Global Masters Fund : 2021 Half Yearly Report and Accounts

For personal use only

ABN 84 109 047 618

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 December 2021

Mr Murray d'Almeida (Chairman)

Dr Emmanuel Clive Pohl AM (Managing Director) Mr Patrick Corrigan AM (retired 18 November 2021) Mrs Angela Obree (appointed 18 November 2021) Mr Jason Pohl (Alternate Director to Dr Pohl)

GLOBAL MASTERS FUND LIMITED

Directors' Report

The Directors of Global Masters Fund Limited (the "Company") submit herewith their report together with the Interim Financial Report for the half-year ended 31 December 2021 and the Auditor's Independent Review Report thereon.

onlyDIRECTORS

The following persons were Directors of the Company since 30 June 2021 and up to the date of this report, unless stated otherwise.

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PRINCIPAL ACTIVITY

The principal activity of the Company is holding an investment in Berkshire Hathaway Inc on NYSE. In addition to Berkshire Hathaway, the Company has invested in a diversified global portfolio of investments.

personalREVIEW OF OPERATIONS

On the 24 November 2021 Global Masters Fund Limited issued 3,225,806 unsecured, listed convertible notes (GFL Notes). The GFL Notes issued at $3.10 raised $10 million for GFL before costs, which has been deployed into the Vanguard MSCI Index International Shares ETF (VGS.ASX). The Vanguard ETF is considered a short- term investment, providing exposure to the global market until such time as an appropriate active strategy can be engaged. Capital raising via convertible note allows the Company to increase the overall size of the investment portfolio without immediately diluting existing GFL Shareholders. The first interest payment in relation to the notes was paid on 31 December 2021 with following payments to be made each quarter- 31 March, 30 June and 30 September.

Due to the issuance of the GFL Notes there are a number of new features in the financial report. Including one off partial recognition of costs $40,677, the initial recognition of the convertible note debt (balance at 31 December 2021 $8,135,551), and the initial recognition of a derivative liability associated with the convertible

option intrinsic in the notes (balance at 31 December 2021 $1,678,915). As part of the December reporting and an ongoing accounting requirement, the Convertible Note Debt will be amortised over the five-year term (amortised interest recognised in the Statement of Profit or Loss of $88,905 compared to interest paid of $55,753) and the derivative liability will be adjusted to fair value (credit to the Statement of Profit or Loss of

$19,918).

ForDuring the last six months, Global Masters Fund Limited recorded portfolio gains of 9.5% (see graph below). The value of the primary investment in Berkshire Hathaway increased by 11.1% with favourable movements in the underlying USD share price and the AUD/USD exchange rate. The actively managed UK portfolio performed well achieving gains in local currency of 12.5% in the six months to 31 December 2021 versus the FTSE which increased by 4.9%, the Australian dollar weakened marginally against the pound by 0.9%.

Portfolio Performance

	6 Mths	12 Mths	5 Years	10 Years	Since Inception
	to Dec 21	to Dec 21	p.a.	p.a.	p.a.
Global Masters Portfolio	9.5%	31.4%	12.8%	16.0%	9.0%
ASX All Ordinaries	2.6%	13.6%	6.4%	6.6%	2.6%
MSCI Index (AUD)	10.8%	27.5%	12.9%	14.4%	5.9%
MSCI Index (USD)	7.1%	20.1%	13.0%	10.6%	5.6%

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GLOBAL MASTERS FUND LIMITED

NET TANGIBLE ASSETS

The NTA per share (tax on realised gains only) at 31 December 2021 was 330.1 cents compared with 301.7 cents at 30 June 2021 an increase of 9.4%.

MARKET COMMENTARY

onlyBy year end, global equities were stronger as investors focused on economic resilience and corporate earnings, despite the ongoing volatility caused by Covid-19. The rising Covid case numbers seemed to become less of a concern for investors as the new variants seem to result in less severe symptoms. Across the world, service- based sectors appear to be losing their positive momentum, while manufacturing sentiment has continued to remain resilient despite supply constraints and rising input prices.

As we head into the new year the outlook for corporate earnings remains positive, however, concerns surrounding monetary policy normalisation and inflation issues are driving increased volatility in the financial markets. As price/earnings ratios are scrutinized, the technology companies that were pumped up on cheap usemoney are deflating. The question remains- what will be the long-term impact on the market as central banks

begin raising interest rates?

DIVIDEND

The Company has historically not paid dividends due to the major investment, Berkshire Hathaway, not yielding

a dividend. For the half-year ending 31 December 2021 a dividend has not been declared. personalSUBSEQUENT EVENTS

Since 31 December 2021 equity markets have broadly experienced a decline in value. The MSCI Index declined by 5.3% between December 2021 and January 2022, over the same period the ASX All Ordinaries Index declined 6.6% and the FTSE increased by 1.1%. The Global Masters NTA increased by 0.9% during January 2022 due to the performance of Berkshire Hathaway through the month.

AUDITORS' INDEPENDENCE DECLARATION

The Auditor's Independence Declaration under section 307C of the Corporations Act 2001 is set out on page 3 and forms part of the Directors' Report for the half-year ended 31 December 2021.

Signed on behalf of the Board in accordance with a Resolution of the Directors.

ForMurray d'Almeida

Chairman

22 February 2022

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GLOBAL MASTERS FUND LIMITED

For personal use only

Condensed Statement of Profit or Loss and Other Comprehensive Income

For the half-year ended 31 December 2021

	Note	31 Dec		31 Dec
		2021	2020
		$	$
Statement of Profit/(Loss)
Revenue	2	244,077	153,201
Unrealised gains/(losses) on investments through profit or loss		715,013	615,678
Changes in fair value of derivative liabilities		19,918	-
Interest Expense		(88,905)	-
Other expenses		(295,759)	(235,544)
Profit/(Loss) before income tax		594,344	533,335
Income tax benefit/(expense)		(126,655)	(205,306)
Net Profit/(Loss) attributable to members of the Company		467,689	328,029
Other Comprehensive Income
Realised and Unrealised gains on Financial Assets taken to equity		2,447,932	3,259,263
Income tax benefit/(expense) relating to components of Other		(712,986)	(912,990)
Comprehensive Income
Net Other Comprehensive Income		1,734,946	2,346,273
Total Comprehensive Income for the period		2,202,635	2,674,302
Earnings per share:		Cents		Cents
Basic earnings/(loss) per share		4.36	3.06
Diluted earnings/(loss) per share		4.36	3.06
Comprehensive income:
Comprehensive earnings per share		20.54	24.94

The above Condensed Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the

Notes to the Condensed Financial Statements.

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