Annual Report For the Financial Year Ended 30 June 2021 Ultima United Limited - Annual Report For the year ended 30 June 2021 CONTENTS 2 PAGE Corporate Directory 3 Directors’ Report 4 Auditor’s Independence Declaration 13 Statement of Profit or Loss and Other Comprehensive Income 14 Statement of Financial Position 15 Statement of Changes in Equity 16 Statement of Cash Flows 17 Notes to the Financial Statements 18 Directors’ Declaration 37 Independent Auditor’s Report to the Members of Ultima United Limited 38 Additional Shareholder Information 42 Ultima United Limited - Annual Report For the year ended 30 June 2021 CORPORATE DIRECTORY 3 EXECUTIVE CHAIRMAN & MANAGING DIRECTOR Jonathan Cheng EXECUTIVE DIRECTOR Cheng Yan Marcus Goh NON-EXECUTIVE DIRECTORS Lo Yew Seng Tome Jongue COMPANY SECRETARY Cheng Yan Marcus Goh PRINCIPAL & REGISTERED OFFICE Suite 14,11 Preston Street COMO, WA 6152 Telephone: (08) 6436 1888 Facsimile: (08) 9367 3311 AUDITORS Moore Australia Audit (WA) Level 15 Exchange Tower, 2 The Esplanade PERTH WA 6000 SHARE REGISTRAR Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9262 3723 SECURITIES EXCHANGE LISTING Australian Securities Exchange (Home Exchange: Perth, Western Australia) Codes: UUL Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 4 The directors of Ultima United Limited (the “Company”) submit herewith the financial report of the Company for the financial year ended 30 June 2021. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: 1) BOARD OF DIRECTORS The names and details of the Company’s directors in office during and since the financial year end until the date of the report are as follows. Directors were in office for the entire period unless otherwise stated. Directors Position Jonathan Cheng Executive Chairman & Managing Director (appointed 21 July 2020) Cheng Yan Marcus Goh Executive Director (appointed 14 June 2021) Lo Yew Seng Non-Executive Director (appointed 14 September 2020) Tome Jongue Non-Executive Director (appointed 14 June 2021) Eric Kong Executive Director (resigned 14 June 2021) Piers Lewis Non-Executive Director (resigned 14 June 2021) Li Yi Non-Executive Director (resigned 10 September 2020) (Simon) Xing Yan Executive Chairman & Managing Director (resigned 20 July 2020) 2) INFORMATION ON DIRECTORS Jonathan Cheng Executive Chairman & Managing Director (appointed 21 July 2020) Non-Executive Director (appointed 24 June 2020 until 21 July 2020) Experience Jonathan’s wealth of experience spans two decades in starting up new enterprises with the last 15 years spent focusing on private equity. Having spearheaded many successful projects, Jonathan’s expertise, and acumen, especially in the Asia-Pacific region, has been described as unparalleled. Mr Cheng sits on multiple boards, across various industries. He holds a double masters degrees in Business Administration and Economics. Interest in Shares 12,682,987 Interest in Options Nil Cheng Yan Marcus Goh Executive Director (appointed 14 June 2021) Experience Mr Goh has experience acting as a business analyst to a number of national insurers and he provided financing, business solutions, industry research regarding deal origination to help grow and propel the business. Mr Goh has completed his Masters of Business administration in 2013. Interest in Shares Nil Interest in Options Nil Lo Yew Seng Non-Executive Director (appointed 14 September 2020) Experience Mr Lo is the founder and director Capella Capital and Capella Management (the “Capella Group”), providing advisory and international venture capital funding. Testament to his expertise, Mr Lo sits on the board of Ban Leong Technologies Ltd and CWT Pte Ltd. Mr Lo has experience in a number of positions in AXIS Communications, a Swedish listed MNC. Mr Lo holds a Bachelor’s degree in Arts and Social Sciences from the National University of Singapore, majoring in Economics. Interest in Shares Nil Interest in Options Nil Tome Jongue Non-Executive Director (appointed 14 June 2021) Experience Mr Jongue has served as a director in Inpac Holdings Pty Ltd in WA and is responsible for managing a number of residential and industrial properties. Mr Jongue is a highly experienced property manager and is well versed in handling tenants, property maintenance, fee collections and property inspections. Mr Jongue has qualifications in business administration. Interest in Shares Nil Interest in Options Nil Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 5 Eric Kong Executive Director (resigned 14 June 2021) Experience Mr. Kong holds an MBA from the University of Western Australia and has extensive corporate experience with Fortune 500 companies. He served in Solectron’s supply chain management division where he often worked with top tier clients that include IBM, Cisco, Sun Microsystems and Lucent Technologies. He then served as Asia Pacific regional accounts manager for Molex; being responsible for business strategy, development and growth in the highly competitive electronics contract manufacturing industry. He is the founder and former director of Altis West; a business consulting firm managing Chinese joint ventures in Australian mining and property sectors. Mr Kong is an experienced manager with intricate knowledge of global business models, trends and high-level expertise in both eastern and western management styles. Interest in Shares 35,775 (at date of resignation) Interest in Options Nil (at date of resignation) Li Yi Non-Executive Director (resigned 10 September 2020) Experience Mr. Yi is a graduate of Southeast University of China and has extensive international state- enterprise investment exposure. He is a national (China) registered consulting engineer for investment. In 1995, Mr. Yi was appointed as General Manager (Legal representative) for Beijing Desheng Power Engineering Consulting COR, and Director of the China Engineering Consulting Company. In 2004 he served as deputy Chief Engineer of North China Electric Power. During this tenure, Mr. Yi was responsible for the engineering, procurement and construction (EPC) development of many domestic and overseas power projects. He was also in charge of developing overseas power engineering markets such as Singapore, Nigeria, the United Arab Emirates and Belarus as well as the implementation of many key national electric power projects throughout China. Interest in Shares 1,895,000 (at date of resignation) Interest in Options Nil (at date of resignation) Piers Lewis Non-Executive Director, Joint Company Secretary (resigned 14 June 2021) Experience Mr Lewis is an experienced executive, board director and team leader, with a diverse background in the resources, banking and technology sectors. In 2011 Piers founded Smallcap Corporate, a corporate advisory services company. Piers currently serves as chairman of Cycliq Group Limited (ASX: CYQ) and Lustrum Minerals Limited (ASX: LRM), and is company secretary for Grange Resources. Mr Lewis is a Chartered Accountant and fellow of the Governance Institute. Interest in Shares Nil (at date of resignation) Interest in Options Nil (at date of resignation) (Simon) Xing Yan Executive Chairman & Managing Director (resigned 20 July 2020) Experience Mr Yan has over 30 years of senior level management experience in international mining trade. He was part of the management team of China National Minerals and Metals Import & Export Corporation (MINMETALS). Mr Yan migrated to Western Australia where he established numerous import export businesses. Mr Yan developed a number of commercial properties, including “Woodsons” (formerly Parry’s Department Store) in Fremantle and Huntingdale Village Shopping Centre. Mr Yan was also a licensed real-estate agent for nearly 20 years, which provided him with a deep knowledge of the Western Australian property market. Mr Yan is widely sought after as a consultant for international trade issues due to his broad contacts and knowledge of Chinese and Australian business systems. Interest in Shares 1,642,500 (at date of resignation) Interest in Options Nil (at date of resignation) Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 6 Directorships of other listed companies Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows: Name Company Jonathan Cheng Argo Exploration Limited (AXT) Cheng Yan Marcus Goh - Lo Yew Seng Ban Leong Technologies (SGX: B26) Tome Jongue - Eric Kong - Piers Lewis Cycliq Group Limited (CYQ) Lustrum Minerals Limited (LRM) Manalto Limited (MTL) eSense Labs Limited (ESE) Digital Wine Ventures Limited (DW8) Li Yi - (Simon) Xing Yan - 3) COMPANY SECRETARY Mr Cheng Yan Marcus Goh – refer above 4) PRINCIPAL ACTIVITIES The principal activity of the Company during the financial year was property development. 