THORNEY OPPORTUNITIES LTD
ABN 41 080 167 264
THORNEY OP P ORTUNITIES LTD
ABN 41 080 167 264
APPENDIX 4E (Listing Rule 4.3A)
Preliminary final report for the year ended 30 June 2021
RESULTS FOR ANNOUNCEMENT TO THE MARKET
(All comparisons to year ended 30 June 2020)
Income from ordinary activities
Profit before tax for the year
Profit after tax for the year
$’000s
38,813
30,105
22,527
Dividend information
2021 Final dividend cents per share
2021 Interim dividend cents per share
2020 Final dividend cents per share
2021 Final dividend dates
Ex-dividend date
Record date
Payment date
Movement
$’000
Up/
Down
Movement
%
85,765
79,849
57,445
Cents
per
share
1.35
0.80
1.27
Up
Up
Up
>100%
>100%
>100%
Franked
amount
per share
1.35
0.80
1.27
Taxing rate
for
franking
26.0%
30.0%
30.0%
8 September 2021
9 September 2021
30 September 2021
Dividend Reinvestment Plan
The Dividend Reinvestment Plan (DRP) will not operate in respect of the 2021 Final dividend.
Net tangible asset backing (after tax) per
share
30 June 2021
30 June 2020
Movement
70.4 cents
61.0 cents
Up 15%
This information should be read in conjunction with the 2021 Annual Report of Thorney
Opportunities Ltd and any public announcements made in the period by Thorney
Opportunities Ltd in accordance with the continuous disclosure requirements of the
Corporations Act 2001 and Listing Rules.
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
Level 39, 55 Collins St. Melbourne VIC 3000 Australia
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 D. Lanzer AM
Dr Gary H. Weiss AM
Secretary: Craig Smith
Country of incorporation: Australia
Registered office: Level 39, 55 Collins Street
Contact details: Level 39, 55 Collins Street
Melbourne Vic 3000
Melbourne Vic 3000
T: + 613 9921 7116
F: + 613 9921 7100
E: contact@thorney.com.au
W: www.thorney.com.au/thorney-opportunities/
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
Solicitors: Arnold Bloch Leibler
333 Collins 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
(AGM):
When: Wednesday 8 November 2021¹
Where: TOP is planning to hold a Virtual 2021 Annual General
Meeting¹
¹ The Company will advise full meeting details to all shareholders early
October 2021.
Thorney Opportunities Ltd 2021 Annual Report
Page | 2
Contents
CHAIRMAN’S LETTER ......................................................................................................................................................... 4
DIRECTORS’ REPORT ......................................................................................................................................................... 7
1. DIRECTORS ................................................................................................................................................................. 7
2. COMPANY SECRETARY ............................................................................................................................................... 8
3. PRINCIPAL ACTIVITIES ................................................................................................................................................. 9
4. RESULT ....................................................................................................................................................................... 9
5. DIVIDENDS ................................................................................................................................................................... 9
6. REVIEW OF OPERATIONS ............................................................................................................................................ 9
7. FINANCIAL POSITION ................................................................................................................................................. 10
8. PROSPECTS .............................................................................................................................................................. 10
9. MATERIAL BUSINESS RISKS....................................................................................................................................... 10
EVENTS SUBSEQUENT TO BALANCE DATE ............................................................................................................ 10
10.
2021 REMUNERATION REPORT (AUDITED) .......................................................................................................... 11
11.
KMP RELEVANT INTERESTS ................................................................................................................................. 14
12.
BOARD AND COMMITTEE MEETINGS ..................................................................................................................... 14
13.
ENVIRONMENTAL REGULATION ............................................................................................................................. 14
14.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITOR ......................................................................... 15
15.
AUDITOR’S INDEPENDENCE DECLARATION ........................................................................................................... 15
16.
NON-AUDIT SERVICES ........................................................................................................................................... 15
17.
AUDITOR’S INDEPENDENCE DECLARATION ........................................................................................................ 16
CORPORATE GOVERNANCE STATEMENT ........................................................................................................... 17
STATEMENT OF COMPREHENSIVE INCOME ........................................................................................................ 18
STATEMENT OF FINANCIAL POSITION .................................................................................................................. 19
STATEMENT OF CHANGES IN EQUITY .................................................................................................................. 20
STATEMENT OF CASH FLOWS ................................................................................................................................ 21
NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................ 22
DIRECTORS’ DECLARATION .................................................................................................................................... 40
INDEPENDENT AUDIT REPORT ............................................................................................................................... 41
SHAREHOLDER INFORMATION ............................................................................................................................... 46
Thorney Opportunities Ltd 2021 Annual Report
Page | 3
Chairman’s letter
Chairman’s letter
Dear fellow TOP shareholder,
I am pleased to report that your company Thorney Opportunities Ltd (TOP) delivered a substantially
improved performance for the year ended 30 June 2021.
TOP’s after tax earnings were a record $22.5 million – a $57.4 million turnaround on the previous year.
Net tangible assets (NTA) after tax and fees at 30 June 2021 stood at 70.4 cps – an increase of 15.4%
over that from 12 months ago.
Directors have declared a fully franked final dividend of 1.35 cps which, on top of the interim dividend
of 0.80 cps, brings TOP’s total dividend payout for the year to 2.15 cps fully franked. This represents
an increase in total dividends paid compared to the prior year of 7.5% and a yield of approximately 3.9%
(pre-franking effect).
The higher dividend payout is in line with TOP’s previously stated aim of delivering increased dividends
to shareholders whenever possible over time. TOP’s ability to pay higher dividend yields – (see bar
chart below) is a welcome outcome at a time of historically low interest rates.
TOP Fully Franked Dividend History
0.65
0.90
1.14
1.27
1.35
0.60
0.60
0.66
0.73
0.80
0.60
0.55
2016
2017
2018
2019
2020
2021
Interim dividend (cps)
Final dividend (cps)
TOP’s overall results for FY2021 are particularly pleasing in light of the market’s continued enthusiasm
for growth and technology stocks rather than the value-based companies which make up the majority
of TOP’s portfolio.
The ongoing improvement in TOP’s NTA performance has carried over into FY2022, and underscores
TOP’s investment philosophy since its inception. TOP remains committed to thorough due diligence
which identifies fundamentally mispriced or undervalued companies. This approach is combined with
continued constructive advocacy with boards and management to implement change when required
designed to deliver positive returns to shareholders over the medium to long term.
A good example of this philosophy is TOP’s current largest holding, Money3 Corporation Limited (MNY).
TOP is a long-term holder in this non-bank provider of automotive vehicle financing and has backed the
company over its history, working closely with board and management to implement change when
Thorney Opportunities Ltd 2021 Annual Report
Page | 4
Chairman’s letter continued
required. MNY continues to grow its market share both organically and through acquisition and its
strong share price performance and increased dividend during FY2021 has continued into the current
financial year.
Another major contributor to TOP’s pleasing performance was its holding in the unlisted 20 Cashews
Pty Ltd (20C) which has an underlying investment in the Australian Community Media group (ACM).
TOP took a cautious approach to its assessment of the carrying value of this investment in FY2020 with
Directors being mindful of the potential longer term impact that bushfires, floods and COVID-19 would
have on regional Australia and the ACM business.
However, during the course of FY2021, management moved to accelerate the transformation plan,
which included operating the business efficiently, disposing of surplus real estate assets, closing print
facilities, rationalising the publication portfolio, launching new publications and strongly growing its
digital subscriber base which has now passed 100,000. This transformational work is continuing.
As a result of the work completed thus far, and the outlook for FY2022, the Directors’ have determined
that an increase in the carrying value of TOP’s investment in ACM is warranted. The carrying value of
TOP’s investment has been increased by approximately $15.0 million since 30 June 2020 to a value of
$21.5 million, making it one of TOP’s largest investments.
