THORNEY OPPORTUNITIES LTD
ACN 080 167 264
ASX Announcement: 24 August 2015
ASX Code: TOP
APPENDIX 4E AND 2015 ANNUAL REPORT
Thorney Opportunities Ltd
Financial results for the year ended 30 June 2015:
Results for announcement to the market
Thorney Opportunities Ltd is pleased to submit its inaugural financial statements for the year ended
30 June 2015.
In accordance with Listing Rule 4.3A, we enclose for immediate release the following information:
1. Appendix 4E; and
2. Thorney Opportunities Ltd 2015 Annual Report
Please direct enquiries to:
Craig Smith
Company Secretary
T: + 61 3 9921 7116
Level 39, 55 Collins Street, Melbourne Vic 3000
Telephone + 61 3 9921 7116 Facsimile + 61 3 9921 7100
THORNEY OPPORTUNITIES LTD
ACN 080 167 264
APPENDIX 4E (Listing Rule 4.3A)
Preliminary final report for the year ended 30 June 2015
RESULTS FOR ANNOUNCEMENT TO THE MARKET
(All comparisons to year ended
30 June 2014)
$’000s
Up/Down
Movement
Revenue from ordinary activities
Profit (loss) after tax for the year
13,815
9,374
Up
Up
1,725%
451%
Dividend information
2015 Final dividend per share
2015 Interim dividend per share
Final dividend dates
Ex-dividend date
Record date
DRP Election date
Final dividend payment date
Amount per
shares (cents)
0.5
Nil
Franked
amount per
share (cents)
0.5
n/a
Tax rate for
franking credit
30%
n/a
16 September 2015
18 September 2015
21 September 2015
14 October 2015
A Dividend Reinvestment Plan (DRP) will operate in respect of the final dividend and no discount will be
applied. The last date for receipt of election notices to participate in the DRP is Monday 21 September 2015.
Net tangible asset backing per ordinary share
30 June 2015
52.1 Cents
30 June 2014
46.6 cents
Additional Appendix 4E disclosure requirements can be found in the Directors’ report and the 30 June 2015
financial statements and accompanying notes.
This report is based on the financial statements of Thorney Opportunities Ltd which have been audited by
Ernst and Young.
Thorney Opportunities Ltd
ABN 41 080 167 264
2015 Annual Report
Company particulars
Thorney Opportunities Ltd is a disclosing entity under the Corporations Act 2001 and currently considered an
investment entity pursuant to ASX Listing Rules. The Company is primarily an investor in listed equities on the
Australian securities market.
ASX Code: TOP
Security: Thorney Opportunities Ltd fully paid ordinary shares
Directors: Alex Waislitz, Chairman
Ashok Jacob
Henry Lanzer AM
Dr Gary Weiss
Secretary: Craig Smith
Country of incorporation Australia
Registered office: Level 39, 55 Collins Street
Melbourne Vic 3000
Contact details: Level 39, 55 Collins Street
Melbourne Vic 3000
T: + 613 9921 7116
F: + 613 9921 7100
E: craig.smith@thorney.com.au
W: www.thorneyopportunities.com.au
Investment Manager: Thorney Management Services Pty Ltd
Level 39, 55 Collins Street
Melbourne Vic 3000
AFSL: 444369
Auditor: Ernst & Young, Melbourne
8 Exhibition Street
Melbourne Vic 3000
Share Registry: Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
T: + 612 9290 9600
F: + 612 9279 0664
W: www.boardroomlimited.com.au
For all shareholder related enquiries please contact the share registry.
Annual
General
Meeting:
When:
Where: Arnold Bloch Leibler
Tuesday 24 November 2015 at 11:00 am Melbourne time
Level 21, 333 Collins Street
Melbourne Vic 3000
Thorney Opportunities Ltd 2015 Annual Report
Page | 2
Contents
Chairman’s letter ................................................................................................................................................ 4
Directors’ report ................................................................................................................................................. 6
1.
2.
3.
4.
5.
6.
7.
8.
Directors .................................................................................................................................................... 6
Company Secretary .................................................................................................................................... 7
Principal activities ...................................................................................................................................... 8
Result ......................................................................................................................................................... 8
Dividends ................................................................................................................................................... 8
Review of operations ................................................................................................................................. 8
Financial position ....................................................................................................................................... 9
Prospects ................................................................................................................................................... 9
9. Material business risks ............................................................................................................................... 9
10. Options ...................................................................................................................................................... 9
11. Events subsequent to balance date ........................................................................................................... 9
12. 2015 Remuneration report (Audited) ...................................................................................................... 10
13. Directors’ relevant interests .................................................................................................................... 13
14. Board and committee meetings .............................................................................................................. 13
15. Environmental regulation ........................................................................................................................ 14
16.
Indemnification and insurance of officers and auditor ............................................................................ 14
17. Auditor’s independence declaration ........................................................................................................ 14
18. Non‐audit services ................................................................................................................................... 14
Auditor’s independence declaration ................................................................................................................. 15
Corporate governance statement .................................................................................................................... 16
Statement of comprehensive income ............................................................................................................... 22
Statement of financial position ......................................................................................................................... 23
Statement of changes in equity ......................................................................................................................... 24
Statement of cash flows .................................................................................................................................... 25
Notes to the financial statements ..................................................................................................................... 26
Directors’ declaration ........................................................................................................................................ 42
Independent audit report .................................................................................................................................. 43
Shareholder information ................................................................................................................................... 45
Thorney Opportunities Ltd 2015 Annual Report
Page | 3
Chairman’s letter to Shareholders
Dear fellow shareholder,
I am pleased to report that for the year ended 30 June 2015, Thorney Opportunities Ltd (TOP) has recorded a
net profit after tax (net of management fees) of $9,373,547, a significant improvement when compared to the
prior period loss after tax of $2,669,210. The TOP net tangible assets (NTA) for the twelve month period ended
30 June 2015 is up 11.8% to 52.1 cents per share up from 46.6 cents last year. The TOP NTA reported for 31
July 2015 was 53.8 cents.
The Board of TOP is proud of this performance which has been achieved despite a volatile environment in
global equity markets over the same period. The performance both confirms the stock‐picking ability of the
investment approach which has been adopted since the
TOP
recapitalisation of TOP at the end of 2013.
investment team and the cautious
TOP is committed to returning value to shareholders whenever it is appropriate and prudent to do so. In this
particular case, it is my view that the Accumulated Franking Credits within TOP belong to shareholders and I
see little merit in them simply accumulating within the company hence, the desire to return them to
shareholders in an orderly basis.
Therefore I am excited to declare TOP’s inaugural dividend, $0.005 per share, fully franked, with a record date
of 18 September 2015. This dividend will be paid to shareholders on 14 October 2015. TOP will also be
introducing a dividend reinvestment plan (DRP) for shareholders the details of which will be sent to
shareholders shortly. It is the private Thorney Group’s present intention to fully participate in the DRP. This
will result in the private Thorney Group further increasing its shareholding in TOP.
Over the course of the past twelve months, I have regularly communicated with you regarding TOP’s new
investments and it is our intention to continue to provide regular updates on our investment portfolio. In
addition we have recently launched a new website www.thorneyopportunities.com.au.
Equity markets, at times, adopt an often inconsistent and somewhat bewildering approach to the valuation
methodology of certain listed investment companies (LICs). Some LICs can see their share price trade at a
discount to the reported NTA, others at a premium. In my view, where a belief in the capabilities of the
investment manager exists and a track record of NTA growth has been demonstrated, the share price of an LIC
should trade at or above the NTA.
I continue to believe the TOP share price does not truly represent the intrinsic value of the TOP investment
portfolio and consequently, have taken the opportunity to increase my shareholding during the year and by
committing to take my dividend in the form of shares under the DRP, and not in cash, I will further increase my
shareholding in TOP.
As I have outlined over the course of the past twelve months, the significant investments within the TOP
investment portfolio have performed positively. After periods of change and stability, Service Stream Limited
and AMA Group Limited are now focused on the execution of their respective business strategies, the benefits
of which and value accretion are evident. Money3 Corporation Limited, despite a number of challenges in
recent months, has continued to deliver financial results which have been above market expectations.
In more recent times, TOP has made a substantial investment in TPI Enterprises Limited and Diversa Limited
and I have high hopes for them to deliver growth over the medium to long term. Since the end of the financial
year, TOP has continued to add to its strategic position in Diversa Limited while TPI Enterprises Limited has
completed its compliance listing on the Australian Securities Exchange. Notwithstanding a soft debut by TPI
Enterprises we are still comfortable about the long term prospects for this company.
Thorney Opportunities Ltd 2015 Annual Report
Page | 4
Chairman’s letter to Shareholders continued
TOP does have a number of investments where further work needs to be done. One such example is Austin
Engineering Limited (ANG) which has recently completed a significant recapitalisation, in which both TOP and
the private Thorney Group participated. Arguably, TOP invested a little too early in the ANG recovery
however, we believe that over 2016‐2017, shareholder value will be restored.
I remain very comfortable with and confident in the existing TOP portfolio positions. At the same time we still
hold cash which can be deployed when further compelling investment opportunities materialise of which there
are a number currently under review.
I look forwarding to communicating with you again over the next couple of months and seeing you at the TOP
AGM in November.
On behalf of my fellow board members and investment team, I want to thank you for your continued support
and interest in TOP and I look forward to a successful year ahead.
Alex Waislitz
Chairman
24 August 2015
Thorney Opportunities Ltd 2015 Annual Report
Page | 5
Directors’ report
The directors present their report, together with the financial statements of Thorney Opportunities Ltd (TOP or
Company), for the year ended 30 June 2015 (FY15) and the auditor’s report thereon. The financial statements
have been reviewed and approved by directors on the recommendation of the Audit and Risk Committee.
1.
