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Annual Report
Year ended 30 June 2017
ABN: 64 169 154 858
Corporate Directory
Directors
Peter McKillop (Independent Director, Chairman)
John McBain (Independent Director)
Jennifer Horrigan (Independent Director)
Anton Tagliaferro (Non-independent Director)
Simon Conn (Non-independent Director)
Secretary
Zac Azzi
Investment Manager
Registered Office
Share Registrar
Investors Mutual Limited
Level 24, 25 Bligh Street
Sydney NSW 2000
(AFSL 229988)
Level 24, 25 Bligh Street
Sydney NSW 2000
Telephone: (02) 9232 7500
Fax: (02) 9232 7511
Email: info@qvequities.com
Website: www.qvequities.com
Link Market Services Limited
1A Homebush Bay Drive
Rhodes NSW 2138
Telephone: 1800 868 464
Auditor
Pitcher Partners
Level 22 MLC Centre, 19 Martin Place
Sydney NSW 2000
Stock Exchange
Australian Securities Exchange (ASX)
ASX code: QVE Ordinary shares
QV Equities Limited, ABN: 64 169 154 858
2
| QV Equities Limited Annual Report 2017
Contents
Annual Report – 30 June 2017
Page number
Financial Highlights
Chairman’s Letter
Investment Manager’s Report
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flow
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Shareholders
Shareholder Information
4
6
8
11
21
23
24
25
27
28
47
48
53
Corporate Governance Statement
The Board of Directors of QV Equities Limited (‘Company’) is responsible for corporate governance. The Board has chosen
to prepare the Corporate Governance Statement (‘CGS’) in accordance with the third edition of the ASX Corporate
Governance Council’s Principles and Recommendations under which the CGS may be made available on a company’s
website. Accordingly, a copy of the Company’s CGS is available on the Company’s website.
QV Equities Limited, ABN: 64 169 154 858
QV Equities Limited Annual Report 2017 | 3
Year in Summary FY2017
Profit after tax
$8,497,402
Management Expense Ratio
1.01 %
Earnings Per Share
(cents)
3.61 Basic
Portfolio Return
(Pre-tax)*
+12.7%
Benchmark**
+13.6%
ASX 300
+13.8%
Portfolio Return
(Post-tax)*
+12.0%
Net Tangible Assets (NTA)
1.21 (pre-tax cum div) 1.16 (post tax cum div)
All data as at 30 June 2017
* Returns are measured for the 2017 financial year
** S&P/ASX300 ex20 index
QVE Pre-tax NTA
Dividends
3.3 cps Fully Franked
(declared for FY 2016)
4.0 cps Fully Franked
(declared for FY 2017)
Net Assets
$320,401,651
Historical NTA Growth
$1.25
$1.20
$1.15
$1.10
$1.05
$1.00
$0.95
$0.90
E
R
A
H
S
R
E
P
A
T
N
August -14
D ece m ber -14
October -14
February -15
A pril-15
June-15
August -15
D ece m ber-15
October-15
February -16
A pril-16
June-16
August -16
D ece m ber-16
October -16
February-17
A pril-17
June-17
Historical Dividend Growth
QVE Dividend Payment
1.5
1.5
1.8
2.0
2.0
E
R
A
H
S
R
E
P
S
T
N
E
C
2.5
2.0
1.5
1.0
0.5
0.0
0.5
FY15 Interim
FY15 Final
FY16 Interim
FY16 Final
FY17 Interim
FY17 Final
4
| QV Equities Limited Annual Report 2017
QVE Overview
QV Equities Limited (the “Company”) is a Listed Investment Company, established to invest in a diversified portfolio of ASX listed entities
outside the S&P/ASX 20 Index. The Company’s investment portfolio is managed by Investors Mutual Limited (IML).
Investment Objective
The Company’s primary objective is to deliver long term value to shareholders through a combination of capital growth and income, by
investing in a diversified portfolio of good quality ASX listed entities outside the S&P/ASX 20 Index. The Company aims to achieve after-
fee returns over a five-year plus investment period that are higher than the S&P/ASX 300 Accumulation Index, excluding that part of the
return that is generated by the securities comprised in the S&P/ASX 20 Accumulation Index.
Foundation of the Company’s Investment Strategy
The Australian sharemarket is heavily concentrated amongst the larger entities both in terms of market capitalisation and industry
sector. The S&P/ASX 20 Index (representing the 20 largest entities by market capitalisation on the ASX) accounts for 54% of the market
capitalisation of the S&P/ASX 300 Index and has a heavy, 70% concentration in the Financial and Resource sectors as at 30 June 2017.
