The 7.3% decrease in management fees (excluding performance fees)
was a result of the 8.6% decline in average FUM. The decrease in management fees was
partially offset by an increase in performance fees to $6.7 million (2021: $4.0 million).
Costs
Total employee expenses (including share-based payment expenses) increased by
$2.0 million on the prior financial year. This primarily reflects a $5.5 million increase in
share-based payment expenses due to additional deferred equity granted to employees
with short-term cash variable compensation being cut during the year.
Other (non-employee) costs increased $1.9 million on the prior year due primarily to
increased business development costs, which were anticipated and included the launch of
the Platinum Investment Bond product (and its direct-to-market proposition) and associated
new campaigns, the growth in social media advertising, and third-party distribution costs.
There was also an increase in operational project-related costs and higher insurance charges.
Total expenses for the financial year increased by $3.9 million to $86.1 million.
Dividends
The Directors have declared a 2022 final fully franked ordinary dividend of 7 cents per share.
This will be paid on 15 September 2022.
A 2022 interim fully franked ordinary dividend of 10 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 2022 4
Chairperson’s Report 2022
CONTINUED
Business Development
Platinum continued to provide a comprehensive range of business development activities
to our clients, both investors and advisers, through roadshows and webinars, participation
in industry events, and the generation and distribution of high-quality content. It was
particularly valuable to recommence overseas travel and be able to meet again with existing
and potential clients.
Throughout the year, we worked towards delivering an exciting new strategy. Platinum
expects to launch its new dual access carbon transition product imminently (subject to
regulatory approval). This product will invest in companies that are enabling or contributing
to the transition away from fossil fuel-derived energy, and goods production and consumption
i.e. the carbon transition. We view the energy transition as a structural area of change that will
span many decades and will provide very attractive investment opportunities across a variety
of industries. In addition, the structure will provide two concurrent ways of transacting for
investors: the ease of an exchange-traded format via the ASX or an unlisted format via the
unit registry.
Environmental, Social and Governance (ESG)
ESG matters continue to be a focus area both for the community and Platinum. Significant
developments during 2022 included incorporating the disclosures recommended by the
Task Force on Climate-related Financial Disclosures (TCFD) into Platinum’s annual
sustainability report and launching a new section on our website to better articulate
Platinum’s approach to ESG investing (www.platinum.com.au/ESG).
For further information on Platinum’s approach to ESG, please read Platinum’s Corporate
Responsibility and Sustainability Report available on our website www.platinum.com.au/
About-Platinum/PTM-Shareholders.
Annual General Meeting (AGM)
Subject to public health orders, the Company’s AGM will be held as a hybrid event, whereby
shareholders can either attend in person or join online. The AGM notice will include details
of how to attend the meeting and will be dispatched to shareholders in the coming weeks.
The Board and its Associated Committees
At our 2021 AGM, we incurred a disappointing ‘first strike’, with more than 25% of votes
cast against the adoption of the 2021 remuneration report. We have listened closely to
shareholder feedback and made a number of changes that the Board feels deal with the
concerns that were raised. The changes include reviewing the executive reward framework
to ensure it remains ‘fit for purpose’ in the current environment and ensuring FY2022 reward
decisions appropriately reflect individual and Company performance and are disclosed
clearly. Included in the remuneration report on page 33 of the Company’s 2022 annual report
is a letter from the Chair of the Nomination and Remuneration Committee (NRC).
Platinum Asset Management Limited Annual Report 2022 5
I encourage all shareholders to read the letter, which outlines the significant actions that the
Board has taken to adopt a revised remuneration framework for the Company’s executive
key management personnel and improve the Company’s disclosure of the link between
performance and variable remuneration outcomes.
The NRC also continued its work in relation to Board succession, with Mr Phillip Moffitt
joining the Board on 17 December 2021 as a replacement for Mr Trumper, bringing strong
investment management experience to the Board.
Lastly, Platinum’s Audit, Risk and Compliance Committee (ARCC) had a busy year overseeing
new product development initiatives and working closely with management towards the
creation of a new risk appetite statement and risk dashboard for the Company. The ARCC
has also overseen the implementation of the Company’s climate-related financial disclosures
in accordance with the TCFD’s recommendations.
Finally
Given the negative investment returns experienced during 2022, I expect that the 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
24 August 2022
Platinum Asset Management Limited Annual Report 2022 6
Year in Review
FOR YEAR ENDED JUNE 2022
Management fee
revenue down
Net profit after tax
(down 38%)
Final dividend of
(~9.8% annualised yield*)
-7%
$101m
7cps
fully franked
Net profit after tax excluding
largely unrealised losses on
seed investments down
Total expenses up 5%
Expenses excluding share-based
payment expense down
-11%
-2%
Largely unrealised mark-to-market
losses on seed investments
-$24.1m
Average FUM down
8.6% on June 2021
$21.4b
* Using 30 June 2022 closing share price of $1.74 and including 2022 interim dividend of 10 cps.
Platinum Asset Management Limited Annual Report 2022 7
Investment performance of the Platinum Trust Funds to 30 June 2022
1 year
p.a.
5 year
compound p.a.
10 year
compound p.a.
International Fund
Global Fund (Long Only)
Asia Fund
European Fund
Japan Fund
International Brands Fund
International Health Care Fund
International Technology Fund
-6%
-16%
-15%
-11%
-8%
-23%
-34%
-19%
6%
4%
8%
3%
4%
6%
7%
9%
11%
11%
12%
10%
14%
11%
14%
13%
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.
Platinum Asset Management Limited Annual Report 2022 8
Managing Director’s Letter 2022
In the first half of our financial year, global equity markets continued
the recent bull run led by popular growth stocks. However, the market
turned sharply in January as central banks indicated their intention to
rein in inflation through higher interest rates. These extreme moves in
markets tend to play to the strengths of our investment approach, which
seeks out-of-favour and undervalued companies and avoids the popular
and overvalued. We think our approach is one that investors can expect
to produce its best results over the course of a full stock market cycle.
In the first six months of calendar 2022, our Platinum International Fund returned -5.4%
compared with global equity markets, which returned -15.6%.1 We protected our clients from
the worst of the downturn during these early months of what we expect to be a significant
bear market in global equities. This result more than caught up the Fund’s underperformance
of the prior 18 months. Over this same period, our Platinum Asia Fund returned -8.0%
compared with Asian regional markets, which returned -11.5%.2 This performance has
returned the Fund’s track record to being ahead of the market on an annualised basis for
1 year, 3 years, 5 years, 10 years and since inception time periods as of 30 June 2022.
Our longer-term performance remains solid across all our strategies, each of which has
produced double-digit compound returns for investors over the last decade.
Our expectations for a deep bear market are premised on recent changes in global financial
conditions. The extravagant monetary and fiscal policies of the last three years created not
only a rapid escalation in inflation but also a wild bull market in speculative growth stocks.
This period followed an already extended period of quantitative easing policies and an
associated low interest rate environment. With central banks now being forced to increase
interest rates and, at least in the US, start winding back quantitative easing, financial conditions
have changed dramatically, even as government spending has been cut. Today’s financial
conditions represent a significant headwind for global stock markets (as well as other asset
prices), in contrast to the tailwinds that have been present for much of the last decade, and
especially since the arrival of COVID-19. There are many other signs that this most recent bull
market has been one of history’s most impressive, from extreme valuations to substantial
retail investor participation. Ultimately, the depth of bear markets tends to be a function of
the strength of the bull market that preceded it. As such, we would not be surprised to see
a fall in the order of 50% from the top of the market, similar to that experienced by global
equity markets during the Tech Wreck of 2000-2002 and the Global Financial Crisis
in 2008-2009.
1
2
Fund returns are 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. The Index reference is the MSCI All Country World Net Return Index (A$).
Past performance is not a reliable indicator of future performance.
Fund returns are 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. The Index reference is the MSCI All Country Asia ex Japan Net Return
Index (A$). Past performance is not a reliable indicator of future performance.
Platinum Asset Management Limited Annual Report 2022 9
In contrast to this dire overall outlook, there remain, as is often the case, significant pockets
of opportunity within markets. This could not be better demonstrated than in the following
chart. Based on the 27-year history of our Platinum International Fund, it depicts that even
with substantial global market events, it is possible to find investment opportunities over time.
However, to achieve this requires a long-term and consistent approach to investing through
various market cycles.
It can pay to ignore the headlines
Platinum International Fund (C Class)
performance since inception.
This graph depicts $20,000 invested in the fund
on 30 April 1995 is worth $370,053 at 31 July 2022*
*
Investment returns are cumulative over the specified period and have been calculated using the fund’s C Class
NAV unit price. They are pre-tax, net of fees and costs and assume the reinvestment of distributions.
Past performance is not a reliable indicator of future returns.
Source: Platinum Investment Management Limited • Wikipedia • Investopedia • Google
With regard to the current opportunities we are seeing:
China’s economy is showing its weakest performance since opening up four decades ago.
This is due to falling residential property sales and related construction activity, a situation
that has been exacerbated by recent COVID-19 lockdowns. Geopolitical tensions have
further suppressed Chinese stock prices. While such tensions seem likely to remain with
us for some time, it is likely that the economy will stage a strong recovery over the next
12 months as it responds to government stimulus and receding COVID-19 infections.
Europe is also facing difficulties, as energy prices soar and business and consumer confidence
collapse following Russia’s invasion of Ukraine. The US market appears to remain generally
less appealing due to the tightening of monetary conditions, however, huge divergences
in stock price performance and valuations have resulted in attractive opportunities at the
individual stock level.
The already weak performance of these major economies has created attractive opportunities
in large subsets of stocks that are sensitive to economic outcomes in these regions, with many
trading at valuations approaching those reached in previous crisis periods.
We expect significant differences in stock market performance by sector and geography in
the years ahead, which should favour our investment approach.
Platinum Asset Management Limited Annual Report 2022APR-1995APR-1997APR-1999APR-2001APR-2003APR-2005APR-2007APR-2009APR-2011APR-2013APR-2015APR-2017APR-2019APR-2021Asian financial crisisRussian debt crisisSeptember 11 terrorist attacks Enron files for bankruptcy SARSepidemicIraq warbeginsTech wreck Global financial crisisSwine flupandemicU.S. flash crashJapaneseearthquake and tsunamiS&PdowngradesU.S. debtEuropean sovereigndebt crisisU.S. stocks fall 20%U.S. fiscal cliff talkssends stocks lowerU.S. GovernmentshutdownUK votesfor BrexitU.S. tapertantrumGlobal marketselloff, Chinamarket collapsePresidentTrumpelectedConcerns ofrising U.S. rates Evergrandedebt crisisRussianinvasionof UkraineChina economicslowdown CoronaviruspandemicU.S. Capitol stormedUS inflation at 40-year high 10
Managing Director’s Letter 2022
CONTINUED
Funds Under Management – Retention and Growth
Funds Under Management ($ million, to 30 June 2022)
OPENING
BALANCE
(1 JULY 2021)
FLOWS
INVESTMENT
PERFORMANCE
CLOSING
BALANCE
(30 JUNE
2022)
DISTRIBUTION
AND OTHER
% OF
TOTAL
14,548
(1,390)
(1,497)
(803)
10,858
60%
518
(23)
(45)
(36)
414
2%
988
–
732
(75)
(92)
(84)
(75)
821
5%
–
573
3%
2,426
(391)
(141)
–
1,894
10%
FUNDS
Retail offerings
Platinum Trust Funds
(excluding funds fed
from PIXX and PAXX)
and Platinum Global
Fund (mFund)
Quoted Managed
Hedge Funds
PIXX and PAXX
Listed Investment
Companies
PMC and PAI
MLC Platinum
Global Fund
Institutional mandates
Management Fee
Mandates
UCITS Platinum
World Portfolios
Cayman Funds
447
38
17
–
“Absolute” Performance
Fee Mandates
358
(55)
“Relative” Performance
(54)
(4)
(16)
–
–
–
376
34
2%
0%
287
2%
Fee Mandates
3,467
(217)
(244)
(49)
2,957
16%
TOTAL
23,522
(2,168)
(2,177)
(963)
18,214
100%
Source: Platinum Investment Management Limited.
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 2022
11
While the second half of the financial year saw an improvement in investment returns relative
to markets for our two largest funds, the Platinum International Fund and Platinum Asia Fund
(and related strategies), their overall absolute returns were still negative for the year to
30 June 2022. The weaker absolute investment returns resulted in a $2.2 billion reduction
in funds under management and net outflows of funds of $2.2 billion (largely reflecting
historical trailing relative underperformance). Approximately $0.9 billion of gains were also
distributed to clients, an amount similar to the prior year. Overall, funds under management
fell 22.6% over the course of the year.
While this is a disappointing outcome, it should be seen in the context of industry trends.
Firstly, the decade-long bull market has generated strong client interest for passive
investment products over actively managed investments, generating aggregate net outflows
across active managers. In addition, to the extent that funds have flowed to active managers,
they have, until recently, favoured ‘growth-style’ funds, which tend to generate strong relative
performance in bull markets. It is quite possible that both these trends could be challenged
in the near term as the bear market unfolds. Certainly, many of the favoured ‘growth-style’
managers have delivered weaker results during the recent market correction, which suggests
to us that they will likely see outflows unless market conditions change. Similarly, any
prolonged and deep bear market will challenge those investors who have preferred
investments that passively track falling indices.
Another strong trend has been a rising client preference for unlisted investments, including
private equity, venture capital, private debt, and unlisted infrastructure and property funds.
Vast sums have been raised in recent years, and the managers of these assets appear to
have consequently experienced significant competition in acquiring underlying investments.
This strongly suggests to us that prospective returns from such assets are likely to be poor.
Although the long-term nature of these funds means that it will take some time for the
ultimate investment returns to be known, it would not surprise us to see the enthusiasm
for such assets to ultimately diminish with investors refocusing on more transparent listed
asset classes.
Irrespective of how markets unfold from here, the future of our business
will continue to ultimately depend on our investment approach delivering
strong investment outcomes for our clients over the course of the current
stock market cycle, which we remain confident we can achieve.
Platinum Asset Management Limited Annual Report 2022 12
Managing Director’s Letter 2022
CONTINUED
In the meantime, we will continue to work on extending and broadening our client base.
As mentioned in last year’s letter, the rise of the do-it-yourself (DIY) investor in recent years
represents an expansion of our direct client base.
We will shortly launch our first new investment strategy in 19 years,
a new carbon transition strategy, which will focus on the impending
transition away from a currently carbon-intensive world economy.
It is intended that this strategy will initially be made available to Australian investors via a dual
access managed fund structure (subject to regulatory approval) which will allow investors
to acquire units either through a traditional managed fund application process or via units
quoted on the ASX. The strategy will aim to take advantage of the wide variety of investment
opportunities that are arising from the world’s move to decarbonise in the decades ahead,
and will be managed using Platinum’s well-established and consistent investment approach.
The strategy will access a much wider range of opportunities than the standard packaging of
solar panels, wind farms, and electric vehicles and is expected to be delivered as an ASX-
quoted managed fund offering, alongside our existing quoted managed fund (QMF) versions
of the Platinum International Fund and Platinum Asia Fund. We expect that the combination
of the investment thematic and the ASX-quoted units should appeal to many DIY investors.
Another issue of increasing importance for many of our clients is their fund manager’s focus
on the sustainability of their investee companies with respect to environmental, social, and
governance (ESG) issues. Our approach has long been that material ESG issues are integral to
any long-term assessment of a potential investment, though today, the market requires that
we demonstrate an explicit consideration of ESG. We have in place our initial ESG framework,
which we will continue to develop with the long-term goal of setting a high standard for ESG
integration in equity market investing.
One of the biggest negative impacts of COVID-19 on our business was our restricted ability
to expand our offshore business, with our London office and the AccessAlpha team in the
US unable to travel to physically meet with prospective clients. Furthermore, our investment
specialists and portfolio managers were unable to lend their usual in-person support to these
efforts. Since the reopening of our borders, we have recommenced our on-the-ground visits
with existing and potential clients. While during the pandemic period, clients appeared
unwilling to consider changes to existing manager line-ups, that sentiment appears to have
changed, with many clients having been disappointed by the results of some of their
managers during the first half of 2022.
Platinum Asset Management Limited Annual Report 2022 13
Our engagement with financial advisers and our direct client base also continues to evolve.
We have stepped up our production and distribution of engaging and timely investment
content via webinars, videos, podcasts, and articles, distributed not only through our website
but a range of mediums including social media, advertising, and external content distributors.