Directors
The directors of TOP in office during the financial year and at the date of this report are as follows:
Name:
Alex Waislitz
Ashok Jacob
Henry Lanzer
Dr Gary Weiss
Period of Directorship:
Director since 21 November 2013
Director since 21 November 2013
Director since 21 November 2013
Director since 21 November 2013
Information on directors
Alex Waislitz BEc, LLB, Non‐executive Chairman
Alex Waislitz was appointed Chairman of the Company on 21 November 2013. Mr Waislitz is the founder and
Chairman of the private Thorney Investment Group, one of Australia’s most successful private investment
groups. He has extensive business and capital markets experience and has been a member of several public
company boards.
Mr Waislitz is the current Vice President of the Collingwood Football Club Limited where he has been a
director since 1998.
He served on the boards of Zoos Victoria Foundation Board and the Victorian State Government Zoological
Parks and Gardens between 2010 and 2012. He joined the International Advisory Board of Maccabi World
Union in 2012 and is a former member of the International Advisory Board for the MBA program at Ben Gurion
University School of Management.
Mr Waislitz has established registered charities; the Waislitz Foundation (2013) and more recently the Waislitz
Family Foundation (2015). These charities focus on community projects, education, health, indigenous
programs and the arts.
Mr Waislitz is a graduate of Monash University in Law and Commerce and a Graduate of the Harvard Business
School OPM Program.
Ashok Jacob BSc, MBA, Non‐executive Director
Ashok Jacob was appointed a director of the Company on 21 November 2013. Mr Jacob is the current
Chairman and Chief Investment Officer of Ellerston Capital Limited.
Mr Jacob is a current director of MRF Limited and a member of the Visy Australia Advisory Board. His previous
directorships include Crown Ltd, Publishing and Broadcasting Ltd, Consolidated Press Holdings Limited,
Challenger Financial Group Ltd, Fleetwood Holdings Ltd, Ecorp Ltd, CPH Investment Group Ltd, Folkestone Ltd
and SnackFoods Ltd.
He holds a Master of Business Administration from the Wharton School, University of Pennsylvania and a
Bachelor of Science from the University of Bangalore.
Thorney Opportunities Ltd 2015 Annual Report
Page | 6
Directors’ report continued
1.
Directors continued
Information on directors continued
Henry D. Lanzer AM B.Com., LLB (Melb), Non‐executive Director
Henry Lanzer AM was appointed a director of the Company on 21 November 2013. Mr. Lanzer is Managing
Partner of Arnold Bloch Leibler ‐ a leading Australian commercial law firm ‐ and has over 30 years’ experience
in providing legal and strategic advice to some of Australia’s leading companies.
He is Chairman of the Audit and Risk Committee for Thorney Opportunities Ltd.
Mr Lanzer is also a Director of Premier Investments Ltd, a Director of Just Group Limited and a director of the
TarraWarra Museum of Art. He is a Life Governor of the Mount Scopus College Council. In June 2015 Mr
Lanzer was appointed as a Member of the Order of Australia.
Dr Gary Weiss LLB(Hons), LLM (with dist.), J.S.D., Non‐executive Director, Lead independent Director
Dr Gary Weiss was appointed a director of the Company on 21 November 2013. Dr Weiss has considerable
expertise in financial services businesses and extensive international business experience.
He holds several other directorships including as director of Ariadne Australia Limited since November 1989
and is the current Chairman of ClearView Wealth Limited and Ridley Corporation Limited.
Other current directorships include Premier Investments Limited, The Straits Trading Company Limited, Pro‐
Pac Packaging Limited and Tag Pacific Limited.
Dr Weiss’ previous directorships include Guinness Peat Group plc, Westfield Group, Coats plc (Chairman),
Tower Australia Limited, Australian Wealth Management Limited, Tyndall Australia Limited (Deputy Chairman),
Joe White Maltings Limited (Chairman), CIC Limited, Whitlam Turnbull & Co Limited and Industrial Equity
Limited.
2.
Company Secretary
Craig Smith B.Bus (Acct), GIA(Cert), Secretary
Craig Smith CPA, ACIS was appointed secretary of the Company on 21 November 2013.
Mr Smith has been the Company Secretary and Chief Financial Officer of the private Thorney Investment
Group since 2008. Prior to joining Thorney, Mr Smith held CFO / Company Secretarial roles with ASX listed
companies Baxter Group Limited and Tolhurst Noall Limited.
Thorney Opportunities Ltd 2015 Annual Report
Page | 7
Directors’ report continued
3.
Principal activities
Thorney Opportunities Ltd is an investment company listed on the Australian Securities Exchange (ASX: TOP).
It has a portfolio of investments across various industries and securities.
The Company’s primary objective is to hold investments in order to provide attractive investment returns to
shareholders through capital growth in the value of the shareholders’ investments as well as potentially
regular dividends.
The Company’s principal activities include investing in listed securities. There have been no changes in the
nature of activities during the 2015 financial year.
4.
Result
The Company’s net profit after tax for the 2015 financial year was $9,373,547 (2014: loss of $2,669,210).
Net tangible assets were 52.1 cents per share (2014: 46.6 cents per share). Earnings per share were 5.57 cents
per share (2014: loss of 2.47 cents per share).
5.
Dividends
On 24 August 2015 the Board declared a fully franked final dividend of 0.5 cents per share (2014: $nil).
The dividend will be paid to shareholders on 14 October 2015. The dividend of approximately $842,184 has
not been recorded as a liability in the financial accounts. The dividend will be paid to all shareholders who are
duly recorded on the register of members as at 5pm on Friday, 18 September 2015.
Details of a proposed Dividend Reinvestment Plan will be announced in August 2015. As the private Thorney
Group’s present intention is to fully participate in the DRP, the dividend net cash outflow will be reduced by a
minimum of 31%.
6.
Review of operations
Over the course of the financial year ended 30 June 2015 the Company increased its net assets by 11.8%.
Cash and cash equivalents as at 30 June 2015 was $33,793,023 (2014: $53,387,315). This reduction in the
balance of cash and cash equivalents reflects the steady deployment of capital into new investment
opportunities. The Company continues to maintain a prudent approach to its cash management.
During the period, the Company has added new investment positions and added to existing positions in the
portfolio.
Notable new investment positions added during the period include TPI Enterprises Limited and Diversa
Limited, positions where the Company has a substantial shareholding position. The Company has added to its
shareholding in Money3 Corporation Limited, Service Stream Limited, AMA Group Limited, each of which
continue to perform well and have contributed to the strong FY15 financial performance.
The Company continues to pursue superior, risk‐adjusted investment opportunities for shareholders.
Thorney Opportunities Ltd 2015 Annual Report
Page | 8
Directors’ report continued
7.
Financial position
The Investment Manager has completed the following transactions during the year which were separately
announced to ASX:
Company
Austin Engineering Limited
TPI Enterprises Limited (unlisted public company at 30 June 2015)
Diversa Limited
¹ Listed on 13 August 2015
Net tangible asset backing per share
Net tangible assets ($)
Shares on issue
Net tangible asset backing cents per share
At 30 June 2015 the Company had cash assets of $33,793,023.
8.
Prospects
ASX
Code
ANG
TPE ¹
DVA
Capital invested
$
3,023,101
7,006,250
2,315,375
12,344,726
2015
87,726,108
168,436,720
52.1
2014
78,323,346
168,363,261
46.6
Whilst the Company retains a substantial cash position as at 30 June 2015, the Company remains committed to
maintaining its disciplined approach to investing.
The Board is cautiously optimistic that, in this economic environment, opportunities will emerge over the
coming months which may be attractive to Thorney Opportunities Ltd.
9.
Material business risks
The Company’s risk management and compliance framework operated effectively throughout the financial
year ensuring that the 2 main areas of risk that have been identified (investment risk and operational risk)
were appropriately monitored and managed.
With an investment mandate with exposures to small to medium size capitalisation companies, TOP will
always bear market risk as it invests its capital in assets that are not risk free.
10. Options
During the financial year option holders paid $38,941 to exercise options to acquire 73,459 ordinary shares in
TOP. Unexercised options totalling 84,014,196 lapsed on 22 April 2015.
11.
Events subsequent to balance date
There were no events subsequent to balance date.
Thorney Opportunities Ltd 2015 Annual Report
Page | 9
Directors’ report continued
12.
2015 Remuneration report (Audited)
This report outlines the Key Management Personnel remuneration arrangements of the Company in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
For the purposes of the report, Key Management Personnel are defined as those persons and corporate
entities having authority and responsibility for planning, directing and controlling activities of the Company.
For Thorney Opportunities Ltd the Key Management Personnel are the Non‐executive Directors and the
Investment Manager.
(a) Remuneration of Directors
The Non‐executive Directors are remunerated by the Company. It is the policy of the Board to remunerate
Directors at market rates commensurate with the responsibilities undertaken by Non‐executive Directors. The
remuneration of the Non‐executive Directors is not linked to the performance of the Company.
Non‐executive Directors’ fees
The Non‐executive Directors’ base remuneration is reviewed annually. Fees paid to each Director have
remained unchanged from the time of their appointment. The amount of base remuneration is not dependant
on the satisfaction of a performance condition, or on the performance of the Company, the Company’s share
price, or dividends paid by the Company.
Non‐executive Chairman’s fees
For his role as Chairman and director of TOP, the Non‐executive Chairman, Alex Waislitz, receives zero
directors’ fees and zero retirement benefits.
Retirement benefits for Directors
The Company does not provide retirement benefits (other than superannuation) to the Non‐executive
Directors. The Investment Manager does not provide retirement benefits (other than superannuation) to the
Non‐executive Chairman.
Other benefits (including termination) and incentives
The Company does not pay other benefits and incentives to the Non‐executive Directors. The Company and
the Investment Manager do not pay other benefits and incentives to the Non‐executive Chairman.