Investment Strategy
The Company’s investment strategy is to create a diversified and balanced portfolio of ASX listed securities outside the S&P/ASX 20
Index, aiming to capitalise on IML’s disciplined investment approach and intensive research process. When assessing investment
opportunities, IML’s team of highly experienced analysts undertake a comprehensive ‘bottom-up’ approach in identifying, researching
and valuing companies. IML’s approach to identifying opportunities for the portfolio is systematic, disciplined and focuses on finding
those entities that meet IML’s investment criteria and then determining an appropriate valuation for those entities. This is the same
approach that has been applied successfully by IML since 1998.
In addition to long term capital growth, IML is focused on long term income growth for the portfolio, seeking investment opportunities
that pay sustainable and growing dividends with attractive franking credits, with the portfolio being diversified across both industry
and individual securities.
QV Equities Limited, ABN: 64 169 154 858
QV Equities Limited Annual Report 2017 | 5
A letter from the Chairman, Peter McKillop
Dear Shareholders,
This is the third annual report to shareholders from QV Equities Limited (the “Company”) after the Company listed on the Australian
Stock Exchange (‘ASX’) on 22 August 2014. I would like to thank all QVE shareholders for their continued support of the Company
during the 2017 financial year. I would also like to take this opportunity to welcome new shareholders who have joined the register
following the completion of the successful capital raising that occurred in March.
Our objective
The Company’s key objective is to provide investors with the opportunity to invest in a diversified portfolio of securities listed on the
ASX other than those included in the S&P/ASX top 20 index. Our objective is to deliver both long-term capital growth and income to
our shareholders.
The twenty largest entities listed on the ASX account for about half of the market capitalisation of the broader market as measured by
the ASX300 index. The top 20 is heavily concentrated in the volatile Financial and Resources sectors and accordingly may not provide
investors with an opportunity to diversify their portfolios.
In comparison, the ex-20 part of the market is much more diversified by stock and sector which offers investors the opportunity for
greater diversification. It is a segment which is less researched than the larger
companies listed on the ASX and as such, offers investors an enhanced opportunity
to gain the long-term capital growth and income they are seeking.
Our portfolio of securities is managed by Investors Mutual Limited (the “Manager”),
a multi award-winning and experienced fund manager with an excellent track
record of successfully managing Australian equities since 1998. Notably, the
Manager added to their list of awards during the year when respected ratings
house, Morningstar, named IML as their Small Cap manager of the year for 2017,
further enhancing their reputation.
The Manager seeks to target quality entities led by capable management, which
have competitive advantages, a recurring and predictable earnings stream which
can grow over time, and whose securities can be bought at an attractive entry price.
Market overview
“… the ex-20 part of
the market is much
more diversified by
stock and sector which
offers investors the
opportunity for greater
diversification”
The ASX300 Accumulation Index had a solid year gaining +13.8% for the 12 months to 30 June 2017, with the bulk of the gains
occurring in the months following Donald Trump’s election as President of the United States in November 2016.
Whilst global market returns were less volatile than previous years, 2016/2017 was an eventful year in world politics with the likes of
Brexit and Trump’s election catching global markets off-guard. Ironically the election of Trump to President in November proved to be
the catalyst for a rerating of global equity markets and the turning point as investors repositioned portfolios for the new President’s
pro-growth agenda. This ‘Trump Trade’ has had a strong positive influence on the Australian Share market, with the ASX300 gaining
+10.6% since 9th November 2016.
Additionally, positive influences on the Australian sharemarket over the year have included solid returns in the Utilities and Healthcare
sectors.
The highly cyclical Resources sector remained true to form, with commodity price volatility continuing. Iron ore gained +17% over the
year, despite falling -18% in the second half. Similarly, the oil price fell -9% over the year and -17% in the second half of the financial year.
The volatile Financial sector de-rated in the second half, due to lacklustre interim results coupled with the impact of the surprise bank
levy announced by the Federal Government in the May Budget.
The QV Equities investment performance
For the 12 months to 30 June 2017, the Company’s portfolio enjoyed a solid year, returning +12.7% before tax, which, while a pleasing
outcome, was slightly behind the benchmark return of +13.6%. The Manager will discuss the Company’s performance in more detail
and provide an overview of holdings and activity in the Investment Management Report on page 8.