The Directors remain excited about the next phase of transformation and the future growth opportunities
which exist for ACM.
In the listed portfolio, TOP’s other four largest holdings apart from MNY at year end were MMA Offshore
Ltd (MRM), AMA Group Ltd (AMA), Southern Cross Electrical Engineering Ltd (SXE) and Consolidated
Operations Group Ltd (COG).
MNY, MRM, SXE and COG all finished FY2021 with share prices higher than the previous year. AMA’s
automotive smash repairs operations were affected by the impact of reduced traffic accidents as a result
of COVID. However, with new management and the prospect of increased traffic flows once Australia
begins to open up (hopefully) next year, we are optimistic AMA will recover.
Although in hindsight we may have invested a little early, we are also expecting strong tailwinds from
the massive capital spending programs in infrastructure and resources to be positive for a number of
TOP portfolio companies including MRM, SXE, Austin Engineering Limited (ANG) and Decmil Group
Limited (DCG).
Whilst I am very optimistic about TOP’s long-term growth prospects, like all shareholders, I remain
disappointed that TOP’s share price has continued to trade below its NTA. Directors, the investment
team and I remain focused on continually reducing and preferably eliminating this unjustified discount
gap.
In February 2021, TOP announced that it would launch a further on-market share buyback for a 12-
month period ending 18 February 2022. I have also foreshadowed a number of other steps designed
to help close the NTA discount gap. These include more frequent shareholder communications and
providing greater detail on key holdings and activities. We will be implementing these and other
shareholder value-enhancing steps in coming months.
As an example, the COVID-19 necessitated introduction of webinar-based TOP investor briefings
throughout the financial year proved popular and these will continue in FY2022. The investor briefings
conducted during the past year have been posted on the newly updated TOP website along with other
communications and podcasts interviews etc. The webinars can also be viewed by clicking here. The
next webinar for TOP investors will take place later this month with details to be sent to shareholders
shortly.
Thorney Opportunities Ltd 2021 Annual Report
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Chairman’s letter continued
Outlook
As I also mentioned to shareholders in Thorney’s other LIC Thorney Technologies Ltd (TEK), in all my
years as a professional share market investor, I cannot recall a time when there has been more diversity
of opinion about the prospects for the next 12 months and beyond.
The optimists are expecting the good times and record share prices to continue, buoyed by the weight
of money which has been poured into the global economy to help limit the economic impact of COVID.
They point to ongoing, historically low interest rates and a lack of investment alternatives to keep
underwriting record share market levels.
The pessimists say we are living on borrowed time, with values unsustainably stretched, inflation just
around the corner and the full global impact of the pandemic so far yet to filter through.
Then there is the very real prospect that more COVID variants could wreak even further havoc on
human health and the global economy. On top of this, they point to increasing geo-political tension
around the world making the prospect of a sharp market correction or worse seem increasingly likely.
At TOP we have always taken a cautiously optimistic approach. We believe that no matter what forces
are impacting the overall market, there will always examples of mispriced or undervalued companies
which have the potential to be re-rated and deliver outstanding share price growth.
A significant number of companies in the TOP portfolio, e.g. Ardent Leisure (ALG), Retail Food Group
(RFG) and the previously mentioned AMA stand to do well when the Australian economy eventually
begins its post lockdown re-openings.
With a constant eye on the macro, TOP continues to seek out more potential gems while at the same
time adjusting our portfolio positions in line with our value models, selling down when we believe prices
have become overheated and adding to holdings when we think selling has been overdone.
As always, our goal will remain to keep delivering positive returns for TOP shareholders over time.
My sincere thanks go to my fellow TOP Directors, to the outstanding Thorney investment management
team and to all TOP shareholders for your continued support.
Alex Waislitz
Chairman
31 August 2021
Thorney Opportunities Ltd 2021 Annual Report
Page | 6
Directors’ report
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 2021 and the auditor’s report thereon.
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
Henry D. Lanzer AM
Ashok Jacob
Dr Gary H. Weiss AM
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 Chairman of Thorney Technologies Ltd and 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 was the Vice President of the Collingwood Football Club Limited where he served as director
between 1998-2021.
He also 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 and the Waislitz Family
Foundation. 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.
Henry D. Lanzer AM B.Com., LLB (Melb), Non-executive Director
Henry D. Lanzer AM was appointed a director of the Company on 21 November 2013 and he is
Chairman of the TOP Audit and Risk Committee.
Mr Lanzer is Managing Partner of Arnold Bloch Leibler - a leading Australian commercial law firm - and
has over 40 years’ experience in providing legal and strategic advice to some of Australia’s leading
companies.
Mr Lanzer is also a director of Premier Investments Limited, a director of Just Group Limited and
previously 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.
Thorney Opportunities Ltd 2021 Annual Report
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Directors’ report continued
1.
Directors continued
Information on directors continued
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 has been the Chair of the Australia-India Council since April
2015.
Mr Jacob’s previous directorships include Consolidated Press Holdings Limited, Publishing and
Broadcasting Ltd, Visy Australia Advisory Board, 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.
Dr Gary H. Weiss AM LLB(Hons), LLM (with dist.), J.S.D., Non-executive Director,
Lead independent Director
Dr Gary H. Weiss AM 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 directorships including as director of Ariadne Australia Limited (since November 1989)
and as Chairman of Ardent Leisure Group Limited and Estia Health Limited.
Other current directorships include The Straits Trading Company Limited and Hearts & Minds
Investments Limited. Dr Weiss is also a Commissioner of the Australian Rugby League Commission.
In June 2019 Dr Weiss was appointed as a Member of the Order of Australia.
Dr Weiss’ previous directorships include Ridley Corporation Ltd, Guinness Peat Group plc, Premier
Investments Limited, Pro-Pac Packaging Limited, Tag Pacific Limited, Westfield Group, Coats plc
(Chairman), ClearView Wealth Limited (Chairman), Mercantile Investment Company Limited, 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 Chief Financial Officer of the private Thorney Investment Group since 2008, was
appointed company secretary of Thorney Technologies Ltd in 2016 and is a director and company
secretary of Anaeco Limited.
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 2021 Annual Report
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Directors’ report continued
3.
Principal activities
Thorney Opportunities Ltd is an investment company listed on the Australian Securities Exchange
(ASX: TOP). Its principal activity is making investments in listed and unlisted securities.
There have been no changes in the nature of these activities during the 2021 financial year.
4.
Result
The Company’s net income before tax for the 2021 financial year was $30,105,004 (2020: $49,744,148
loss) and the net profit after tax was $22,527,361 (2020: 34,917,472 loss).
Net tangible assets after tax were 70.4 cents per share (2020: 61.0 cents per share).
5.
Dividends
On 25 August 2021 the Board declared a final fully franked dividend of 1.35 cents per share (2020 Final
dividend: 1.27 cents per share). The tax rate for imputation purposes will be at 26%, which is the
maximum allowable under Australian taxation law (i.e. 100% fully franked). The Dividend Reinvestment
Plan (DRP) will not operate in respect of the 2021 Final dividend.
The Final dividend will be paid to shareholders on 30 September 2021. The total dividend of
approximately $2,674,316 has not been recorded as a liability in the financial accounts. The dividends
will be paid to all shareholders who are duly recorded on the register of members as at 5pm on
Wednesday, 9 September 2021.
The fully franked 2021 Interim dividend of 0.80 cents per share was paid on 31 March 2021.
The fully franked 2020 Final dividend of 1.27 cents per share was paid on 30 September 2020.
6.