(b) Remuneration of the Investment Manager
The Investment Manager is a corporate entity controlled by Mr Waislitz that has specified authority and
responsibility in regard to the management of the Company’s investment portfolio and is remunerated by the
Company in accordance with the Investment Management Agreement (IMA) between the Company and the
Investment Manager.
In respect of the year ended 30 June 2015, the Investment Manager was entitled to:
a Base Fee of $1,372,834 (GST exclusive), being a Base Fee equal to 0.75% per half year of the gross asset
value of the Company, payable half‐yearly in arrears, calculated as at the last business day of the relevant
half‐year; and
a Performance Fee of $2,358,125 (GST exclusive), payable in respect of the year ended 30 June 2015. The
fee is the greater of zero and the amount calculated as 20% of the Increase Amount. The Increase
Amount is the adjusted Net Asset Value for the current period less the Net Asset Value from the previous
period and less a hurdle, equivalent to the value of any Base Fee paid or accrued. Performance fee
entitlements are calculated on an annual basis, commencing on 1 July of each financial year. If there is no
Increase Amount for a financial year, the shortfall is not carried forward and not deducted from any
increase in future financial year(s) for the purposes of calculating future Performance Fees.
Thorney Opportunities Ltd 2015 Annual Report
Page | 10
Directors’ report continued
12.
2015 Remuneration report (Audited) continued
(c) Details of Remuneration
Key Management Personnel received the following remuneration amounts:
2015
Short term benefits
Fees
$
Other
$
Alex Waislitz
Ashok Jacob
Henry Lanzer¹
Dr Gary Weiss
Total
Personnel remuneration
Key Management
0
50,000
55,000
50,000
155,000
2014
Short term benefits
Fees
$
Other⁴
$
0
29,166
32,083
29,166
90,415
Current Directors²
Alex Waislitz
Ashok Jacob
Henry Lanzer¹
Dr Gary Weiss
Sub‐total
Former Directors³
Vaughan Webber
Colin Cowdon
Hugh Robertson
Nigel Sharp
Sub‐total
Total Directors’ Fees
Other
Ron Hollands
Total
Personnel remuneration
¹ Mr Lanzer’s fees are paid or payable to Arnold Bloch Leibler and include GST
² Remuneration from 21 November 2013 until 30 June 2014
³ Remuneration from 1 July 2013 until 21 November 2013
⁴ Extra directors’/consulting fees for additional workload on transitional issues
11,750
5,875
2,500
5,875
26,000
116,415
Key Management
124,098
240,513
97,460
27,460
27,460
27,460
179,840
179,840
0
0
0
0
0
0
0
0
0
0
Post‐employment
benefits
Superannuation
$
Total
$
0
4,760
0
4,760
9,520
0
54,760
55,000
54,760
164,520
Post‐employment
benefits
Superannuation
$
Total
$
0
2,699
0
2,699
5,398
3,627
3,083
2,771
3,083
12,564
17,962
0
31,865
32,083
31,865
95,813
112,837
36,418
32,731
36,418
218,404
314,217
0
0
124,098
179,840
17,962
438,315
There were no short‐term cash profit sharing and other bonuses, non‐monetary benefits, other post‐
employment benefits, termination benefits or share based payments to Key Management Personnel in the
year.
Thorney Opportunities Ltd 2015 Annual Report
Page | 11
Directors’ report continued
12.
2015 Remuneration report (Audited) continued
(d) Service Arrangements
The following service arrangements have been agreed between the Company and the Non‐executive Directors
with respect to remuneration and other terms of employment.
Ashok Jacob
Commenced 21 November 2013
No term has been set unless the Director is not re‐elected by shareholders of the Company
Base annual fee of $50,000 plus superannuation
Henry Lanzer
Commenced 21 November 2013
No term has been set unless the Director is not re‐elected by shareholders of the Company
Base annual fee of $50,000 (GST exclusive)
Dr Gary Weiss
Commenced 21 November 2013
No term has been set unless the Director is not re‐elected by shareholders of the Company
Base annual fee of $50,000 plus superannuation
(e) Employment agreement
The Non‐executive Chairman has an employment agreement with Tiga Trading Pty Ltd, a related body
corporate of the Investment Manager, not the Company.
Commenced as Director on 21 November 2013
No term of agreement has been set unless the Director is not re‐elected by shareholders of the
Company
No base salary or other compensation was received from the Company
The Director is employed under an employment agreement with Tiga Trading Pty Ltd which will
continue indefinitely until terminated
(f) History of TOP performance
The table below summarises TOP’s key financial performance indicators over the last five financial years.
As at 30 June
2015
2014
2013
2012
2011
Earnings
$
9,373,547)
(2,669,210)
(258,150)
(2,029,000)
476,000)
EPS
cps
Share price
cps
NTA
cps
$5.57)
($2.47)
($0.81)
($6.30)
$1.47)
$46.5
$44.5
$36.4
$37.8
$31.5
$52.1
$46.6
$45.3
$45.2
$37.8
Earnings are for continuing operations only. The EPS, share price and NTA have all been adjusted for the 1:7
Share Consolidation that occurred on 2 December 2013.
Thorney Opportunities Ltd 2015 Annual Report
Page | 12
Directors’ report continued
13.
Directors’ relevant interests
The number of TOP ordinary shares and options held in the Company by the KMP is as follows:
Balance
21 November
2013
Additions/
(Disposals)
Balance
30 June
2014
Additions/
(Disposals)
Balance
30 June
2015
Lapsed
8,366,855
‐
42,200,000
25,283,428
50,566,855
25,283,428
1,182,450
‐
‐
(25,283,428)
51,749,305
‐
1,034,934
‐
‐
517,467
1,034,934
517,467
‐
‐
100,000
50,000
100,000
50,000
9,971
‐
‐
4,986
9,971
4,986
‐
‐
‐
‐
‐
‐
‐
(517,467)
1,034,934
‐
‐
(50,000)
100,000
‐
‐
(4,986)
9,971
‐
Alex Waislitz
Shares
Options
Ashok Jacob
Shares
Options
Henry Lanzer
Shares
Options
Dr Gary Weiss
Shares
Options
There have been no changes in Directors’ relevant interests in shares since the end of the financial year except
for Mr Alex Waislitz who has increased his holding in the Company by 198,572 shares to 51,947,877 shares, as
at the date of this report. All Directors have duly notified the Australian Securities Exchange in accordance
with the Corporations Act 2001 of changes in their relevant interests.
14.
Board and committee meetings
The number of Board meetings, including meetings of Board Committees, held during the year ended 30 June
2015 and the number of those meetings attended by each Director is set out below:
Board
Meetings
Audit & Risk
Committee
No. of
meetings
held while
a Director
4
4
4
4
No. of
meetings
attended
4
3
4
4
No. of
meetings
held while
a Director
3
‐
3
‐
No. of
meetings
attended
3
‐
3
1¹
Alex Waislitz
Ashok Jacob
Henry Lanzer
Gary Weiss
¹ Whilst Mr Jacob and Dr Weiss are not formal members of the Audit & Risk Committee they are invited to
attend each meeting. Dr Weiss attended 1 committee meeting during the year.
Thorney Opportunities Ltd 2015 Annual Report
Page | 13
Directors’ report continued
15.
Environmental regulation
The operations of TOP are not subject to any particular or significant environmental regulations under a
Commonwealth, State or Territory law.
16.
Indemnification and insurance of officers and auditor
TOP has paid insurance premiums in respect of directors’ and officers’ liability for current and former directors
and officers of the Company.
The insurance policies prohibit disclosure of the nature of the liabilities insured against and the amount of the
premiums.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of
the terms of its audit engagement agreement against claims by third parties arising from any non‐audit
services (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since
the financial year.
17.
Auditor’s independence declaration
The Auditor’s independence declaration, as required under section 307C of the Corporations Act 2001, is set
out on page 15.
18.
Non‐audit services
Details of the amounts paid or payable to Ernst & Young for audit services provided during the year are set out
in note 17 to the financial statements on page 38 of this report.
There were non‐audit services amounting to $5,500 performed by the Company’s auditor, Ernst & Young,
during the 2015 financial year.
This report is made in accordance with a resolution of the Board of Directors.
On behalf of the Board
Alex Waislitz
Chairman
Melbourne, 24 August 2015
Thorney Opportunities Ltd 2015 Annual Report
Page | 14
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Thorney
Opportunities Limited
In relation to our audit of the financial report of Thorney Opportunities Limited for the year ended
30 June 2015, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.
Ernst & Young
Kester Brown
Partner
24 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Corporate governance statement
2015 Corporate governance statement
Thorney Opportunities Ltd (Thorney Opportunities, TOP or Company) is committed to developing and
maintaining an effective system of corporate governance which is commensurate with the size and nature of
the Company, its Board and the scope of its operations.
In the following statements we detail how the Company adheres to the 8 core principles and where there is
non‐adherence we disclose why it is necessary to take a different approach.
Principle 1: Lay solid foundations for management and oversight
The primary role of the Board is to ensure the long‐term prosperity of Thorney Opportunities.
The Board is responsible for a broad range of matters and will act in the best interests of the Company to
ensure that the business of the Company is properly managed. The Company has no employees and its day‐to‐
day functions and investment activities are managed by Thorney Management Services Pty Ltd (Investment
Manager) pursuant to an investment Management Agreement (IMA) approved by shareholders.
The Board has adopted a Board Charter which stipulates those matters expressly reserved to the Board and
which operational activities and what levels of authority have been delegated to the Investment Manager.
The Board may delegate any of these matters to individual Directors, Board Committees or the Investment
Manager but any such delegation shall be in accordance with the law and the Company’s Constitution.
The Board meets at least quarterly. At these meetings senior managers of the Investment Manager are
available to report on the Company’s operations.
Before being invited to join the Board and standing for election by shareholders, all non‐executive Directors
have appropriate background checks. All details of directors’ qualifications, skills and experience, other
material directorships currently held and any related party disclosures are included in the meeting materials
presented to shareholders.