6
| QV Equities Limited Annual Report 2017
A letter from the Chairman, Peter McKillop (continued)
Placement & Share Purchase Plan
In March, the Company raised $65m before costs through an institutional Placement and Shareholder Purchase Plan (SPP). The capital
raising provided an opportunity for shareholders to increase their shareholding in the Company at a slight discount to the prevailing
market price, but at a premium to the pre-existing NTA.
The Manager has taken a prudent and cautious approach to investing these funds by using any pullback in favoured companies share
prices to invest these additional funds. At the date of writing the Company is around 75% invested.
Financial results
For the year ended 30 June 2017, the Company delivered a net after-tax profit of $8.5 million. On an earnings per share basis, the FY
2017 result equates to after-tax earnings of 3.61 cents.
A fully franked interim dividend of 2 cents per share was paid on 3 April 2017. A final fully franked dividend for the 2017 financial year,
of 2 cents per share, will be paid on 31 October 2017 (the ex-dividend date for the final dividend will be 2 October 2017). Pleasingly,
this means that shareholders who subscribed at IPO have now been paid a total of 9.3cps in fully franked dividends in addition to the
growth in the NTA which the Manager has been able to achieve over the last 3 years.
AGM
Shareholders are invited to attend our third Annual General Meeting to be held at the Sofitel Sydney Wentworth, Sydney on Wednesday
1 November at 10am in the Adelaide Room. Further details regarding the AGM proceedings will be sent to shareholders shortly.
Shareholder engagement and QVE communication
We are committed to maintaining regular and consistent communication with our
shareholders through a variety of formats:
• Monthly NTA reports & investment updates
•
•
•
Regular investment videos
Annual shareholder briefings in major cities
Regular webinars
If you have not already, we would encourage shareholders to subscribe to receive
these updates & invitations via the QVE website: www.qvequities.com
In summary
“…For the year ended
30 June 2017, the
Company delivered a
net after-tax profit of
$8.5 million”
The Board continues to believe that a carefully-selected holding of ex-20 stocks, managed by Investors Mutual Limited, will provide
good opportunities for investors going forward. This portfolio should be able to deliver long-term capital growth and sustainable
income from a more diversified range of investments than is currently available from those companies that comprise the top-20 index.
I look forward to further discussing the results presented in this Annual Report and to meeting as many of our shareholders as possible
at the Annual General Meeting on 1 November 2017.
Yours sincerely,
Peter McKillop,
Chairman
16 August 2017
QV Equities Limited Annual Report 2017 | 7
Investment Manager’s Report
QV Equities Limited
Investment Manager’s Report
30 June 2017
Investment Manager’s Report
Investment Manager’s Report
Investors Mutual Limited (‘IML’) is pleased to deliver its third investment report for QV Equities Limited.
Investors Mutual Limited (‘IML’) is pleased to deliver its third investment report for QV Equities Limited.
Economic conditions both in Australia and overseas have remained uneven over the last 12 months and as such, the Manager has
remained cautious and prudent in managing the QVE portfolio of stocks outside the top 20.
Economic conditions both in Australia and overseas have remained uneven over the last 12 months and as such, the Manager has
remained cautious and prudent in managing the QVE portfolio of stocks outside the top 20.
IML’s approach to investing in the share market has been consistent since inception in 1998 and involves investing in companies at an
attractive entry price, which possess the following four clear quality characteristics:
IML’s approach to investing in the share market has been consistent since inception in 1998 and involves investing in
companies at an attractive entry price, which possess the following four clear quality characteristics:
• a competitive advantage over their peers;
recurring predictable earnings;
•
• a capable management team; and
•
a competitive advantage over their peers;
recurring predictable earnings;
a capable management team; and
the ability to grow earnings and dividends over time.
the ability to grow earnings and dividends over time.
•
•
•
•
At the time of writing the Company’s portfolio was made up of 44 listed securities spread across various ASX sectors. Some of the top
At the time of writing the Company’s portfolio was made up of 44 listed securities spread across various ASX sectors. Some of the
top holdings of the Company include well-known companies such as Caltex, Sonic Healthcare and Amcor as well as other lesser
holdings of the Company include well-known companies such as Caltex, Sonic Healthcare and Amcor as well as other lesser known but
known but quality companies such as Pact Group, Spark Infrastructure and Tox Free.
quality companies such as Pact Group, Spark Infrastructure and Tox Free.