We continue to attend key industry events, many of which have now switched to hybrid
models of delivering live and online options. Our annual client roadshow, held in March this
year, remained a virtual event but allowed us to invite a wider range of clients, including our
direct investors in our listed investment companies, alongside our managed fund, quoted
managed fund, and European-based clients. Next year, we expect to return to physical events
with an online stream to allow us to continue to connect with a broader range of advisers
and investors who may prefer such a format.
Foundations for the Future
At the core of Platinum’s offering is our investment approach, which is implemented
by a highly experienced investment team. The ongoing growth and development of our
investment team is therefore important to securing the long-term future of the business.
Recently, we appointed Douglas Isles to the role of Head of Investment (HOI). Douglas has
previously worked at Platinum as an investment analyst and subsequently established our
investment specialist team. In his new role, Douglas will take on responsibility for managing
the investment team and the investment process, allowing myself and my Co-Chief
Investment Officer (CIO) Clay Smolinski to place greater focus on the day-to-day debate
around investment ideas. Clearly, the roles of CIO and HOI will require a close working
relationship in order to ensure a co-ordinated approach to managing the team. We have also
recently promoted four of our analysts to the role of portfolio manager, bringing the total
number of portfolio managers to 12. These promotions continue to build the decision-
making capability of the team and allow for natural succession planning within the team.
As we have said previously, we recognise that not all our people will spend their entire career
at Platinum, and ensuring there is a smooth succession when individuals depart is critical for
maintaining performance and the confidence of clients and shareholders.
Platinum Asset Management Limited Annual Report 2022 14
Managing Director’s Letter 2022
CONTINUED
Outlook
Investors are faced with an extraordinarily complex environment. Inflation is running at levels
not seen in decades, and interest rates are rising sharply. This is occurring just as the consumer
boom in manufactured goods is coming to an end and spending is being switched back to
services, creating issues for those trying to estimate company earnings. Russia’s invasion of
Ukraine, among many of its outcomes, has created havoc in commodity markets, resulting in
soaring energy costs, particularly for Europe. China is in its first serious recession since its
move to a market economy, at a time when its relationships with the West are deteriorating.
It is an environment where there will be continual surprises for investors and having regard to
past experience, one where we believe our investment approach will be rewarded.
Concluding Remarks
I would like to thank all of my colleagues for their contributions to keeping a fund
management business running, including the daily processing of fund applications and
redemptions, providing client service and communications, settling our purchases and sales
of shares for our products, navigating the complex regulatory environment, maintaining and
developing our IT systems, and managing our finances. Our team of dedicated professionals
has done a great job of keeping the business operating efficiently in what have been
challenging times.
Andrew Clifford
Managing Director
Platinum Asset Management Limited Annual Report 2022 Platinum Asset Management Limited Annual Report 2022 15
16
Platinum Asset Management Limited Annual Report 2022
Our Journal
You can find a range of thought-provoking articles and videos on our
website, www.platinum.com.au. For ad hoc commentary on the latest
market trends and investment themes, look up The Journal under
Insights & Tools.
If you find yourself short on time to read our in-depth reports and
articles, have a listen to our audio podcasts or watch brief market
updates in video format.
Market Update:
Inflation
Takes its Toll
on Markets
CEO and co-CIO Andrew
Clifford talks with
Investment Specialist
Julian McCormack on the
impact of inflation, rising
interest rates, the
Russia-Ukraine conflict
and the re-emergence of
Covid in China on global
equity markets. Against
this market backdrop,
Andrew discusses
Platinum's investment
approach, drivers of
recent returns and where
the team is investing....
The
Beautiful
Game
There is an apparent
paradox of investing in
shares; price is everything
yet it is also nothing.
There is no contradiction
in this paradox because
the reality lies in the very
essence of what share
selection is really about.
If one starts from the
naive stance of saying
you want to own really
fine companies that will
be bigger and hopefully
better in the coming
few years...
Turmoil
Provides
Catalyst for
Significant
Investment
in Europe
It is no surprise that
investor sentiment has
turned negative on
Europe. In the short
term, there are good
reasons to be cautious.
However, recent events
are providing catalysts
for significant change...
By Andrew Clifford
13 April 2022
By Kerr Neilson
04 February 2022
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Platinum Asset Management Limited Annual Report 2022 1818
Platinum Asset Management Limited Annual Report 2022
Platinum Asset Management Limited Annual Report 2022 Platinum Asset Management Limited Annual Report 2022
19
19
Financial Statements 2022
Platinum Asset Management Limited
General Information
The financial statements were authorised for issue, in accordance with a resolution of
Directors, on 24 August 2022. The Directors have the power to amend and reissue the
financial statements.
Platinum Asset Management Limited Annual Report 2022Page HeadingPAGE SUB HEADING 20
Shareholder Information
The shareholder information set out below was applicable as at 19 August 2022.
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
Total
Holding less than a marketable parcel (less than $500)
NUMBER
OF HOLDERS
OF ORDINARY
SHARES
5,113
10,821
3,930
3,894
172
23,930
1,166
Platinum Asset Management Limited Annual Report 2022
21
Ordinary shareholders
Twenty largest ordinary shareholders
The names of the twenty largest shareholders of the Company are listed below:
ORDINARY SHARES
NUMBER HELD
SHARES ISSUED
% OF TOTAL
K Neilson
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
Platinum Investment Management Limited (nominee)
Pacific Custodians Pty Limited
BNP Paribas Nominees Pty Limited
National Nominees Limited
Jilliby Pty Limited
J Clifford
BNP Paribas Nominees Pty Limited
(IB AU NOMS Retail Client DRP)
Starbrook Enterprises Pty Limited
UBS Nominees Pty Limited
Garrett Smythe Limited
First Samuel Limited
BNP Paribas Nominees Pty Limited
HUB24 Custodial Serv Limited
JAMPLAT Pty Limited
Xetrov Pty Limited
G Hancock and J Hancock
Southern Steel Investments Pty Limited
126,037,420
62,245,722
60,637,826
53,143,210
29,364,201
13,267,445
8,527,991
6,542,956
6,500,000
5,000,000
3,231,654
2,700,000
2,515,859
1,963,500
1,958,188
1,629,068
1,502,500
1,500,000
1,128,084
1,122,012
21.48
10.61
10.34
9.06
5.01
2.26
1.45
1.12
1.11
0.85
0.55
0.46
0.43
0.33
0.33
0.28
0.26
0.26
0.19
0.19
390,517,636
66.57
Unquoted ordinary shares
There are no unquoted ordinary shares, however, the Company has share-based payment
arrangements through which a total of 29,249,834 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 2022
22
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:
K Neilson
J Clifford, Moya Pty Limited, A Clifford
^ Based on the last substantial shareholder notice lodged.
Distribution of Annual Report to Shareholders
ORDINARY SHARES
% OF TOTAL
NUMBER HELD
SHARES ISSUED
126,037,421^
32,831,449^
21.48
5.60
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.
Notice of Annual General Meeting
1 September 2022
2 September 2022
15 September 2022
The Annual General Meeting (AGM) of Platinum Asset Management Limited will be held on
Wednesday 16 November 2022. 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 2022
Directors’ Report
23
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 2022.
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
Kerr Neilson
Philip Moffitt
Andrew Clifford
Elizabeth Norman
Andrew Stannard
Tim Trumper
Principal Activities
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed on 17 December 2021)
Chief Executive Officer/Managing Director
Executive Director and Director of Investor Services & Communications
Executive Director and Chief Financial Officer
Non-Executive Director (resigned on 17 November 2021)
The Company is the non-operating holding company of Platinum Investment Management
Limited (“PIML”) and its controlled entities. PIML, trading as Platinum Asset Management,
operates a funds management business.
Operating and Financial Review
Fund Under Management (“FUM”) at 30 June 2022 was $18.2 billion and this represented a
decrease of 23% from the 30 June 2021 closing FUM of $23.5 billion. The closing FUM figure
at 30 June 2022 was reduced by the annual net distribution outflow of $888 million. Average
FUM for the year of $21.4 billion was lower than the average FUM of $23.4 billion for the
previous year. The change in closing FUM was driven by negative investment returns of
$2.2 billion and net fund outflows of $2.2 billion and the 30 June 2022 net distribution.
The Group’s profit before tax was $146.7 million for the year ended 30 June 2022, which
is a 37.4% decrease from the previous year. The main contributor to the decrease in profit
and earnings per share was the largely unrealised losses on seed investments, including
share of associates losses, which contributed losses before tax for the year of $24.1 million,
as compared to a gain before tax of $43.9 million for the year to 30 June 2021. Underlying
profit after tax, which excludes gains and losses on seed investments (net of tax), was down
10.9% to $118.2 million (30 June 2021: $132.6 million).
Whilst the negative investment returns experienced during the 2022 financial year are
unwelcome, it is important to note the downside protection provided by Platinum’s strategies
during this time. For instance, the Platinum International Fund (“PIF”) and Platinum Asia Fund
(“PAF”) both outperformed their nominated indices for the year ended 30 June 2022.
Platinum Asset Management Limited Annual Report 2022 24
Directors’ report
CONTINUED
Operating and Financial Review – continued
The Group earned performance fee revenue of $6.7 million (2021: $4.0 million). Staff costs
were $3.5 million lower compared to the prior period, primarily due to lower variable
compensation expenses. Share-based payment expense increased by $5.5 million due to
an additional grant of Partners Plan rights in June 2022. These awards will only vest in the
event that total shareholder return hurdles are met (refer Remuneration Report for detail).
One quarter of the June 2021 Partner Plan grant was tested against total shareholder return
hurdles for the year ended 30 June 2022 and did not vest. However, accounting rules require
a share-based payments expense of $0.7 million to be recorded in the current financial year
for those rights. Non-staff expenses were $1.9 million higher compared with the prior year
primarily due to an increase in business development activity and insurance charges.
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.
On the product development front, Platinum expects to launch its new dual access carbon
transition product imminently (subject to regulatory approval). This product will invest in
companies that are enabling or contributing to (whether directly or indirectly i.e. are part of
the value chain) the transition away from fossil fuel-derived energy and goods production
and consumption.
Platinum continues to implement measures to maintain the ongoing safety and well-being
of employees. Employees are working in a hybrid fashion; they are able to work from home
and are encouraged to spend significant time in the office to maximise effectiveness of
collaboration, mentoring and relationship building. 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 to play an important role in the funds management
sector because:
• We maintain a highly differentiated product and maintain 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-quality research and a large idea base.
The Company is in a solid 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 likely result in unreasonable prejudice to the
consolidated entity because the information is commercially sensitive.
Platinum Asset Management Limited Annual Report 2022 25
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 2022 final fully-franked
dividend of 7 cents per share ($41,067,523 including dividend paid on treasury shares), with
a record date of 2 September 2022 and payable to shareholders on 15 September 2022.
A 2022 interim fully-franked dividend of 10 cents per share ($58,667,890 including dividend
paid on treasury shares) was paid on 18 March 2022. A 2021 final fully-franked dividend of
12 cents per share ($70,401,468 including dividend paid on treasury shares) was paid on
16 September 2021.
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
Mr Guy Strapp was appointed as an Independent Non-Executive Director on 27 August 2020.
He was elected Board Chairman on 21 November 2020. Mr Strapp serves as a member of the
Audit, Risk & Compliance Committee and Nomination & Remuneration Committee.
Mr Strapp has over 35 years’ experience in the investment and financial services sectors,
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. Mr Strapp’s
most recent executive role was as CIO and CEO of Eastspring Investments (formerly
Prudential Asset Management) in Hong Kong.
Mr Strapp brings to the Board extensive local and international experience in asset
management, gained on both the investment and distribution side of the business.
Platinum Asset Management Limited Annual Report 2022 26
Directors’ report
CONTINUED
Information on Directors – continued
Stephen Menzies BECON, LLB, LLM
Mr Stephen Menzies was appointed as an Independent Non-Executive Director on 11 March
2015. He serves as a member of Audit, Risk & Compliance Committee and Nomination and
Remuneration Committee (Chair until 26 October 2021).
Mr Menzies has over 30 years’ experience as a corporate lawyer specialising in capital
markets and mergers and acquisitions. Mr Menzies is a retired partner of Ashurst law firm and
prior to his retirement in 2015 was consistently ranked as one of Australia’s leading corporate
lawyers. During his time at Ashurst he was the Head of China Practice and oversaw the
Shanghai and Beijing offices of that firm.
Mr Menzies is a Non-Executive director of Platinum World Portfolios Plc, a director of SAIC
Motor Australia Pty Ltd and is Chairman of Silicon Quantum Computing Pty Limited. He was
previously the Chairman of the Centre for Quantum Computation & Communication
Technology.
Anne Loveridge BA (HONS), FCA (AUSTRALIA), GAICD
Ms Anne Loveridge was appointed as an Independent Non-Executive Director on
22 September 2016. She was elected Chair of the Audit, Risk & Compliance Committee
and serves as a member of the Nomination & Remuneration Committee.
Ms Loveridge has over 30 years’ experience in business. She is formally trained as a Chartered
Accountant and has a breadth of experience in people leadership and remuneration as we
as audit, risk, regulatory compliance and finance skills. Ms Loveridge had a 30-year career
at PwC Australia, where she retired as Senior Partner and Deputy Chair in 2015.
Ms Loveridge brings to the Board extensive financial service and company director
experience gained through her numerous senior leadership and director roles in highly
regulated ASX listed organisations in financial services, health sectors as well as arts related
not-for-profit entities.
Ms Loveridge is a Non-Executive Director of ASX Listed companies National Australia Bank
Limited and NIB Holdings Limited and government agency, Destination NSW. She was
previously the Chair of Bell Shakespeare.
Brigitte Smith B.CHEM ENG (HONS), MBA, MALD, FAICD
Ms Brigitte Smith was appointed as an Independent Non-Executive Director on 31 March
2018. She serves as a member of the Audit, Risk & Compliance Committee and became
Chair of the Nomination & Remuneration Committee on 26 October 2021.
Ms Smith has over 20 years’ experience in the investment and financial services sector.
Ms Smith brings to the Board extensive financial service experience within Australia and
the US with a focus on supporting business strategy, human resources and operations.
Ms Smith is the co-founder and Managing Director of GBS Venture Partners. 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.
Ms Smith is a Non-Executive Director of Amber Electric and AllVascular and also serves as
an Investment Committee member for Diversified Impact Fund at Social Ventures Australia.
Platinum Asset Management Limited Annual Report 2022 27
Philip Moffitt BECON (HONS), BLAS PSYCH (HONS), GRADDIPPSYCH, ASSOCIATE FINSIA
Mr Philip Moffitt was appointed as an Independent Non-Executive Director on 17 December
2021. He serves as a member of the Audit, Risk & Compliance Committee and Nomination &
Remuneration Committee.
Mr Moffitt has over 35 years’ experience in investment management.
Mr Moffitt was previously a partner at Goldman Sachs (London and Sydney) and also
Chairman of Goldman Sachs Australia Managed Fund Board. Prior to this he held a number
of senior roles within Tokai Asia in Hong Kong and Bankers Trust in Australia.
Mr Moffitt is a Non-Executive Director of Aware Super and serves as Chair of its Investment
Committee and Direct Assets Committee, is a Director of Green Road Consulting, is Chair of
Newington College Foundation.
Andrew Clifford BCOM (HONS)
Mr Andrew Clifford was appointed as an Executive Director on 8 May 2013. Mr Clifford is a
co-founder of Platinum and was appointed Platinum’s Managing Director on 1 July 2018,
he continues to serve as the Co-Chief Investment Officer since 8 May 2013.
Mr Clifford has over 30 years’ experience in investment and funds management with a focus
on global equity markets.
Prior to co-founding Platinum, Mr Clifford was a Vice President at Bankers Trust Australia
covering Asian equities and managing the BT Select Market Trust – Pacific Basin Fund, where
he worked alongside Platinum’s other co-founder, Kerr Neilson.
Mr Clifford is a Non-Executive Director of the JAAM Foundation and Australian Wildlife
Conservancy.
Kerr Neilson BCOM, ASIP
Mr Kerr Neilson was appointed as a Non-Executive Director on 1 September 2020. He serves
as a member of the Audit, Risk & Compliance Committee and Nomination & Remuneration
Committee. Prior to his appointment as a Non-Executive Director in September 2022,
Mr Neilson was an Executive Director from 12 July 1993 to 31 August 2020.
Mr Neilson founded Platinum in 1994 and was the Managing Director from incorporation to
30 June 2018.
Mr Neilson has over 40 years’ experience in investment markets and funds management
within Australia, Asia, UK and South Africa.
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.