Service arrangements have been agreed between the Company and the Directors with respect to their
individual remuneration and other terms of employment. Each Director has entered into an agreement
regarding insurance, access to records and disclosure of any trading in TOP securities as required under ASX
Listing Rules and the Company’s Trading Policy.
The Company Secretary has a direct reporting line to each Director of TOP in regard to all matters to do with
the proper functioning of the Board and the Committees.
Diversity
The Company has not promulgated a Diversity Policy nor has it set any measurable objectives for gender
diversity in compliance with ASX Recommendation 1.5. As TOP has no employees the Board has determined
that a Diversity Policy and the setting of measurable objectives to achieve gender diversity are not warranted
at this time. However, the composition of the Board is periodically reviewed.
The TOP Board undertakes a formal annual performance self‐assessment of the Board, the Audit and Risk
Committee and individual directors.
An evaluation of board performance was undertaken during the financial year ended 30 June 2015 with no
material changes proposed to the Board processes or individual director contributions.
Thorney Opportunities Ltd 2015 Annual Report
Page | 16
Corporate governance statement continued
Principle 1: Lay solid foundations for management and oversight continued
The independent directors meet at least once a year to review and evaluate the performance of the
Investment Manager.
A satisfactory evaluation of the Investment Manager’s performance for the financial year ended 30 June 2015
was undertaken by the independent directors.
The Investment Manager has an established induction process for all its employees with responsibilities under
the IMA. As part of this induction process, new senior executives will receive briefings on the business of the
Company and the Investment Manager and their policies and procedures. These briefings will focus on the key
operational, regulatory, risk and compliance issues that are of relevance to the Company and the Investment
Manager.
Principle 2: Structure the board to add value
Nomination and appointment of new Directors
ASX Recommendation 2.1 states that a board should establish a nomination committee and disclose a charter.
Given the size and nature of the Company, the Board has determined that a Nomination Committee is not
warranted.
The Board considers the issues that would otherwise be considered by a Nominations Committee.
Board skills matrix
The TOP Board must comprise directors with an appropriate range of skills, experience and expertise.
All directors
All directors
Board skills and experience:
Executive
leadership
Financial
markets
acumen
Governance
Public policy
and
Regulation
Shareholder
engagement
Strategy
All directors
All directors
All directors
All directors
The Board skills matrix sets out the key skills and experience of the Directors
and the extent to which they are represented on the current Board and its
Committees.
In addition to the skills and experience outlined in this table the Board
considers that each Director has the appropriate attributes such as
honesty and integrity;
an understanding of shareholder value;
has sufficient time to undertake the role appropriately;
an enquiring mind; and
a demonstrated commitment to appropriate standards of
governance.
Background information on Directors in office at the date of this Annual Report is set out in the Directors’
Report.
The Company’s Constitution provides that there must be a minimum of 3 and a maximum of 10 directors.
Having regard to the size and the nature of its business, the Company has determined that a 4 member board
is appropriate and sufficient to enable it to effectively discharge its responsibilities to the Company.
Thorney Opportunities Ltd 2015 Annual Report
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Corporate governance statement continued
Principle 2: Structure the board to add value continued
Majority of independent directors
The Board currently comprises 2 independent, non‐executive directors (Ashok Jacob and Dr Gary Weiss) and 2
non‐independent non‐executive directors (Alex Waislitz and Henry Lanzer). The Board regularly assesses the
independence of each non‐executive director.
Director
Alex Waislitz
Henry Lanzer
Ashok Jacob
Dr Gary Weiss
Position
Chairman
Director
Director
Director1
Classification
Non‐independent
Non‐independent
Independent
Independent
Appointment
21 November 2013
21 November 2013
21 November 2013
21 November 2013
Last election
25 November 2014
21 November 2013
21 November 2013
21 November 2013
Thorney Opportunities notes that the current Board does not comply with ASX Recommendation 2.4 with
respect to a majority of independent directors. The Board considers that all Directors of TOP bring significant
expertise and investment experience to the Company and that the current structure is appropriate for the
Company at this time.
Directors are elected by shareholders and in accordance with the provisions of the Constitution, no director
holds office for a period longer than 3 years without standing for re‐election by the shareholders.
Chairman and independence
Thorney Opportunities notes that ASX Recommendation 2.5 states that the chair should be independent and,
in particular, should not be the same person as the CEO of the entity.
The Board takes the view that it is in the best interests of shareholders that Mr Waislitz be the Chairman of
Thorney Opportunities and we make the following observations:
Mr Waislitz, as the long‐term chairman and CEO of the private Thorney Investment Group, has a
demonstrated track record of successful investment performance over 2 decades.
In November 2013, shareholders voted in favour of all Thorney Investment Group proposals, including the
appointment of Mr Waislitz as a director, on the expectation he be appointed Chairman of the Company.
There are well‐credentialed independent directors serving on the Board.
Delegation of certain responsibilities to Board committees.
The appointment of Dr Gary Weiss as Lead independent director.
The Company has a program for inducting new directors and encourages all its directors to maintain the skills
and knowledge required to effectively perform their role.
Each director may obtain independent professional advice at the expense of the Company on matters arising in
the course of their Board duties. The payment for the cost of the advice by the Company is subject to the
approval of the Chairman, which will not be unreasonably withheld.
1 Lead Independent Director
Thorney Opportunities Ltd 2015 Annual Report
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Corporate governance statement continued
Principle 3: Act ethically and responsibly
Code of Conduct and Conflicts of Interest
The Company has established a Code of Conduct that provides guidance to Directors and employees of the
Investment Manager. Under these principles Directors will:
conduct business in good faith and in a manner that will maintain confidence in the Company’s
integrity;
perform their duties to high standards of honest, ethical and law‐abiding behaviour;
not engage in conduct likely to adversely affect the reputation of Thorney Opportunities.
treat others with dignity and respect; and
The Code of Conduct also sets out details of how conflicts of interest should be avoided. Directors must
disclose to the Company any material personal interest they or their associates may have in a matter that
relates to the affairs of the Company, and inform the Board, via the Company Secretary, of any changes.
Where conflicts of interest arise, the Code sets out appropriate arrangements that must be followed.
A copy of the Code of Conduct is available on the Company’s website.
Principle 4: Safeguard integrity in corporate reporting
Audit Committee
Thorney Opportunities has established an Audit and Risk Committee and adopted an Audit and Risk Committee
Charter. Henry Lanzer (Committee Chairman) and Alex Waislitz have been formally appointed to the
Committee but all directors are invited and encouraged to attend each meeting. The Company notes that its
Committee composition and Charter do not conform to ASX Recommendation 4.1, however the Board believes
that given the size and nature of the Company and the Board, the committee structure is sufficiently
appropriate to independently verify and safeguard the integrity of the financial reporting.
A table of attendance at committee meetings by directors is included in the directors’ report.
Assurance
Thorney Opportunities does not employ its own CEO or CFO. However for the purposes of section 295A of the
Corporations Act and ASX Recommendation 4.2, the Chairman and Company Secretary provide the required
assurances and declarations each half‐year.
The Thorney Opportunities Board has received assurance from the Chairman and Company Secretary that, in
their opinion :
the financial records of the Company have been properly maintained;
the financial statements comply with the appropriate accounting standards and give a true and fair
view of the financial position and performance of the Company; and
the opinion has been formed on the basis of a sound system of risk management and internal control
which is operating effectively.
External Auditor
The Audit and Risk Committee Charter includes information on the procedures for selection and appointment
of the external auditor of Thorney Opportunities and for the rotation of the external audit engagement
partner. This year shareholders appointed Ernst & Young as the company’s auditor and this marks Year 2
under the rotation policy.
TOP ensures that the external auditor attends the AGM and is available to answer questions relevant to the
audit from shareholders.
Thorney Opportunities Ltd 2015 Annual Report
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Corporate governance statement continued
Principle 5: Make timely and balanced disclosure
Thorney Opportunities has adopted a Disclosure Policy which has procedures designed to ensure compliance
with ASX Listing Rule and Corporations Act disclosure requirements and to ensure accountability of Directors
and senior management of the Investment Manager for that compliance.
The policy, which is available on the Company’s website, has procedures designed to ensure that material
information is communicated to the Chairman and Company Secretary and for the assessment of information
for the disclosure of material information to the market.
The Board acknowledges the importance of promoting timely and balanced disclosure of all material matters
concerning Thorney Opportunities and believes it is fully compliant with Principle 5 and its recommendations.
Principle 6: Respect the rights of shareholders
Thorney Opportunities has a Communications Policy which seeks to promote effective communication with our
shareholders. The Company communicates in several ways including via its Annual Report and Half‐yearly
accounts, monthly net tangible asset backing announcements, shareholder updates from the Chairman and
other ASX announcements regarding material investments and other developments.
Thorney Opportunities Ltd maintains a website at: www.thorneyopportunities.com.au.
Annual General Meeting
TOP’s AGM will be held on Tuesday 24 November 2015 at 11:00 am Melbourne time in the boardroom of
Arnold Bloch Leibler, Level 21, 333 Collins Street Melbourne.
The Chairman of the meeting will ensure that shareholders are given the opportunity to participate at the
AGM.
TOP encourages shareholders to contact the Share Registry and opt in to receive and send all communications
to and from the Company electronically.
Principle 7: Recognise and manage risk
The Board, through the Audit and Risk Committee, is responsible for setting policies for oversight of risk and
identification and management of material business risks. Thorney Opportunities has an approved Audit and
Risk Committee Charter (see Principle 4 above) and in conjunction with the Investment Manager has adopted a
Risk Management Policy.
The Investment Manager has implemented a risk management and compliance framework which enables the
identification of risks, the execution of appropriate responses, the monitoring of risks and the controls applied
to mitigate risks.