Portfolio allocation as at 30 June 2017
PORTFOLIO ALLOCATION AS AT 30 JUNE 3017
Real Estate
Information
Technology
Financials
Energy
Industrials
Consumer
Discretionary
Materials
Utilities
Health Care
8
| QV Equities Limited Annual Report 2017
-5-
Investment Manager’s Report (continued)
Key equity investments
Description
Sonic Healthcare
Pact Group
Fletcher Building
Clydesdale Bank
Amcor Limited
Global pathology company
Rigid plastics packaging company
NZ building materials company
UK retail bank
Global packaging company
Spark Infrastructure
Owner of electricity distribution and transmission assets
Ansell
Bank of Queensland
Caltex Australia
Tox Free
Steadfast
Orica
GWA
Global glove manufacturer
Australian Regional bank
Petrol retailer and refinery company
Industrial Waste disposal company
Insurance Broker
Manufacturer of commercial grade explosives & chemicals
Owner & importer of bathroom brands incl. Caroma
Mayne Pharma
Global Pharmaceutical company
ASX
AusNet
Australian Stock Exchange
Owner of monopoly electricity and gas assets
Shopping Centres Australasia
Neighbourhood retail property trust
Aurizon
Oil Search
Z Energy
*Holding weight as at 30 June 2017
Australian rail company
PNG LNG producer
NZ Petrol retailer and refinery company
Holding
weight*
3.63%
3.23%
3.19%
3.18%
2.91%
3.14%
3.13%
3.09%
3.03%
2.88%
2.87%
2.52%
2.36%
2.28%
2.00%
2.08%
1.97%
1.49%
1.84%
1.81%
The complete portfolio is shown on page 53 of this financial report.
During the year, the Company raised $65m before costs through an institutional placement and shareholder purchase plan (SPP). The
capital raising provided an opportunity for shareholders to increase their shareholding in QVE, while also allowing shareholders to
benefit from a lower investment management fee payable on the portfolio due to the sliding scale of investment management fees.
The capital raising was also accretive to the Company’s NTA. The Manager took advantage of any pullback in share prices to invest some
of these additional funds so that at the date of writing the Company is around 75% invested in equity holdings. We remain alert to
opportunities in periods of weakness to add to the Company’s holdings.
For the 12 months to 30 June 2017 the QVE portfolio enjoyed a solid year returning +12.7% before tax and after fees. While a pleasing
outcome, it was slightly behind the benchmark’s return of +13.6%. The portfolio benefitted from its exposure to holdings such as
Pinnacle Investments, Duet Group, Orica and GWA Group which all performed well. At the same time we avoided the likes of Vocus, TPG
and Domino’s Pizza, companies whose share prices already incorporated high growth expectations and which all de- rated over the
period. The benchmark benefitted from gains in the cyclical Materials sector, with commodity stocks such as Fortescue, Bluescope Steel
and South 32 all performing strongly over the 2017 financial year. These are stocks which do not fit the 4 quality criteria that we look for
in companies. Their earnings, dividends and share prices are very unpredictable and volatile.
Global conditions remain challenging for investors in our view. On the one hand, low global growth and high consumer debt levels in
most developed economies means that earnings growth for many companies is difficult. At the same time, investors are likely to be
confronted with the current lower interest rate environment for the foreseeable future. This is even though we are seeing some move
towards normalising cash rates by the Federal Reserve in the US and elsewhere (with the Bank of Canada recently surprising markets
QV Equities Limited Annual Report 2017 | 9
Investment Manager’s Report (continued)
by increasing its cash rate). Australia’s inflation rate remains benign at 2.1%, and with household debt at record levels, there is little
incentive for the RBA to raise the cash rate from its current record low of 1.5% in the near term.
With the economic environment being so uneven, it remains a challenge for many ASX listed companies to deliver earnings and
dividend growth. Because of this environment, we have attempted to skew the portfolio towards those companies which we believe
remain reasonably priced and which can continue to generate earnings growth and healthy dividends in the years ahead.
A key contributor to QVE’s performance over 2017 was Duet Group. Duet is an owner of high quality infrastructure assets predominantly
across the electricity and gas distribution and transmission sectors in Australia. Most of these assets are regulated monopolies in the
markets they serve, providing reliable, recurrent earnings and cash flow to security holders. Duet securities rose +22% during the
financial year (excluding dividends) as investors rerated the company given the security of the company’s cashflows and the attractive
distributions that the company was paying. During the year, the company increased its stake in the Dampier to Bunbury gas pipeline
and also purchased the Cullerin Range Wind Farm. The secure nature of the company’s cashflow ultimately attracted corporate interest
with Hong Kong based investor Cheung Kong Infrastructure (CKI) privatising the company for $3.03 per security late in the financial
year, a bid which we accepted and thereby crystalising very good capital gains for QVE.