Platinum Asset Management Limited Annual Report 2022 28
Directors’ report
CONTINUED
Information on Directors – continued
Elizabeth Norman BA, GRADUATE DIPLOMA IN FINANCIAL PLANNING
Ms Elizabeth Norman was appointed as an Executive Director on 8 May 2013. She is also
Platinum’s Director of Investor Services and Communications.
Ms Norman joined Platinum in February 1994 in a role of Investor Services and
Communications Manager.
Ms Norman has over 30 years’ experience in investor services and communications.
Prior to joining Platinum, Ms Norman 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
Mr Andrew Stannard was appointed as an Executive Director on 10 August 2015. He is also
Platinum’s Finance Director.
Mr Stannard has over 30 years’ experience in finance with expertise in audit, financial control,
operations, funds management, financial services regulation and corporate governance.
Prior to joining Platinum, Mr Stannard was Chief Financial Officer of Alliance Bernstein for its
Asia-Pacific region.
Information on Former Directors
Tim Trumper MBA, UNE
Independent Non-Executive Director from 1 August 2018 to 17 November 2021. Member of
the Audit, Risk & Compliance and Nomination & Remuneration Committees.
Mr Trumper is Chair of the NRMA, was advisor and shareholder in Quantium, Australia’s
leading data and analytics company and invests in 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.
Information on Company Secretary
Joanne Jefferies BCOM, LLB
Ms Joanne Jefferies was appointed Platinum’s General Counsel and Group Company
Secretary on 17 October 2016. Ms Jefferies serves as the Company Secretary for Platinum,
a number of its subsidiary entities and ASX Listed investment companies, Platinum Asia
Investments Limited and Platinum Capital Limited.
Ms Jefferies is an English law qualified solicitor with more than 25 years’ experience in
financial services law and corporate governance specialising in asset management and
banking, in England and across Asia Pacific.
Platinum Asset Management Limited Annual Report 2022 29
Ms Jefferies previously worked for 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.
Ms Jefferies is a Non-Executive Director of Australian Pain Management Association Limited.
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 2022, and the number of meetings
attended by each Director were:
BOARD
ATTENDED/
HELD
NOMINATION &
REMUNERATION
COMMITTEE
ATTENDED*/HELD
AUDIT, RISK &
COMPLIANCE
COMMITTEE
DUE
DILIGENCE
COMMITTEE
ATTENDED*/HELD ATTENDED*/HELD
Guy Strapp
Stephen Menzies1
Anne Loveridge
Brigitte Smith
Philip Moffitt2
Kerr Neilson
Andrew Clifford
Elizabeth Norman
Andrew Stannard
Joanne Jefferies3
Tim Trumper4
9/9
7/9
9/9
9/9
2/3
9/9
9/9
9/9
9/9
–
5/5
8/8
6/8
7/8
8/8
3/5
7/8
–
–
–
–
2/2
4/4
3/4
4/4
4/4
1/2
4/4
–
–
–
–
2/2
2/3
–
1/1
–
–
–
2/3
3/3
3/3
2/3
–
Executive Directors may be invited to attend committee meetings as guests.
Stephen Menzies had a formal leave of absence approved by the Chairman due to health reasons.
*
1
2 Philip Moffitt was appointed as a non-executive director on 17 December 2021 and was only eligible to attend
meetings since his appointment date. Philip Moffitt had pre-existing commitments at the time of his appointment
that were known to make him unable to attend one Board meeting, one Nomination and Remuneration
Committee meeting and one Audit, Risk and Compliance Committee meeting. In addition, an unscheduled out of
cycle Nomination and Remuneration Committee meeting was held which he was unable to attend. He anticipates
being able to attend all scheduled meetings for the year ahead.
Joanne Jefferies is not a director of the Company, however, is the Group Company Secretary and also a member
of Due Diligence Committee.
3
4 Tim Trumper retired as a non-executive director at the conclusion of the Annual General Meeting on 17 November
2021 and was only eligible to attend meetings prior to his resignation date.
Platinum Asset Management Limited Annual Report 2022
30
Directors’ report
CONTINUED
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 2022 30 JUNE 2021
Andrew Clifford
5,815,931
5,504,435
Kerr Neilson
34,257,123
47,323,794
Elizabeth Norman
1,344,078
1,271,902
Philip Moffitt
87,160
–
Tim Trumper*
–
27,268
Platinum International Fund
Andrew Clifford
34,350,010
30,502,697
Kerr Neilson
14,895,881
14,817,222
Elizabeth Norman
577,119
512,480
Stephen Menzies
62,530
62,530
Platinum Global Fund
Andrew Clifford
6,366,104
6,017,357
Kerr Neilson
5,000,000
5,000,000
Elizabeth Norman
737,039
696,663
Platinum European Fund
Kerr Neilson
9,001,064
15,399,420
Elizabeth Norman
324,327
283,112
Platinum Japan Fund
Kerr Neilson
29,742,298
34,029,763
Elizabeth Norman
267,109
239,591
Platinum Global Fund (Long Only)
Kerr Neilson
25,013,152
27,691,013
Elizabeth Norman
186,478
171,193
Platinum International Brands Fund
Kerr Neilson
2,549,266
2,533,841
Platinum International Healthcare Fund
Kerr Neilson
12,798,071
12,723,287
Elizabeth Norman
187,350
182,975
Platinum International Technology Fund
Kerr Neilson
9,284,213
14,504,419
Platinum International Fund
(Quoted Managed Hedge Fund)
Anne Loveridge
15,972
15,721
Platinum Asia Fund
(Quoted Managed Hedge Fund)
Anne Loveridge
Brigitte Smith
Stephen Menzies
17,927
60,358
29,674
15,252
60,358
24,398
* Resigned during the year.
Platinum Asset Management Limited Annual Report 2022
31
Indemnity and Insurance of Directors and Officers
During the year, the Group incurred a premium in respect of a contract for indemnity
insurance for the Directors and Officers of the Company named in this report.
The Group insures the Directors and Officers of the Group in office to the extent permitted
by law for losses, liabilities, costs and charges in defending any legal proceedings arising out
of their conduct while acting in the capacity of Directors and Officers of the Group, other
than conduct involving a wilful breach of duty in relation to the Group. During the year, the
Group paid insurance premiums to insure the Directors and Officers of the Company and its
subsidiaries as permitted by the Corporations Act 2001. The terms of the contract prohibit
the disclosure of the premiums paid.
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 2022 32
Directors’ report
CONTINUED
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 71.
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
Chairperson
24 August 2022
Sydney
Andrew Clifford
Director
Platinum Asset Management Limited Annual Report 2022
Remuneration Report
33
A Message from the Chair of the Nomination and Remuneration Committee
Dear Shareholders
Despite a difficult year, Platinum has retained a measure of its resilience, through improved
relative investment performance during the second half of the financial year, strong progress
in business development and operational goals, and a strong balance sheet.
In response to feedback last year, we have taken significant steps to respond to shareholder
concerns about remuneration, with changes to our framework and disclosures,
and differentiated outcomes for executives that reflect performance across all aspects
of our business.
Our Response to Shareholder Concerns in Relation to the 2021 Remuneration Report
At our 2021 Annual General Meeting (AGM), we incurred a ‘first strike’ with more than 25%
of votes cast against the adoption of the FY2021 remuneration report. The Board takes this
outcome very seriously and recognises that the decisions we made last year about how we
reward our executives were not in line with the expectations of a number of shareholders.
The action undertaken during FY2022 focused on three key aspects:
• Working closely with shareholders and proxy advisers to ensure that their concerns
are well understood;
• Reviewing the executive reward framework to ensure it remains ‘fit for purpose’ in the
current environment; and
•
Ensuring FY2022 reward decisions appropriately reflect individual and Company
performance and are disclosed clearly.
Primarily, the feedback received from shareholders related to:
• Did not prescribe caps for our executive Key Management Personnel (KMP) short term
incentive (STI) awards;
• Used a process to determine executive KMP STI awards that relied heavily on Board
discretion and was not sufficiently transparent to shareholders; and
• Considered making an inaugural Chief Executive Officer (CEO) long term incentive (LTI)
award under the newly introduced Platinum Partners Long Term Incentive Plan (Platinum
Partners LTIP) that some shareholders considered to be too uncertain and/or potentially
too large.
We also received some feedback around the Platinum Partners LTIP structure that focused
on our use of an absolute total shareholder return (TSR) measure and multiple testing gates
but have balanced that feedback against not disenfranchising the overall strong positive vote
for the plan by our shareholders (approximately 88% voted in favour of the resolution to
adopt the plan). We also note that the initial tranche of 2021 LTI awards made to non-KMP
staff failed their 2021 TSR hurdle and therefore did not vest, thus reflecting the strong
alignment of realised rewards with shareholder outcomes. That said, the Board will continue
to review the potential to introduce any additional performance measure(s) in the future.
We have sought to address shareholder concerns in a range of ways that have been set out
in this report.
Platinum Asset Management Limited Annual Report 2022 34
Remuneration Report
CONTINUED
Reward Outcomes
Platinum’s performance in FY2022 is reflected in the variable remuneration outcome for
the CEO and executive KMP. The Board’s decision not to make any STI award to the CEO
and a downward adjustment to the other executive KMPs’ STI awards reflects the Board’s
commitment to align remuneration with shareholder outcomes. Shareholder concerns have
been front of mind in making reward decisions for FY2022. Supported by the framework
changes outlined below, key reward decisions for FY2022 were as follows:
• The CEO did not receive any STI award;
• Other executive KMP received STI awards equivalent to 55% of their maximum potential
STI awards and down, in aggregate, by 44% on the prior year’s STI awards. Strong
individual and team performance were partially offset by the Board’s decision to apply
a downwards modifier to reflect 2022 share price and profitability outcomes;
•
For those executive KMP that did receive STI awards, reducing the proportion of those
awards which were paid in cash – in aggregate, cash STI awards for executive KMP were
cut by 44% on the prior year, with a larger proportion of the STI awards being awarded as
deferred equity under the Deferred Remuneration Plan when compared to the prior year;
• The Board recognised that Platinum has not, for many years, included a long term
incentive component for executive KMP or other senior managers – the result being that
the proportion of share ownership by a number of key staff is now unacceptably low,
whether measured by industry standards or, more importantly, by the increased retention
risk currently run by the Company. Given that Platinum’s future profitability will be entirely
determined by the performance of its key people, this is an important issue for the Board
to address. This year’s proposed LTI awards for the executive KMP mark an important first
step in reducing this risk and thereby helping ensure Platinum’s future success.
• Proposed new allocations of LTI awards under the Platinum Partners LTIP to the CEO and
other executive KMP (subject to maximum caps for CEO) thereby increasing the “at risk”
component of executive pay. Even though not strictly required, for transparency in the
current year, these awards will be taken to the forthcoming AGM for shareholder approval.
In reaching these decisions the Board remained cognisant of the strong demand for financial
services executives across the industry and the importance of ensuring that Platinum’s
framework continues to support the attraction and retention of top talent. In particular, the
Board recognised that Platinum’s executive KMP each perform unconventional and expanded
roles that do not fit neatly with other comparable companies and that their total
remuneration should reflect this.
Platinum Asset Management Limited Annual Report 2022 35
A More Transparent Reward Framework
We have reflected on concerns raised by shareholders last year. Although the Board
did exercise reasonable downward discretion in both FY2020 and FY2021 to reduce
recommended STI awards, it has acknowledged that articulation of the link between
performance and reward could be improved. As a result, during FY2022 we conducted
an extensive review of our executive KMP reward framework to seek to address shareholder
and proxy adviser concerns, making the following key changes:
•
•
Firstly, we introduced maximum STI award caps which are linked to more explicit key
performance indicators (KPIs) for executive KMP, thus providing greater clarity on what
the Board considers to be appropriate STI award outcomes having regard to
performance. This supports a clearer link between performance and pay; and
Secondly, we applied an STI modifier which makes explicit the rationale for, and
magnitude of, discretionary adjustments made by the Board to KPI based remuneration
outcomes, having regard to the overall performance of the Company.
Importantly, we have included additional disclosures in our remuneration report to provide
greater transparency on performance outcomes and to clearly communicate the Board’s
decision-making processes and its use of discretion in determining reward outcomes.
Other FY2022 Activity
Platinum’s Nomination and Remuneration Committee has been active in the 2022 financial
year and up to the date of this report. In particular, we:
• Reviewed and updated the CEO’s and other executive KMPs’ remuneration arrangements
and KPIs;
• Reviewed and recommended to the Board the aggregate variable remuneration pool as
well as the individual awards for the CEO, other executive KMP and senior managers;
•
Introduced the Platinum Partners LTIP and granted awards to key members of staff
beyond investment team members as part of our broader succession and retention policy;
• Continued to push forward with our program of Board renewal, appointing a new
Nomination and Remuneration Committee Chair and Mr Phillip Moffitt to the Board; and
• Approved Platinum’s revised diversity and inclusion policy and objectives.
Platinum Asset Management Limited Annual Report 2022 36
Remuneration Report
CONTINUED
Looking Forward
Platinum’s core purpose remains to deliver good 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 good medium to long-term investment
performance is the primary driver of fund inflows, profit growth and ultimately long-term
value creation for shareholders. Platinum’s remuneration policy continues to be shaped
around this core purpose as it aims to balance this with the need to reward strong individual
performance and retain talent. Ultimately, Platinum’s purpose can only be fulfilled if it is able
to continue 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.
We will continue to refine and review our remuneration arrangements to ensure that they
align with Platinum’s core purpose and business strategy, and we welcome your feedback.
Brigitte Smith
Chair of Nomination & Remuneration Committee
Platinum Asset Management Limited Annual Report 2022 37
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 2022. 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.
Table of Contents
1. Our response to shareholders’ concerns in relation to FY2021 remuneration report
2. Summary of remuneration outcomes for FY2022
3. Overview of remuneration framework
4. Key management personnel (KMP)
5. Remuneration of executive KMP
6. Remuneration of non-executive directors
7.
Link between Company performance and KMP remuneration paid by the
Consolidated Entity
8. Oversight and governance
9. Remuneration services provided to the Nomination and Remuneration Committee
10. Key terms of KMP employment/service contracts
11. Interests of KMP in PTM shares
12. Directors’ interests in contracts
13. Loans to KMP and their related parties
14. Other related-party payments involving KMP
15. Shareholders’ approval of the FY2021 (prior year) remuneration report
Platinum Asset Management Limited Annual Report 2022 38
Remuneration Report
CONTINUED
1.
Our Response to Shareholders’ Concerns in Relation to FY2021 Remuneration Report
The Board takes shareholder concerns very seriously. Thus, following the ‘first strike’ received
against the adoption of the FY2021 remuneration report at last year’s annual general meeting,
we engaged an independent external remuneration consultant to assist us in conducting a
full review of our executive remuneration framework to better align it with the expectations
of our shareholders and the proxy advisors and to improve our disclosure around our FY2022
reward decisions.
The significant action that has been taken by the Board during FY2022 in response to these
concerns has been focussed on:
Improving shareholder
engagement
Enhancing the executive
KMP reward framework
• Engagement increased
• Introduction of STI caps
• Concerns well understood
and CEO LTI caps
• Consultation on proposed
• Introduction of a Board
changes
STI modifier
• Enhanced governance
and disclosures
Enhancing disclosure of
FY2022 variable reward
decisions
• Explicitly linked to KPIs
• Appropriately differentiated
• Clearly articulated
Our understanding of shareholders’ concerns and how we have sought to address these
concerns is summarised below.
WHAT WE HEARD
WHAT WE CHANGED AND WHY
Executive KMP variable
awards were too
discretionary in nature
and did not prescribe caps
The proposed FY2021 CEO
LTI award was considered
too high and/or uncertain
• Introduced detailed KPIs for executive KMPs that are linked
more explicitly to reward outcomes.
• Introduced caps on maximum STI and CEO LTI awards.
• Introduced a Board modifier to KPI based remuneration
outcomes having regard to overall Company performance.
• In response to proxy adviser feedback, the proposed LTI
award for the CEO for 2021 was withdrawn.
• The proposed 2022 CEO LTI award is significantly less than
the 2021 proposed potential maximum LTI award.
• The proposed LTI awards for the CEO and other executive
KMP will be taken to the 2022 AGM for shareholder approval.
Platinum Asset Management Limited Annual Report 2022 39
In response to the feedback we received, we have significantly enhanced the disclosure
of each executive KMP’s individual KPI weightings and their collective achievement against
those KPIs in order to present a clearer link between performance and pay. We have
introduced caps on maximum STI and LTI awards having regard to external benchmarking
data and the roles performed by our executive KMP.