The main areas of risk that have been identified are market risk and operational risk. As a listed investment
company Thorney Opportunities will always bear market risk as it invests its capital in assets that are not risk
free. Operational risks can include legal, regulatory, disaster recovery, systems, process and human resource
risks. Our risk management framework has been designed to monitor, review and continually improve risk
management throughout the Company.
For the year ended 30 June 2015 the Audit and Risk Committee reviewed TOP’s risk management framework
and the Board was satisfied that it continues to be sound.
Thorney Opportunities Ltd 2015 Annual Report
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Corporate governance statement continued
Principle 7: Recognise and manage risk continued
The Board believes that commensurate with the size and nature of the business that an internal audit function
is not warranted at this time. TOP utilises highly effective internal control processes and systems, developed
over 2 decades by the Investment Manager to manage the multifaceted investment activities of the private
Thorney Group. The Investment Manager employs staff and consultants who are responsible for evaluating
and continually improving the effectiveness of the risk management and internal control systems. These
systems are subject to an annual external audit.
The Company does have a material exposure to the Australian stock market. A large fall or correction to the
overall market is likely to adversely affect the TOP NTA. The Investment Manager seeks to reduce this risk
through careful stock selection, diversification and management of the relative weightings of individual
securities.
Principle 8: Remunerate fairly and responsibly
Remuneration Committee
ASX Recommendation 8.1 states that a board should establish a remuneration committee. Given the size and
nature of the Company and the fact the company does not employ executives, the Board has determined that
a Remuneration Committee is not warranted, nor does it have a Remuneration Policy to disclose.
Non‐executive Directors
Non‐executive Directors are remunerated by a fixed director’s fee including superannuation or as a fixed
consulting fee plus GST, as permitted by the Company’s Constitution.
The maximum remuneration of Non‐executive Directors is determined by Shareholders at a General Meeting
in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. At present
the maximum aggregate remuneration of Non‐executive Directors is $400,000 per annum. The apportionment
of non‐executive Director Remuneration within that maximum will be made by the Board having regard to the
inputs and value to the Company of the respective contributions by each Non‐executive Director. The Board
may award additional remuneration to Non‐executive Directors called upon to perform extra duties or services
on behalf of the Company.
Non‐executive Chairman
The Non‐executive Chairman is employed by the private Thorney Investment Group and does not receive any
salary, benefits or incentives for his role as a Director of TOP.
The amount of remuneration for all directors, including all monetary and non‐monetary components, are
detailed in the directors’ report under 2015 Remuneration Report (audited).
Investment Manager
The Investment Manager has specified authority and responsibility in regard to management of the Thorney
Opportunities investment portfolio. The Investment Manager is entitled to a base fee and a performance fee
in accordance with the IMA.
Persons involved in investment management are employees of the private Thorney Investment Group and are
not remunerated by the Company.
Further details on the fees paid to the Investment Manager are included in the financial statements.
Thorney Opportunities Ltd 2015 Annual Report
Page | 21
Statement of comprehensive income
For the year ended 30 June 2015
Income
Net changes in fair value of trading investments
Interest received
Other income
Total investment income/(loss)
Expenses
Management fees
Performance fees
Directors' fees
Fund administration and operational costs
Legal and professional fees
Other administrative expenses
Total expenses before significant items
Significant items
Restructuring costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Note
2015
$
2014
$
3
3
3
3
21
21
21
10,506,853
2,403,981
903,864
13,814,698
(1,407,155)
(2,417,078)
(164,520)
(195,836)
(187,029)
(69,533)
(2,592,925)
1,586,501
156,176
(850,248)
(740,999)
‐
(124,491)
(53,386)
(110,965)
(70,083)
(4,441,151)
(1,099,924)
‐
(719,038)
9,373,547
(2,669,210)
4
‐
‐
Total comprehensive profit/(loss) for the year
9,373,547
(2,669,210)
Basic and diluted earnings/(loss) per share
15
5.57
(2.47)
The Statement of comprehensive income should be read in conjunction with the notes to the financial
statements.
2015
cents
2014
cents
Thorney Opportunities Ltd 2015 Annual Report
Page | 22
Statement of financial position
As at 30 June 2015
ASSETS
Current assets
Cash and short‐term deposits
Financial assets
Receivables
Other assets
Total current assets
Non‐current assets
Financial assets
Total non‐current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Payables
Borrowings
Derivative financial instruments
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserve
Accumulated losses
TOTAL EQUITY
Note
2015
$
2014
$
6
7
8
9
7
10
11
12
13
14
33,793,023
51,340,689
85,891
17,270
53,387,315
17,064,268
272,907
25,477
85,236,873
70,749,967
10,277,672
10,000,000
10,277,672
10,000,000
95,514,545
80,749,967
6,695,489
852,708
240,240
811,247
1,615,374
‐
7,788,437
2,426,621
7,788,437
2,426,621
87,726,108
78,323,346
80,975,125
11,551,886
(4,800,903)
80,945,910
‐
(2,622,564)
87,726,108
78,323,346
The Statement of financial position should be read in conjunction with the notes to the financial statements.
Thorney Opportunities Ltd 2015 Annual Report
Page | 23
Statement of changes in equity
For the year ended 30 June 2015
Balance at 1 July 2014
Profit for the year
Total comprehensive income for the year
Transfer to Profits reserve
Transactions with shareholders:
Shares issued – options exercised
Cost of shares issued
Total transactions with shareholders
Issued
capital
$
80,945,910
‐
‐
‐
38,941
(9,726)
29,215
Reserves
$
Accumulated
losses
$
Total
equity
$
‐
‐
‐
(2,622,564)
78,323,346
9,373,547
9,373,547
9,373,547
9,373,547
11,551,886
(11,551,886)
‐
‐
‐
‐
‐
‐
‐
38,941
(9,726)
29,215
Balance as at 30 June 2015
80,975,125
11,551,886
(4,800,903)
87,726,108
For the year ended 30 June 2014
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2013
79,109,240
‐
(64,668,354)
14,440,886
Loss for the year
Total comprehensive income for the year
‐
‐
Transactions with shareholders:
Shares issued
Cost of shares issued
S258F capital reduction
Total transactions with shareholders
Balance as at 30 June 2014
68,229,438
(1,677,768)
(64,715,000)
1,836,670
80,945,910
‐
‐
‐
‐
‐
‐
(2,669,210)
(2,669,210)
(2,669,210)
(2,669,210)
‐
‐
64,715,000
68,229,438
(1,677,768)
‐
64,715,000
66,551,670
(2,622,564)
78,323,346
The Statement of changes in equity should be read in conjunction with the notes to the financial statements.
Thorney Opportunities Ltd 2015 Annual Report
Page | 24
Statement of cash flows
For the year ended 30 June 2015
Cash from operating activities:
Interest received
Dividends received
Proceeds from sale of trading investments
Payments for trading investments
Payments to suppliers and employees
Finance costs paid
Other
2015
$
2014
$
2,610,780
888,629
6,795,587
(27,151,012)
(2,659,729)
(113,246)
15,001
1,333,419
150
1,161,618
(15,843,445)
(1,087,702)
‐
156,026
Net cash (used in)/provided by operating activities
6(a) (19,613,990)
(14,279,934)
Cash flows from investing activities:
Payments for long‐term investments
Net cash (used in)/provided by investing activities
Cash flows from financing activities:
Proceeds from issue of shares
Payment for transaction costs
Other
Net cash provided by/(used in) financing activities
‐
‐
(10,000,000)
(10,000,000)
38,941
(9,726)
(9,517)
68,229,438
(1,677,768)
‐
19,698
66,551,670
Net (decrease)/increase in cash held
Cash at the beginning of the year
Cash at the end of the year
(19,594,292)
53,387,315
42,271,736
11,115,579
6
33,793,023
53,387,315
The Statement of cash flows should be read in conjunction with the notes to the financial statements.
Thorney Opportunities Ltd 2015 Annual Report
Page | 25
Notes to the financial statements
1.
Corporate information
TOP is a company limited by shares, incorporated and domiciled in Australia. The nature of the operations and
principal activities of the company are described in the director’s report.
The Company’s investment activities are managed by Thorney Management Services Pty Ltd (Investment
Manager) pursuant to an Investment Management Agreement approved by Shareholders.
The financial statements of Thorney Opportunities Ltd for the year ended 30 June 2015 were authorised for
issue in accordance with a resolution of the Board of Directors on 24 August 2015.
2.1
Summary of accounting policies
(a)
Basis of preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Accounting Standards Board. The financial statements are presented in Australian
Dollars and the company is a for‐profit entity for the purpose of preparing financial statements.
The annual report has also been prepared on a historical cost basis, except for financial assets and financial
liabilities held at fair value through profit or loss, that have been measured at fair value.
Statement of compliance
The financial statements have been prepared in accordance with the Australian Accounting Standards as
issued by the Australian Accounting Standards Board and International Financial Reporting Standards as issued
by the International Accounting Standards Board.
Changes in Accounting Standards
The Company has adopted a number of new and amended Australian Accounting Standards and AASB
interpretations for the reporting period, including the following list:
AASB 2012‐3 Amendments to Australian Accounting Standards ‐ Offsetting Financial Assets and
Financial Liabilities
AASB 2013‐3 ‐ Amendments to AASB 136 – Recoverable Amount Disclosures for Non‐Financial Assets
AASB 2013‐5 ‐ Amendments to Australian Accounting Standards – Investment Entities
AASB 1031 ‐ Materiality
The adoption of these new and amended standards did not have an impact in the reporting.
Thorney Opportunities Ltd 2015 Annual Report
Page | 26
Notes to the financial statements continued
2.1
Summary of accounting policies continued
(a)
Basis of preparation continued
Standards issued that might have an impact but not yet effective
Standards issued that might have an impact but are not yet effective up to the date of issuance of the
Company’s financial statements are listed below. The Company intends to adopt applicable standards when
they become effective.