Ansell was another strong contributor over the year, gaining +34%. Ansell is a company which has been in existence for over 100 years
and while the company may be better known for its condom business, Ansell is in fact the largest manufacturer of industrial & surgical
gloves in the world. Ansell is a global business and industry leader, with 5 innovation centres, 19 manufacturing plants in 55 countries
and more than 15,000 employees spread around the world. Ansell’s leadership position, its strong focus on innovation and unrivalled
distribution provides us with confidence in the company’s outlook over the long term. We were pleased with the attractive price at
which the company sold its sexual wellness business during the year at US$600m, which represented a multiple of 16 times EBITDA.
This sale sees the company now debt free and well positioned to make accretive acquisitions in its core gloves division to further build
out its product range and distribution footprint. Following this sale, the company announced a 10% share buyback and more recently a
restructuring which will ultimately see US$30m removed from the cost base by FY2020.
The Manager remains cautious on the outlook for markets. Given the low alternative rates of return from cash and bonds many equity
valuations remain elevated as investors have bid up prices in search of income. Markets have also repriced higher on the back of the
Trump Presidency. It remains to be seen, whether there will be any real benefits to flow from the Republican agenda in the US, but
in the interim markets have priced in this optimism and valuations globally are near record levels. Thus, we continue to hold a higher
cash weighting than normal, reflecting the high valuation of many companies in our coverage. In what is a volatile and low growth
environment going forward, the Manager remains focused on investing in companies that we believe are reasonably valued and that
can grow through their own initiatives rather than relying on general economic tailwinds.
The Manager continues to focus on companies that can grow their earnings through identified ‘self-help’ initiatives. These initiatives
include; companies capable of making accretive bolt-on acquisitions, such as Tox Free; companies growing market share, such as Ansell;
companies taking costs out of their business, such as Pact Group; or companies that have contracted revenue growth, such as Spark
Infrastructure and Shopping Centres Australasia.
It remains our pleasure to bring IML’s investing skills to the Company’s portfolio for another year. Together with the investment team,
we look forward to meeting shareholders either at the upcoming AGM or any of the investor education forums which we will be
holding early in 2018. The ex-20 sector of the market is a sector which has delivered good returns for our investors over many years, and
which we believe continues to offers investor good opportunities while also diversifying their exposure away from the top 20.
Our objective is clear; to deliver reasonable, long-term growth over time through a steadily growing NTA, whilst also paying a healthy
dividend to the Company’s shareholders sourced from the accumulation of dividends paid by our investee companies.
Anton Tagliaferro
Investment Director
Investors Mutual Limited
Simon Conn
Senior Portfolio Manager
Investors Mutual Limited
16 August 2017
16 August 2017
10 | QV Equities Limited Annual Report 2017
Directors’ Report
The Directors present their report together with the financial report of QV Equities Limited (“the Company”) for the year ended 30 June
2017.
Directors
The following persons were Directors of the Company from their appointment date and up to the date of this report:
Name
Position
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
Principal activities
Independent Director (Chairman)
Independent Director
Independent Director
Non-independent Director
Non-independent Director
Appointment
date
17 April 2014
17 April 2014
26 April 2016
30 April 2014
14 June 2016
The principal activity of the Company is making investments in a diversified portfolio of entities listed on the Australian Securities
Exchange which are not included in the S&P/ASX 20 Index. The primary objective is to provide both long term capital growth and
income. No change in this activity took place during the year or is likely in the future.
Dividends
Dividends paid to shareholders were as follows:
2017
Ordinary shares – interim 2017
Ordinary shares – final 2016
2016
Ordinary shares – interim 2016
Ordinary shares – final 2015
Dividend
Per Share
Total
amount
Date of
payment
%
Franked
2.0 cents
1.8 cents
1.5 cents
1.5 cents
$4,430,175
03/04/2017
$3,984,999
31/10/2016
$3,320,685
04/04/2016
$3,002,999
06/11/2015
100%
100%
100%
100%
Since year end, the Directors have declared a final fully franked dividend of 2.0 cents per fully paid ordinary share to be paid on 31
October 2017.