The Board recognises that a balanced scorecard outcome does not always capture the full
range of factors that are relevant to making reward decisions and that the ability to make
discretionary adjustments is an important governance mechanism. The newly introduced STI
modifier enables the Board to clearly communicate the magnitude of, and the rationale for,
adjustments to KPI-based STI outcomes.
A summary of FY2022 reward outcomes and further detail on the executive KMP reward
framework changes are provided on the following pages.
2. Summary of Remuneration Outcomes for FY2022
The Board remains focused 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 performance.
In determining remuneration outcomes this year, the Board specifically:
•
Sought to ensure executive KMP remuneration outcomes reflected the disappointing
profit and share price performance experienced by shareholders.
–
–
–
–
Total annual remuneration received by executive KMPs fell by 24% year on year,
driven primarily by cash STI awards being cut by 44% in aggregate on the prior year.
As was the case for FY2021, the Chief Executive Officer/co-Chief Investment Officer,
Mr Andrew Clifford, did not receive any variable STI award for FY2022.
Despite the other executive KMPs meeting a number of their individual KPIs for the
year, their actual STI awards reflected only 55% of the maximum opportunity after the
Board applied significant downward adjustments to their KPI-derived remuneration,
with at least 33% of those STI awards being satisfied via deferred equity pursuant to
Platinum’s Deferred Remuneration Plan.
Whilst Platinum’s executive KMP remuneration has been historically weighted towards
variable remuneration, this year, the deferred element of the variable awards was
significantly increased, including by the proposed grant of “at risk” performance
rights under the Platinum Partners LTIP to better align remuneration with the
shareholder return experience. Awards under the Platinum Partners LTIP to the
executive KMP aim to ensure that a significant proportion of variable awards are
“at risk” and directly linked to shareholder outcomes. These awards will be taken
to the 2022 AGM for shareholder approval.
Platinum Asset Management Limited Annual Report 2022 40
Remuneration Report
CONTINUED
–
–
Taking into account the proposed LTI award for the CEO, 76% of the CEO’s
remuneration for 2022 was delivered by “at risk” variable remuneration (inclusive
of the proposed LTI award). For other executive KMP, in aggregate 71% of their total
remuneration for 2022 was delivered via variable awards (inclusive of the proposed
LTI awards).
Platinum’s STI and LTI awards have long deferral periods relative to Platinum’s peers.
Following support from shareholders and proxy advisors, Platinum has retained these
longer deferral periods for both the STI awards (4 years) and LTI awards (8 years) in
order to promote key staff retention and increase alignment with shareholders.
•
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.
• Considered the current level of staff ownership in the Company and the alignment
of remuneration with the shareholder return experience.
The overall FY2022 award outcomes were as follows:
•
•
•
•
Staff expenses decreased by $3.1 million on the prior year. Reduced short term incentive
cash payments accounted for $3.6 million of this decrease, partly offset by salary
increases approved from the prior year.
There were no awards made under the Profit Share Plan (PSP), largely due to the relative
underperformance of our funds. The Investment Team Plan and General Employee Plan
cash pools were decreased. With the exception of a very small group of employees who
each made outstanding contributions to the business, there were no increases in cash
variable awards for non-investment staff members.
A total of $8.5 million (2021: $8.9 million) 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 2026 subject to continued service
conditions (unless “good leaver” provisions apply) and non-forfeiture and malus
provisions. 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 $20.2 million (2021: $35.9 million), was awarded to employees (excluding
executive KMP) under the Platinum Partners LTIP, down 44% on the prior year. Vesting
of the rights is subject to total shareholder return (TSR) conditions being met and other
non-forfeiture, malus and clawback provisions. The rights have a June 2030 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.
Platinum Asset Management Limited Annual Report 2022 41
The allocation of the FY2022 profits attributed to both shareholders and staff (in the form of
remuneration) is outlined in the first graph below. It shows that the remuneration awarded to
staff was modest, relative to the returns to shareholders, with shareholders receiving a share
of profits more than two 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.
In particular, the Board recognises that Platinum has not, for many years, included a long
term incentive component to either KMP or other senior management remuneration.
As a result, the proportion of share ownership by key staff is unacceptably low, whether
measured by industry standards and, more importantly, by the increased retention risk
currently run by the Company. This year’s executive KMP LTI awards, which are subject to
shareholder approval at the upcoming AGM, mark an important first step in reducing this
risk and thereby helping to ensure Platinum’s future success.
51%
27%
22%
8%
22%
70%
3. Overview of Remuneration Framework
The core purpose of the Company is to deliver good 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 efficacy of our remuneration program is best measured by our long-term investment
performance outcomes and the retention rate of key staff members.
Platinum Asset Management Limited Annual Report 2022Graph 1: Share of FY2022 Profit(pre-tax and pre-staff costs)Staff costs andshare-based payments expenseTax (community)ShareholdersGraph 2: Composition of PTM share ownershipExecutive directors and staffNon-executive directorsNon related shareholders 42
Remuneration Report
CONTINUED
Platinum’s remuneration program has three key elements:
i.
ii.
iii.
Fixed Remuneration: This is set at a level sufficient to attract exceptional talent. It includes
salary, benefits and superannuation. Fixed remuneration is benchmarked to external
market data 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 based on meeting performance objectives following rigorous review by
senior management and the Nomination and 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.
Deferred rights are subject to a four-year continuous service vesting condition1.
Long Term Variable Remuneration (deferred equity):2 Key members of staff will be
periodically invited by the Board (upon the recommendation of the Nomination and
Remuneration Committee), to participate in the Platinum Partners LTIP in order to
directly align their remuneration with shareholder value creation. These awards take the
form of performance rights and are subject to an eight-year continuous service exercise
condition.1 Vesting of the performance rights is dependent on specified total shareholder
return (TSR) hurdles being achieved.
Subject to “good leaver” provisions and other non-forfeiture and malus provisions.
1
2 Platinum also has two inactive long term variable 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.
Platinum Asset Management Limited Annual Report 2022 43
This deferral elements of the short term and long term variable remuneration plans are
designed to align employees’ interests with shareholders’, retain talent and foster sound
financial, operational and risk management practices.
FIXED
REMUNERATION
1
Fixed Remuneration
Set to attract exceptional
talent
Benchmarked to market
Rewards each employee
for their skills, attributes
and role accountabilities
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
achieving performance
hurdles
Eight-year deferral period
to encourage a long term
commitment to the firm
Reward
Framework
2
SHORT TERM
VARIABLE
REMUNERATION
(Cash & Deferred Equity)
Short Term 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
Short Term Variable
Remuneration
(Deferred equity)
Improves alignment of
employees and shareholders
Four-year deferral element
to foster sustainable growth
and sound financial,
operational and risk
management practices
Platinum Asset Management Limited Annual Report 2022 44
Remuneration Report
CONTINUED
4. 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
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Kerr Neilson
Philip Moffitt
Andrew Clifford
Elizabeth Norman
POSITION
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed on 17 December 2021)
Managing Director, Chief Executive Officer (CEO)
and co-Chief Investment Officer
Executive Director and Director of Investor Services
and Communications
Andrew Stannard
Executive Director, Finance Director
Tim Trumper
Non-Executive Director (resigned on 17 November 2021)
There were no other employees that held a KMP position within the Company
or consolidated entity.
Platinum Asset Management Limited Annual Report 2022
45
5. Remuneration of Executive KMP
a) Executive KMP Remuneration Framework
Our executive KMP remuneration framework is designed to support Platinum’s strategic
priorities. We have a clear set of principles which guide our remuneration decisions and
design. As we operate in a dynamic and rapidly evolving market, we review our approach
to remuneration at least annually so that we are aligned to market expectations and
business objectives.
Platinum’s three core values underpin its purpose and business strategy, which are set
forth below.
PLATINUM’S PURPOSE
“to deliver good investment returns over the medium to long-term
that help clients secure their financial futures”
PLATINUM’S BUSINESS STRATEGY
1. Deliver good investment returns for our clients
2. Maintain a strong team and distinctive culture
3. Maintain and grow our Australian retail business
4. Capitalise on the attractive and deep offshore institutional opportunity
5. Ensure an efficient and scalable infrastructure that prioritises client service
UNDERPINNED BY PLATINUM’S VALUES
EXCELLENCE
INTEGRITY
TEAM MINDSET
We set high standards
We invest in our people
to excel
We do what we say
we will do
We look for ways to
continuously improve
We embrace diverse
thinking
We always act in the
interests of our clients
We take responsibility
for our actions
We do what is right
rather than what is easy
We communicate
transparently
We don’t hold back,
we contribute fully
We align team, organisation
and personal goals
We contribute to teams
beyond our own
We work in an inclusive
and collaborative manner
We seek to understand
and consider others
We build cohesion
and respect differences
As a “pure play” investment manager, the value of Platinum is entirely linked to the skills and
expertise of its people and as a heavily regulated fiduciary business, we believe that ensuring
our staff consistently live the Company’s values is an important driver of long term
shareholder returns. It is therefore appropriate that the executive KMP remuneration
framework focuses on a well-balanced mix of financial and non-financial KPIs.
Platinum Asset Management Limited Annual Report 2022 46
Remuneration Report
CONTINUED
The table below summarises Platinum’s remuneration framework for its executive KMP:
FIXED
REMUNERATION
VARIABLE REMUNERATION
PURPOSE
DELIVERY
Attract
and retain
executives.
Base salary
(including salary
sacrifice) and
superannuation.
APPROACH Reviewed
annually by
checking
relativities
against a
peer group
of financial
services and
other ASX 200
companies.
SHORT TERM VARIABLE
REMUNERATION (STI)
Rewards for performance
during current year.
CEO: Mr Andrew Clifford is eligible
for STI awards under the CEO Plan
(capped at A$1 million), subject to
meeting the annual KPIs as set by
the Board. Any award under the
CEO Plan must be delivered via
deferred equity rights pursuant
to Deferred Remuneration Plan.
As the co-CIO, Mr Clifford is also
eligible to receive awards via the
Investment Team Plan (ITP) and
the Profit Share Plan (PSP).
Other Executive KMP – Under our
current practice, at least 33% of the
STI awards are delivered via the
grant of deferred equity rights
pursuant to Deferred Remuneration
Plan, with the remainder delivered
in the form of cash.
Annual performance is measured
using a mix of financial and
non-financial KPIs including:
• Investment performance;
• Revenue and profit growth;
• Diversification of client base;
• People and culture leadership;
and
• Risk management and
operational effectiveness.
Board has discretion to apply
a modifier to KPI-derived
remuneration having regard
to Company performance.
Vesting of deferred rights is subject
to continued service of 4 years.
No exercise conditions.
LONG TERM VARIABLE
REMUNERATION (LTI)
Rewards the creation
of long term
shareholder value.
All executive KMP are
eligible to participate
in the Platinum
Partners LTIP.
Awards are delivered
via the grant of
performance rights.
Performance rights
awarded to a
participant will be
divided into four
equal tranches and
tested against TSR
performance hurdles
over four consecutive
years.
Vesting of each tranche
of performance
rights is subject
to achieving the
minimum TSR
performance hurdles.
Exercise of performance
rights is subject to
continued service of
8 years.
Platinum Asset Management Limited Annual Report 2022
47
Details of Executive KMP Remuneration Framework
When assessing the market positioning of our KMPs’ remuneration against other peers
(both listed and unlisted), it is important to consider Platinum’s organisational structure
and the broader scope of our KMPs’ accountabilities. Both the CEO and the Finance Director
perform dual roles: the CEO is also Platinum’s co-CIO; the Finance Director also acts as
Platinum’s Chief Financial Officer (CFO) and Chief Operating Officer (COO). Similarly, the
Director of Investor Services and Communications’ primary business development
accountabilities are more closely aligned to those of a divisional CEO, in addition to being
responsible for managing investor relations and external communications.
Fixed Remuneration
The fixed remuneration (base salary plus superannuation) of our executive KMPs and of the
CEO in particular, is currently conservatively positioned against both sector peers and
comparable roles within other ASX200 companies, having regard to the broader scope of
their accountabilities. As a result, the ratio of variable remuneration to fixed remuneration
may appear higher when compared to peers and the broader market. In order to address this,
the Board may increase fixed pay over the next few years to levels more comparable to
industry peers whilst still benchmarking total remuneration (including variable) to be
consistent with peers.
Platinum Asset Management Limited Annual Report 2022 48
Remuneration Report
CONTINUED
Variable Remuneration – STI and LTI
The current remuneration mix for executive KMP remains weighted towards variable
remuneration, albeit with longer vesting periods for the deferred equity components
(i.e. deferred rights and performance rights) than industry norms. Recipients of deferred
equity are not permitted to hedge their economic interests.
Subject to the achievement of financial and non-financial KPIs, variable STI awards can be
made to executive KMP in the form of deferred rights granted pursuant to the Deferred
Remuneration Plan or as cash. Deferred rights under the Deferred Remuneration Plan will vest
after a four-year period subject to continuous service during that period. Generally, employees
who leave before the relevant vesting date will forfeit their unvested deferred rights.
Platinum proposes to grant LTI awards to the executive KMP this year to strengthen the
alignment between long term interests of shareholders and executives. Platinum will present
these awards for the approval of shareholders at Platinum’s 2022 AGM. If approved by
shareholders, these LTI awards will be delivered via the grant of performance rights pursuant
to the Platinum Partners LTIP. The terms of the Platinum Partners LTIP are set out later in this
report. In summary, under the terms of the plan, each award will be split into four equal
tranches with each tranche tested annually against absolute TSR compound annual growth
rate (CAGR) performance conditions. This is to ensure that “windfall” gains do not accrue to
the executives and to better align the award with the actual shareholder experience for each
year of the applicable four-year award testing period. A tranche of performance rights will
lapse if they fail the TSR CAGR test for the relevant testing year. The exercise of these
performance rights is also subject to an eight-year continuous service condition,
to encourage a long term commitment to the firm.
The Board considers that an absolute TSR is an appropriate performance hurdle for the
following reasons:
• There are very few listed companies in the Australian market with a business that is
directly comparable to Platinum’s; and
• A broader market index is not considered an appropriate peer group as there is risk of
misalignment between remuneration and shareholder value creation. For example, using
a broad market index may mean that remuneration outcomes are impacted by broad
market movements of other companies (e.g. mining companies) that don’t correspond
to long-term value creation for Platinum shareholders.
As part of its annual review, the Board determined to retain the TSR CAGR thresholds of
between 7.5% and 15% (compounded annually) for these 2022 awards as, in the Board’s view,
they continue to be appropriate having regard to the current economic environment and
represent a relatively strong return for shareholders. By way of example, over four years,
a TSR CAGR of 7.5% represents a total shareholder return of 33%, and 15% represents a total
shareholder return of 75%. The Board will continue to consider the appropriateness of
introducing a second performance condition for the Platinum Partners LTIP.
Platinum Asset Management Limited Annual Report 2022 49
KMP Maximum Variable Remuneration Opportunity
This year, we introduced explicit maximum variable remuneration caps for the executive KMP,
which have been set with close regard to appropriate external benchmarking data, including
data supplied by an independent remuneration consultant.
EXECUTIVE KMP
REMUNERATION $’000
CEO
% OF TOTAL
(INCL. SUPER)
CO-CIO
% OF TOTAL
(INCL. SUPER)
DIRECTOR OF INVESTOR
SERVICES AND
COMMUNICATIONS %
OF TOTAL (INCL. SUPER)
FINANCE DIRECTOR
% OF TOTAL
(INCL. SUPER)
1
FIXED
498,568
17%
–
–
MAX STI
(DEFERRED EQUITY)
MAX LTIP
(FACE VALUE)
1,000,000
1,500,000
33%
3,000,000
100%
50%
–
–
1
FIXED
MAX STI (CASH &
DEFERRED EQUITY)
MAX LTIP
(FACE VALUE)
473,568
21%
1,350,000
59%
450,000
20%
1
FIXED
MAX STI (CASH &
DEFERRED EQUITY)
MAX LTIP
(FACE VALUE)
473,568
25%
1,000,000
52%
450,000
23%
1
Fixed Compensation includes both salary and superannuation for FY2022.
b) Executive KMP Performance Against FY2022 KPIs
When determining the STI allocations for the executive KMP for the 2022 financial year, the
Nomination and Remuneration Committee considered a number of factors including each
KMP’s individual contributions against the KPIs, their respective individual priorities and their
level of demonstrated alignment to Platinum’s purpose, business strategy and values.
Under Platinum’s balanced scorecard approach, all executive KMP were assessed against
the same KPIs. However, the CEO/co-CIO’s performance was assessed against additional
performance metrics relating to the investment performance of the portfolios for the
relevant period.