Review of operations
Over the course of the financial year ended 30 June 2021, the Company’s net tangible assets increased
by $17,394,602 to $139,488,491 (2020: $122,093,889). The increase principally reflects mark to market
increases in the market value of the Company’s portfolio for the twelve-month period, and an increase
in the fair value of TOP’s investment in 20 Cashews Pty Ltd (20C).
TOP’s five largest listed portfolio holdings Money3 Corporation Ltd (MNY), MMA Offshore Ltd (MRM),
AMA Group Ltd (AMA), Southern Cross Electrical Engineering Ltd (SXE) and Consolidated Operations
Group Ltd (COG) represent 55% of TOP’s listed portfolio. Of the top 5, MNY, MRM, SXE and COG all
closed at a stronger share price compared to 30 June 2020, contributing to an overall unrealised gain
of $10.2 million for TOP’s listed portfolio at 30 June 2021. A net unrealised gain of $15.1 million was
also recognised as a result in TOP’s fair value determination of its unlisted investment in 20 Cashews
Pty Ltd (20C), which holds an underlying investment in Australia Community Media (ACM) Group. The
increase in fair value is predominately due to positive impacts from the ACM business transformation
measures, the positive performance of media related investments, and investments made in media and
technology related businesses over the last twelve months. A further $0.2 million unrealised gain was
recognised on other long-term investments
Cash and short-term deposits as at 30 June 2021 was $2,710,406 (2020: $6,561,555). The $3,851,149
decrease in cash predominately reflects slight decline in cash from operating activities, payments made
in relation to the Share buy-back totalling $1.011 million, dividends paid of $3.949 million, partially offset
by net proceeds received from unlisted investments totalling $1.168 million.
Thorney Opportunities Ltd 2021 Annual Report
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Directors’ report continued
6.
Review of operations continued
The On-Market Share Buy-Back announced on 5 December 2019, was completed on 18 December
2020. This resulted in a total of 4,488,314 shares being bought back at a cost of $2,656,843, at an
average of 59.19 cents per share.
On 3 February 2021 the Company announced a further On-Market Share Buy-Back for the period 19
February 2021 to 18 February 2022. As at 30 June 2021, a total of 1,033,417 shares have been bought
back at a cost of $555,741, an average of 53.78 cents per share.
During FY2021 the Company became a substantial holder of QFE, HUB, ST1, RFG, and lodged change
of interest of substantial holder notices for PRT, ISU, TNY, OVH, MNY, COG, DCG, MRM, QFE and
AS1.
A series of TOP Investor Briefings were held over a Webinar throughout the financial year. Investor
Briefing recordings can be viewed by clicking here.
7.
Financial position
The Company’s net tangible assets can be summarised as follows:
Net tangible asset backing per share
Net tangible assets
Shares on issue
Net tangible assets after tax per share
8.
Prospects
2021
$139,488,491
198,097,499
70.4 cents
2020
$122,093,889
200,071,679
61.0 cents
The Company remains committed to maintaining its disciplined approach to investing.
The Board is optimistic that, in this challenging economic environment, opportunities which may be
attractive to the Company will continue to emerge over the coming period.
9.
Material business risks
The Company’s risk management and compliance framework operated effectively throughout the
financial year ensuring that the two 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. Events subsequent to balance date
There were no events subsequent to balance date.
Thorney Opportunities Ltd 2021 Annual Report
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Directors’ report continued
11.
2021 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. There was no change in
remuneration during the period and annual fees paid to each Director have remained unchanged since
their appointment. The amount of base remuneration is not dependent 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 (Thorney Management Services Pty Ltd) 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 2021, the Investment Manager was entitled to:
•
a Base Fee of $2,293,734 (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 $5,669,005 (GST exclusive). 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 2021 Annual Report
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Directors’ report continued
11.
2021 Remuneration report (Audited) continued
(c) Details of Remuneration
Key Management Personnel (KMP) received the following remuneration amounts:
2021
Short term benefits
Fees
$
Other
$
Alex Waislitz
Ashok Jacob
Henry Lanzer¹
Dr Gary Weiss
Total KMP remuneration
0
50,000
54,750
50,000
154,750
2020
Short term benefits
Fees
$
Other
$
Alex Waislitz
Ashok Jacob
Henry Lanzer¹
Dr Gary Weiss
Total KMP remuneration
0
50,000
54,750
50,000
154,750
Post-employment
benefits
Superannuation
$
0
4,750
0
4,750
9,500
Post-employment
benefits
Superannuation
$
0
4,750
0
4,750
9,500
0
0
0
0
0
0
0
0
0
0
Total
$
0
54,750
54,750
54,750
164,250
Total
$
0
54,750
54,750
54,750
164,250
¹ Mr Lanzer’s fees are paid or payable to Arnold Bloch Leibler and exclude GST
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 for
the current or the prior year. Arnold Bloch Leibler is a legal firm of which Henry Lanzer is the managing
partner.
(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 $54,750 (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
Thorney Opportunities Ltd 2021 Annual Report
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Directors’ report continued
11.
2021 Remuneration report (Audited) continued
(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
2021
2020
2019
2018
2017
Earnings after tax
(PAT)
$
22,527,361)
(34,917,472)
12,045,578)
11,109,436)
20,189,353)
EPS
Share price
NTA (after tax)
(cents per share)
11.3)
(17.2)
5.9)
5.9)
11.9)
(cents per share)
54.5
47.0
67.0
69.0
69.5
(cents per share)
70.4
61.0
80.1
75.7
71.6
Earnings are for continuing operations only.
History of TOP Performance Last 5 Years
NTA
cps
100
90
80
70
60
50
40
2017
2019
2018
2021
2020
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
PAT
$M
NTA
Cumulative PAT since Thorney began as Investment Manager ($M)
Thorney Management Services Pty Ltd (Investment Manager) assumed investment management
responsibilities from 21 November 2013 pursuant to an Investment Management Agreement approved
by shareholders at the 2013 Annual General Meeting.
Thorney Opportunities Ltd 2021 Annual Report
Page | 13
Directors’ report continued
12. KMP relevant interests
The number of TOP ordinary shares held by directors and other KMP (or their associates) is as follows:
Balance
30 June
2019¹
Additions/
(Disposals) ¹
Balance
30 June
2020¹
Additions/
(Disposals)
¹
Balance
30 June
2021¹
60,160,052
1,061,846
125,700
9,971
Directors
Alex Waislitz²
Ashok Jacob
Henry Lanzer
Dr Gary Weiss
Other KMP
Thorney Management
Services Pty Ltd (TMS)²
¹ The table above includes relevant interests held directly, indirectly or by an associate.
² Pursuant to the Corporations Act 2001 (Cth), Alex Waislitz has a deemed relevant interest in the
ordinary shares of TOP held by Thorney Holdings Pty Ltd, Tiga Trading Pty Ltd, Jasforce Pty Ltd and
Waislitz Charitable Corporation Pty Ltd. TMS is an associate of Alex Waislitz and each of the foregoing
entities, so has been listed in the above table for completeness
60,160,052
1,061,846
125,700
9,971
60,160,052
1,061,846
125,700
9,971
60,160,052
60,160,052
60,160,052
-
-
-
-
-
-
-
-
-
-
There have been no changes in Directors’ relevant interests in shares since the end of the financial
year. All Directors have duly notified the Australian Securities Exchange in accordance with the
Corporations Act 2001 (Cth) of changes in their relevant interests.