Review of operations
The Board is pleased with the performance of the Company since listing in August 2014. Our investment manager, Investors Mutual
Limited (IML) has patiently built a portfolio of good quality ex 20 shares which IML believe are well placed to deliver the Company’s
objectives of long term capital growth and consistent income.
QV Equities Limited Annual Report 2017 | 11
Directors’ Report (continued)
Listed below is the Company’s performance for the past 6 and 12 months:
Performance
Increase in QVE's NTA
Benchmark Return
12 months to 30 June 2017
31 December 2016 to 30 June 2017
+12.0%
+4.6%
+13.6%
+6.5%
Note: these figures are calculated net of IML’s management fee.
Investment operations for the year ended 30 June 2017 resulted in an operating profit before tax of $9,222,156 (2016: $6,467,548) and
an operating profit after tax of $8,497,402 (2016: $5,717,941).
Net Tangible Assets (NTA) for each ordinary share as at 30 June 2017 (calculated on market value less realisation costs and before
applicable taxes and before provision for dividends) amounted to $1.21 (2016: $1.11) per share. NTA after tax before provision for
dividends was $1.16 (2016: $1.07) per share.
In March, the Company raised $65m before costs through an institutional Placement and Shareholder Purchase Plan (SPP). The capital
raising provided an opportunity for shareholders to increase their shareholding in QVE at a slight discount to the prevailing market
price, but at a premium to the pre-existing NTA.
This was achieved through $35m raised from the institutional Placement, $24.6m though the Share Purchase Plan and $5.5m from
professional and sophisticated investors which represented a portion of the shortfall in the SPP. A combined 53,410,089 shares were
issued through the raising. All shares were offered at $1.22 per share.
Further information on the operating and financial review of the Company is contained in the Chairman’s letter on pages 6 to 7 of the
Annual Report.
Financial position
The net asset value of the Company at 30 June 2017 was $320,401,651 (2016: $237,584,752).
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Company during the year ended 30 June 2017.
Matters subsequent to the end of the period
Since the end of the financial year, the Directors declared a fully franked final dividend of 2.0 cents per fully paid ordinary share payable
on 31 October 2017.
No other matter or circumstance other than those mentioned above, has occurred subsequent to the end of the financial year that has
significantly affected, or may significantly affect the operations of the Company, the results of those operations or the state of affairs of
the Company in subsequent financial years.
Likely developments and expected results of operations
The Company will continue to pursue its primary objective of providing long term capital growth and income through a diversified
portfolio of the ASX listed entities outside of the S&P/ASX 20 index.
Further information on the Company’s business strategies and results is contained in the Investment Manager’s Report on pages 8 to 10
of the Annual Report.
Environmental regulation
The Company is not affected by any significant environmental regulation in respect of its operations.
To the extent that any environmental regulation may have an incidental impact on the Company’s operations, the Directors of the
Company are not aware of any breach by the Company of those regulations.
12 | QV Equities Limited Annual Report 2017
Directors’ Report (continued)
Information on Directors
Peter McKillop
Independent Director, Chairman
Experience and expertise
Peter McKillop has over 30 years’ experience in the funds management, financial planning and superannuation industry. Peter was
Managing Director of State Super Financial Services from 1990 until his retirement in 2011. During his time with State Super Financial
Services, Peter was responsible for the overall management of the company’s activities, including compliance with all legislative
requirements and ensuring that the product range remained appropriate to clients needs.
Prior to joining State Super Financial Services, Peter was the Group Manager Investment Services at Perpetual Funds Management
Limited (Perpetual) where he engineered the launch of Perpetual’s house funds into the retail area in 1987, including Perpetual’s highly
successful Industrial Share Fund.
Peter is a Fellow of the Institute of Chartered Accountants of Australia and holds a Bachelor of Economics from the University of Sydney.
Peter was appointed as the Chairman of the Board on 14 June 2016.
Other current directorships
Peter McKillop is a Director of the Advisory Board of the Australian Dental Foundation.
Former directorships in last 3 years
Peter McKillop has not held any other directorships of listed companies within the last three years.
Special responsibilities
Chairman of the Board.
Interests in shares and options of the Company
Details of Peter McKillop’s interest in shares of the Company are included later in this report.
Interests in contracts
Peter McKillop has no interests in contracts of the Company.