Platinum Asset Management Limited Annual Report 2022
50
Remuneration Report
CONTINUED
The table below summarises the executive KMPs’ KPIs and performance outcomes for the
2022 financial year.
PERFORMANCE
MEASURES
INVESTMENT
PERFORMANCE
REVENUE AND
PROFIT GROWTH
KEY PERFORMANCE INDICATORS – 2022 FINANCIAL YEAR
FY2022 KEY PERFORMANCE
INDICATORS AND ASSESSED
OUTCOMES
CEO/
CO-CIO
WEIGHTING
DIRECTOR
OF INVESTOR
SERVICES &
COMM’NS
WEIGHTING
FINANCE
DIRECTOR
WEIGHTING
20%
–
–
20%
20%
20%
Weighted average 1- and 3-year
investment performance was
below expectations on both an
absolute and relative basis.
Returns of flagship funds versus
peers were also below
expectations.
The downside capture for
flagship funds over 3 years
was met.
Assessment: The target was
largely not met.
Average base fee revenue fell
by 7% and adjusted profit
(ex-investment income and
performance fees) fell by 13%.
Average base fee margins
were maintained.
Run-rate fund flows were
negative but better than
investment performance
adjusted expectations.
International Brands and
International Healthcare Funds
partially met their flow targets.
Assessment: The target was
largely not met.
Platinum Asset Management Limited Annual Report 2022 51
PERFORMANCE
MEASURES
DIVERSIFICATION
OF CLIENT BASE
PEOPLE AND
CULTURE
LEADERSHIP
KEY PERFORMANCE INDICATORS – 2022 FINANCIAL YEAR
FY2022 KEY PERFORMANCE
INDICATORS AND ASSESSED
OUTCOMES
CEO/
CO-CIO
WEIGHTING
DIRECTOR
OF INVESTOR
SERVICES &
COMM’NS
WEIGHTING
FINANCE
DIRECTOR
WEIGHTING
20%
40%
20%
20%
20%
20%
Overall growth in client assets was
disappointing, largely reflecting
current investment performance.
However, the business:
• Achieved targeted client
retention statistics and loss/
churn rates;
• Increased retail target audience
and the variety of events;
• Increased engagement levels
across a number of mediums
including content, distribution
and social media; and
• Delivered new ESG integration
project including the
development of a new fund
focused on carbon transition.
Progress made in opening new
funds offshore and increasing
prospect engagement.
Assessment: Client service-related
objectives were largely met.
Ensured strong cohesion and
stability within the investment
team by attracting, retaining
and developing key staff.
Achieved low senior staff
turnover across the broader
team and delivered programs
that aim to improve culture.
Delivered succession planning,
new remuneration arrangements
and increased staff ownership
as well as creating new roles to
further optimise the organisation.
Assessment: Objectives were
fully met.
Platinum Asset Management Limited Annual Report 2022 52
Remuneration Report
CONTINUED
PERFORMANCE
MEASURES
RISK MANAGEMENT
AND OPERATIONAL
EFFECTIVENESS
KEY PERFORMANCE INDICATORS – 2022 FINANCIAL YEAR
FY2022 KEY PERFORMANCE
INDICATORS AND ASSESSED
OUTCOMES
CEO/
CO-CIO
WEIGHTING
DIRECTOR
OF INVESTOR
SERVICES &
COMM’NS
WEIGHTING
FINANCE
DIRECTOR
WEIGHTING
20%
20%
40%
No significant regulatory issues
identified in FY2022.
No significant errors or breaches
of investment guidelines.
Continued enhancement of risk
management and corporate
governance.
Operational and IT systems
and processes maintained and
enhanced with a particular focus
on cyber security and improving
operational effectiveness.
Assessment: Objectives were
fully met.
The FY2022 performance measures will apply for the FY2023 scorecard.
c) Executive KMP Remuneration Outcomes for FY2022
Awarded remuneration represents the value of remuneration that has been awarded in the
2022 financial year, as determined by the Board, and includes fixed remuneration, STI awards
(cash and deferred equity) and LTI awards (deferred equity). The actual value of the deferred
equity awards realised will depend on future performance outcomes and LTI awards will only
deliver value to the executives if shareholder TSR hurdles are achieved. This ensures strong
alignment with shareholder interests.
Fixed Remuneration
Platinum KMP had not received any fixed remuneration increases since 2018. During FY2022,
each executive KMP received an increase of $25,000 to their base salary. The increase
reflects the Board’s intent to increase fixed remuneration over time to levels more
comparable to industry peers.
Short Term Variable Remuneration and Board Modifier
When assessing the 2022 financial year performance outcomes against Platinum’s balanced
scorecard, the Board considered it appropriate to adjust those KPI remuneration outcomes
to recognise the Company’s share price performance and the effect of Platinum’s investment
performance on the FY2022 flows and profits. As a result, the Board applied a modifier to the
KPI STI remuneration outcomes resulting in a downwards adjustment to those outcomes.
Platinum Asset Management Limited Annual Report 2022 53
The 2022 financial year executive KMP STI outcomes after the application of the modifier
were as follows:
EXECUTIVE KMP
A Clifford
E Norman
A Stannard
UNADJUSTED
KPI STI OUTCOME
(% OF MAX STI)
BOARD
MODIFIER
FINAL
STI OUTCOME
(% OF MAX STI)
62%
71%
76%
0%
77%
72%
0%
55%
55%
Long Term Variable Remuneration
Subject to approval of shareholders at Platinum’s forthcoming AGM, Platinum proposes to
grant LTI awards to the CEO, Director of Investor Services and Communications and the
Finance Director to strengthen the alignment between long term interests of shareholders
and executives.
A Clifford – Managing Director, CEO and co-CIO
Mr Andrew Clifford is the Managing Director, CEO and co-Chief Investment Officer (CIO) of
the Company. Mr Clifford is eligible for awards under the CEO Plan (capped at A$1 million),
subject to meeting his KPIs. Any amounts awarded to Mr Clifford under the CEO Plan, must
be provided to Mr Clifford as an equivalent award of deferred equity rights issued pursuant
to the Deferred Remuneration Plan.
Upon meeting the predetermined targets for investment performance, Mr Clifford is
entitled to receive awards in relation to his role as the co-CIO under the Investment Team
Plan (ITP) and the Profit Share Plan (PSP) subject to caps on both plans and Board discretion.
As a portfolio manager, Mr Clifford was directly responsible for generating approximately
$253 million in annualised fee revenue and his potential upside remuneration reflects this.
His maximum award, which only becomes payable in the event of strong 1- and 3-year
investment performance as per the ITP and PSP, is capped at less than 3% of the revenue
generated on behalf of shareholders (based on FY2022 fee revenues).
Despite the achievement of a number of his CEO KPIs (Mr Clifford’s STI outcome based on
the balanced scorecard was 62% of his maximum award) having regard to the performance
of the Platinum International Fund relative to the nominated index, Mr Clifford did not wish
to receive any variable remuneration either in his role as CEO or co-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 (ITP and PSP).
Platinum Asset Management Limited Annual Report 2022
54
Remuneration Report
CONTINUED
A Clifford – Managing Director, CEO and co-CIO – continued
In recognition of the current lower fixed compensation in comparison to industry peers, the
Board set the CEO LTIP award cap at 2 x peers’ median salary for FY2022 (based on industry
benchmarking data for the financial services sector). As a matter of good corporate governance,
this award will be presented to shareholders for approval at the forthcoming AGM.
EXECUTIVE
KMP
YEAR
SALARY
$'000
SUPER
$'000
STI –
CASH
STI –
DEFERRED
TOTAL
STI
% OF
MAX
STI
LTIP
(FACE
VALUE)
LTIP
(FAIR
VALUE)1
A CLIFFORD 2022 475,000 23,568
–
–
–
0% 1,500,000 1,185,000
E Norman – Executive Director, Director of Investor Services and Communications
Due to the dual CEO/co-CIO role performed by Mr Andrew Clifford, Ms Elizabeth Norman’s
role is more extensive in scope than is typical for the industry and her remuneration reflects
this. Ms Norman has responsibility for product maintenance and development, Australian,
US and European distribution, retail marketing, brand and advertising, investment consultant
relations, and investor and shareholder relations. Ms Norman is responsible for over 50,000
direct retail and adviser relationships in Australia and for the development of the business
offshore. Ms Norman is also an Executive Director of the Company.
Ms Norman is eligible for STI awards under the General Employee Plan, subject to meeting
her KPIs. These awards may be issued as cash or as deferred equity under the Deferred Equity
Plan. The short term variable remuneration paid to Elizabeth Norman this year reflects her
leadership and involvement in the development of several important business initiatives
during the year including a new fund focused on the carbon transition. Ms Norman was also
responsible for the 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 Board determined a pre-adjustment STI outcome, based the balanced scorecard,
of 71% of her maximum award. However, in light of overall disappointing FY2022 client and
shareholder outcomes, the Board applied an STI modifier to adjust the final STI downwards
to approximately 55% of her maximum STI award.
Ms Norman was awarded an LTI of 1 x base salary for 2022. As a matter of good corporate
governance, this award will be presented to shareholders for approval at the forthcoming AGM.
EXECUTIVE
KMP
YEAR
SALARY
$'000
SUPER
$'000
STI –
CASH
(67%)
STI –
DEFERRED
(33%)
TOTAL
STI
% OF
MAX
STI
LTIP
(FACE
VALUE)
LTIP
(FAIR
VALUE)1
E NORMAN 2022 450,000 23,568 500,000 250,000 750,000 55% 450,000 355,000
1 The LTI awards are subject to shareholder approval, which will be sought at Platinum’s 2022 Annual General
Meeting. The number of rights allocated will be based on the five-day VWAP in September 2022. The fair value
estimate is independently calculated and is also used to determine the accounting value which is amortised over
future vesting periods. The fair value of the FY2022 award disclosed above has been estimated at 79% of the face
value, based on an independent valuation as at 20 June 2022.
Platinum Asset Management Limited Annual Report 2022
55
A Stannard – Executive Director, Finance Director
Similar to Ms Norman, Mr Andrew Stannard also performs a broader role, as both Chief
Financial Officer (CFO) and Chief Operating Officer (COO). This role is more extensive in
scope than is typical for the industry and includes responsibility for nine operational teams
being Investment Operations, Finance, Human Resources, Legal, Risk and Compliance,
Information Technology, Projects, Data, and Unit Registry. Andrew is also an Executive
Director of the Company.
Mr Stannard is eligible for STI awards under the General Employee Plan, subject to meeting
his KPIs. These awards may be issued as cash or as deferred equity under the Deferred Equity
Plan. The short term variable remuneration paid to Mr Stannard this year reflects his input
into various strategic business initiatives and the provision of technical support for a number
of new business development opportunities. Highlights include 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 the Platinum Partners LTIP.
The Board determined a pre-adjustment STI outcome, based on the balanced scorecard,
of 76% of Mr Stannard’s maximum award. However, in light of overall poor FY2022 client
and shareholder outcomes, the Board applied an STI modifier that reduced the final STI
to approximately 55% of his maximum STI award.
Mr Stannard was awarded an LTI of 1 x base salary for 2022. As a matter of good corporate
governance, this award will be presented to shareholders for approval at the forthcoming AGM.
EXECUTIVE
KMP
YEAR
SALARY
$'000
SUPER
$'000
STI -
CASH
(55%)
STI -
DEFERRED
(45%)
TOTAL
STI
% OF
MAX
STI
LTIP
(FACE
VALUE)
LTIP
(FAIR
VALUE)1
A STANNARD 2022 450,000 23,568 300,000 250,000 550,000 55% 450,000 355,000
1 The LTI awards are subject to shareholder approval, which will be sought at Platinum’s 2022 Annual General
Meeting. The number of rights allocated will be based on the five-day VWAP in September 2022. The fair value
estimate is independently calculated and is also used to determine the accounting value which is amortised over
future vesting periods. The fair value of the FY2022 award disclosed above has been estimated at 79% of the face
value, based on an independent valuation as at 20 June 2022.
Platinum Asset Management Limited Annual Report 2022
56
Remuneration Report
CONTINUED
d) Executive KMP Remuneration Received for FY2022
The table below presents disclosure of the remuneration provided by the consolidated entity
to executive KMPs of the consolidated entity, based on the amounts received by the
individuals during the financial year.
CASH
SALARY
$
OTHER1
$
SUPER-
ANNU-
ATION
$
SHORT
TERM
VARIABLE
REMUNER-
ATION
(CASH)2
$
SHORT
TERM
VARIABLE
REMUNER-
ATION
VESTED
LONG
TERM
(DEFERRED)3 AWARDS
$
$
VARIABLE
REMUNER-
ATION AS A
% OF TOTAL
REMUNER-
ATION4
TOTAL
$
2022
Andrew
Clifford
Elizabeth
Norman
Andrew
475,000
– 23,568
– 283,113
–
781,681
36%
450,000
– 23,568
500,000
99,091
– 1,072,659
56%
Stannard
450,000
– 23,568 300,000
42,468
–
816,036
1,375,000
– 70,704 800,000 424,672
– 2,670,376
42%
46%
2021
Andrew
Clifford
Elizabeth
Norman
Andrew
450,000
– 21,694
–
–
–
471,694
0%
425,000
– 21,694 1,000,000 319,400
– 1,766,094
75%
Stannard
425,000
– 21,694
425,000 106,466
–
978,160
54%
Same
Incumbent 1,300,000
– 65,082 1,425,000 425,866
– 3,215,948
58%
Kerr Neilson
(until 31/8/20) 75,000 219,178
3,616
–
–
–
297,794
1,375,000 219,178 68,698 1,425,000 425,866
– 3,513,742
0%
53%
1
“Other” represents a payment for accumulated annual and long service leave entitlements on retirement as an
Executive Director in 2021. 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 below.
2 See the “Variable Remuneration Plans” section 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 “short term variable remuneration (deferred)” amount noted above reflects the number of shares that vested in
the period multiplied by the closing Platinum share price on the date of vesting. Andrew Clifford received vested
awards of 165,563 shares at $1.71, Elizabeth Norman received vested awards of 57,948 shares at $1.71 (2021: 64,656
at $4.94 shares) and Andrew Stannard received 24,835 vested shares at $1.71 per share (2021: 21,552 shares at $4.94).
4 Fixed remuneration refers to salary and superannuation. Variable remuneration refers to both cash and
deferred components.
Platinum Asset Management Limited Annual Report 2022
57
The table below presents the remuneration provided by the consolidated entity to executive
KMP of the consolidated entity, in accordance with accounting standards. No awards were
made to executive KMP under the Platinum Partners LTIP for the financial year to 30 June 2021.
The proposed Platinum Partners LTIP awards for executive KMP in 2022 are subject to
shareholder approval at the upcoming AGM.
CASH
SALARY
$
OTHER1
$
SUPER-
ANNU-
ATION
$
VARIABLE
REMUNER-
ATION
(CASH)2
$
VARIABLE
REMUNER-
ATION
(DEFERRED)3
$
TOTAL
$
VARIABLE
REMUNER-
ATION AS A
% OF TOTAL
REMUNER-
ATION4
2022
Andrew
Clifford
Elizabeth
Norman
Andrew
Stannard
2021
Andrew
Clifford
Kerr Neilson
475,000 39,805 23,568
–
239,997
778,370
31%
450,000 10,990 23,568
500,000
377,899 1,362,457
64%
450,000 23,959 23,568
300,000
184,800
982,327
1,375,000 74,754 70,704 800,000 802,696 3,123,154
49%
51%
450,000 24,091 21,694
–
237,997
733,782
32%
(until 31/8/20)
75,000
6,285
3,616
–
–
84,901
0%
Elizabeth
Norman
Andrew
Stannard
425,000
8,758 21,694 1,000,000
409,100 1,864,552
76%
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
56%
60%
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 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 attributable to Andrew Clifford represents the current year portion of the 2018 deferred
award of $1,000,000. The accounting valuation attributable to Elizabeth Norman represents the current year
portion of the 2022 deferred award of $250,000, the 2021 deferred award of $500,000, the 2020 award of
$450,000, the 2019 award of $350,000 and the 2018 award of $350,000. The accounting valuation attributable to
Andrew Stannard represents the current year portion of the 2022 deferred award of $250,000, the 2021 deferred
award of $250,000, the 2020 award of $150,000, the 2019 award of $150,000 and the 2018 award of $150,000.