13. Board and committee meetings
The number of Board meetings, including meetings of Board Committees, held during the year ended
30 June 2021 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
5
5
5
5
No. of
meetings
attended
5
3
5
4
No. of
meetings
held while
a Director
4¹
4¹
4¹
4¹
No. of
meetings
attended
4
3
4
4
Alex Waislitz
Ashok Jacob
Henry Lanzer
Gary Weiss
¹ Whilst Mr Jacob and Dr Weiss are not formal members of the Audit and Risk Committee they are
invited to attend each meeting. Mr Jacob and Dr Weiss attended committee meetings during the year.
14. Environmental regulation
The operations of TOP are not subject to any particular or significant environmental regulations under
a Commonwealth, State or Territory law.
Thorney Opportunities Ltd 2021 Annual Report
Page | 14
Directors’ report continued
15.
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.
16. Auditor’s independence declaration
The Auditor’s independence declaration, as required under section 307C of the Corporations Act
2001, is set out on page 16.
17. 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 15 to the financial statements on page 36 of this report.
There were no non-audit services performed by the Company’s auditor, Ernst & Young, during the 2021
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, 31 August 2021
Thorney Opportunities Ltd 2021 Annual Report
Page | 15
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 Ltd
As lead auditor for the audit of the financial report of Thorney Opportunities Ltd for the financial year
ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
Ernst & Young
Tony Morse
Partner
31 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 16
Corporate governance statement
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 2021 Corporate governance statement, which is available on the Company’s website here, we
detail how the Group adheres to the ASX Corporate Governance Principles and Recommendations 4th
Edition. Where there is non-adherence we disclose why TOP considers that it is necessary to take a
different approach. The updated 2021 statement was approved by the Board on 02 June 2021.
Thorney Opportunities Ltd 2021 Annual Report
Page | 17
Statement of comprehensive income
For the year ended 30 June 2021
Statement of comprehensive income Note
Income
Net changes in fair value of trading investments
Interest income
Dividend income
Other income
Total investment income/(loss)
Expenses
Management fees
Performance fees
Directors' fees
Finance costs
Fund administration and operational costs
Legal and professional fees
3
3
3
3
3
Other administrative expenses
Total expenses
2021
$
2020
$
36,556,039)
11,953)
2,190,663)
54,174)
38,812,829)
(50,690,301)
195,345)
3,369,179)
173,711)
(46,952,066)
(2,351,078)
(5,810,730)
(169,725)
(264)
(103,595)
(191,648)
(80,785)
(8,707,825)
(2,260,552)
-)
(169,725)
(557)
(110,525)
(189,225)
(61,498)
(2,792,082)
Profit/(loss) before income tax (expense)/benefit
Income tax (expense)/benefit
30,105,004)
(7,577,643)
(49,744,148)
14,826,676
4
Total comprehensive gain/(loss) for the year
22,527,361)
(34,917,472)
Basic and diluted gain/(loss) per share
13
11.31)
(17.24)
The statement of comprehensive income should be read in conjunction with the notes to the financial
statements.
2021
Cents
2020
Cents
Thorney Opportunities Ltd 2021 Annual Report
Page | 18
Statement of financial position
As at 30 June 2021
Statement of financial position
ASSETS
Currents assets
Cash and short-term deposits
Financial assets
Receivables
Prepayments
Total current assets
Non-current assets
Financial assets
Deferred tax assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Financial liabilities
Payables and accruals
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserve
Accumulated losses
TOTAL EQUITY
Note
2021
$
2020
$
6
7
9
7
4
2,710,406)
6,561,555)
125,310,737) 107,538,844)
106,540)
13,017)
1,005,613)
25,116)
129,051,872) 114,219,956)
22,314,588)
-)
6,375,000)
3,306,556)
22,314,588)
9,681,556)
151,366,460) 123,901,512)
7
10
26,388)
7,580,494)
-)
1,807,623)
7,606,882)
1,807,623)
4
4,271,087)
4,271,087)
-)
-)
11,877,969)
1,807,623)
139,488,491) 122,093,889)
11
12
102,356,034) 103,369,689)
135,763,063) 108,890,443)
(90,166,243)
(98,630,606)
139,488,491) 122,093,889)
The statement of financial position should be read in conjunction with the notes to the financial
statements.
Thorney Opportunities Ltd 2021 Annual Report
Page | 19
Statement of changes in equity
For the year ended 30 June 2021
Statement of changes in
equity
Balance at 1 July 2020
Issued
capital
$
103,369,689
)
Reserves
$
108,890,443)
Accumulated
losses
$
Total
equity
$
(90,166,243) 122,093,889)
Profit after tax for the year
Total comprehensive gain for the year
-)
-)
-)
-)
22,527,361)
22,527,361)
22,527,361)
22,527,361)
Transfer to Profits Reserve
Transactions with shareholders:
Dividends paid
Share Buy-back
Cost of Share buy-back
Total transactions with shareholders
Balance as at 30 June 2021
For the year ended 30 June 2020
-)
30,991,724)
(30,991,724)
-)
-)
(1,010,905)
(2,750)
(1,013,655)
102,356,034
(4,119,104)
-)
-)
(4,119,104)
-)
-)
-)
-)
(4,119,104)
(1,010,905)
(2,750)
(5,132,759)
) 135,763,063)
(98,630,606) 139,488,491)
Balance at 1 July 2019
Issued
capital
$
105,585,376
Reserves
$
88,486,055)
Accumulated
losses
$
Total
equity
$
(31,053,769) 163,017,662)
Loss after tax for the year
Total comprehensive loss for the year
-)
-)
-)
-)
(34,917,472)
(34,917,472)
(34,917,472)
(34,917,472)
Transfer to Profits Reserve
Transactions with shareholders:
Dividends paid
Share Buy-back
Cost of Share buy-back
Total transactions with shareholders
Balance as at 30 June 2020
-)
24,195,002)
(24,195,002)
-)
-)
(2,212,014)
(3,673)
(2,215,687)
(3,790,614)
-)
-)
(3,790,614)
103,369,689) 108,890,443)
(3,790,614)
(2,212,014)
(3,673)
(6,006,301)
(90,166,243) 122,093,889)
-)
-)
-)
-)
The statement of changes in equity should be read in conjunction with the notes to the financial
statements.
Thorney Opportunities Ltd 2021 Annual Report
Page | 20
Statement of cash flows
For the year ended 30 June 2021
Statement of cash flows
Cash flows from operating activities:
Interest received
)Dividends received
Proceeds from sale of trading investments
Payments for trading investments
Payments to suppliers and employees
Finance costs
Other income received
Net cash (used in)/ provided by operating activities
6
Cash flows from investing activities:
Proceeds from repayment of investments
Payment for long-term investments
Net cash provided by investing activity
Cash flows from financing activities:
Payment for Share Buy-Back costs
Payment for Share Buy-back
Dividends paid
Net cash (used in) financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the year
Cash at the end of the year
2021
$
2020
$
11,953)
2,293,118)
37,592,916)
(36,181,316)
(3,826,567)
(264)
54,174)
(55,986)
195,345)
3,266,724)
55,214,986)
(44,327,739)
(6,139,308)
(557)
173,711)
8,383,162)
1,750,000
(582,501)
1,167,499)
-)
-)
-)
(2,750)
(1,010,905)
(3,949,007)
(3,673)
(2,212,014)
(3,380,585)
(4,962,662)
(5,596,272)
(3,851,149)
6,561,555)
2,786,890)
3,774,665)
6
2,710,406)
6,561,555)
The statement of cash flows should be read in conjunction with the notes to the financial statements.
Thorney Opportunities Ltd 2021 Annual Report
Page | 21
Notes to the financial statements
Notes to the financial statements
1.
Corporate information
The financial statements of Thorney Opportunities Ltd and its subsidiary (collectively TOP or the
Company) for the year ended 30 June 2021 were authorised for issue in accordance with a resolution
of the directors on 31 August 2021.