Financial Instruments — Amendments to AASB 9 (effective from 1 January 2018)
AASB 9 (December 2014) is a new Principal standard which replaces AASB 139. This new Principal version
supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and
includes a model for classification and measurement, a single, forward‐looking ‘expected loss’ impairment
model and a substantially‐reformed approach to hedge accounting. The Company early adopted the standard
issued in December 2009 (as amended) and does not intend to apply the subsequent amendments until
effective date 1 January 2018.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets
compared with the requirements of AASB 139. There are also some changes made in relation to financial
liabilities. The main changes are:
Financial assets
Allows an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive income. Dividends in respect of these
investments that are a return on investment can be recognised in profit or loss and there is no impairment
or recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value through profit or loss at initial recognition if
doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise
from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities
designated at fair value through profit or loss (FVPL) using the fair value option.
Revenue from Contracts with Customers — AASB 15 (effective from 1 January 2017)
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which replaces IAS 11
Construction Contracts, IAS 18 Revenue and related Interpretations. The core principle of this standard is that
an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. Early application of this standard is permitted.
The International Accounting Standards Board (IASB) in its July 2015 meeting decided to confirm its proposal to
defer the effective date of IFRS 15 (the international equivalent of AASB 15) from 1 January 2017 to 1 January
2018. The amendment to give effect to the new effective date for IFRS 15 is expected to be issued in
September 2015. At this time, it is expected that the AASB will make a corresponding amendment to AASB 15,
which will mean that the application date of this standard for the company will move from 1 July 2017 to 1 July
2018.
Thorney Opportunities Ltd 2015 Annual Report
Page | 27
Notes to the financial statements continued
2.2
Accounting judgements and estimates
The preparation of the Company’s financial statements requires management to make judgments, estimates
and assumptions that affect the amounts recognised in the financial statements. However, uncertainty about
these assumptions and estimates could result in outcomes that could require a material adjustment to the
carrying amount of the asset or liability affected in the future.
The significant accounting policies have been consistently applied in the current financial year and the
comparative period, unless otherwise stated. Where necessary, comparative information has been
re‐presented to be consistent with current period disclosures.
Fair value of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial position
cannot be measured based on quoted prices in active markets, their fair value is measured using valuation
techniques. The inputs to these models are taken from observable markets where possible, but where this is
not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations
of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could
affect the reported fair value of financial instruments.
2.3
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
a) Financial instruments
(i) Classification
The Company classifies its financial assets and financial liabilities into the categories below in accordance with
AASB 9.
Financial assets and liabilities at fair value through profit or loss
The Company has two discrete portfolios of securities, the long‐term portfolio and the trading portfolio.
The long‐term portfolio relates to holdings of securities which the Directors intend to retain on a long term
basis. The long‐term portfolio is recognised as a non‐current asset in the statement of financial position.
The trading portfolio comprises securities acquired principally for the purpose of generating a profit from
short‐term fluctuation in price. The trading portfolio is recognised as a current asset in the statement of
financial position. All derivatives are classified as held for trading.
Other financial liabilities
This category includes all financial liabilities, other than those classified as at fair value through profit or loss.
Other financial liabilities are measured at their nominal amounts. Amounts are generally settled within 30
days of being recognised as other financial liabilities. Given the short‐term nature of other financial liabilities,
the nominal amount approximates fair value.
Thorney Opportunities Ltd 2015 Annual Report
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Notes to the financial statements continued
2.3
Summary of significant accounting policies continued
a) Financial instruments continued
(ii) Recognition
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Purchases or sales of financial assets that require delivery of assets within the time frame generally established
by regulation or convention in the marketplace are recognised on the trade date, i.e. the date that the
Company commits to purchase or sell the asset.
(iii) De‐recognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised where:
i. The rights to receive cash flows from the asset have expired; or
ii. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass‐through’
arrangement; and
iii. Either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled
or expires.
(iv) Initial measurement
Both the long‐term and trading portfolios are classified at initial recognition as financial assets at fair value
through profit or loss. All transaction costs for such instruments are recognised directly in profit or loss.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value
with net changes in fair value presented in the statement of profit or loss.
Dividend income earned on investments held at fair value through profit or loss is recognised in the statement
of comprehensive income.
Loans and receivables and financial liabilities (other than those classified as at fair value through profit or loss)
are measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue.
For financial assets and liabilities where the fair value at initial recognition does not equal the transaction
price, the Company recognises the difference in the statement of comprehensive income, unless specified
otherwise.
Thorney Opportunities Ltd 2015 Annual Report
Page | 29
Notes to the financial statements continued
2.3
Summary of significant accounting policies continued
a)
Financial instruments continued
(v) Subsequent measurement
After initial measurement, the Company measures financial instruments which are classified as at fair value
through profit or loss at fair value (see Note 7 below). Subsequent changes in the fair value of those financial
instruments are recorded in ‘Change in fair value of financial assets and liabilities at fair value through profit or
loss’. Interest earned is recorded in ‘Interest revenue’ according to the terms of the contract. Dividend
revenue is recorded in ‘Dividend revenue’.
Fair value measurement
b)
The Company measures financial assets and liabilities at fair value through profit or loss, such as equity
securities and debt instruments, at each balance sheet date.
Fair value is 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.
Fair value measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:
Level 1
Level 2
Level 3
Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
Thorney Opportunities Ltd 2015 Annual Report
Page | 30
Notes to the financial statements continued
2.3
Summary of significant accounting policies continued
b) Fair value measurement continued
When the fair values of financial assets and financial liabilities recorded in the statement of financial position
cannot be measured based on quoted prices in active markets, their fair value is measured using a discounted
cash flow model. The inputs to this model are taken from observable markets where possible, but where this
is not feasible, a degree of judgement is required in establishing fair values. Judgements include
considerations of inputs such as the discount rate including counterparty credit risk. Changes in assumptions
about these factors could affect the reported fair value of financial instruments. See Note 7 for further
disclosures.
Functional and presentation currency
c)
The Company’s functional and presentation currency is the Australian Dollar, which is the currency of the
primary economic environment in which it operates. The Company’s performance is evaluated and its liquidity
is managed in Australian Dollars. Therefore, the Australian Dollar is considered as the currency that most
faithfully represents the economic effects of the underlying transactions, events and conditions.
Interest revenue and expense
d)
Interest earned on financial assets classified as ‘at fair value through the profit or loss’ is recorded in ‘Interest
revenue’ according to the terms of the contract.
Dividend revenue
e)
Dividend revenue is recognised when the Company’s right to receive the payment is established. Dividend
revenue is presented gross of any non‐recoverable withholding taxes, which are disclosed separately as tax
expense in the Statement of profit and loss.
Fees, commissions and other expenses
f)
Except where included in the effective interest calculation (for financial instruments carried at amortised cost),
fees and commissions are recognised on an accrual basis. Legal and audit fees are included within ‘Legal and
professional fees’, and are recorded on an accrual basis.
Cash, and cash equivalents
g)
Cash and cash equivalents in the Statement of financial position comprise cash on hand, demand deposits,
short term deposits in banks with original maturities of three months or less and short‐term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
Thorney Opportunities Ltd 2015 Annual Report
Page | 31
Notes to the financial statements continued
2.3
Summary of significant accounting policies continued
h)
Taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting date where the Company operates and
generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the
statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilised.
Due to and due from brokers
i)
Amounts due to brokers (refer to note 10) are payables for securities purchased (in a regular way transaction)
that have been contracted for but not yet delivered on the reporting date. Refer to the accounting policy for
‘other financial liabilities’ for recognition and measurement of these amounts.
Amounts due from brokers include margin accounts and receivables for securities sold (in a regular way
transaction) that have been contracted for but not yet delivered on the reporting date. Refer to accounting
policy for ‘loans and receivables’ for recognition and measurement of these amounts.
Goods and services tax (GST)
j)
Revenue, expenses and assets are recognised net of the amount of GST except:
i. When the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
ii. Receivables and payables are stated with the amount of GST included.
Reduced input tax credits (RITC) recoverable by the Company from the ATO are recognised as a receivable in
the Statement of financial position.
Cash flows are included in the Statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority
is classified as part of operating cash flows.
Thorney Opportunities Ltd 2015 Annual Report
Page | 32
Notes to the financial statements continued
3.
Total investment income
The major components of investment income in the Statement of comprehensive income are:
Realised gains (losses)
Unrealised gains (losses)
Interest income
Underwriting fees
Dividend income
Other income
Gross investment income
2015
$
491,693
10,015,160
2,403,981
15,000
888,629
235
13,814,698
2014
$
131,134
(2,724,059)
1,586,501
156,026
150
‐
(850,248)
Thorney Management Services Pty Ltd
investment management
responsibilities from 21 November 2013 pursuant to an Investment Management Agreement approved by
shareholders at the 2013 Annual General Meeting.
(Investment Manager) assumed
4.
Income tax
The income tax (expense)/benefit attributable to the year differs from the prima facie amount payable on the
profit/(loss) before tax. The difference is reconciled as follows:
Profit/(loss) before income tax expense
Prima facie tax expense on profit from ordinary activities
before income tax (expense) / benefit at 30% (2014: 30%)
Deferred income tax (expense)
‐ Origination and reversal of temporary differences
‐
Imputation credits on dividends received
Carried forward tax losses utilised / (increased)
Income tax expense recognised in the Statement of profit or loss
Deferred tax
Trading stock
Business establishment costs
Other
Deferred tax liability
Benefit of tax losses brought to account
Net deferred tax
2015
$
9,373,547
2014
$
(2,669,210)
(2,812,064)
800,763
3,483,771
(114,252)
(557,455)
‐
242,589
(19)
(1,043,333)
‐
3,622,316
(437,125)
(12,610)
3,172,581
(3,172,581)
‐
283,391
(585,309)
(9,201)
(311,119)
311,119
‐
At 30 June 2015, the Company has estimated unused gross capital tax losses of $30,714,116 (2014:
$30,714,116) and gross revenue tax losses of $26,018,137 (2014: $24,735,036) that are available to offset
against future taxable capital and revenue profits, subject to continuing to meet relevant statutory tests. Of
the gross revenue losses, $16,670,302 has not been recognised as a deferred tax asset as of 30 June 2015.