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 2022
58
Remuneration Report
CONTINUED
e) Variable Remuneration Plans
There were three cash short term variable remuneration plans in operation during the 2022
financial year, each of which operated in conjunction with the Deferred Remuneration Plan.
Each plan is overseen by the Nomination and Remuneration Committee. The investment
team is eligible to participate in the Investment Team Plan (ITP) and the Profit Share Plan
(PSP). All other staff are covered by the General Employee Plan. Each short term variable
remuneration award is apportioned between a cash amount, which is generally paid in June
and an award of deferred rights under the Deferred Remuneration Plan, the value of which is
linked to the PTM share price. Deferred rights are subject to a four-year continuous service
vesting condition.
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
PARTICIPANTS POOL FORMULA
CAP
Investment
Team Plan
Investment
team
Weighted average
1- and 3-year
performance1
2 x salary of
investment team
(caps out at 5%
outperformance)
HURDLE
MSCI2
Profit Share
Plan
Investment
team
Weighted average
1- and 3-year
performance
5% of adjusted net
profit (caps out at
6% outperformance)
MSCI
+1%
AWARD
TYPE
Cash
and/or
deferred
equity
award
Investment Team Plan (only members of the investment team are eligible)
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 having regard to 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 timeframe and is relative to a nominated market index.
1 The Board can elect to make discretionary awards in excess of the pool amount should it be warranted. In this
case, annual awards for investment team members may then be determined by an individual assessment of each
employee’s contribution.
2 MSCI refers to the relevant MSCI index applicable to each strategy.
Platinum Asset Management Limited Annual Report 2022 59
The total remuneration outcome (comprising both fixed and variable components) for
each investment professional is also benchmarked to appropriate external market data.
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”) (only selected members of the investment team are eligible)
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-based 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 and
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 (all non-investment team members are eligible)
Performance is assessed against pre-determined operational performance indicators relevant
to each employee, which flow down from the executive KMP’s KPIs. 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 relevant external market data.
Equity Incentive Plan
In June 2016, the Board approved the implementation of the Equity Incentive Plan (then
known as the Deferred Remuneration Plan). This financial year, with the introduction of the
Platinum Partners’ LTIP in July 2021 under the umbrella of the existing Equity Incentive Plan,
the Equity Incentive Plan was approved by shareholders at the November 2021 AGM.
As a result, there are now two sub-plans operating under the Company’s Equity Incentive
Plan, the Deferred Remuneration Plan and the Platinum Partners Long Term Incentive Plan.
Platinum Asset Management Limited Annual Report 2022 60
Remuneration Report
CONTINUED
The main objectives of the Equity Incentive Plan are to directly align employees’
remuneration with shareholder value creation, foster sustainable growth, as well
as sound financial, operational and risk management practices, and to retain talent.
Details of each sub-plan are set forth below:
Deferred Remuneration Plan (all staff are eligible)
Eligible employees are selected by the Nomination and 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 dollar value
of the 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. Deferred rights are subject to a four-year continuous service vesting
condition. 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. Awards of deferred rights may also be forfeited in
accordance with other forfeiture and malus provisions under the plan rules.
In order to satisfy the obligations of the Company that arise from the granting of deferred
rights to eligible employees, 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, an eligible employee will receive one PTM ordinary share 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 Board to award cash or some other instrument rather
than deferred rights, but the Board 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 (by invitation of the Board only)
Eligible employees are invited to participate in the Platinum Partners LTIP by the Board (upon
the recommendation of the Nomination and Remuneration Committee), generally as part of
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. The number of performance rights
awarded is determined by dividing the dollar amount of the 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.
Platinum Asset Management Limited Annual Report 2022 61
The vesting of the performance rights is conditional upon the Company meeting minimum
Total Shareholder Return (TSR) compound annual growth rate performance hurdles as set
forth in the table below (TSR Hurdle). Alternative criteria to TSR (for example investment
performance or financial growth measures) were considered by the Board but ultimately
rejected on the basis that they were not considered to be fully aligned to shareholder
outcomes and thus could result in perverse award outcomes (potentially applicable if
individual investment performance was used as a criteria), were already employed as a criteria
for short term variable awards (in the case of aggregate investment performance), or were
otherwise substantially correlated to TSR (in the case of EPS or revenue growth).
Each award that is granted, is divided into four equal tranches, with one quarter of the award
being tested annually against the TSR Hurdle measured from the beginning of the relevant
performance period to the end of the relevant performance period, for up to four years (each
a Performance Period). 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 ASX
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 ASX
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 performance 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 performance rights being tested will
not meet the vesting condition and will lapse.
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
TSR HURDLE
(VESTING CONDITION)
ENTITLEMENT TO RESULTING PTM
SHARES PER DEFERRED RIGHT
TSR < 7.5%
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
Platinum Asset Management Limited Annual Report 2022 62
Remuneration Report
CONTINUED
The exercise of performance rights that have vested i.e. those performance 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 Platinum Partners LTIP 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 plan rules,
and includes a failure to comply with Platinum’s non-compete / non-solicit / non-poaching
conditions. Furthermore, awards of performance rights may also be forfeited in accordance
with the malus and clawback provisions of the plan rules.
Following the expiry of the eight-year service condition, an eligible employee has a further
five years to exercise any vested performance rights. In certain limited situations, as set forth
in the plan rules, the right to exercise performance 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
performance rights, the Company intends to either purchase PTM shares on-market and hold
these shares within an employee share trust or issue shares to satisfy performance rights that
are exercised. No amount is payable in cash by any eligible employee on either grant or
exercise of a performance right.
Eligible employees will have no voting or dividend rights until their performance rights have
been exercised and their shares have been allocated. However, the performance 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 performance 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.
Other Variable Remuneration Plans
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.
Platinum Asset Management Limited Annual Report 2022 63
6. 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 remuneration 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
recommend the remuneration of the non-executive directors to the Nomination and
Remuneration Committee 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). 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.
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 non-executive director may retire or resign from the Board, or be removed
by a resolution of shareholders.
Platinum Asset Management Limited Annual Report 2022 64
Remuneration Report
CONTINUED
Remuneration Structure
The following table displays the non-executive directors in office during the financial year
and the relevant Board and Committee Chairs at 30 June 2022.
NON-EXECUTIVE
DIRECTOR
GUY STEPHEN
*
STRAPP MENZIES LOVERIDGE
ANNE BRIGITTE
*
TIM
SMITH NEILSON MOFFITT TRUMPER
PHILIP
**
KERR
***
Board
Chair
Chair
Director Director Director Director Director
Audit, Risk &
Compliance
Committee Member Member
Chair Member Member Member Member
Nomination &
Remuneration
Committee
Member Member
Member
Chair Member Member Member
The table below shows the annualised fixed remuneration (excluding superannuation)
amounts for the non-executive directors during the financial year based on the Board and
Committee Chair positions held at 30 June 2022.
NON-EXECUTIVE
DIRECTOR
GUY STEPHEN
*
STRAPP MENZIES LOVERIDGE
ANNE BRIGITTE
*
TIM
SMITH NEILSON MOFFITT TRUMPER
***
PHILIP
**
KERR
Board
$230,000 $130,000
$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 $160,000
$175,000 $175,000 $160,000 $160,000 $160,000
* Ms Smith replaced Mr Menzies as Chair of the Nomination and Remuneration Committee on 26 October 2021.
** Mr Moffitt became a Non-Executive Director on 17 December 2021.
*** Mr Trumper resigned as Non-Executive Director on 17 November 2021.
Platinum Asset Management Limited Annual Report 2022 65
The table below presents actual amounts received by the non-executive directors.
The decrease in total remuneration is primarily due to non-executive director changes.
CASH
SUPER-
SALARY ANNUATION
$
$
2022
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Kerr Neilson
Philip Moffitt
260,000
164,769
175,000
166,631
160,000
24,176
16,500
17,500
17,000
16,000
(from 17/12/21)
86,761
8,676
Tim Trumper
(until 17/11/21)
2021
Guy Strapp
61,333
6,133
1,074,494
105,985
(from 27/8/20)
205,590
16,271
Michael Cole
(until 20/11/20)
Stephen Menzies
Anne Loveridge
Brigitte Smith
Tim Trumper
Kerr Neilson
(from 1/9/20)
78,204
175,000
175,000
160,000
160,000
7,429
16,625
16,625
15,200
15,200
133,333
12,667
1,087,127
100,017
VARIABLE
REMUNER-
ATION
(CASH)
$
VARIABLE
REMUNER-
ATION
(DEFERRED)
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
$
284,176
181,269
192,500
183,631
176,000
95,437
67,466
1,180,479
221,861
85,633
191,625
191,625
175,200
175,200
146,000
1,187,144
Stephen Menzies is Platinum Investment Management Limited’s (PIML’s) representative on the
Board of the Dublin domiciled Platinum World Portfolios Plc (PWP) and his director’s fees are
paid by PWP. Amounts paid in the current year were €24,000 (equivalent to A$36,204)
(2021: €24,000 (equivalent to A$37,920)).
Platinum Asset Management Limited Annual Report 2022
66
Remuneration Report
CONTINUED
7.
Link Between Company Performance and KMP Remuneration Paid by the
Consolidated Entity
The table below shows Platinum’s five-year performance across a range of metrics and
corresponding KMP remuneration outcomes.
2022
2021
2020
2019
2018
Closing funds under
management ($m)
Average funds under
management ($m)
Net flows ($m)
Average base
management fee (bps p.a.)
Base fee revenue ($m)
Total revenue and
18,214
23,522
21,385
24,769
25,699
21,350
23,363
23,749
25,394
(2,169)
(2,255)
(3,031)
(246)
115
246
114
265
116
276
116
295
26,528
1,034
116
307
other income ($'000)
232,847
316,419
298,666
299,320
353,290
Total expenses ($'000)
86,129
82,207
77,897
76,421
84,966
Profit after income
tax expense ($'000)
101,493
163,258
155,611
158,336
191,594
Basic earnings per share
(cents per share)
Total dividends
(cents per share)
Share price at end of year
Total aggregate KMP
17.54
28.17
26.76
27.03
32.36
17
1.74
24
4.91
24
3.73
27
4.85
32
5.76
fixed remuneration ($)1
2,737,141
2,717,490
2,854,551
2,808,483
2,510,503
Total aggregate
KMP variable
remuneration ($)2,3
1,602,696
2,237,498
1,738,200
1,792,575
4,762,595
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 Dublin domiciled Platinum World Portfolios PLC).
2 The decrease in 2022 KMP variable remuneration reflected a decrease 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 co-CIO related to the significant investment outperformance 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 Company,
individual and team performance, and the degree of competition for executive talent.
Platinum Asset Management Limited Annual Report 2022
67
8. Oversight and Governance
The Nomination and Remuneration Committee ensures that appropriate remuneration
policies and practices are in place which align with the Company’s purpose, strategic
objectives and values. It makes recommendations to the Board on the development of the
Company’s remuneration policies and practices which are designed to recognise strong
individual and Company performance as well as to promote effective management of
financial and non-financial risks in alignment with the Company’s risk appetite.
The Nomination and Remuneration Committee is also responsible for making
recommendations to the Board regarding variable remuneration outcomes. When
considering the variable remuneration outcomes, the Nomination and Remuneration
Committee will consider the extent to which remuneration is aligned with outcomes for
shareholders and clients. In making its recommendations to the Board, it will incorporate
feedback from the Chief Executive Officer, Head of People and Culture, and Chief
Compliance Officer (regarding risk and compliance behaviours), external benchmarking
data and may also consult with independent remuneration consultants.
The role of the Nomination and Remuneration Committee is set out in its Charter.
Its responsibilities include the following:
• To review and make recommendations to the Board in respect of the CEO, executive
KMP 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/co-CIO, executive KMP, 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 policies and the framework, 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 independence and tenure; and
• To ensure appropriate Board succession planning.
Platinum Asset Management Limited Annual Report 2022 68
Remuneration Report
CONTINUED
During the 2022 financial year, the Nomination and Remuneration Committee dealt with the
following significant items that relate to remuneration arrangements:
•
Introduced the Platinum Partners Long Term Incentive Plan with awards being made
under the plan to key 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 Nomination and Remuneration Committee Chair and the appointment of Phillip
Moffitt to the Board;
• Reviewed and updated the CEO and other executive KMP remuneration arrangements
linking outcomes to explicit KPIs;
• Reviewed and recommended to the Board the aggregate 2021/2022 variable
remuneration pool as well as the individual awards for the CEO, other executive directors,
senior managers and portfolio managers; and
• Approved Platinum’s revised diversity and inclusion policy and objectives.
9. Remuneration Services Provided to the Nomination and Remuneration Committee
The Company utilised Financial Institutions Remuneration Group and PartnersInRem as the
primary sources of remuneration benchmarking data. PricewaterhouseCoopers (PwC) was
used as a consultant to the remuneration and benefit plans both in Australia and also in the
UK. In addition, executive KMP roles were benchmarked to publicly available information of
comparable ASX200 companies.
10. Key Terms of KMP Employment/Service Contracts
The key aspects of the KMP service contracts are outlined below:
• Remuneration and other terms of service for non-executive directors are formalised in
letters of appointment. Remuneration and other terms of service for the executive KMP
are set forth in employment agreements.
• All contracts (for both executive KMP and non-executive directors) include the
components of remuneration that are to be paid and provide for periodic review of
remuneration, but do not prescribe how remuneration levels are to be modified from
year to year.
•
•
•
Executive KMP do not have a contractual right to receive variable remuneration, any
allocations are at the Board’s discretion. Non-executive directors are not entitled to
receive any variable remuneration.
In the event of termination, all KMP are entitled to receive their statutory leave
entitlements and superannuation benefits.
In relation to variable remuneration for executive KMP, upon resignation, variable
remuneration is generally only paid if the KMP is employed by Platinum at the date
of payment. However, the Board retains discretion to make variable remuneration
payments (both cash and deferred equity) in certain exceptional circumstances,
such as bona-fide retirement.
Platinum Asset Management Limited Annual Report 2022 69
• All directors, except for the Managing Director, Mr Andrew Clifford, must stand for
re-election by shareholders at the third AGM after their initial election or otherwise their
last re-election.
• Mr Andrew Clifford can terminate his employment by providing at least twelve months’
notice. All other executive KMP can terminate their appointment by providing at least six
months’ notice.
• All executive KMP have entered into post-employment restraints whereby they may not
solicit either employees or clients of Platinum for a period of twelve months.
• Non-executive directors may resign by written notice to the Chairman. Where
circumstances permit, it is desirable that reasonable notice of an intention to resign
is given to assist the Board in succession planning.
11. Interests of KMP in PTM Shares
The relevant interest in ordinary shares of the Company that each director held at balance
date was:
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Kerr Neilson1
OPENING BALANCE
ADDITIONS
DISPOSALS
22,000
40,000
22,000
41,666
50,000
–
28,000
84,000
–
–
–
(41,666)
CLOSING
BALANCE
72,000
40,000
50,000
84,000
252,074,841
–
(126,037,421)
126,037,420
Philip Moffitt (from 17/12/21)2
–
50,000
Andrew Clifford3
Elizabeth Norman4
Andrew Stannard5
32,831,449
766,748
–
Tim Trumper (until 17/11/21)6
18,900
–
–
–
–
–
–
–
–
(18,900)
50,000
32,831,449
766,748
–
–
1 Decrease due to termination of stability deed between Judith Neilson and Kerr Neilson dated 31 March 2016.
Termination of deed occurred on 30 September 2021.
2 Appointed during the year.
3 Andrew Clifford also has vested, but unexercised, rights to receive up to 165,563 shares pursuant to awards made
under the Company’s deferred remuneration plan.
4 Elizabeth Norman also has contingent rights to receive up to 446,540 shares and vested, but unexercised, rights
equivalent to 171,227 shares, both pursuant to awards made under the Company’s Deferred Remuneration Plan.
5 Andrew Stannard has contingent rights to receive up to 271,479 shares and vested, but unexercised, rights
equivalent to 46,387 shares, both pursuant to awards made under the Company’s Deferred Remuneration Plan.
6 Resigned during the year.
Platinum Asset Management Limited Annual Report 2022
70
Remuneration Report
CONTINUED
12. 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 and its role
as responsible entity of its registered managed investment schemes.
13. 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.
14. Other Related-Party Payments Involving KMP
No other related-party payments were made to KMP during the year or as at the date of
this report.
15. Shareholders' Approval of the FY2021 (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 17 November 2021), the Company’s remuneration report
was not carried on a poll and received a vote against of 50.04%. Platinum’s response to
shareholder concerns in relation to the 2021 remuneration report is set out on the first page
of this report.