Thorney Opportunities Ltd 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.
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.
COVID-19 pandemic – impact on value of investment
The global COVID-19 pandemic continues to create uncertainty in the economic environment within
which the Company operates. While the operations and controls of the Company have not been
adversely impacted by the pandemic, there are impacts being observed on the Company’s investment
portfolio. Further discussion on the effect of these impacts on the valuation of the Company’s
investments is contained in Note 7.
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 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions,
issued in June 2020, added paragraphs 46A, 46B, 60A, C20A and C20B. A lessee shall apply that
amendment for annual reporting periods beginning on or after 1 June 2020. Earlier application is
permitted, including in financial statements not authorised for issue at the date AASB 2020-4 was
issued.
This standard applies from 1 July 2021 has not had an impact on the Company as the Company
currently does not have lease arrangements where the Company acts as lessee.
Thorney Opportunities Ltd 2021 Annual Report
Page | 22
Notes to the financial statements continued
2.1 Summary of accounting policies continued
Standards issued that might have an impact but not yet effective
The Company has not applied any Australian Accounting Standards or AASB Interpretations that have
been issued as at balance date but are not yet effective for the year ended 30 June 2021.
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-current. This Standard amends AASB 101 Presentation of Financial Statements (July 2015) as
a consequence of the issuance of International Financial Reporting Standard Classification of Liabilities
as Current or Non-current (Amendments to IAS 1) by the International Accounting Standards Board
(IASB) in January 2020. This Standard now applies to annual reporting periods beginning on or after 1
January 2023, deferred from 1 January 2022. Implementation of this standard is not expected to have
a significant impact on the Company and its financial reporting disclosures.
AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform –
Phase 2, which amended AASB 4, AASB 7, AASB 9, AASB 16 and AASB 139, issued in September
2020, added paragraphs 104–106 and C20C–C20D. An entity shall apply these amendments for annual
reporting periods beginning on or after 1 January 2021. Earlier application is permitted. If an entity
applies these amendments for an earlier period, it shall disclose that fact. Implementation of this
standard is not expected to have a significant impact on the Company and its financial reporting
disclosures.
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018–2020
and Other Amendments. This Standard amends: (a) AASB 1 First-time Adoption of Australian
Accounting Standards (July 2015); (b) AASB 3 Business Combinations (August 2015); (c) AASB 9
Financial Instruments (December 2014); (d) AASB 116 Property, Plant and Equipment (August 2015);
(e) AASB 137 Provisions, Contingent Liabilities and Contingent Assets (August 2015); and (f) AASB
141 Agriculture (August 2015); as a consequence of the issuance by the International Accounting
Standards Board in May 2020 of the following International Financial Reporting Standards: (g) Annual
Improvements to IFRS Standards 2018–2020; (h) Reference to the Conceptual Framework
(Amendments to IFRS 3); (i) Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16); and (j) Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS
37). This Standard applies to annual periods beginning on or after 1 January 2022. The amendments
to individual Standards may be applied early, separately from the amendments to the other Standards.
These amendments are not expected to have a significant impact on the Company.
(b) Basis of consolidation
The Company meets the definition of an Investment Entity under AASB 10 Consolidated Financial
Statements, as it meets the following criteria:
•
•
•
the Company obtains funds from shareholders for the purpose of providing them with investment
management services;
the Company’s business purpose, which it communicated directly to shareholders, is investing
solely for returns from capital appreciation and investment income; and
the performance of investments made by the Company are measured and evaluated on a fair
value basis.
The Company meets all the typical requirements of an investment entity.
The Company has determined that for any entities it controls or has significant influence over, that do
not provide investment related services to the Company, consolidated financial statements are not
required. The Company’s investments in these entities are measured at fair value through profit and
loss in accordance with AASB 9.
Thorney Opportunities Ltd 2021 Annual Report
Page | 23
Notes to the financial statements continued
2.2 Accounting judgements and estimates
The preparation of the Company’s financial statements requires management to make judgements,
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. Further
information is provided in note 7.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits, together with future tax planning strategies. Further
details are provided in note 4.
Thorney Opportunities Ltd 2021 Annual Report
Page | 24
Notes to the financial statements continued
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, principally for the purpose of generating capital appreciation. 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.
(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.
The Company includes in this category equity instruments. Equity instruments include investments in
subsidiaries and associates. The following is noted:
•
•
Investment in subsidiaries: in accordance with the exemption under AASB 10, investments in
subsidiaries are not consolidated, unless the subsidiary does not meet this exemption because
it performs services that relate to the investment activity of the Company. Otherwise the
Company measures unconsolidated subsidiaries at fair value through profit and loss.
Investment in associates: in accordance with the exemption in AASB 128 Investment in
Associates and Joint Ventures, the Company does not account for its investments in associates
using the equity method. Instead the Company measures its investments in associates through
fair value through profit and loss.
Thorney Opportunities Ltd 2021 Annual Report
Page | 25
Notes to the financial statements continued
2.3 Summary of significant accounting policies continued
a)
Financial instruments continued
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.
(v) Subsequent measurement
After initial measurement, the Company remeasures financial instruments which are classified as at fair
value through profit or loss at fair value (see note 7). 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’.
Thorney Opportunities Ltd 2021 Annual Report
Page | 26
Notes to the financial statements continued
2.3 Summary of significant accounting policies continued
b)
Fair value measurement
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 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
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 comprehensive income.
Thorney Opportunities Ltd 2021 Annual Report
Page | 27
Notes to the financial statements continued
2.3 Summary of significant accounting policies continued
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 is presented as defined
above, net of outstanding bank overdrafts.
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 liabilities are recognised for all taxable temporary differences, except:
i. When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss
ii. In respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint arrangements, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in
the foreseeable future
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Thorney Opportunities Ltd 2021 Annual Report
Page | 28
Notes to the financial statements continued
2.3 Summary of significant accounting policies continued
Profits reserve
i)
The profits reserve is made up of amounts transferred from current and retained earnings that are
preserved for future dividend payments.
Due to and due from brokers
j)
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)
k)
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.
3.
Total investment income
The major components of investment income in the Statement of comprehensive income are:
2021
$
2020
$
9,178,782
21,216,453)
6,793,438
(18,093,306)
Net realised gains of trading investments1
Gain/(loss) that had been unrealised in prior period for trading
investments which were realised in the reporting period2
Unrealised gain/(loss) for change in fair value of trading
investments
Net changes in fair value of trading investments
Interest income
Dividend income
Other income
Total investment income/(loss)
(53,813,448)
(50,690,301)
195,345)
3,369,179)
173,711)
(46,952,066)
1 Net realised gains of trading investments is the difference between the selling price and the cost of the
investments bought and sold during the reporting period.
2 Gain/(loss) that had been unrealised in prior period for trading investments which were realised in the reporting
period, represents the 30 June 2020 unrealised fair value adjustments of investments sold in the reporting period.
20,583,819
36,556,039
11,953
2,190,663
54,174
38,812,829
Thorney Opportunities Ltd 2021 Annual Report
Page | 29
Notes to the financial statements continued
4.