Thorney Opportunities Ltd 2015 Annual Report
Page | 33
Notes to the financial statements continued
5.
Dividends
(a) Final Dividend FY 2015 not recognised at year end
Since the end of the year, the Directors have declared a 0.5 cent per
share fully franked dividend which has not been recognised as a
liability at the end of the financial year.
(b) Dividend franking account
Balance at 1 July
Franking credits received on dividends from investments
Balance at 30 June
Subsequent to reporting period, the franking account will reduce by
the dividend proposed above
2015
$
2014
$
842,184
109,223
380,841
490,064
360,936
129,128
‐
109,159
64
109,223
‐
109,223
The Company’s ability to pay franked dividends is fully dependent upon the receipt of franked dividends from
investments as while the Company continues to utilise its available tax losses, it will not pay tax.
6.
Cash and short‐term deposits
Cash at bank
Short‐term deposits
Total cash and short‐term deposits
2015
$
33,793,023
‐
33,793,023
2014
$
987,315
52,400,000
53,387,315
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short‐term deposits are made
for varying periods of between 1 day and 90 days, depending on the immediate cash requirements of the
Company, and earn interest at the respective short‐term deposit rates.
The carrying value of Cash and short‐term deposits approximates Fair Value.
a) Reconciliation of net profit/(loss) after tax to net cash provided by operating activities:
Profit/(loss) for the year
Adjustments for non‐cash items:
Net gain on disposal of investments
Unrealised component of change in fair value of
investments
Changes in Assets & Liabilities:
(Increase)/decrease in receivables
Increase/(decrease) in creditors & accrued expenses
(Increase) in financial assets
(Increase)/decrease in other assets
(Decrease) in provisions
Net cash (used in)/provided by operating activities
2015
$
9,373,547
2014
$
(2,669,210)
(491,693)
(131,134)
(10,015,160)
2,724,059
206,799
1,659,968
(20,355,425)
8,208
(234)
(19,613,990)
(253,082)
740,387
(14,681,827)
(8,675)
(452)
(14,279,934)
Thorney Opportunities Ltd 2015 Annual Report
Page | 34
Notes to the financial statements continued
7.
Financial assets
Financial assets at fair value through profit or loss
Listed equities¹
Unlisted equities²
Long term financial assets³
Total financial assets
Total current
Total non‐current
2015
$
2014
$
44,334,439
7,006,250
10,277,672
61,618,361
17,064,268
‐
10,000,000
27,064,268
51,340,689
10,277,672
17,064,268
10,000,000
¹ Measured at fair value using quoted market prices which are deemed a Level 1 input under the Fair Value
hierarchy as prescribed in AASB 13 and disclosed in note 2.3 (b). In July 2014, options previously deemed
to be Level 3 were transferred to Level 1 upon listing on the ASX. There were no other transfers between
levels.
² Measured at fair value, calculated with inputs deemed to be Level 2 under the Fair Value hierarchy as
prescribed in AASB 13 and disclosed in note 2.3 (b). The unlisted equities represent an investment in TPI
Enterprises Limited which in May 2015 completed a capital raising of $36.5 million at $4.75 per share
pursuant to an Information Memorandum. Valuation techniques, such as comparisons to similar
investments for which market observable prices are available, or the last sale price, are also adopted to
determine the fair value of investments included in level 2 of the hierarchy.
³ Measured at fair value using a discounted cash flow model, calculated with inputs deemed to be Level 3
under the Fair Value hierarchy as prescribed in AASB 13 and disclosed in note 2.3 (b). This model involves
the projection of a series of cash flows on an unlisted interest bearing security and is reviewed each
month by the Manager when calculating the TOP NTA. Key inputs to the discounted cash flow model
include the principal value of unlisted interest bearing securities of $10m, a coupon rate of 9% and a
discount rate of 8.77% (2014: 9.32%). A 1% increase (decrease) in the discount rate would result in a
decrease (increase) in fair value by approximately $240,000.
Reconciliation of recurring fair value measurements categorised within Level 3 of the fair value hierarchy:
Non‐current financial assets:
Balance at 1 July 2014
Unrealised gain recognised in Statement of
comprehensive income
Reclassification to current financial assets and
Level 1
Balance at 30 June 2015
Balance at 1 July 2013
Acquisition of financial instruments
Balance at 30 June 2014
Bonds
9,500,000
Options
500,000
Total
10,000,000
777,672
2,000,000
2,777,672
‐
10,277,672
(2,500,000)
‐
(2,500,000)
10,277,672
‐
9,500,000
9,500,000
‐
500,000
500,000
‐
10,000,000
10,000,000
Thorney Opportunities Ltd 2015 Annual Report
Page | 35
Notes to the financial statements continued
8.
Receivables
Accrued interest
Unearned income
GST
Total receivables
The carrying value of Receivables approximates Fair Value.
9.
Other assets
Prepayments
Total other assets
10.
Payables (current)
Management fee payable
Performance fee payable
Sundry creditors and accruals
Outstanding settlements
Total payables
2015
$
66,107
18,749
1,035
85,891
2015
$
17,270
17,270
2015
$
734,268
2,417,078
122,790
3,421,353
6,695,489
2014
$
272,907
‐
‐
272,907
2014
$
25,477
25,477
2014
$
611,305
‐
169,713
30,229
811,247
Payables are non‐interest bearing and unsecured. Outstanding settlements include amounts due to brokers
for settlement of security purchases and are settled within 3 days of the transaction. Sundry creditors are
generally paid in accordance with the terms negotiated with each individual creditor. The Management Fee
and Performance Fee are paid within 60 days of receiving an invoice from the Investment Manager.
The carrying value of Payables approximates Fair Value.
11.
Borrowings
Prime broker
Total borrowings
2015
$
852,708
852,708
2014
$
1,615,374
1,615,374
The Company has a Prime Broker Agreement with UBS AG, Australia Branch to provide services including
borrowing and lending of securities, settlement of third party transactions and, cash loans. The agreement
allows UBS to take a custodial charge over assets lodged with UBS, as security for payments and performance
obligations of the Company under the Prime Brokerage Agreement. Interest accrues daily on all cash advances
at a rate equivalent to a benchmark rate of interest plus an agreed margin. Amounts drawn are repayable on
demand.
The carrying amount of the borrowing has been measured at fair value through profit or loss which is deemed
to be a Level 2 input under the Fair Value hierarchy as prescribed in AASB 13 and disclosed in note 2.3 (b).
Thorney Opportunities Ltd 2015 Annual Report
Page | 36
Notes to the financial statements continued
12.
Derivative financial instruments
Exchange traded options at fair value¹
Total derivative financial instruments
2015
$
240,240
240,240
2014
$
‐
‐
¹ Measured at fair value using quoted market prices which are deemed a Level 1 input under the Fair Value
hierarchy as prescribed in AASB 13 and disclosed in note 2.3 (b).
13.
Issued capital
(a) Ordinary shares
Balance at 1 July
1:7 Share Consolidation
Ordinary shares issued
Costs of share issues and buy‐back
S258F reduction¹
2015
Number of
shares
2014
Number of
shares
2015
2014
$
$
168,363,261
‐
73,459
‐
‐
223,351,239
(191,443,521)
136,455,543
‐
‐
80,945,910
‐
38,941
‐
‐
79,109,240
‐
68,229,438
(1,648,330)
(64,715,000)
Total ordinary shares
168,436,720
168,363,261
80,984,851
80,975,348
(b) Options
Balance at 1 July
Options issued
Exercise of options
Options expired
Transaction costs
Total options
84,087,655
‐
(73,459)
(84,014,196)
‐
‐
84,143,198
(55,543)
‐
‐
‐
84,087,655
‐
‐
‐
‐
(9,726)
(9,726)
‐
‐
‐
‐
(29,438)
(29,438)
Total issued and authorised capital
168,436,720
252,450,916
80,975,125
80,945,910
¹ The Company reduced its accumulated losses and contributed equity by an equal amount via a S258F Corporations Act
2001 reduction.
(c) Terms and conditions:
(i)
Ordinary shares
Ordinary shares entitle the holder to receive dividends as declared and the proceeds on winding up the
Company in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their
holder to one vote, either in person, or by proxy, at a meeting of the Company.
(ii)
Options
The options lapsed on 22 April 2015.
Thorney Opportunities Ltd 2015 Annual Report
Page | 37
Notes to the financial statements continued
14.
Reserve
Profits reserve
2015
$
11,551,886
2014
$
‐
The profits reserve details an amount preserved for future dividend payments.
15.
Earnings per share
2015
2014
Basic and diluted earnings per share (cents)
5.57
(2.47)
Earnings used in calculating basic and diluted earnings per share ($)
9,373,547
(2,669,210)
2015
Number
of Shares
2014
Number
of shares
Weighted average number of ordinary shares used in calculating
basic and diluted earnings per share ¹
168,388,834
108,104,687
¹ The weighted average number of ordinary shares used in calculating earnings per share has been adjusted for the
1:7 Share Consolidation that occurred on 2 December 2013.
16.
Financial reporting by segments
The Company is managed as a whole and is considered to have a single operating segment. There is no further
division of the Company or internal segment reporting used by the Directors when making strategic,
investment or resource allocation decisions.
The Company’s assets are located entirely in Australia or are listed on the Australian Securities Exchange.
17.
Auditor’s remuneration
Remuneration of the auditor for:
Audit and review of financial reports
Other services
2015
$
2014
$
52,800
5,500
49,500
‐
Thorney Opportunities Ltd 2015 Annual Report
Page | 38
Notes to the financial statements continued
18.