Platinum Asset Management Limited Annual Report 2022 Auditor’s Independence Declaration
TO THE DIRECTORS OF PLATINUM ASSET MANAGEMENT LIMITED
71
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 2022, 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;
(b) No contraventions of any applicable code of professional conduct in relation to the audit;
and
(c) No non-audit services provided that contravene 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
24 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 72
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
NOTE
CONSOLIDATED
2022
$’000
2021
$’000
Revenue
Management fees
Performance fees
Total revenue
Other income
Interest
Distributions and dividends
Share of profit/(loss) of associates
Gains/(losses) on financial asset at fair
value through profit or loss
Foreign exchange gains/(losses)
on overseas bank accounts
Total revenue and other income
Expenses
Employee expenses
Salaries and employee-related expenses
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
3
3
6
17
9
9
15
7
246,004
265,290
6,665
3,950
252,669
269,240
498
3,695
(17,998)
541
3,437
30,974
(6,096)
12,955
79
(728)
232,847
316,419
40,926
11,908
9,147
7,020
5,551
4,695
1,934
882
1,222
2,168
305
152
219
44,395
6,413
9,569
6,025
5,247
3,768
1,926
1,272
1,166
1,482
392
197
355
86,129
82,207
146,718
45,225
101,493
234,212
70,954
163,258
Platinum Asset Management Limited Annual Report 2022
73
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
2022
$’000
2021
$’000
5,733
(5,399)
5,733
(5,399)
107,226
157,859
8
8
CENTS
17.54
17.43
CENTS
28.17
28.00
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 2022
74
Consolidated Statement of Financial Position
AS AT 30 JUNE 2022
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
2022
$’000
2021
$’000
12
6
10
9
9
14
13
15
13
13
15
7
87,449
89,876
29,771
207,096
92,394
43,315
2,103
4,851
142,663
349,759
6,090
4,160
2,005
3,901
16,156
1,481
846
3,249
4,473
10,049
26,205
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
323,554
342,024
Platinum Asset Management Limited Annual Report 2022
75
NOTE
CONSOLIDATED
2022
$’000
2021
$’000
18
19
706,595
714,893
(560,123)
(575,834)
177,082
323,554
202,965
342,024
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 2022
76
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
CONSOLIDATED
ISSUED
CAPITAL
$’000
RESERVES
$’000
RETAINED
PROFITS
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2021
714,893
(575,834)
202,965
342,024
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
–
–
–
–
101,493
101,493
5,733
–
5,733
5,733
101,493
107,226
(8,298)
–
–
–
9,978
–
–
(8,298)
9,978
–
(127,376)
(127,376)
Balance at 30 June 2022
706,595
(560,123)
177,082
323,554
Platinum Asset Management Limited Annual Report 2022
77
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
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Platinum Asset Management Limited Annual Report 2022
78
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Receipts from operating activities
Payments for operating activities
Finance costs paid
Income taxes paid
NOTE
CONSOLIDATED
2022
$’000
2021
$’000
251,194
(69,380)
(152)
276,507
(71,661)
(197)
(59,002)
(64,139)
Net cash from operating activities
16
122,660
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
395
98,644
(138,644)
(219)
22,488
(27,205)
2,498
3,677
(38,366)
519
117,753
(117,753)
(41)
69,532
(75,514)
42,804
3,478
40,778
(127,376)
(133,337)
(10,952)
(1,873)
(7,326)
(1,744)
(140,201)
(142,407)
Net movement in cash and cash equivalents
(55,907)
38,881
Cash and cash equivalents at the
beginning of the year
Effects of exchange rate changes
on cash and cash equivalents
143,277
105,333
79
(937)
Cash and cash equivalents at the end of the year
87,449
143,277
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Platinum Asset Management Limited Annual Report 2022
79
Notes to the Financial Statements
30 JUNE 2022
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 24 August 2022 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 Group has not early adopted any standards, interpretations or amendments that have
been issued but are not yet effective.
Platinum Asset Management Limited Annual Report 2022 80
Notes to the Financial Statements
30 JUNE 2022
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 Platinum Asia Fund
(Quoted Managed Hedge Fund) (“PAXX”)
Dividend received from Platinum Asia
Investments Limited (“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
2022
$’000
2021
$’000
244,951
7,718
252,669
261,323
7,917
269,240
2022
$’000
2021
$’000
–
458
2,550
2,100
1,127
18
3,695
861
18
3,437
Platinum Asset Management Limited Annual Report 2022
81
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.
• Net gains/(losses) on financial assets at fair value through profit and loss:
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, PAI (b) PWP
(c) unlisted Platinum Trust Funds and (d) other investments and 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 2022 82
Notes to the Financial Statements
30 JUNE 2022
Note 4. Segment information – continued
The segment financial results, segment assets and liabilities are disclosed below:
30 JUNE 2022
30 JUNE 2021
FUNDS INVESTMENTS
MANAGEMENT AND OTHER
$’000
$’000
FUNDS INVESTMENTS
TOTAL MANAGEMENT AND OTHER
$’000
$’000
$’000
TOTAL
$’000
Revenue and
other income
Management and
performance fees
252,669
– 252,669
269,240
– 269,240
Interest
189
309
498
288
253
541
Net gains/(losses) on
financial assets and
equity in associates
Distributions
and dividends
Net foreign
exchange
(losses)/gains
on overseas
bank accounts
Total revenue and
–
–
(24,094) (24,094)
3,695
3,695
–
–
43,929 43,929
3,437
3,437
–
79
79
–
(728)
(728)
other income/(loss) 252,858
(20,011) 232,847
269,528
46,891 316,419
Expenses
85,472
657 86,129
81,583
624 82,207
Profit/(loss) before
income tax
expense/(benefit)
Income tax expense
167,386
(20,668) 146,718
187,945
46,267 234,212
/(benefit)
51,425
(6,200) 45,225
57,738
13,216 70,954
Profit/(loss) after
income tax
expense/(benefit)
Other comprehensive
115,961
(14,468) 101,493
130,207
33,051 163,258
income/(loss)
(32)
5,765
5,733
34
(5,433)
(5,399)
Total comprehensive
income/(loss)
115,929
(8,703) 107,226
130,241
27,618 157,859
Total assets
74,301
275,458 349,759
131,590
250,681 382,271
Total liabilities
23,569
2,636 26,205
31,764
8,483 40,247
Net assets
50,732
272,822 323,554
99,826
242,198 342,024
Platinum Asset Management Limited Annual Report 2022
83
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 Limited
Cayman Islands
Platinum Asia Ex-Japan
Opportunities Fund Limited
Cayman Islands
Platinum Global Opportunities
Master Fund Limited
Cayman Islands
Platinum Global Opportunities Fund Limited Cayman Islands
Platinum Europe Opportunities
Master Fund Limited**
Cayman Islands
Platinum Europe Opportunities Fund Limited** Cayman Islands
Platinum Japan Opportunities
Master Fund Limited**
Cayman Islands
Platinum Japan Opportunities Fund Limited** Cayman Islands
2022
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2021
%
100
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 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 2022
84
Notes to the Financial Statements
30 JUNE 2022
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 closing rate 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 as at 30 June 2022 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.
Platinum Asset Management Limited Annual Report 2022 85
Note 6. Equity investments in associates
The Group’s investments in PAI, PWP and PAXX represent interests in associates which are
accounted for using the equity method of accounting. PAXX ceased to be an associate during
the year due to the sale of all units held. Information relating to this is shown below:
a.
Interests in associates
ENTITY COUNTRY
OF INCOR-
PORATION
EQUITY
INTEREST
%
FAIR
VALUE
$’000
CARRYING
AMOUNT
$’000
2022 2021
2022
2021
2022
2021
REASON FOR
ASSESSMENT
OF SIGNIFICANT
INFLUENCE
PAI
Australia
8.2
8.2
25,800 36,900 32,246 38,694 Ownership interest
was 8.2% at 30 June
2022; 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
16.8 16.3
60,148 66,324 60,148 66,324 Ownership interest
was 16.8% at 30 June
2022; PIML acts as
IM in accordance
with the Investment
Management
Agreement; the Group
provides performance
and exposure reports
to the PWP Board and
Stephen Menzies is
a Director of PWP and
a Director of the
Company.
2,604 The Group ceased
to have significant
influence due to sale
of its equity interest in
PAXX during the year.
PAXX
Australia
–
1.7
–
2,604
–
85,948 105,828 92,394 107,622
Platinum Asset Management Limited Annual Report 2022 86
Notes to the Financial Statements
30 JUNE 2022
Note 6. Equity investments in associates – continued
a.
Interests in associates – continued
The fair value of PAI reflects the 30 million shares held multiplied by the PAI closing share
price at 30 June 2022 of $0.86 (2021: $1.23).
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 2022.
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
TOTAL
ASSETS^
$’000
TOTAL
LIABILITIES*
$’000
NET
ASSETS
$’000
30 June 2022
Associates financial position
PAI
PWP
Total associates’ statement of financial position
Group’s share of associate
PAI
PWP
Total Group’s share of associate
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
397,163
377,439
1,522
2,162
32,369
60,644
124
495
498,661
447,174
180,624
27,270
610
26,522
40,838
66,461
3,052
2,144
137
448
395,641
375,277
770,918
32,245
60,149
92,394
471,391
446,564
154,102
1,072,057
38,694
66,324
2,604
107,622
^ All assets held by associates are current assets.
* Associates total liabilities include non-current liabilities of $0 (2021: $17,698,000).
** PAXX’s financial position disclosed only for 30 June 2021 when PAXX was an associate.
Platinum Asset Management Limited Annual Report 2022
87
Note 6. Equity investments in associates – continued
c. Carrying amount of investment using the equity method
Opening balance
Sale of PAXX units
Redemption of PWP units
Share of associates’ profit/(loss) (see Note 6d)
Exchange rate translation impact
Dividends paid and dilution of unitholding (see Note 6d)
2022
$’000
107,622
(2,498)
–
(15,417)
5,268
(2,581)
2021
$’000
125,019
(29,869)
(12,935)
33,517
(5,567)
(2,543)
Closing balance (see Note 6a)
92,394
107,622
d. Associate’s net income
30 June 2022
Associates’ net income
PAI
$’000
PWP
$’000
PAXX
$’000
TOTAL
$’000
Total investment income/(loss)
(60,053)
Total expenses
(7,151)
(81,014)
(5,492)
(17,241)
(158,308)
–
(12,643)
Profit/(loss) before tax
(67,204)
(86,506)
(17,241)
(170,951)
Income tax benefit
19,750
–
–
19,750
Total profit/(loss) after tax
(47,454)
(86,506)
(17,241)
(151,201)
Group’s share of associate
Total investment income/(loss)
(4,892)
(10,523)
Total expenses
Profit/(loss) before tax
Income tax benefit
(583)
(5,475)
1,609
(921)
(11,444)
–
Total profit/(loss) after tax
(3,866)
(11,444)
(107)
–
(107)
–
(107)
(15,522)
(1,504)
(17,026)
1,609
(15,417)
Dividend received and dilution
of unitholding
(2,582)
–
1
(2,581)
Undistributed profit/(loss)
in the period
(6,448)
(11,444)
(106)
(17,998)
Platinum Asset Management Limited Annual Report 2022
88
Notes to the Financial Statements
30 JUNE 2022
Note 6. Equity investments in associates – continued
d. Associates' net income – continued
30 June 2021
Associates’ net income
Total investment income
Total expenses
Profit/(loss) before tax
Income tax expense
PAI
$’000
PWP
$’000
PAXX
$’000
TOTAL
$’000
115,040
7,313
107,727
(31,801)
152,174
5,508
146,666
–
37,577
–
37,577
304,791
12,821
291,970
–
(31,801)
Total profit/(loss) after tax
75,926
146,666
37,577
260,169
Group’s share of associate
Total investment income
Total expenses
Profit/(loss) before tax
Income tax expense
Total profit/(loss) after tax
9,445
600
8,845
(2,615)
6,230
21,460
900
20,560
–
20,560
6,727
–
6,727
–
6,727
37,632
1,500
36,132
(2,615)
33,517
Dividend received and dilution
of unitholding
(2,085)
–
Undistributed profit in the period
4,145
20,560
(458)
6,269
(2,543)
30,974
Platinum Asset Management Limited Annual Report 2022
89
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
Assessment of significant influence: At 30 June 2022, the consolidated entity was
assessed as having significant influence over PAI and PWP, 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 2022, no impairment was
identified for PAI or PWP. The carrying amount for PAI is equal to the fair value of
PAI’s underlying net assets.
Platinum Asset Management Limited Annual Report 2022 90
Notes to the Financial Statements
30 JUNE 2022
Note 7. Income tax
(a) Income tax expense
The income tax expense attributable to profit comprises:
Current tax
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
Prior year and other adjustments
Franking credits and foreign
tax credit 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
2022
$’000
53,218
(7,993)
45,225
2021
$’000
63,151
7,803
70,954
146,718
44,015
234,212
70,264
(740)
615
2,536
58
(71)
(855)
1,076
389
744
–
(1,188)
45,225
(664)
70,954
2022
$’000
2021
$’000
27
4,657
(1,946)
2,636
(584)
(317)
4,473
6
4,747
(1,274)
8,477
(359)
(391)
11,206
Platinum Asset Management Limited Annual Report 2022
91
Note 7. Income tax – continued
(b) Non-current liabilities - net deferred tax liabilities – continued
The net deferred tax liability figure is comprised of $2,847,000 (2021: $2,024,000) of deferred
tax assets and $7,320,000 (2021: $13,230,000) of deferred tax liabilities.
The deferred tax assets that will be recovered or settled within 12 months are estimated to be
$2,642,000 at 30 June 2022 (2021: $2,003,000).
Deferred tax includes $1,260,000 (2021: $2,225,000) recorded in the share-based payments
reserve and foreign currency translation reserve within equity.
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 2022 92
Notes to the Financial Statements
30 JUNE 2022
Note 8. Earnings per share
Profit after income tax attributable to the owners
of Platinum Asset Management Limited
101,493
163,258
2022
$’000
2021
$’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
578,659,423
579,542,631
3,626,061
3,587,674
582,285,484
583,130,305
CENTS
17.54
17.43
CENTS
28.17
28.00
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 2022
Note 9. Depreciable assets
Fixed assets – at cost
Less: Accumulated depreciation
Right-of-use asset – at cost
Less: Accumulated depreciation
93
2021
$’000
6,018
(3,241)
2,777
10,620
(3,853)
6,767
2022
$’000
6,109
(4,006)
2,103
10,638
(5,787)
4,851
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 2020
Additions
Depreciation expense
Balance at 30 June 2021
Additions
Disposal
Depreciation expense
Balance at 30 June 2022
FIXED
ASSETS
$’000
RIGHT-OF-USE
ASSET
$’000
4,007
42
(1,272)
2,777
219
(11)
(882)
2,103
8,669
24
(1,926)
6,767
18
–
(1,934)
4,851
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 2022
94
Notes to the Financial Statements
30 JUNE 2022
Note 10. Financial assets at fair value through profit or loss
Platinum Trust Fund investments
Equity securities held by the seeded investments
Unlisted shares*
Convertible note*
2022
$’000
164
38,151
1,000
4,000
43,315
2021
$’000
220
44,120
–
–
44,340
*
In March 2022, the Group invested $1 million to acquire a 0.25% shareholding in an unlisted entity and also
acquired $4 million of convertible notes issued by the same unlisted entity.
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 for the Platinum
Trust Funds.
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).
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 2022
95
Note 11. Fair value measurement – 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 2022 and 30 June 2021.
2022
Financial assets
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
Equity securities held by
wholly owned seed funds
38,034
Unlisted shares & convertible note
Platinum Trust Fund investments
–
–
38,034
117
–
164
281
–
5,000
–
5,000
38,151
5,000
164
43,315
2021
Financial 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
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
Level 3 financial assets consist of:
•
•
Investment in unlisted equity investment. The investment is initially recognised at
fair value, being the consideration given. After initial recognition, the shareholding
continues to be measured at fair value based on the recent transaction price between
independent parties.
A convertible note carried at fair value. The best estimate of fair value at 30 June 2022
was determined to be $4,000,000 using the market approach and approximated by the
recent transaction price.
Platinum Asset Management Limited Annual Report 2022
96
Notes to the Financial Statements
30 JUNE 2022
Note 11. Fair value measurement – continued
These assets are valued in accordance with a valuation policy established by PIML. Level 3
assets were 1.5% of net assets at 30 June 2022 (2021: 0.1%). Further details related to the level
3 securities are not disclosed, as the amounts are not material to the Group.