Income tax
The income tax expense attributable to the year differs from the prima facie amount payable on the
profit before tax. The difference is reconciled as follows:
Current tax
Current income tax expense
Deferred tax
Origination and reversal of temporary differences
Income tax expense/(benefit) recognised in the Statement of
comprehensive income
Imputation credits converted to losses
Imputation credits on dividends received
Profit/(loss) before income tax (expense)/benefit
Prima facie tax expense on profit from ordinary activities
before income tax expense at 26% (2020: 30%)
Deferred income tax expense
-
-
Prior period adjustment
Adjustment for change in corporate tax rate
Adjustment for trading stock and long term investments
Other
Income tax (expense)/ benefit recognised in the
Statement of comprehensive income
2021
$
2020
$
498,754)
761,829)
7,078,889)
(15,588,505)
7,577,643)
(14,826,676)
30,105,004)
(49,744,148)
(7,827,301)
14,923,244)
921,646)
(239,628)
(286,650)
(1,437,673)
1,299,195)
(7,232)
1,361,005)
(408,302)
4,065)
874,261)
(1,930,072)
2,475)
(7,577,643)
14,826,676)
Deferred tax
Trading stock
Long term financial assets
Business establishment costs
Other
Losses available for offsetting against future taxable income
Net deferred tax (liability)/ asset
(9,644,193)
(4,147,217)
25,782)
13,421)
9,481,120)
(4,271,087)
(7,550,212)
-
57,737)
16,480)
10,782,551)
3,306,556)
At 30 June 2021, the Company has estimated gross revenue tax losses of $36,465,846 (2020:
$35,941,837) that are available to offset against future taxable revenue profits, subject to continuing to
meet relevant statutory tests and have been recognised as a deferred tax asset.
In assessing the probability of the future realisation of carry forward tax losses and the extent to which
a deferred tax asset for carry forward losses is to be recognised, the Company has considered market
conditions existing at 30 June 2021 and has considered future economic uncertainties in the Company’s
forecast.
At 30 June 2021 the Company did not exceed the ATO Base Rate Entity (BRE) Aggregate turnover
threshold of $50 million, therefore Company applies a 26% tax rate in the current financial year (2020:
30%).
At 30 June 2021, the Company has estimated unused gross capital tax losses of $30,714,821 (2020:
$30,714,821) for which no deferred tax asset has been recognised.
Thorney Opportunities Ltd 2021 Annual Report
Page | 30
Notes to the financial statements continued
5.
Dividends
(a) Final Dividend FY 2021 not recognised at year end
Since the end of the year, the Directors have declared a final
dividend of 1.35 cents per share fully franked at 26% tax rate
which has not been recognised as a liability at the end of the
year (2020: 1.27 cents per share)
(b) Dividend franking account
Balance at 1 July
Franking credits received on dividends from investments
Franked dividends paid during the period
Balance at 30 June
Subsequent to reporting period, the franking account will
reduce by the dividend proposed above
2021
$
2020
$
2,674,316)
2,540,910)
1,506,812)
980,984)
(1,768,302)
719,494)
1,640,333)
1,361,005)
(1,494,526)
1,506,812)
939,625)
1,088,962)
(220,131)
417,850)
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.
The Company expects to receive sufficient franking credits during FY22 so it can pay a fully franked
FY21 Final dividend.
6.
Cash and short-term deposits
Cash at bank
Total cash and short-term deposits
2021
$
2,710,406
2,710,406
2020
$
6,561,555
6,561,555
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 after tax to net cash provided by operating activities:
Total comprehensive gain/(loss) for the year
22,527,361)
(34,917,472)
Adjustments for non-cash items:
Unrealised component of change in fair value of investments
Net gain on disposal of investments
(27,377,257)
-
71,906,754)
-)
2021
$
2020
$
Changes in Assets & Liabilities:
(Increase) in receivables
(Increase) in financial assets
(Increase) in other assets
Increase/ (decrease) in creditors & accrued
expenses
Increase/ (decrease) in other financial liabilities
Increase/ (decrease) in deferred tax liabilities
Net cash (used in)/ provided by operating activities
(899,073)
(7,521,918)
(12,099)
5,602,774)
(105,426)
(10,315,605)
(1,210)
(3,343,602)
46,583)
7,577,643)
(55,986)
(13,601)
(14,826,676)
8,383,162)
Thorney Opportunities Ltd 2021 Annual Report
Page | 31
Notes to the financial statements continued
7.
Fair value measurement
To reflect the source of valuation inputs used when determining the fair value of its financial assets and
financial liabilities, the Company uses the fair value hierarchy prescribed in AASB 13 Fair Value
Measurement:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: valuation techniques using market observable inputs, either directly or indirectly.
Level 3: valuation techniques using non-market observable data.
The Company invests in both listed and unlisted investments, in order to execute its investment
mandate. Listed investments include listed equities and listed derivatives. Unlisted investments
include private equity businesses, where the Company invests in financial instruments such as
unlisted equities, loan notes and derivatives that are not quoted in an active market.
Listed investments trading in an active market are valued based upon quoted market prices at each
balance sheet date. A market is regarded as active if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions on an arm’s length basis. The fair
value of listed equities that are actively trading in an active market at 30 June 2021 are classified as
Level 1.
Unlisted financial assets are valued at fair value in accordance with AASB 13 Fair Value Measurement,
applying the principles in ‘International Private Equity and Venture Capital Valuation Guidelines’.
When there is no observable market data available, the Company uses market-based valuation
techniques to determine fair value. The fair value of these investments are classified as Level 3.
The fair value measurement hierarchy of the Company’s financial assets and financial liabilities is as
follows:
Assets measured at fair value
Level 1: Listed equities
Level 3: Long-term financial assets
- 20 Cashews Pty Ltd (20C)
- Other
Total long-term financial assets
Total financial assets
Total current
Total non-current
Liabilities measured at fair value
Level 1: Exchange traded options
Total financial liabilities
Key inputs and sensitivities
2021
$
2020
$
125,310,737
107,538,844
21,500,000
814,588
22,314,588
147,625,325
125,310,737
22,314,588
6,375,000
-
6,375,000
113,913,844
107,538,844
6,375,000
26,388
26,388
-
-
The largest long-term financial asset is represented by the 25% ownership interest in 20 Cashews Pty
Ltd (20C) which holds an underlying investment in the Australian Community Media Group (ACM)
(incorporated in Australia). The fair value of TOP’s investment in 20C is represented by the relative
fair values of ACM (82%), shares in Prime Media Group Limited (15%), Independent Media Publishers
Pty Ltd (IMP) investments, including investment holdings in realestateview.com.au, Beevo and Propic
(3%).
Thorney Opportunities Ltd 2021 Annual Report
Page | 32
Notes to the financial statements continued
The fair value of Prime Media Group Limited, Independent Media Publishers Pty Ltd are based on
observable market inputs. The fair value of ACM is determined by a discounted cash flow model
(DCF) of the ACM operating business at 30 June 2021.
The DCF valuation includes inputs to the valuation that are considered Level 3 of the fair value
hierarchy as the DCF valuation requires assumptions to be made to determine certain inputs that are
not based on observable market data.
At reporting date, the key unobservable inputs used by the Company within its DCF valuation in
determining the fair value of the ACM business, together with a quantitative sensitivity analysis as at
30 June 2021 is summarised below:
Key inputs and sensitivities
Unobservable
inputs
Description
EBITDA
margin
Long-term
growth rate
Weighted
average cost of
capital
(WACC)
The EBITDA margin represents the ACM's earnings
before interest, tax, depreciation, and amortisation as a
percentage of the ACM's total revenue.
A long-term growth rate of 0% is used to extrapolate the
cash flows of the business beyond the five-year forecast
period.
The WACC (post-tax) of 15% is used to convert the
forecast cash flow into present value terms. The WACC
takes into account both the cost of debt and equity.
Business-specific risk are incorporated by applying beta
factors evaluated based on publicly available market data.
Sensitivity of the input to the
fair value calculation
1% increase
1% decrease
$3.2 million
($3.2 million)
1% increase
1% decrease
$0.7 million
($0.6 million)
1% increase
1% decrease
($1.0 million)
$1.1 million
At 30 June 2021 the global economy continues to be impacted by the COVID-19 pandemic and the
duration and extent of these impacts on the unlisted investment fair values were highly uncertain.