5) FINANCIAL RESULTS The financial results of the Company for the year ended 30 June 2021 are: 30/06/2021 30/06/2020 % Change Cash and cash equivalents ($) 2,889,656 97,873 2,852% Net assets ($) 4,040,666 1,545,695 161% 30/06/2021 30/06/2020 % Change Revenue ($) 283,528 988,281 (71%) Net loss after tax ($) (250,506) (268,038) (7%) Loss per share ($) (0.64) (0.91) (30%) 6) DIVIDENDS PAID OR RECOMMENDED The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. 7) REVIEW OF OPERATIONS PROPERTY DEVELOPMENT 3 Oak Street, Cannington, Western Australia During the year, the Company announced the signing of a master lease with Rhinox Property Management Pty Ltd. The master lease was announced on 21 October 2020 and covers the 10 units at the property that were not sold in the year prior. The lease agreement represented a 100% increase in the rental income for the Company. The master lease does not represent a change in the Company’s intentions to continue with the sales efforts of the units. The Company believes that the lease arrangement increases the marketability of the units by being high-yield lease apartments and maximises the current value of the units by raising rental yield. The Company is still currently in the midst of marketing the units through online sales platforms. However, at the date of this report, despite several enquiries, the Company has not received any firm commitments or offers in relation to the sale of the remaining units. Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 7 19-21 Tate Street, Bentley, Western Australia The Company owns the properties 19 & 21 Tate Street, Bentley. The Company has been and continues to assess the viability of developing special disability accommodation units under the National Disability Insurance Scheme (“NDIS”) for the Bentley Project. Over the course of the year, the Company developed its previous assessments into plans and drawings for the development and construction of 6 (six) villa-type, high physical support, platinum level special disability accommodation. As of January 2021, said plans were submitted for planning approval to the City of Canning and awaiting feedback and approval. Following discussions in relation to the Bentley project, the Company decided to concurrently put the land for the Bentley project on the market for sale. Hokkaido Development On 30 December 2020, the Company announced a proposed issue of securities and capital raising for the purposes of acquiring and developing three plots of land at a development named TELLUS Villas (“TVP”), a 17-lot land plot measuring over 34,000m2 in Niseko, a popular ski resort town in Hokkaido, Japan. TVP is owned by Infinity Capital Group Australia, a substantial shareholder in the Company. The Company received shareholder approval on 14 May 2021 to raise up to $20,190,203 by way of issuing up to 33,650,338 fully paid ordinary shares in the Company. The Company made corresponding announcements on the ASX in relation to updates on the project. 8) SIGNFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Company during the financial year. 9) AFTER BALANCE DATE EVENTS On 14 August 2021, the Company successfully completed the capital raising in relation to the Hokkaido development and raised the amount of $20,190,203. The Company expects to proceed with settlement of the acquisition of the three plots of land of TVP and construction as soon as practicable. Under Japanese law, the Company would be allowed to commence off-the-plan sales of the to-be-completed villas and accordingly, will commence sales efforts as soon as practicable. The Company will make further announcements as to updates on the development. 10) MEETINGS OF DIRECTORS The number of Directors’ meetings held during the financial year and the number of meetings attended by each Director during the time the Director held office are: Directors Meetings Directors Number Eligible to Attend Meetings Attended Jonathan Cheng 2 2 Eric Kong 2 2 Piers Lewis 2 2 Li Yi 1 - Lo Yew Seng 2 - Cheng Yan Marcus Goh - - Tome Jongue - - (Simon) Xing Yan - - The Company does not have a formally constituted audit committee nor a remuneration committee as the board considers that the company’s size and type of operation do not warrant such committees. 11) FUTURE DEVELOPMENTS The Directors continue to actively seek and evaluate a number of property development opportunities and further information will be made available to the market in accordance with its continuous disclosure obligations under the ASX Listing Rules. Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 8 12) ENVIRONMENTAL ISSUES The Company is not subject to any significant environmental regulation under the Commonwealth or State legislation. The Board is not aware of any breach of environmental requirements as they apply to the Company. 13) REMUNERATION REPORT This Remuneration Report covers the following Key Management Personnel: Directors (Simon) Xing Yan (resigned 20 July 2020) Eric Kong (resigned 14 June 2021) (James) Zixi Ban Jonathan Cheng Li Yi (resigned 10 September 2020) Lo Yew Seng (appointed 14 September 2020) Cheng Yan Marcus Goh (appointed 14 June 2021) Tome Jongue (appointed 14 June 2021) Other than the directors, the Company does not currently have any other employees. Executive directors and any personnel in the senior management position are collectively referred to as executives in this Report. Remuneration Policy The remuneration policy of the Company has been designed to align directors’ and executives’ objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates and offering specific long-term incentives based on key performance areas affecting the Company’s financial results. The board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors and executives to run and manage the Company. The board’s policy for determining the nature and amount of remuneration for board members and executives of the Company is as follows: Executive Remuneration Policy The remuneration policy, setting the terms and conditions for the executive directors and other senior executives (or collectively “executives”), was developed by the board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The board reviews executive packages annually by reference to the Company’s performance, executive’s performance and comparable information from industry sectors and other listed companies in similar industries. The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder’s wealth. Executives are also entitled to participate in the employee share and option arrangements. The executive directors receive a superannuation guarantee contribution required by the government, which is currently 10% and do not receive any other retirement benefits. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Shares given to directors and executives are valued as the difference between the market price of those shares and the amount paid by the director or executive. Options are valued using the Black-Scholes method. Non-Executive Remuneration Policy The board’s policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting, (currently $250,000). Fees for non-executive directors are not linked to the performance of the Company. However, to align directors’ and executives’ interests with shareholder interests, non-executive directors are encouraged to hold shares in the company and are able to participate in the employee option plan. Performance based remuneration The Company has no performance based remuneration component built into executive remuneration packages. Non- executive directors’ remuneration are not performance based. Company performance, shareholder’s wealth and director’s and executive’s remuneration The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. Currently, this is facilitated through the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The Company believes the policy will be effective in increasing shareholder’s wealth. For details of directors’ interests in options at year end, refer the Directors’ Report. Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 9 Employment contracts of key management personnel Johnathan Cheng As part of his appointment as Executive Chairman & Managing Director, under a service agreement entered into with Mr Cheng, he is to be paid Director fees of $150,000 per annum (exclusive of GST). The agreement may be terminated by either party by providing 3 month’s written notice and upon payment of any outstanding fees for services rendered. It was resolved on 21 June 2021 via written resolutions that all directors on the board of directors of the Company shall for the time being not receive any part of their annual fees for FY 20/21 or until such time that the directors resolve to be paid. It was also resolved that the annual fees would continue to accrue in the interim. Cheng Yan Marcus Goh As part of his appointment as Executive Director and Company Secretary, under a service agreement entered into with Mr Goh, his salary is $80,000 per annum plus superannuation for providing services to the Company as Executive Director and Company Secretary. The agreement may be terminated by either party by providing 3 month’s written notice and upon payment of any outstanding fees for services rendered. The term of the service agreement is on an ongoing basis subject to termination. It was resolved on 21 June 2021 via written resolutions that all directors on the board of directors of the Company shall for the time being not receive any part of their annual fees for FY 20/21 or until such time that the directors resolve to be paid. It was also resolved that the annual fees would continue to accrue in the interim. Eric Kong – resigned 14 June 2021 Prior to resigning from the Company, under a service agreement entered into with Mr Kong, his salary is $100,000 per annum plus superannuation for providing services to the Company as Executive Director. The agreement may be terminated by either party by providing 1 month’s written notice and upon payment of any outstanding fees for services rendered. (Simon) Xing Yan – resigned 20 July 2020 Prior to resigning from the Company, under a service agreement entered into with Mr Yan, his salary is $150,000 per annum plus superannuation for providing services to the Company as Executive Chairman & Managing Director. The agreement may be terminated by either party by providing 1 month’s written notice and upon payment of any outstanding fees for services rendered. Compensation of Key Management Personnel for the year ended 30 June 2021 SHORT-TERM BENEFITS POST EMPLOYMENT SHARE-BASED PAYMENT TOTAL Salary & Fees Cash Bonus Leave entitleme nts Super- annuation Non- monetary Equity Options Directors Jonathan Cheng - Executive Chairman & Managing Director(1) 2021 - - - - - - - - 2020 600 - - - - - - 600 Simon Yan Xing - Executive Chairman & Managing Director(2) 2021 12,500 - 4,131 1,188 - - - 17,819 2020 150,000 - 2,125 14,250 - - - 166,375 Eric Kong - Executive Director(3) 2021 100,000 - 2,670 9,500 - - - 112,170 2020 100,000 - 8,333 9,500 - - - 117,833 Li Yi – Non-Executive Director(4) 2021 1,046 - - - - - - 1,046 2020 8,000 - - - - - - 8,000 Cheng Yang Marcus Goh – Executive Director(5) 2021 - - - - - - - - 2020 - - - - - - - - Lo Yew Seng – Non-Executive Director(6) 2021 - - - - - - - - 2020 - - - - - - - Tome Jongue – Non-Executive Director(7) 2021 - - - - - - - - Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 10 (1) Mr Jonathan Cheng was appointed as Executive Chairman and Managing Director on 21 July 2020. (2) Mr Simon Xing Yan resigned as Executive Chairman and Managing Director on 21 July 2020. (3) Mr Eric Kong resigned as Executive Director on 14 June 2021. (4) Mr Li Yi resigned as Non-Executive Director on 10 September 2020. (5) Mr Cheng Yan Marcus Goh was appointed as Executive Director on 14 June 2021. (6) Mr Lo Yew Seng was appointed as Non-Executive Director on 14 September 2020. (7) Mr Tome Jongue was appointed as Non-Executive Director on 14 June 2021. (8) Mr Piers Lewis was appointed as Non-Executive Director on 21 July 2020 and resigned on 14 June 2021. (9) Mr (James) Zixi Ban resigned as Non-Executive Director on 24 June 2020. Option holdings of key management personnel 2021 The Company’s Directors and key management personnel did not hold any options at 30 June 2021. 2020 The Company’s Directors and key management personnel did not hold any options at 30 June 2021. Shareholdings of key management personnel 2021 Balance at 01.07.20 Granted as Remuneration On Exercise of Options Bought & (Sold) Balance at 30.06.21 (Simon) Xing Yan 1,642,500 - - (1,642,500) - Eric Kong 35,775 - - - 35,775 Jonathan Cheng 5,476,290 - - 8,006,697 13,482,987 Li Yi 2,295,059 - - (795,059) 1,500,000 Cheng Yan Marcus Goh - - - - - Tome Jongue - - - - - Lo Yew Seng - - - - - Piers Lewis - - - - - TOTAL 9,449,624 - - 5,569,138 15,018,762 2020 Balance at 01.07.19 Granted as Remuneration On Exercise of Options Bought & (Sold) Balance at 30.06.20 (Simon) Xing Yan 1,642,500 - - - 1,642,500 Eric Kong 35,775 - - - 35,775 (James) Zixi Ban 10,000 - - (10,000) - Jonathan Cheng(1) 5,476,290 - - - 5,476,290 Li Yi 2,295,059 - - - 2,295,059 TOTAL 9,459,624 - - (10,000) 9,449,624 2020 - - - - - - - - Piers Lewis – Non-Executive Director(8) 2021 31,775 - - - - - - 31,775 2020 - - - - - - - - (James) Zixi Ban – Non-Executive Director(9) 2021 - - - - - - - - 2020 4,917 - - - - - - 4,917 Total Remuneration 2021 145,321 - 6,801 10,688 - - - 162,810 2020 263,517 - 10,458 23,750 - - - 297,725 Ultima United Limited - Annual Report For the year ended 30 June 2021 DIRECTORS' REPORT 11 (1) Opening shares are the amount held at date of appointment by Jonathan Cheng and his related parties on 24 June 2020. Compensation options granted during the year ended 30 June 2021 No compensation options were granted to directors or executive during the financial year (2020: nil). There are no compensation options in existence at reporting date. Performance income as a proportion of total income No performance based bonuses have been paid to directors or executives during the financial year (2020: nil). Loans to key management personnel There were no loans to or from key management personnel during the financial year (2020: nil). END OF REMUNERATION REPORT 14) OPTIONS At the date of this report there are no unissued ordinary shares of the Company under option. No ordinary shares have been issued as a result of the exercise of options during or since the end of the financial year. 15) INDEMNIFYING OFFICERS OR AUDITOR During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: The Company has entered into agreements to indemnify all directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the directors. The Company has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a willful breach of duty in relation to the Company. The amount of the premium paid during the year was $16,638. The Company has not indemnified the auditors during or since the end of the financial year. 16) PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of these proceedings. The Company was not a party to any such proceedings during the year. 17) AUDITORS INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and can be found on page 13 of the annual report. 18) NON-AUDIT SERVICES The board of directors is satisfied that the provision of non-audit services, totaling $6,330 were performed during the year by the Company’s auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reason: x The nature of the services provided do not compromise the general principles relating to auditors independence as set out in the APES 110 (Code of Ethics for Professional Accountants). Page 1 Moore Australia Audit (WA) – ABN 16 874 357 907. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. Moore Australia Audit (WA) Level 15, Exchange Tower, 2 The Esplanade, Perth, WA 6000 PO Box 5785, St Georges Terrace, WA 6831 T +61 8 9225 5355 F +61 8 9225 6181 www.moore-australia.com.au AUDITOR’S INDEPENDENCE DECLARATION UNDER S307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ULTIMA UNITED LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2021 there have been no contraventions of: i. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. any applicable code of professional conduct in relation to the audit. GREG GODWIN MOORE AUSTRALIA AUDIT (WA) PARTNER CHARTERED ACCOUNTANTS Signed at Perth this 3rd day of November 2021. MOORE AUSTRALIA AUDIT (WA) GR G EG GO PARTNE Ultima United Limited - Annual Report For the year ended 30 June 2021 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 14 Notes 30-Jun-21 30-Jun-20 $ $ Revenue 2A 283,528 988,281 Cost of Sales 2B (73,432) (673,792) Gross Profit 210,096 314,489 Employee benefits expenses 2C (165,176) (298,629) Occupancy expenses (11,319) (13,231) Depreciation expense - (309) Consultancy expenses (91,825) (76,855) Legal and compliance expenses (121,628) (56,627) Net gain/(loss) on financial assets held at fair value 11,241 (1,730) Finance expenses (70,499) (113,396) Administration expenses (11,396) (21,750) Loss before income tax expense (250,506) (268,038) Income tax expense 4(b) - - Net loss for the year (250,506) (268,038) Other comprehensive Income - - Total comprehensive income for the year (250,506) (268,038) Basic and diluted loss per share (cents per share) 20 (0.64) (0.91) The accompanying notes form part of these financial statements. Ultima United Limited - Annual Report As at 30 June 2021 STATEMENT OF FINANCIAL POSITION 15 Notes 30-Jun-21 30-Jun-20 $ $ CURRENT ASSETS Cash and cash equivalents 5 2,899,656 97,873 Trade and other receivables 6 25,886 26,713 Inventory 7 2,810,839 2,810,839 TOTAL CURRENT ASSETS 5,736,381 2,935,425 NON CURRENT ASSETS Inventory (Property development) 8 1,181,610 1,181,610 Financial assets 9 17,293 6,052 Plant and equipment 10 - - TOTAL NON CURRENT ASSETS 1,198,903 1,187,662 TOTAL ASSETS 6,935,284 4,123,087 CURRENT LIABILITIES Trade and other payables 11 443,682 45,253 Provisions 12 61,590 121,045 Borrowings 13 1,684,886 58,931 TOTAL CURRENT LIABILITIES 2,190,158 225,229 NON CURRENT LIABILITIES Borrowings 13 704,460 2,352,163 TOTAL NON CURRENT LIABILITIES 704,460 2,352,163 TOTAL LIABILITIES 2,894,618 2,577,392 NET ASSETS 4,040,666 1,545,695 EQUITY Issued capital 14 10,842,814 8,097,337 Reserves 15 482,267 482,267 Accumulated losses 16 (7,284,415) (7,033,909) TOTAL EQUITY 4,040,666 1,545,695 The accompanying notes form part of these financial statements. Ultima United Limited - Annual Report For the year ended 30 June 2021 STATEMENT OF CHANGES IN EQUITY 16 Issued Capital Option Reserves Accumulated Losses Total $ $ $ $ Balance at 1 July 2019 8,097,337 482,267 (6,765,871) 1,813,733 Loss for the year - - (268,038) (268,038) Other comprehensive income - - - - Total comprehensive income for the year - - (268,038) (268,038) Issue of share capital - - - - Balance at 30 June 2020 8,097,337 482,267 (7,033,909) 1,545,695 Balance at 1 July 2020 8,097,337 482,267 (7,033,909) 1,545,695 Loss for the year - - (250,506) (250,506) Other comprehensive income - - - - Total comprehensive income for the year - - (250,506) (250,506) Issue of share capital 2,745,477 - - 2,745,477 Balance at 30 June 2021 10,842,814 482,267 (7,284,415) 4,040,666 The accompanying notes form part of these financial statements Ultima United Limited - Annual Report For the year ended 30 June 2021 STATEMENT OF CASH FLOWS 17 Notes 30-Jun-21 30-Jun-20 $ $ Cash flows from operating activities Receipts from customers 255,221 939,366 Payments to suppliers and employees (106,668) (504,290) Interest and other income - 3 Deposit paid - - Finance costs (70,499) (65,839) Net cash provided by / (used in) operating activities 21(ii) 78,054 369,240 Cash flows from investing activities Purchase of property, plant and equipment - - Payment for property development - (8,189) Net cash used in investing activities - (8,189) Cash flows from financing activities Proceeds from issue of shares 2,745,477 - Proceeds from borrowings - - Repayment of borrowings (21,748) (552,789) Net cash provided by / (used in) investing activities 2,723,729 (552,789) Net decrease in cash and cash equivalents held 2,801,783 (191,738) Cash and cash equivalents at beginning of financial year 97,873 289,611 Cash and cash equivalents at end of financial year 21(i) 2,899,656 97,873 The accompanying notes form part of these financial statements . Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 18 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Company is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial report covers the Company of Ultima United Limited and has been prepared in Australian dollars. Ultima United Limited is a listed public company, incorporated and domiciled in Australia. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. The following is a summary of the material accounting policies adopted by the entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. (a) Critical Accounting Judgements, Estimates and Assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Share based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using Black-Scholes option pricing model. Impairment The Company assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the Company’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate. Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, and are based on the best estimates of directors. These estimates take into account both the financial performance and position of the company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the company based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the company operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the company unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. (b) Revenue The Company has applied AASB 15: Revenue from Contracts with Customers using the cumulative effective method. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 19 Rental revenue: Rental income is recognised in the statement of comprehensive income in the reporting period in which it is received, over the term of the lease in accordance with the lease agreement. Lease incentives granted are recognised as an integral part of the total rental income over the term of the lease. Interest: Interest revenue is recognised on a proportional basis using the effective interest rates method. Sales Revenue: The company develops and sells residential properties with revenue recognised when control over the property has been transferred to the customer. (c) Earnings Per Share The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the net profit or loss attributable to members for the reporting period, after excluding any costs of servicing equity, by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding. (d) Impairment of Assets At each reporting date the Company assesses whether there is any indication that an asset may be impaired. Where an indication of impairment exists, the Company makes a formal estimate of recoverable amount. Where carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or Company assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (e) Income Tax Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: x except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither that accounting profit or loss nor taxable profit or loss; and x in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: x except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; and x in respect of deductible temporary differences with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 20 (f) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (g) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the Statement of Financial Position. (h) Trade and Other Receivables Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for lifetime expected credit losses using the simplified approach in accordance with AASB 9: Financial Instruments. Bad debts are written off when identified. Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis. (i) Inventories Inventories and work in progress are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Cost includes the cost of acquisition, development costs, holding costs and directly attributable interest on borrowed funds where the development is a qualifying asset. Capitalisation of borrowing costs is ceased during extended periods in which active development is interrupted. When a development is completed and ceases to be a qualifying asset, borrowing costs and other costs are expensed as incurred. Current and Non-current Inventory Assets Inventory is classified as current when it satisfies any of the following criteria: x it is expected to be realised in, or is intended for sale or consumption in, the entity’s normal operating cycle; x it is held primarily for the purpose of being traded; or x it is expected to be realised within twelve months of the reporting date. All other inventory is treated as non-current. (j) Property held for development and resale Property held for development and resale comprises land held for development, contract costs and other holding costs incurred to date. Costs include the cost of acquisition, development, interest on funds borrowed for the development and holding costs until completion of the development. Interest and holding charges incurred after development is completed are expensed. Profit is recognised on an individual contract basis generally at settlement. (k) Plant and Equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Depreciation The depreciable amount of plant and equipment is depreciated on a diminishing value basis over the asset’s useful life to the Company commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Plant and equipment 33.00% Furniture and Fittings 11.25% Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 21 Software 33.00% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Profit or Loss and Other Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (l) Trade and Other Payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of consideration to be paid in the future for goods and services received, whether or not billed to the Company. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis. (m) Issued Capital Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (n) Financial Instruments Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument is classified "at fair value through profit or loss", in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Financial assets Financial assets are subsequently measured at: x amortised cost; x fair value through other comprehensive income; or x fair value through profit or loss. A financial asset that meets the following conditions is subsequently measured at amortised cost: x the financial asset is managed solely to collect contractual cash flows; and x the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income: x the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; x the business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset. By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss. The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. Financial liabilities Financial liabilities are subsequently measured at: x amortised cost; or x fair value through profit or loss. A financial liability is measured at fair value through profit and loss if the financial liability is: x a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations applies; x held for trading; or x initially designated as at fair value through profit or loss. All other financial liabilities are subsequently measured at amortised cost using the effective interest method. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 22 Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. Derecognition of financial assets A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All of the following criteria need to be satisfied for derecognition of financial asset: x the right to receive cash flows from the asset has expired or been transferred; x all risk and rewards of ownership of the asset have been substantially transferred; and x the Company no longer controls the asset (ie the Company has no practical ability to make a unilateral decision to sell the asset to a third party). On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of a debt instrument classified as at fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss. On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. Derecognition of financial liabilities A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Impairment The Company recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost or fair value through other comprehensive income. Loss allowance is not recognised for: financial assets measured at fair value through profit or loss; or equity instruments measured at fair value through other comprehensive income. The Company uses the simplified approach to impairment, as applicable under AASB 9: Financial Instruments: Simplified approach The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the recognition of lifetime expected credit loss at all times. This approach is applicable to: x trade receivables or contract assets that result from transactions within the scope of AASB 15: Revenue from Contracts with Customers and which do not contain a significant financing component; and x lease receivables. In measuring the expected credit loss, a provision matrix for trade receivables was used taking into consideration various data to get to an expected credit loss (ie diversity of customer base, appropriate groups of historical loss experience, etc). Recognition of expected credit losses in financial statements At each reporting date, the Company recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. Assets measured at fair value through other comprehensive income are recognised at fair value, with changes in fair value recognised in other comprehensive income. Amounts in relation to change in credit risk are transferred from other comprehensive income to profit or loss at every reporting period. For financial assets that are unrecognised (eg loan commitments yet to be drawn, financial guarantees), a provision for loss allowance is created in the statement of financial position to recognise the loss allowance. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 23 (o) Comparatives When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (p) Employee Benefits Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within 1 year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than 1 year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows. (q) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (r) Fair value of Assets and Liabilities The Company measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Company would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. (s) Impact of the Application of New Accounting Standards Initial adoption of AASB 2020-04 COVID-19 – Related Rent Concessions AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19- Related Rent Concessions amends AASB 16 by providing a practical expedient that permits lessees to assess whether rent concessions that occur as a direct consequence of the COVID-19 pandemic and, if certain conditions are met, account for those rent concessions as if they were not lease modifications. Initial adoption of AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business AASB 2018-6 amends and narrows the definition of a business specified in AASB 3 Business Combinations, simplifying the determination of whether a transaction should be accounted for as a business combination or an asset acquisition. Entities may also perform a calculation and elect to treat certain acquisitions as acquisitions of assets. The standards listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 24 (t) New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021 reporting periods and have not been early adopted by the company. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. NOTE 2: LOSS FOR THE YEAR 30-Jun-21 30-Jun-20 $ $ 2A) Revenue Rental Revenue 254,394 205,603 Interest Income - 3 Revenue from Sales - 735,990 Other Revenue 29,134 46,685 283,528 988,281 2B) Cost of Sales Property costs relating to rental revenue 73,432 78,183 Costs of sales relating to sales of inventories - 595,609 73,432 673,792 Loss before income tax has been determined after the following specific expenses: 2C) Employee benefits expenses - Salaries and entitlements 163,204 293,903 - Long service leave 1,972 4,726 165,176 298,629 NOTE 3: AUDITORS’ REMUNERATION 30-Jun-21 30-Jun-20 $ $ Remuneration of the auditor for: - Auditing or reviewing the financial report 21,838 18,905 - Other professional services 6,330 7,641 28,168 26,546 Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 25 NOTE 4: INCOME TAX EXPENSE 30-Jun-21 30-Jun-20 $ $ (a) The components of tax expense comprise: Current tax - - Deferred tax - - - - (b) The prima facie tax benefit on loss from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax benefit on loss from ordinary activities before income tax at 30% (2020: 27.5%) (75,152) (73,710) Add tax effect of: - Revenue losses not recognised 101,752 78,277 - Other non-deductible items 4,215 - - Other non-assessable items (8,311) (12,469) - Other deferred tax balances not recognised (22,054) 7,902 Income tax expense - - (c) Deferred tax recognised at 30% (2020: 30%) (Note 1): Deferred tax liabilities: Prepayments - (306) Deferred tax assets: Carry forward revenue losses - 306 Net deferred tax - - (d) Unrecognised deferred tax assets at 30% (2020: 30%) (Note 1): Carry forward revenue losses 1,872,362 1,747,720 Financial assets 105,037 105,037 Inventory 98,973 98,973 Inventory (Property development) 92,998 92,998 Provisions and accruals 24,582 41,860 Carry forward capital losses 15,000 15,000 Other 5,965 2,512 2,214,917 2,104,100 The tax benefits of the above deferred tax assets will only be obtained if: (a) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised; (b) the Company continues to comply with the conditions for deductibility imposed by law; and (c) no changes in income tax legislation adversely affect the Company in utilising the benefits. Note 1 - the corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2022 providing certain turnover thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is expected to apply in the future income year when the asset is realised or the liability is settled. The Directors have determined that the deferred tax balances be measured at the tax rates stated. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 26 NOTE 5: CASH AND CASH EQUIVALENTS 30-Jun-21 30-Jun-20 $ $ Current Cash at Bank 2,899,656 97,873 NOTE 6: TRADE AND OTHER RECEIVABLES 30-Jun-21 30-Jun-20 $ $ Current GST receivable 7,325 13,307 Deposits paid 5,044 5,044 Prepayments 12,354 3,406 Other Debtors 1,163 4,956 25,886 26,713 NOTE 7: INVENTORY 30-Jun-21 30-Jun-20 $ $ Costs carried forward in respect of properties of interest in (Oak Street Cannington): At the beginning of the financial year 2,810,839 3,398,390 Additions during the period - - Borrowing costs capitalised - - Disposal of Inventory - (587,551) Balance at the end of the financial year 2,810,839 2,810,839 As previously announced by the Company, the building at 3 Oak Street Cannington officially reached lock-up stage on 20 June 2018. Since that point, the Company has sold 2 of the 12 units at the Cannington Project. The property also serves as security against the Westpac borrowings as detailed in Note 13. NOTE 8: INVENTORY (PROPERTY DEVELOPMENT) 30-Jun-21 30-Jun-20 $ $ Costs carried forward in respect of properties of interest in Tate Street Bentley: At the beginning of the financial year 1,181,610 1,173,421 Additions during the year - 8,189 Non-current balance at reporting date 1,181,610 1,181,610 The 30 June 2021 balance relates to the property developments located at 19-21 Tate Street, Bentley Western Australia. Refer to Note 13 for details of security over these assets. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 27 NOTE 9: FINANCIAL ASSETS 30-Jun-21 30-Jun-20 $ $ Non-Current Listed Shares at fair value 17,293 6,052 Total Financial assets at fair value through profit or loss 17,293 6,052 NOTE 10: PLANT AND EQUIPMENT 30-Jun-21 30-Jun-20 $ $ Plant and equipment at cost 28,611 28,611 Accumulated depreciation (28,611) (28,611) - - Movements in carrying amounts Balance at beginning of the year - 309 Additions - - Depreciation expense - (309) At reporting date - - NOTE 11: TRADE AND OTHER PAYABLES 30-Jun-21 30-Jun-20 $ $ Trade creditors 130,081 11,257 Other creditors and accruals 313,601 33,996 443,682 45,253 Trade creditors are non-interest bearing and are normally settled on 30 day terms. NOTE 12: PROVISIONS 30-Jun-21 30-Jun-20 $ $ Annual Leave 25,641 87,068 Long service leave 35,949 33,977 61,590 121,045 Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 28 NOTE 13: BORROWINGS 30-Jun-21 30-Jun-20 $ $ CURRENT Loan from financial institution (i), (ii) 1,684,886 58,931 1,684,886 58,931 NON-CURRENT Loan from financial institution (i), (ii) 704,460 2,352,163 704,460 2,352,163 Total Borrowings 2,389,346 2,411,094 (i) NATIONAL AUSTRALIA BANK FACILITY Facility: Business Loan Facility Limit: $785,604 Loan Type: Variable Rate Interest Loan Term: 30 Years – Expires 10 July 2045 Interest Rate: 4.70% per annum Security: Registered Mortgage over property situated at 19 and 21 Tate Street Bentley WA 6102 Covenants: There are no covenants to be complied with (ii) WESTPAC BANKING FACILITY Facility: Bank Bill Business Loan Facility Limit: $1,979,000 Loan Type: Variable Rate Interest Only Loan Term: 2 Years– Expires 1 December 2021 Interest Rate: 2.46% per annum Facility Fee: 1.0% per annum The total Westpac facility of $1,979,000 is secured by the following: x Limited Guarantee and Indemnity by (Simon) Xing Yan. x Limited Guarantee and Indemnity by S & A Holding (Aust) Pty Ltd, a company related to Mr Yan, supported by: - General Security Agreement by S & A Holding (Aust) Pty Ltd over all existing and future assets and undertakings. - Mortgage by S & A Holding (Aust) Pty Ltd over the property located at 1 Tamara Drive Cockburn Central, WA 6164. x Mortgage by Ultima United Limited over the property located at 3 Oak Street Cannington, WA 6107. x General Security Agreement by Ultima United Limited over all existing and future assets and undertakings. x There are no covenants to be complied with. The Company notes that it is in the process of processing a rollover of the limited guarantee and indemnity to alternate entities other than (Simon) Xing Yan and S & A Holding (Aust) Pty Ltd. The Company expects that this will be completed in December 2021. The loan will be rolled over. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 29 NOTE 14: ISSUED CAPITAL 30-Jun-21 30-Jun-20 $ $ 44,063,983 (30 June 2020: 29,325,749) fully paid ordinary shares of no par value 10,842,814 8,097,337 (a) Movements in fully paid ordinary shares on issue: 30-Jun-21 30-Jun-20 $ Number $ Number At the beginning of the year 8,097,337 29,325,749 8,097,337 29,325,749 Shares issued 2,745,477 14,738,234 - - At reporting date 10,842,814 44,063,983 8,097,337 29,325,749 (b) Terms of Ordinary Shares Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held and in proportion to the amount paid up on the shares held. At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid up amount of the share when a poll is called, otherwise each shareholder has one vote on a show of hands. (c) Capital risk management The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it may continue to provide returns for shareholders and benefits for other stakeholders. The Company’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets. The Company is not subject to any externally imposed capital requirements. Management effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. The gearing ratios for the years ended 30 June 2021 and 30 June 2020 are tabled below. 2021 2020 $ $ Total borrowings 2,389,346 2,411,094 Less: Cash and cash equivalents (2,899,656) (97,873) Net debt / (cash) (510,310) 2,313,221 Total equity 4,040,666 1,545,695 Total capital 3,530,356 3,858,916 Gearing ratio (14%) 60% Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 30 NOTE 15: RESERVES 30-Jun-21 30-Jun-20 $ $ Option Reserve 482,267 482,267 Movements in options on issue: 30-Jun-21 30-Jun-20 $ Number $ Number At the beginning of the year 482,267 - 482,267 - At reporting date 482,267 - 482,267 - NOTE 16: ACCUMULATED LOSSES 30-Jun-21 30-Jun-20 $ $ Balance at beginning of the year (7,033,909) (6,765,871) Net loss attributable to members (250,506) (268,038) At reporting date (7,284,415) (7,033,909) Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 31 NOTE 17: KEY MANAGEMENT PERSONNEL DISCLOSURES Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Company’s key management personnel (‘KMP’) for the year ended 30 June 2021. Compensation of key management personnel by individual Compensation details of key management personnel have been disclosed in the Directors’ Report. The totals of remuneration paid to key management personnel of the Company during the year are as follows: 30-Jun-21 30-Jun-20 $ $ Short term benefits 152,122 273,975 Post employment benefits 10,688 23,750 162,810 297,725 Short-term employee benefits These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP. Post-employment benefits These amounts are the current-year’s estimated cost of providing for the Company’s defined benefits scheme post- retirement, superannuation contributions made during the year and post-employment life insurance benefits. NOTE 18: RELATED PARTY DISCLOSURE Key management personnel Disclosures relating to key management personnel are set out in the Directors’ Report and Note 17. There were no other transactions with related parties during the year. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 32 NOTE 19: FINANCIAL INSTRUMENTS (i) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company’s principal financial instruments comprise cash and short-term deposits. The main purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the Company. The Company also has other financial instruments such as trade debtors and creditors which arise directly from its operations. For the year under review, it has been the Company’s policy not to trade in financial instruments. The directors’ overall risk management strategy seeks to assist the Company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board of Directors on a regular basis. These include the credit risk policies and future cash flow requirements. Financial Risk Exposures and Management The main risks arising from the Company’s financial instruments are interest rate risk and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below: (a) Foreign Currency Risk The Company is not exposed to fluctuations in foreign currencies. (b) Interest Rate Risk The Company is exposed to movements in market interest rates on short term deposits and bank borrowings. The policy is to monitor the interest rate yield curve out to 120 days to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. (c) Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company does not have any significant credit risk exposure to any single counterparty or any Company of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company’s maximum exposure to credit risk. (d) Liquidity Risk The Company manages liquidity risk by monitoring forecast cash flows. The Company does not have any significant liquidity risk as the Company does not currently have any collateral debts. (e) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 33 (ii) FINANCIAL INSTRUMENT COMPOSITION AND MATURITY ANALYSIS The table below reflects the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations of the settlement period for all other financial instruments. As such, the amounts might not reconcile to the Statement of Financial Position. Floating interest rate $ Fixed interest maturing in Non- Interest bearing $ Total $ 30 June 2021 1 year or less $ over 1 year less than 5 $ more than 5 years $ Financial Assets Cash and cash equivalents 2,899,656 - - - - 2,899,656 Trade and other receivables - - - - 25,886 25,886 Listed investments - - - - 17,293 17,293 2,899,656 - - - 43,179 2,942,835 Weighted Average Interest Rate -% - - - - Financial Liabilities Trade and other creditors - - - - 443,682 443,682 Borrowings - 1,684,886 237,600 466,860 - 2,389,346 - 1,684,886 237,600 466,860 443,682 2,833,028 Weighted Average Interest Rate - 2.46% 4.70% 4.70% - Floating interest rate $ Fixed interest maturing in Non- Interest bearing $ Total $ 30 June 2020 1 year or less $ over 1 year less than 5 $ more than 5 years $ Financial Assets Cash and cash equivalents 97,873 - - - - 97,873 Trade and other receivables - - - - 26,713 26,713 Listed investments - - - - 6,052 6,052 97,873 - - - 32,765 130,638 Weighted Average Interest Rate -% - - - - Financial Liabilities Trade and other creditors - - - - 45,253 45,253 Borrowings - 58,931 1,861,216 490,947 - 2,411,094 - 58,931 1,861,216 490,947 45,253 2,456,347 Weighted Average Interest Rate - 4.70% 2.75% 4.70% - Trade and sundry payables are expected to be paid as follows: 2021 2020 $ $ Less than 6 months 443,682 45,253 443,682 45,253 (iii) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying amounts as presented in the statement of financial position. Differences between fair values and carrying values of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since the initial recognition by the Company. Most of these instruments, which are carried at amortised cost (i.e. loan liabilities), are to be held until maturity. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 34 NOTE 19: FINANCIAL INSTRUMENTS (CONTINUED) Listed investments have been valued at the quoted market bid price at balance date, adjusted for transaction costs expected to be incurred. For unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying net assets or discounted cash flows of the investment. 2021 2020 2021 Carrying Amount Fair Value Carrying Amount Fair Value Financial assets: $ $ $ $ Cash & cash equivalents 2,899,656 2,899,656 97,873 97,873 Financial assets at fair value through profit or loss (listed investments) 17,293 17,293 6,052 6,052 Financial assets at amortised cost (Trade & other receivables) 25,886 25,886 26,713 26,713 Total financial assets 2,942,835 2,942,835 130,638 130,638 Financial liabilities: Trade & other payables 443,682 443,682 45,253 45,253 Bank borrowings 2,389,346 2,389,346 2,411,094 2,411,094 Total financial liabilities 2,833,028 2,833,028 2,456,347 2,456,347 (iv) PRICE SENSITIVITY ANALYSIS Management believes the estimated fair values resulting from the valuation of listed investments and recorded in the statement of financial position and the related changes in fair values recorded in the statement of comprehensive income are reasonable and the most appropriate at Statement of Financial Position date. At 30 June 2021, the effect on loss as a result of changes in the share price of listed investment, with all other variables remaining constant would be as follows: 2021 2020 $ $ CHANGE IN PROFIT/(LOSS) Increase in fair value of investment by 10% 1,729 605 Decrease in fair value of investment by 10% (1,729) (605) 2021 Level 1 Level 2 Level 3 Total Financial assets: $ $ $ $ Financial assets at fair value through profit or loss: — listed investments 17,293 - - 17,293 — unlisted investments - - - - 17,293 - - 17,293 2020 Level 1 Level 2 Level 3 Total Financial assets: $ $ $ $ Financial assets at fair value through profit or loss: — listed investments 6,052 - - 6,052 — unlisted investments - - - - 6,052 - - 6,052 Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs. In valuing unlisted investments, included in Level 2 of the hierarchy, valuation techniques such as those using comparisons to similar investments for which market observable prices are available have been adopted to determine the fair values of these investments. Derivative instruments are included in Level 3 of the hierarchy with the fair values being determined using valuation techniques incorporating observable market data relevant to the hedged position. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 35 NOTE 19: FINANCIAL INSTRUMENTS (CONTINUED) (v) INTEREST RATE SENSITIVITY ANALYSIS The following table illustrates sensitivities to the Company’s exposure to changes in interest rates. The table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. 2021 2020 $ $ CHANGE IN PROFIT/(LOSS) (Increase) to loss from a 2% rise in interest rate (1,410) (2,267) Decrease to loss from a 2% fall in interest rate 1,410 2,267 NOTE 20: EARNINGS PER SHARE 2021 2020 $ $ (a) Loss used in the calculation of basic earnings per share (250,506) (268,038) Number of shares Number of shares (b) Weighted average number of ordinary shares outstanding during the financial year used in calculation of basic earnings per share 38,895,506 29,325,749 (c) Earnings per share ($) (0.64) (0.91) NOTE 21: CASH FLOW INFORMATION 2021 2020 $ $ (i) Reconciliation of cash and cash equivalent: Cash at Bank - Note 5 2,899,656 97,873 (ii) Reconciliation of cash flows from operating activities with loss after income tax Loss after income tax (250,506) (268,038) Depreciation expense - 309 Revaluation - financial assets at fair value (11,241) 1,730 Finance costs - 47,336 Changes in assets and liabilities: - (Increase)/ Decrease in trade and other receivables 827 (16,941) -(Increase)/ Decrease in inventory - 587,551 - (Decrease)/ Increase in trade and other payables 398,429 5,347 - (Decrease)/ Increase in provisions (59,455) 11,946 Net cash provided by operating activities 78,054 369,240 (iii) Non-cash financing and investing activities During the year there was $29,429 (2020: $47,336) non-cash financing activities relating to financing costs incurred on the Westpac loan. No other non-cash financing and investing activities have occurred during the year ended 30 June 2021. Ultima United Limited - Annual Report For the year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS 36 NOTE 22: SEGMENT INFORMATION The Company has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. The Company has recently acquired three (3) plots of land in a luxury ski village in Niseko, Hokaaido. The monies for this were raised in the capital raising described in Note 23 below. This marks an expansion of the Company’s operations into Japan and the Asia Pacific. However as at 30 June 2021, the Company primarily operated in one geographical and business segment being property development in Australia. All segment assets, segment liabilities and segment results relate to the one segment and therefore no segment analysis has been prepared. NOTE 23: EVENTS SUBSEQUENT TO REPORTING DATE On 14 August 2021, the Company successfully completed the capital raising in relation to the Hokkaido development and raised the amount of $20,190,203. The Company expects to proceed with settlement of the acquisition of the three plots of land of TVP and construction as soon as practicable. Under Japanese law, the Company would be allowed to commence off-the-plan sales of the to-be-completed villas and accordingly, will commence sales efforts as soon as practicable. The Company will make further announcements as to updates on the development. NOTE 24. CONTINGENT LIABILITIES In the opinion of the directors there were no contingent liabilities at 30 June 2021, and the interval between 30 June 2021 and the date of this report. NOTE 25: COMMITMENTS (a) Lease expenditure commitments There is one operating lease being a rental lease for the Company’s office premises. 