QV Equities Limited Annual Report 2017 | 13
Directors’ Report (continued)
John McBain
Independent Director
Experience and expertise
John McBain has over 19 years’ experience in the funds management industry. John is currently the Chief Executive Officer and Executive
Director of Centuria Capital Limited (Centuria), an ASX listed specialist investment manager with $4.26 billion in assets under management.
In 1999 John formed Century Property Funds, a dedicated unlisted property fund manager and in 2006 he arranged the merger of unlisted
property fund manager Century Funds Management Pty Limited with Centuria Capital Limited. John oversees the core operations of
Centuria namely, listed and unlisted property funds management and tax effective investment bond management. John is a director of
Centuria Life Limited and sits on the investment committees of both Centuria Life and Over Fifty Guardian friendly societies.
Prior to his roles with Century and Centuria, John held senior positions in a number of property investment and consulting companies in
Australia, New Zealand and the United Kingdom. John holds a Diploma in Urban Valuation from Auckland University.
Other current directorships
John McBain is a Director of Centuria Capital Limited and Centuria Life Limited.
Former directorships in last 3 years
John McBain has not held any other directorships of listed companies within the last three years.
Special responsibilities
Chairman of Nomination and Corporate Governance Committee.
Interests in shares and options of the Company
Details of John McBain’s interest in shares of the Company are included later in this report.
Interests in contracts
John McBain has no interests in contracts of the Company.
Jennifer Horrigan
Independent Director
Experience and expertise
Jennifer Horrigan has more than 25 years’ experience across investment banking, financial communications, investor relations and
strategic communications. She was most recently the Chief Operating Officer in Australia of the independent investment bank Greenhill
& Co. She has extensive experience in enterprise management, including the supervision and management of compliance, HR and
financial management.
Jennifer holds a Bachelor of Business from the Queensland University of Technology, a Graduate Diploma in Applied Finance from Finsia
and a Graduate Diploma in Management from the Australian Graduate School of Management (AGSM).
Other current directorships
Jennifer Horrigan is a Director of APN Funds Management, Generation Healthcare (ASX: GHC), Industria REIT (ASX: IDR), Redkite
(national children’s cancer charity) and the Breast Cancer Institute of Australia/ Australia and New Zealand Breast Cancer Trails Group.
Former directorships in last 3 years
Jennifer Horrigan has not held any other directorships of listed companies within the last three years.
Special responsibilities
Chair of the Audit Committee
Interests in shares and options of the Company
Jennifer Horrigan has no interests in shares in the Company.
Interests in contracts
Jennifer Horrigan has no interests in contracts of the Company.
14 | QV Equities Limited Annual Report 2017
Directors’ Report (continued)
Anton Tagliaferro
Non-independent Director
Experience and expertise
Anton Tagliaferro has over 30 years’ experience in the financial services industry. Anton founded the Manager, Investors Mutual Limited
in March 1997 and holds the position of Chief Investment Officer and Investment Director.
Anton commenced his professional year with Deloitte Haskins and Sells in London, where he gained the status of Chartered
Accountant. From 1988 to 1992 Anton was Group Investment Manager and Equities Manager at Perpetual Trustees Australia Ltd
(Perpetual). At Perpetual, Anton was responsible for running Perpetual’s Industrial Share Fund which during his time, continually
outperformed in the Australian equities market and was highly rated in Money Management’s annual Australian Equity Manager
surveys for four years in a row.
Anton holds a Bachelor of Arts (Honours) in Accountancy from the Metropolitan University in London, is a member of the Institute of
Chartered Accountants and a member of the Financial Services Institute of Australasia.
Other current directorships
Anton Tagliaferro is a Director of Investors Mutual Limited.
Former directorships in last 3 years
Anton Tagliaferro has not held any other directorships of listed companies outside the Company.
Interests in shares and options of the Company
Details of Anton Tagliaferro’s interest in shares of the Company are included later in this report.
Interests in contracts
Details of Anton Tagliaferro’s interest contracts of the Company are included later in this report.
Simon Conn
Non-independent Director
Experience and expertise
Simon Conn has served as part of the Manager’s investment team since June 1998 and has over 12 years’ experience as a Senior
Portfolio Manager in the small cap sector. While employed with the Manager, Simon is responsible for analysing stocks from a wide
range of industry sectors which have given him the broad grounding to manage the Manager’s small cap portfolios.
In 1992 Simon commenced his career at KPMG as a tax and investment consultant. In 1995 Simon joined the investment division of QBE
Insurance Group where he was employed as an analyst across a range of asset classes including equities.