These factors meant that there was estimation uncertainty in determining key inputs into the fair value
of level 3 investments at 30 June 2021.
Level 3 transfers
For assets and liabilities that are recognised at fair value on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period. Reconciliation of recurring fair value measurements
categorised within Level 3 is as follows:
Financial assets: Level 3
Balance at 1 July 2020
Unrealised gain recognised in statement of
comprehensive income
Redemption of convertible notes
Long-term financial asset additions
Balance at 30 June 2021
Balance at 1 July 2019
Unrealised loss recognised in statement of
comprehensive income
Balance at 30 June 2020
Thorney Opportunities Ltd 2021 Annual Report
Financial
assets
(20C)
6,375,000)
16,875,000)
(1,750,000)
-)
21,500,000)
7,500,000)
(1,125,000)
6,375,000)
Financial
assets
(other)
-
Total
6,375,000)
232,087 17,107,087)
(1,750,000)
-
582,501
582,501)
814,588 22,314,588)
-
-
-
7,500,000)
(1,125,000)
6,375,000)
Page | 33
Notes to the financial statements continued
8.
Financial assets
Financial assets at fair value through profit or loss
Listed equities¹ and options and unlisted equities, notes and
warrants²
Total financial assets
Total current
Total non-current
2021
$
2020
$
147,625,325
113,913,844
125,310,737
22,314,588
107,538,844
6,375,000
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).
² Measured at fair value using Directors’ valuations which are deemed a Level 3 input under the fair
value hierarchy as prescribed in AASB 13.
9.
Receivables
Outstanding settlement
Dividend clearing
Sundry debtor
GST
Total receivables
2021
$
1,004,943
-
-
670
1,005,613
2020
$
-
102,455
2,500
1,585
106,540
Outstanding settlements include amounts receivable from brokers for settlement of security purchases
and are settled within 2 days of the transaction. The carrying value of receivables approximates fair
value.
10. Payables
Management fee accrual
Performance fee accrual
Dividend payable
Outstanding settlements
Sundry creditors and accruals
Total payables
2021
$
1,170,094
5,810,730
223,286
281,990
94,394
7,580,494
2020
$
952,493
-
455,525
291,847
107,758
1,807,623
The Management Fee and Performance Fee are accrued in line with the terms of the Investment
Management Agreement and paid within 60 days of receiving an invoice from the Investment
Manager. The accrual includes GST after deduction of the reduced input tax credit
Dividend payable represents unsettled dividend payments to shareholders at year end, which are non-
interest bearing and unsecured. Outstanding settlements include amounts due to brokers for
settlement of security purchases and are settled within 2 days of the transaction. Sundry creditors are
generally paid in accordance with the terms negotiated with each individual creditor.
The carrying value of payables approximates fair value.
Thorney Opportunities Ltd 2021 Annual Report
Page | 34
Notes to the financial statements continued
11.
Issued capital
2021
Number of
shares
2020
Number of
shares
2021
2020
$
$
200,071,679)
203,619,230)
103,369,689) 105,585,376)
(1,974,180)
-)
(3,547,551)
-)
(1,010,905)
(2,750)
(2,212,014)
(3,673)
198,097,499)
200,071,679)
102,356,034) 103,369,689)
(a) Ordinary shares
Balance at 1 July
Ordinary shares issued:
Share buy-back
Costs of buy-back
Total issued and authorised
capital
(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) Capital Management
The Board manages and regularly reviews the Company’s capital, ensuring that it is deployed
in the most efficient manner in order to maximise shareholder value. This involves the Board
making decisions in relation to the level of distributions, share buy-backs and other capital
management initiatives. The Company is not currently subject to any capital requirements
imposed by an external party.
(iii) Share buy-back
On 5 December 2019, the Company announced an on-market share buy-back which
commenced 19 December 2019 and completed on 18 December 2020 of the eligible 20,361,923
shares to be bought back, TOP bought back 4,488,314 shares at a cost of $2,656,843, an
average of 59.19 cents per share.
On 3 February 2021 the Company announced a further On-Market Share Buy-Back for the
period 19 February 2021 to 18 February 2022. Total eligible shares to be bought back are
16,202,141, in line with ‘10/12’ limit prescribed by the Corporations Act 2001 (Cth). The on-
market buy-back does not require shareholder approval. At 30 June 2021 a further 1,033,417
shares had been bought back, with 15,168,724 shares remaining to be purchased.
12. Reserve
Profits reserve
Movement in profits reserve:
Balance at 1 July
Transfers from retained earnings
Dividends paid
Balance at 30 June
2021
$
135,763,063)
2020
$
108,890,443)
108,890,443)
30,991,724)
(4,119,104)
135,763,063)
88,486,055)
24,195,002)
(3,790,614)
108,890,443)
The profits reserve details an amount preserved for future dividend payments.
Thorney Opportunities Ltd 2021 Annual Report
Page | 35
Notes to the financial statements continued
13. Earnings per share
Basic and diluted earnings/(loss) per share (cents)
11.31
(17.24)
Earnings/(loss) used in calculating basic and diluted earnings
per share ($)
22,527,361
(34,917,472)
2021
2020
Weighted average number of ordinary shares used in
calculating basic and diluted earnings per share
14. Financial reporting by segments
2021
Number
of Shares
2020
Number
of shares
199,180,997
202,489,035
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.
15. Auditor’s remuneration
Remuneration of the auditor for:
Audit and review of financial reports
2021
$
2020
$
67,500
69,410
Thorney Opportunities Ltd 2021 Annual Report
Page | 36
Notes to the financial statements continued
16. 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.
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. This is except for the investment in unlisted
investments, which represent 15% (2020: 6%) of total investments.
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 and unlisted 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 and unlisted equity securities at fair value was $147,625,325
(2020: $113,913,844). A decrease of 10% in share value of securities held could have an impact of
approximately $14,762,532 (2020: $11,391,384) 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 2021 Annual Report
Page | 37
Notes to the financial statements continued
16. 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.
17. 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 2021:
Services from and reimbursements to related parties¹
Entities with significant influence over the Company:
Thorney Management Services Pty Ltd
TIGA Trading Pty Ltd
Related parties of key management personnel of the
Company:
Arnold Bloch Leibler
¹ All related party transaction amounts are shown exclusive of GST
2021
$
2020
$
7,962,739
52,000
2,205,416
52,000
57,661
60,639
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
2021 a base fee of $2,293,734 (2020: $2,205,416) and a performance fee of $5,669,005 (2020: $0)
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 2021 financial year (2020: $52,000).
TMS, TIGA Trading Pty Ltd, Thorney Holdings 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).
TOP frequently co-invests in financial assets alongside Thorney Investment Group, some other private
entities controlled by Alex Waislitz and Thorney Technologies Ltd (TEK). All these entities are
‘associates’ in respect of TOP pursuant to section 12(2)(a)(iii) of the Act by virtue of them being
commonly controlled by Mr Alex Waislitz who, pursuant to section 50AA of the Act, has the capacity to
determine the outcome of decisions about the financial and operating policies of each of these entities.
Where the combined shareholding of the associates exceeds 5% of the voting shares of a listed
investee entity, TOP lodges its own substantial shareholder notice with the ASX pursuant to section
671B of the Act.
While the Investment Manager maintains a primary buy/hold/sell strategy for each managed investee
company, from time to time an investee company may, for commercial reasons such as cash flow or
tax management, execute a trade with a divergent view. To mitigate any actual, perceived or potential
conflicts of interest, the Investment Manager maintains a register which is regularly presented to the
Board via compliance reports.