Opening balance
Purchases during the year
Transfers to Level 1
Gains/(losses) during the year
Closing balance
Note 12. Trade and other receivables
Management fees receivable
Performance fees receivable
Prepayments
Distribution receivable
Sundry debtors
2022
$’000
260
5,000
(80)
(180)
5,000
2022
$’000
22,231
4,510
2,637
18
375
2021
$’000
–
260
–
–
260
2021
$’000
24,892
128
1,902
476
214
29,771
27,612
Management and performance fees receivable(s) are received between three to 30 days after
balance date.
ACCOUNTING
POLICY
Trade receivables represent 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 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 2022
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
2022
$’000
2,495
1,665
4,160
846
1,481
2,327
97
2021
$’000
2,220
1,700
3,920
718
1,311
2,029
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 payables
GST payable
2022
$’000
4,254
1,836
6,090
2021
$’000
3,934
2,244
6,178
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 2022
98
Notes to the Financial Statements
30 JUNE 2022
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
Payments
Accretion of interest
Balance at 30 June
Current
Non-current
2022
$’000
7,110
(2,008)
152
5,254
2,005
3,249
2021
$’000
8,829
(1,916)
197
7,110
1,871
5,239
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
2022
$’000
305
1,934
152
2,391
Future minimum rentals payable under short-term leases are as follows:
Within one year
30 JUNE
2022
$’000
74
30 JUNE
2021
$’000
392
1,926
197
2,515
30 JUNE
2021
$’000
96
Platinum Asset Management Limited Annual Report 2022
99
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
Profit after income tax expense for the year
101,493
163,258
2022
$’000
2021
$’000
Adjustments for:
Share-based payments expense
Foreign exchange differences on foreign bank account
Distributions and dividends
Depreciation of fixed assets
Depreciation of right-of-use asset
Interest income
(Gain)/loss 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
11,908
(79)
(3,695)
882
1,934
(498)
6,413
728
(3,437)
1,272
1,926
(541)
24,094
(43,929)
(2,159)
(5,903)
878
(823)
(5,910)
538
6,873
(1,021)
610
215
7,588
555
Net cash from operating activities
122,660
140,510
Platinum Asset Management Limited Annual Report 2022
100
Notes to the Financial Statements
30 JUNE 2022
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.
Opening balance
Granted during the year
Forfeited during the year
Vested and exercised
Closing balance
NUMBER OF DEFERRED RIGHTS
2021
2022
6,973,139
7,115,680
5,003,258
1,810,880
(31,218)
(1,682,250)
(788,375)
(271,171)
11,156,804
6,973,139
Exercisable at the end of the period
1,344,191
734,408
Platinum Asset Management Limited Annual Report 2022
101
Note 17. Share based payments – continued
Long-Term Remuneration Plan
The Nomination & Remuneration Committee approved the Platinum Partners Long Term
Incentive Plan (“Partners Plan”) in July 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.
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 lapse.
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)
ENTITLEMENT TO RESULTING PTM
SHARES PER DEFERRED RIGHT
TSR < 7.5%
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 2022 102
Notes to the Financial Statements
30 JUNE 2022
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.
One quarter of the June 2021 Partner Plan grant was tested against TSR hurdles for the year
ended 30 June 2022 and did not vest.
In the current year, the total fair value of rights arising from the June 2022 allocation awards
was $16,093,342 (June 2021 allocation: $27,568,379), which was based on the 11,920,994
rights (2021: 8,229,367) granted. The fair value of rights was estimated at $1.35 (2021: $3.35)
based on the share price at grant date of $1.71 (2021:$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% (2021: 35%), expected dividend
yield of 9.2% (2021: 5.2%) and risk-free rate of 3.4% (2021: 0.01%).
Expenses Arising from Share-Based Payment Transactions (DRP & Partner Plan)
ACCOUNTING EXPENSE
Deferred rights granted in 2022: Partners Plan
Deferred rights granted in 2021: Partners Plan
Deferred rights granted in 2022: DRP
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
Total share-based payments expense
Associated payroll tax expense
Total
2022
$’000
1,554
2,665
1,476
1,408
1,343
1,268
2,194
–
11,908
170
12,078
2021
$’000
–
2,665
–
1,442
925
566
736
79
6,413
366
6,779
Platinum Asset Management Limited Annual Report 2022
103
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 2022 104
Notes to the Financial Statements
30 JUNE 2022
Note 18. Issued capital
2022
SHARES
2021
SHARES
2022
$’000
2021
$’000
Ordinary shares – fully paid (a) 586,678,900
586,678,900
751,355
751,355
Treasury shares (b)
(13,858,865)
(8,018,094)
(44,760)
(36,462)
Total issued capital
572,820,035
578,660,806
706,595
714,893
(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:
Opening balance
8,018,094
6,687,403
36,462
33,357
2022
SHARES
2021
SHARES
2022
$’000
2021
$’000
Shares acquired by the
Employee Share Trust
Shares transferred
to employees
Balance at the end
6,420,446
1,779,817
10,934
7,326
(579,675)
(449,126)
(2,636)
(4,221)
of the financial year
13,858,865
8,018,094
44,760
36,462
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 2022
105
2022
$’000
(601)
2021
$’000
(6,334)
(588,144)
(588,144)
28,622
18,644
(560,123)
(575,834)
Note 19. Reserves
Foreign currency translation reserve
Capital reserve
Share-based payments reserve
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
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 2022
106
Notes to the Financial Statements
30 JUNE 2022
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 2020
16,997
(935)
(588,144)
(572,082)
Exchange rate
translation impact
Movement in share-based
payments reserve
Balance at 30 June 2021
–
(5,399)
1,647
18,644
(6,334)
(588,144)
(575,834)
–
–
(5,399)
1,647
–
–
5,733
9,978
–
–
(601)
(588,144)
(560,123)
Exchange rate translation impact
–
5,733
Movement in share-based
payments reserve
Balance at 30 June 2022
9,978
28,622
Note 20. Dividend made and proposed
Dividends paid
Dividends paid during the financial year were as follows:
Final dividend paid for the 2021
financial year (12 cents per share)
Interim dividend paid for the 2022
financial year (10 cents per share)
Final dividend paid for the 2020
financial year (11 cents per share)
Interim dividend paid for the 2021
financial year (12 cents per share)
2022
$’000
2021
$’000
69,454
57,922
–
–
127,376
–
–
63,799
69,538
133,337
Platinum Asset Management Limited Annual Report 2022
107
Note 20. Dividend made and proposed – continued
Dividends not recognised at year-end
Since 30 June 2022, the Directors declared to pay a 2022 final fully-franked dividend of
7 cents per share, payable out of profits for the 12 months to 30 June 2022. The dividend has
not been provided for at 30 June 2022, because the dividend was declared after year-end.
Franking credits
2022
$’000
2021
$’000
Franking credits available at reporting date based
on a tax rate of 30%
66,545
61,767
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%
3,517
9,029
70,062
70,796
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 and PWP; and
•
Equity and other securities held by the seeded investments, being the offshore Cayman
Island domiciled funds Platinum Global Opportunities Fund Ltd, Platinum Asia Ex-Japan
Opportunities Fund Ltd (the “Cayman Funds”), other seed funds and investments.
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 2022
108
Notes to the Financial Statements
30 JUNE 2022
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 2022, performance fees of
$4,510,365 (2021: $127,517) were receivable.
Platinum Asset Management Limited Annual Report 2022 109
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 2022.
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 and PAI, 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 2022
110
Notes to the Financial Statements
30 JUNE 2022
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 2022
30 JUNE 2021 30 JUNE 2022
30 JUNE 2021
Cash and cash equivalents
(732)/894
(725)/886
–
(237)/289
(5,468)/6,683
(6,029)/7,369
–
–
(2,931)/3,583
(3,355)/4,100
–
–
–
–
–
–
Investments in:
PAXX
PWP
PAI
Equity securities held
by the seeded investments
(4,197)/5,130
(4,012)/4,904
Platinum Trust Funds
(15)/18
(20)/24
Receivables
Payables
(80)/98
7/(9)
(40)/49
30/(37)
–
–
–
–
–
–
–
–
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$721,972 lower/A$882,436 higher
(2021: A$752,202 lower/A$846,683 higher).
Price risk
The Group is exposed to indirect price risk through its equity-accounted investments and
investments in financial assets at fair value through profit or loss. The impact of price risk is
summarised in the table below:
ENTITY
PAI
PWP
PAXX
Equity securities held by
seeded investments
Platinum Trust Funds
Unlisted shares and convertible notes
IMPACT ON NET PROFIT BEFORE TAX OF 10%
INCREASE/(DECREASE) IN 30 JUNE VALUES
2022
$’000
INCREASE/(DECREASE)
2021
$’000
INCREASE/(DECREASE)
3,225/(3,225)
6,015/(6,015)
–
4,616/(4,616)
16/(16)
500/(500)
3,869/(3,869)
6,632/(6,632)
260/(260)
4,411/(4,411)
2/(2)
–
Platinum Asset Management Limited Annual Report 2022
111
Note 21. Financial risk management – continued
Price risk – continued
Interest rate risk
At 30 June 2022, 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 2022 would cause the Group’s net profit
before tax to be $1,773,253 higher/lower (2021: $1,432,769 higher/lower), based on the
impact on its interest-bearing cash balances. An interest rate movement at 30 June 2022
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- (2021: AA-)
or higher. At 30 June 2022 and 30 June 2021, the relevant credit ratings were as follows:
RATINGS
AA-
A+
A
2022
$’000
2021
$’000
168,807
185,342
7,891
625
6,955
856
177,323
193,153
Platinum Asset Management Limited Annual Report 2022
112
Notes to the Financial Statements
30 JUNE 2022
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 trade and other
payable and lease 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.
2022
Trade and
other payables
Lease liabilities
Total
2021
Trade and
other payables
Lease liabilities
Total
AT CALL
$’000
WITHIN
30 DAYS
$’000
BETWEEN
1 AND 3
MONTHS
$’000
OVER
3 MONTHS
$’000
–
–
–
6,090
173
6,263
–
345
345
–
4,900
4,900
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
TOTAL
$’000
6,090
5,418
11,508
TOTAL
$’000
6,178
7,425
13,603
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 2022 or
30 June 2021. 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 2022
113
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 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 2022 114
Notes to the Financial Statements
30 JUNE 2022
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
2022
$
2021
$
202,632,121
219,609,966
Receivable in the statement of financial position
18,440,903
19,031,105
PIML recognized management fee and performance fee of $5,623,006 (2021: $5,367,007)
from PAI. PIML recognized management fee and performance fee of $ 2,844,024
(2021: $2,505,993) from PWP.
Investment transactions
During the year, the subsidiary PIML received a final 2021 fully-franked dividend of
$1,800,000 (2021: $900,000) and an interim 2022 fully franked dividend of $750,000
(2021: $1,200,000) from its investment in PAI.
PIML also received the 30 June 2022 distribution of $18,296 from the Platinum Trust Funds
(2021: $17,862).
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
$7,996 (2021: Nil).
PIML incurred a fee of $2,592,825 (2021: $2,537,378) for general marketing and distribution
services provided by Platinum UK Asset Management Limited. PIML incurred a fee of
$132,836 (2021: $62,755) for general marketing and distribution services provided by
Platinum Management Malta Limited.
In the current year, the cash amount transferred to the Platinum Employee Share Trust was
$8,460,000 (2021: $4,600,000).
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 2022
115
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
2022
$’000
2021
$’000
3,249
3,887
803
177
75
4,304
812
169
49
4,917
^ 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:
2022
GRANT
(UN-
VESTED)
2021
GRANT
(UN-
VESTED)
2020
GRANT
(UN-
VESTED)
2019
GRANT
(UN-
VESTED)
2018
GRANT
(VESTED)
TOTAL
Number of rights
allocated to KMP
during each year
Accounting
expense
attributed
to KMP
295,000
153,462
160,859
108,696
248,346
966,363
$87,000 $130,500 $115,200 $109,999
$359,997 $802,696
Platinum Asset Management Limited Annual Report 2022
116
Notes to the Financial Statements
30 JUNE 2022
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:
Guy Strapp
Stephen Menzies
Anne Loveridge
Brigitte Smith
Kerr Neilson1
Philip Moffitt
(from 17/12/2021)2
Andrew Clifford3
Elizabeth Norman4
Andrew Stannard5
Tim Trumper
(until 17/11/2021)6
OPENING
BALANCE
22,000
40,000
22,000
41,666
ADDITIONS
DISPOSALS
50,000
–
28,000
84,000
–
–
–
(41,666)
CLOSING
BALANCE
72,000
40,000
50,000
84,000
252,074,841
–
(126,037,421)
126,037,420
–
50,000
32,831,449
766,748
–
18,900
–
–
–
–
–
–
–
–
(18,900)
50,000
32,831,449
766,748
–
–
1 Decrease due to termination of stability deed affecting shares between Judith Neilson and Kerr Neilson dated
31 March 2016. Termination occurred on 30 September 2021.
2 Appointed during the year.
3 Andrew Clifford also has vested, but unexercised, rights to receive up to 165,563 shares pursuant to awards made
under the Company’s deferred remuneration plan.
4 Elizabeth Norman also has contingent rights to receive up to 446,540 shares and vested, but unexercised, rights
equivalent to 171,227 shares, both pursuant to awards made under the Company’s deferred remuneration plan.
5 Andrew Stannard has contingent rights to receive up to 271,479 shares and vested, but unexercised, rights
equivalent to 46,387 shares, both pursuant to awards made under the Company’s deferred remuneration plan.
6 Resigned during the year.
Platinum Asset Management Limited Annual Report 2022
117
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”), and its overseas network firms
as indicated below:
FIRM
2022
$
2021
$
Audit services
Audit and review of the financial
statements and AFSL audit
Audit of financial statements
EY
Overseas EY
Total audit, compliance and assurance services
Taxation services
Compliance services
Compliance services
Total taxation services
Other services
Other services
Total other services
Total fees paid and payable to the
auditors and their related practices
EY
Overseas EY
EY
176,962
10,554
187,516
156,000
6,325
162,325
29,500
1,941
31,441
–
–
50,750
1,227
51,977
7,500
7,500
218,957
221,802
Platinum Asset Management Limited Annual Report 2022
118
Notes to the Financial Statements
30 JUNE 2022
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
2022
$’000
129,069
129,069
PARENT
2021
$’000
134,936
134,936
2022
$’000
85,895
754,524
3,315
3,315
PARENT
2021
$’000
126,250
756,738
9,023
9,023
751,209
747,715
706,577
43,291
1,341
751,209
714,893
31,481
1,341
747,715
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 24 August 2022, no other matter or circumstance has
arisen since 30 June 2022 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 2022
119
Directors’ Declaration
30 JUNE 2022
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 2022 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
24 August 2022
Sydney
Andrew Clifford
Director
Platinum Asset Management Limited Annual Report 2022
120
Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
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 2022, 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 2022 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 2022 Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
121
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial report section of our report. We are independent of the Group in
accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES
110 Code of Ethics for Professional Accountants (including Independence Standards) (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, but we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of
the financial report section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 122
Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
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 2022,
management fees were $246,004,000
and performance fees were $6,665,000.
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
2022 from investments vehicles on a
sample basis, and evaluating whether
they met the relevant revenue
recognition criteria. This included
assessing the inputs into the calculation
model, testing its mathematical
accuracy and examining the
methodology applied in accordance
with contractual arrangements.
– 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 2022
Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
123
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 2022 was
$92,394,000.
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 the accounting
treatment and presentation thereon.
– Performing an assessment of the Group’s
determination of control or significant
influence over the 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 and recalculating the carrying
amount by agreeing inputs such as net
asset value and percentage of ownership.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 124
Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
Accounting for investments in associates – continued
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
– Performing an impairment assessment on
the investments in associates. This included
an assessment of objective evidence of
impairment, in accordance with the
Australian Accounting Standards, for
associates where the carrying amount
exceeded the fair value.
– Assessing the adequacy of the disclosures in
Note 6 to the financial report in accordance
with Australian Accounting Standards.
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 2022 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
125
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 126
Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgment and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in
the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Platinum Asset Management Limited Annual Report 2022 Independent Auditor’s Report
TO THE MEMBERS OF PLATINUM ASSET MANAGEMENT LIMITED
127
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 2022 128
REPORT ON THE AUDIT OF THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 33 to 70 of the directors’ report
for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Platinum Asset Management Limited for the year
ended 30 June 2022, 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
24 August 2022
Sydney
Platinum Asset Management Limited Annual Report 2022 129
Platinum Asset Management Limited Annual Report 2022 130
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