Financial risk management
The Company’s objective in managing risk is the creation and protection of shareholder value. Risk is inherent
in the Company’s activities but it is managed through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls. The process of risk management is critical to the
Company’s continuing profitability. The Company is exposed to credit risk, liquidity risk and market risk (which
includes interest rate risk and equity price risk) arising from the financial instruments it holds.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company
by failing to discharge an obligation.
The Company is exposed to the risk of credit‐related losses that can occur as a result of a counterparty or
issuer being unable or unwilling to honour its contractual obligations. These credit exposures exist within
financing relationships, derivatives and other transactions.
The Company has counterparty exposure to Money3 Corporation Limited through its investment in bonds.
The bond issuer has put in place a second‐ranking security position for bondholders. In the event the issuer
goes bankrupt, the bondholders should have priority over unsecured creditors. The Investment Manager
monitors the counterparty in order to assess its ability to meet its interest and principal obligations.
It is the Company’s policy to enter into financial instruments with reputable counterparties. The Investment
Manager closely monitors the creditworthiness of the Company’s counterparties (e.g. brokers, custodian,
banks etc.) by reviewing their credit ratings, financial statements and press releases on a regular basis.
Liquidity risk
Liquidity risk is defined as the risk that the Company will encounter difficulty in meeting obligations associated
with financial liabilities. Liquidity risk arises because of the possibility that the Company could be required to
pay its liabilities earlier than expected.
The Company invests primarily in marketable securities and other financial instruments, which under normal
market conditions are readily convertible to cash. In addition, the Company has no borrowings and has a daily
policy to monitor and maintain sufficient cash and cash equivalents to meet normal operating requirements.
Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to
changes in market variables such as interest rates and equity prices. As the Company is a listed investment
company with a flexible investment mandate, the Company will always be subject to market risks as the prices
of its investment fluctuates with the market.
The Company’s listed equity securities are susceptible to market price risk arising from uncertainties about
future values of the investments. The Company manages the equity price risk through adherence to its
investment policy and objectives.
At the reporting date, the exposure to listed equity securities at fair value was $44,094,189. A decrease of 10%
in share value of securities held could have an impact of approximately $4,409,419 on the income or equity
attributable to the Company, depending on whether the decline is significant or prolonged. An increase in 10%
in share value of securities held would have a similar favourable impact on income and equity.
Thorney Opportunities Ltd 2015 Annual Report
Page | 39
Notes to the financial statements continued
18.
Financial risk management continued
Interest risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows. The
company is not materially exposed to interest rate risk as the majority of its cash is in short‐term deposits with
fixed interest rates. The Company’s exposure to interest rate relates primarily to cash at bank and borrowings
with Prime Broker. Interest rate sensitivities have not been performed as the Company’s exposure to interest
rate risk is not significant.
19.
Contingent liabilities
Other than as described in Note 5, the Company has no contingent liabilities as at 30 June 2015.
20.
Events subsequent to balance date
There were no events subsequent to balance date.
21.
Related party transactions
The following table provides the total amount of transactions which have been entered into with related
parties during the year ended 30 June 2015:
Entities with significant influence over the Company:
Thorney Holdings Pty Ltd
Thorney International Pty Ltd
Thorney Management Services Pty Ltd
Tiga Trading Pty Ltd
Related entities of key management personnel of the Company:
Arnold Bloch Leibler
¹ All related party transaction amounts are shown exclusive of GST
Services from and reimbursements
to related parties¹
2015
$
2014
$
‐
‐
3,730,959
52,000
250,000
6,504
722,926
35,000
1,376
53,848
The Company has entered into an investment management agreement with Thorney Management Services
Pty Ltd (TMS) for a period of 10 years and expiring 21 November 2023.
Under this agreement TMS is entitled to a base fee and a performance fee. For the year ending 30 June 2015 a
base fee of $1,372,834 (2014: $722,926) and a performance fee of $2,358,125 (2014: $nil) was paid or payable
to TMS. The Company must pay TMS within 60 days of receiving an invoice.
Tiga Trading Pty Ltd, a related entity of TMS, employs personnel to provide company secretarial and financial
accounts preparation services to Thorney Opportunities Ltd. These services are provided on commercial terms
and total $52,000 for the financial year 2015 (2014: $35,000).
TMS, Tiga Trading Pty Ltd, Thorney Holdings Pty Ltd, Thorney International Pty Ltd and Thorney Investment
Group Australia Pty Ltd are related bodies corporate controlled by Alex Waislitz by virtue of 608(1) of the
Corporations Act (2001).
For the purposes of AASB 101 and AASB 124, the parent and ultimate parent of Thorney Opportunities Ltd is
Thorney Investment Group Australia Pty Ltd.
Thorney Opportunities Ltd 2015 Annual Report
Page | 40
Notes to the financial statements continued
21.
Related party transactions continued
During the year, the Company engaged Arnold Bloch Leibler, a legal firm of which Henry Lanzer is the
managing partner, to provide legal advice totalling $1,376 (2014: $53,848).
In accordance with the terms of Mr Lanzer’s appointment, a payment of $50,000 was paid or payable to Arnold
Bloch Leibler as remuneration for his role as a Director of the Company.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit
(other than those detailed above) by reason of a contract made by the Company or a related Company with
the Director or with a firm of which he is a member or with a Company in which he has substantial financial
interest.
Key Management Personnel received the following remuneration amounts:
Short‐term benefits
Post‐employment benefits
Total remuneration
22.
List of investments
AMA Group Limited
Austin Engineering Limited
Australian Renewable Fuels Limited
Diversa Limited
Money3 Corporation Limited (equity, bond, option)
Service Stream Limited
TPI Enterprises Limited
Other listed investments
TOTAL INVESTMENTS
2015
$
155,000
9,520
164,520
2014
$
90,415
5,398
95,813
Market value
as at
30 June 2015
$
14,971,300
1,416,452
1,495,251
2,277,666
18,158,755
10,454,796
7,006,250
5,837,890
61,618,360
Thorney Opportunities Ltd 2015 Annual Report
Page | 41
Directors’ declaration
In accordance with a resolution of directors of Thorney Opportunities Ltd, I state that:
1.
In the opinion of the Directors:
(a) the financial statements and notes of Thorney Opportunities Ltd for the financial year ended 30 June 2015
are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the financial position as at 30 June 2015 and of its performance for the
year ended on that date;
(ii)
complying with Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 2.1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015.
On behalf of the Board,
Alex Waislitz
Chairman
Melbourne, 24 August 2015
Thorney Opportunities Ltd 2015 Annual Report
Page | 42
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
To the Members of Thorney Opportunities Ltd
Report on the Financial Report
We have audited the accompanying financial report of Thorney Opportunities Ltd, which comprises the
statement of financial position as at 30 June 2015, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory information, and the Directors’
declaration.
Directors’ responsibility 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 controls as the Directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity's
preparation of the financial report that gives a true and fair view 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 entity's internal controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the Directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We have given to the Directors of the Company a written Auditor’s Independence
Declaration, a copy of which is included in the Directors’ Report. We confirm that the Auditor’s
Independence Declaration would be in the same terms if given to the Directors as at the time of this
auditor’s report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
Opinion
In our opinion:
a.
the financial report of Thorney Opportunities Ltd is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the Company's financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.1.
Report on the remuneration report
We have audited the Remuneration Report included in Note 12 of the Directors' report for the year
ended 30 June 2015. 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.
Opinion
In our opinion, the Remuneration Report of Thorney Opportunities Ltd for the year ended
30 June 2015 complies with section 300A of the Corporations Act 2001.
Ernst & Young
Kester Brown
Partner
Melbourne
24 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Shareholder information
As at 24 August 2015
Voting rights
All ordinary shares carry one vote per share without restriction.
Distribution of shareholders
Category
1 – 1,000 shares
1001 – 5,000 shares
5001 – 10,000 shares
10,001 – 100,000 shares
100,001 or more shares
Total number of holders
Number of shareholders holding less than a marketable parcel
20 largest shareholders of ordinary shares
Name
THORNEY HOLDINGS PTY LTD
RUBI HOLDINGS PTY LTD
TIGA TRADING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RUBI HOLDINGS PTY LTD
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
ELPHINSTONE HOLDINGS PTY LTD
DYNASTY PEAK PTY LTD
FRANK COSTA SUPERANNUATION PTY LTD
OBPF NOMINEES PTY LTD
TAMIT NOMINEES PTY LTD
MR MALCOLM STEINBERG & MR ADAM GREGORY STEINBERG
THIRTY‐FIFTH CELEBRATION PTY LTD
MRS NOLA ISABEL CRIDDLE
PICTON COVE PTY LTD
BLACKCAT HOLDINGS PTY LTD
AUSTIN SUPERANNUATION PTY LTD
VENN MILNER SUPERANNUATION PTY LTD
NOLA CRIDDLE FOUNDATION PTY LTD
THE TRUST COMPANY (SUPERANNUATION) LTD
Substantial shareholders
Name
Thorney Holdings Pty Ltd
Rubi Holdings Pty Ltd
Ordinary
shareholders
228
343
175
677
166
1,589
146
Number
of
shares
45,393,372
12,150,608
6,471,578
5,980,000
4,749,392
4,080,000
3,000,000
2,028,000
2,000,000
2,000,000
2,000,000
1,700,000
1,534,496
1,500,000
1,305,704
1,055,000
1,037,082
1,006,724
1,000,000
1,000,000
% of
issued
capital
26.95
7.21
3.84
3.55
2.82
2.42
1.78
1.20
1.19
1.19
1.19
1.01
0.91
0.89
0.78
0.63
0.62
0.60
0.59
0.59
Number
of
shares
51,947,877
16,900,000
Voting
Power
%
30.84
10.03
Thorney Opportunities Ltd 2015 Annual Report
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Thorney Opportunities Ltd 2015 Annual Report
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