Thorney Opportunities Ltd 2021 Annual Report
Page | 38
Notes to the financial statements continued
17. 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 $2,911 (2020: $5,889).
In accordance with the terms of Mr Lanzer’s appointment, a payment of $54,750 was paid or payable
to Arnold Bloch Leibler as remuneration for his role as a Director of the Company (2020: $54,750).
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
2021
$
154,750)
9,500)
164,250)
2020
$
154,750)
9,500)
164,250)
18. Contingent liabilities and commitments
The Company has no contingent liabilities or commitments as at 30 June 2021.
19. Events subsequent to balance date
There were no events subsequent to balance date.
20. Parent entity information
The parent entity information is materially consistent with the financial information as the Company’s
unconsolidated subsidiary has not commenced trading.
21. Group information
The parent entity is Thorney Opportunities Ltd and its unconsolidated subsidiary is detailed in the
following table:
Name of entity
Subsidiary
87 Truca Pty Ltd
Country of
incorporation
Australia
Ownership
2021
100%
2020
100%
Thorney Opportunities Ltd 2021 Annual Report
Page | 39
Directors’ declaration
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 2021 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the entity’s financial position as at 30 June 2021 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 2021.
On behalf of the Board,
Alex Waislitz
Chairman
Melbourne, 31 August 2021
Thorney Opportunities Ltd 2021 Annual Report
Page | 40
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
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Independent Auditor's Report to the Members of Thorney Opportunities
Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Thorney Opportunities Ltd (the Company), which comprises
the statement of financial position as at 30 June 2021, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Company's financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Company in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 41
2
Fair value measurement and existence of investments
Why significant
How our audit addressed the key audit matter
The Company invests in listed and unlisted
financial assets valued at $147.6 million at
30 June 2021, which represents 97.5% of the total
assets of the Company.
The investment portfolio includes $125.3 million of
listed equities and $22.3 million equity
investments in unlisted companies.
As outlined in Note 7 to the financial report, these
assets are carried at fair value through profit and
loss. Fair value is assessed based on quoted
(unadjusted) prices in active markets at reporting
date for listed equities and through a discounted
cash flow model for the unlisted equity investment.
The assumptions used in the discounted cash flow
model require judgement, based on conditions
existing and emerging at 30 June 2021.
The fair value measurement and existence of
investments is a key audit matter because it
represents a principal element of the Company’s
total assets due to its size and the judgement
involved in measuring the unlisted investment.
Our audit procedures included the following:
► For the listed equity investments:
► Obtained and considered the independent
assurance report that describes the
effectiveness of the operational processes
and controls of the Company’s asset
custodian.
► Agreed the quantity of all listed equity
investments to the custodial statement.
► Agreed the fair value of all equity
investments to market closing prices at
reporting date.
► With the assistance of our valuation and
modelling specialists, for the equity investment
in an unlisted company we:
►
Evaluated the reasonableness of key
assumptions applied in the discounted cash
flow model.
► Assessed the key inputs such as discount
rates, forecast cash flows and terminal
growth rate and agreed these inputs to
supporting documents, where applicable.
►
Tested the mathematical accuracy of the
discounted cashflow model.
► Benchmarked market multiples to
observable external market data from
comparable entities.
► Assessed the adequacy of the disclosures
included in Note 7 to the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 42
3
Investment management and performance fees
Why significant
How our audit addressed the key audit matter
The Company pays its Investment Manager,
Thorney Management Services Pty Ltd (TMS), a
related party, fees as stipulated in the Investment
Management Agreement (IMA). There is a base
management fee of 0.75% of gross assets and a
performance fee of 20% of the increase in net
asset value net of base management fee for the
year. The base management fee is calculated half
yearly while the performance fee is calculated on
an annual basis.
For the year ended 30 June 2021, a base
management fee of $2.3 million and a
performance fee of $5.8 million were recognised.
Investment management and performance fees is a
key audit matter because they are of interest to
key stakeholders as they represent significant
expenses that reduce the net tangible assets of the
Company and paid to a related party.
Our audit procedures included the following:
► Determined whether the calculation of the
base management fee and performance fee
expenses were in accordance with the IMA.
► Agreed key inputs used in the base
management fee and performance fee
calculations, including gross assets, in the case
of base management fees, and the net asset
increase, in the case of performance fees, to
the statement of financial position.
► Recalculated the base management fee and
performance fee and compared the
recalculated amounts to the expenses
recognised in the statement of comprehensive
income.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s Annual Report for the year ended 30 June 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 43
4
In preparing the financial report, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 44
5
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 13 of the directors' report for
the year ended 30 June 2021.
In our opinion, the Remuneration Report of Thorney Opportunities Ltd for the year ended
30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Tony Morse
Partner
Melbourne
31 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Thorney Opportunities Ltd 2021 Annual Report
Page | 45
Shareholder information
Shareholder information
As at 30 August 2021
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 PROPRIETARY LIMITED
RUBI HOLDINGS PTY LTD
TIGA TRADING PTY LTD
ELPHINSTONE HOLDINGS PTY LTD
HUONCAN SUPER PTY LTD
LANGBURGH PTY LTD
MRS NOLA ISABEL CRIDDLE
HUON CANNING CO PTY LTD
PERPETUAL CORPORATE TRUST LTD
TAMIT NOMINEES PTY LTD
AUSTIN SUPERANNUATION PTY LTD
KINSBROOK PTY LTD
CASTLE FARMS PTY LTD
CITICORP NOMINEES PTY LIMITED
PICTON COVE PTY LTD
BLACKCAT HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DEEMCO PTY LIMITED
DENATA PTY LTD
TRONES INVESTMENTS PTY LTD
Substantial shareholders
Name
THORNEY HOLDINGS PROPRIETARY LIMITED
RUBI HOLDINGS PTY LTD
Ordinary)
Shareholders)
321)
413)
231)
884)
227)
2,076)
229)
Number)
of)
shares)
52,684,531
21,000,000
6,570,159
5,780,000
3,243,437
2,500,000
1,750,000
1,661,004
1,514,517
1,352,025
1,344,068
1,210,000
1,140,000
1,120,101
1,117,469
1,055,000
1,015,770
956,850
900,000
870,833
% of
issued
capital
26.59%
10.60%
3.32%
2.92%
1.64%
1.26%
0.88%
0.84%
0.77%
0.68%
0.68%
0.61%
0.58%
0.57%
0.56%
0.53%
0.51%
0.48%
0.45%
0.44%
Number)
of)
shares)
60,160,052
21,000,000
Voting
Power
%
30.37%
10.60%
Thorney Opportunities Ltd 2021 Annual Report
Page | 46
Shareholder information continued
List of investments
Money3 Corporation Ltd
MMA Offshore Ltd
AMA Group Ltd
Southern Cross Electrical Engineering Ltd
Consolidated Operations Group Ltd
Austin Engineering Ltd
Decmil Group Limited
Palla Pharma Ltd
Retail Food Group Ltd
Ardent Leisure Group
Service Stream Ltd
EarlyPay Ltd (was CML Group Ltd)
Cooper Energy Ltd
Mesoblast Ltd
Tinybeans Group Ltd
Spirit Telecom
Other listed investments
Total listed investments
Australian Community Media Group
Other
Total unlisted investments
Total investments
Fair value
as at
30 June 2021
$
29,312,500
12,984,169
10,498,772
8,555,561
7,223,200
7,171,838
6,991,586
6,940,564
6,194,373
5,990,592
5,069,185
4,086,747
2,313,581
1,757,511
1,529,370
1,352,118
7,370,324
125,341,991
21,500,000
783,334
22,283,334
147,625,325
Thorney Opportunities Ltd 2021 Annual Report
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Thorney Opportunities Ltd 2021 Annual Report
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