0-6 months 6-12 months Greater than 12 months Total $ $ $ $ Rental lease for the Company's premises 6,118 5,098 0 11,216 6,118 5,098 0 11,216 (b) Capital commitments As at 30 June 2021, there are no capital commitments (2020: nil). Page | 3 Moore Australia Audit (WA) – ABN 16 874 357 907. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. Moore Australia Audit (WA) Level 15, Exchange Tower, 2 The Esplanade, Perth, WA 6000 PO Box 5785, St Georges Terrace, WA 6831 T +61 8 9225 5355 F +61 8 9225 6181 www.moore-australia.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ULTIMA UNITED LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Ultima United Ltd (the “Company”) which comprises the statement of financial position as at 30 June 2021, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and 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: i. 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 then ended; and ii. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence 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 & 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. 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, and we do not provide a separate opinion on these matters. Page | 3 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ULTIMA UNITED LIMITED (CONTINUED) Report on the Audit of the Financial Report (continued) Key Audit Matters (continued) Carrying Value Assessment for Inventories & Undeveloped Property Asset Refer to Notes 7 and 8 - Carrying values of $2.8 million and $1.2 million respectively Assessing the carrying amount of the Company’s inventory/property assets including 3 Oak Street, Cannington which was completed in December 2018 and undeveloped land at 19-21 Tate Street, Bentley, Western Australia was a key audit matter. Factors giving rise to this conclusion included the size of these balances and the judgement required in the assessment, particularly in relation to: x whether there are any indicators of impairment relating to the inventory balance at 3 Oak Street, Cannington. During the previous financial year, this property was valued at $4.1 million (excl. GST) on a “as if complete” basis by an independent professional expert in securing bank financing for the property; x whether there are any indicators of impairment relating to the Tate Street property. This vacant block was purchased several years ago and development application for multiple dwellings (apartments) on the lot was granted by the town council. However, development has been deferred pending sale of the Oak Street units. This property was subject to an independent market appraisal in August 2020 and was valued at $1.3 million; and x the current state of the Perth property market (including the affect of COVID-19) which directly influences the funding appetite of potential lenders and/or investors. We performed procedures over the assessment of the carrying values of these assets which included the following: x Evaluation of the independent professional valuation, including the external expert’s competence, capabilities and objectivity. Assessing the methodologies used by the expert and appropriateness of the key assumptions based on our knowledge of the property industry; x Evaluation of the independent appraiser’s competence, capabilities and objectivity; x Assessed the appropriateness of the carrying values of both Oak Street and Tate Street properties by comparing against indicative market values of similar properties (by location and size) being advertised for sale on www.realestate.com.au; x Evaluation of the Perth apartment property market for any further indicators of impairment based on available market data/commentary and information sourced from the public domain/industry publications; and x Reviewed the relevant disclosures contained in the financial statements. Presentation of Borrowings Refer to Note 13 – Borrowings At 30 June 2021, the Company had significant bank borrowings of $2.4 million. These borrowings relate to the financing of the construction of units at 3 Oak Street, Cannington as well as the initial acquisition of the Tate Street, Bentley property. These borrowings were identified as key audit matters due to their material balances as well as ensuring balances are appropriately presented according to their facility terms. Our procedures included, amongst others: x Obtained loan statements to verify the year end loan balances; x Reviewing the specific terms of the bank facility documents to ensure the borrowings are appropriately presented or classified on the balance sheet; and x Reviewed the relevant disclosures contained in the financial statements. Page | INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ULTIMA UNITED LIMITED (CONTINUED) Report on the Audit of the Financial Report (continued) Other Information 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. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related 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 has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located on the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our auditor’s report. Page | 4 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ULTIMA UNITED LIMITED (CONTINUED) Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report as included in the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Ultima United Limited, for the year ended 30 June 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. GREG GODWIN MOORE AUSTRALIA AUDIT (WA) PARTNER CHARTERED ACCOUNTANTS Signed at Perth this 3rd day of November 2021. GR G EG GO PARTNER MO M ORE AUSTRA RA RA RA RA RA RA RA RA RA RA RA RA RA RA RALI LI LI LI LI LI LI LI LI LI LI LI LI LI LI LI LI LI LI LI L A AUDIT (WA) Ultima United Limited - Annual Report For the year ended 30 June 2021 ADDITIONAL SHAREHOLDER INFORMATION 42 HOLDINGS AS AT 15 October 2021 The distribution of members and their holdings of equity securities in the company as at 15 October 2021 were as follows: Number of Securities Held Fully Paid Shares No. of Holders Securities 1-1,000 70 32,090 1,001 - 5,000 230 702,297 5,001 – 10,000 44 361,003 10,001 - 100,000 110 3,818,669 100,001 and over 64 65,393,465 Total 518 70,307,524 Holders of less than a marketable parcel: 55 20 LARGEST SHAREHOLDERS AS AT 15 October 2021 Fully Paid Ordinary Shares No. (%) 1 INFINITY CAPITAL GROUP AUSTRALIAN DEVELOPMENT PTY LTD 9,749,317 13.87 2 WING KIONG ANTHONY LOH 6,432,574 9.15 3 BNP PARIBAS NOMINEES PTY LTD5,112,458 7.27 4 MS WAI SHAN YUEN 2,960,000 4.21 5 MR BOON WEI LIM 2,834,357 4.03 6 MR HING TONG TSUI 2,822,583 4.01 7 MS CELINE NG 2,810,000 4.00 8 MS EUNICE KOH 2,713,217 3.86 9 HD MINING & INVESTMENT PTY LTD 2,520,000 3.58 10 MR LI QUAN 2,000,000 2.84 11 MR CHENG RONG WANG 1,766,259 2.51 12 MR KWEK THIAM CHYE 1,719,346 2.45 13 MR LI YI 1,500,000 2.13 14 JADE ROAD INVESTMENTS LIMITED 1,500,000 2.13 15 MR CHAN FAI LO 1,434,709 2.04 16 MR JONATHAN CHENG 1,432,704 2.04 17 MS CHAN YUET PING 1,365,000 1.94 18 MR CHAU MING TUEN 1,050,000 1.49 19 MR JONATHAN CHENG 800,000 1.14 20 MS AGATHA HOI PING YAU 704,035 1.00 53,226,559 75.69 Substantial Shareholders The names of the substantial shareholders listed in the Company’s register as at 30 June 2021: Fully Paid Ordinary Shares No. (%) INFINITY CAPITAL GROUP AUSTRALIAN DEVELOPMENT PTY LTD 9,749,317 13.87 WING KIONG ANTHONY LOH 6,462,574 9.15 BNP PARIBAS NOMINEES PTY LTD 5,112,458 7.27 Ultima United Limited - Annual Report For the year ended 30 June 2021 ADDITIONAL SHAREHOLDER INFORMATION 43 Voting Rights Ordinary Shares In accordance with the Company's Constitution, on a show of hands every member present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held. Restricted Securities The Company has no restricted securities at the current date. Company Secretary The name of the Company Secretary is Cheng Yan Marcus Goh. Address and telephone details of the entity’s registered and administrative office Suite 14,11 Preston Street COMO, WA 6152 Telephone: + (61) 8 6436 1888 Facsimile: + (61) 8 6436 1899 Address and telephone details of the office at which a register of securities is kept Advanced Share Registry Services 150 Stirling Highway Nedlands Western Australia 6009 Telephone: + (61) 8 9389 8033 Facsimile: + (61) 8 9367 3311 Securities exchange on which the Company’s securities are quoted The Company’s listed equity securities are quoted on the Australian Securities Exchange. Review of Operations A review of operations is contained in the Directors’ Report.