Simon holds a Bachelor of Economics and Bachelor of Laws from the University of Sydney. Simon is a qualified solicitor and is a Fellow
of the Financial Services Institute of Australasia.
Simon was appointed to the Board on 14 June 2016.
Other current directorships
Simon Conn has not held any other directorships of listed companies outside the Company.
Former directorships in last 3 years
Simon Conn has not held any other directorships of listed companies within the last three years.
Interests in shares and options of the Company
Details of Simon Conn’s interest in shares of the Company are included later in this report.
Interests in contracts
Details of Simon Conn’s interest contracts of the Company are included later in this report.
QV Equities Limited Annual Report 2017 | 15
Directors’ Report (continued)
Zac Azzi
Company secretary
Zac Azzi has over 20 years’ of financial services experience covering asset management, custody, platform and advice. Zac started his
career in corporate accounting at AMP and then St George Bank. In 2003 Zac joined Old Mutual Australia Limited (Skandia) in the role of
Head of Finance and Operations, and subsequently Chief Operating Officer (COO), helping them establish and manage their Australian
operations.
Zac subsequently joined SFG Australia Limited where he helped them established their funds management and platform businesses
before joining Investors Mutual Limited (the Manager) in August 2015 where he was appointed as COO and Company Secretary.
Zac holds a Bachelor of Commerce from the Macquarie University, a Masters of Business Administration from the Australian Graduate
School of Management and is also a Certified Practicing Accountant.
Meeting of Directors
The numbers of meetings of the Company’s Board of Directors and each Board committee held during the period ended 30 June 2017,
and the numbers of meetings attended by each Director were:
Directors
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
Directors’ meetings
Meeting of committees
Audit
Nomination
A
7
7
7
5
6
B
7
7
7
7
7
A
5
5
5
–
–
B
5
5
5
–
–
A
3
3
3
–
–
B
3
3
3
–
–
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
The Company has not established a Remuneration Committee as it has no paid employees. The services of Zac Azzi (COO and Company
Secretary), Anton Tagliaferro (Executive Director) and Simon Conn (Executive Director) are provided to the Company without additional
charge as part of the arrangements with the Investment Manager.
16 | QV Equities Limited Annual Report 2017
Directors’ Report (continued)
Remuneration report (audited)
This report details the nature and amount of remuneration for each Director of QV Equities Limited in accordance with the Corporations
Act 2001.
Fees and payments to Directors reflect the demands that are made on and the responsibilities of the Directors and are reviewed
annually by the Board. The Company determines the remuneration levels and ensures they are competitively set to attract and retain
qualified and experienced Directors.
Directors’ base fees are set at a maximum of $100,000 per annum. Directors do not receive bonuses nor are they issued options on
securities. Directors’ fees cover all main Board activities and membership of committees.
Under the ASX Listing Rules, the maximum fees paid to Directors may not be increased without the approval from the Company at a
general meeting. Directors seek approval from time to time as appropriate.
A. Details of remuneration
The following table shows details of the remuneration paid by the Company to the Directors for the year ended 30 June 2017 and 30
June 2016.
2017
Non-executive Directors
Peter McKillop
Jennifer Horrigan
John McBain
Total key management
personnel compensation
2016
Non-executive Directors
Don Stammer
Peter McKillop
John McBain
Total key management
personnel compensation
Short term employee benefits
Directors’ fees
$
Post-employment benefits
Superannuation
$
9,132
27,397
27,397
30,868
2,603
2,603
Total
$
40,000
30,000
30,000
63,926
36,074
100,000
Short term employee benefits
Directors’ fees
$
Post-employment benefits
superannuation
$
36,530
27,397
27,397
91,324
3,470
2,603
2,603
8,676
Total
$
40,000
30,000
30,000
100,000
The Manager agreed to pay Jennifer Horrigan’s remuneration ($7,500) during the transition period between the appointment of Ms.
Horrigan and the retirement of Don Stammer. This transition period was designed to enable an appropriate and orderly handover
between the Directors. Directors’ base fees paid by the Company remain capped at $100,000 per annum.
Directors receive a superannuation guarantee contribution required by the government, which was 9.5% of individual benefits
for financial year 2017 and did not receive any other retirement benefits. Directors may also elect to salary sacrifice their fees into
superannuation.
QV Equities Limited Annual Report 2017 | 17
Directors’ Report (continued)
B. Director related entity remuneration
All transactions with related entities were made on normal commercial terms and conditions.
Anton Tagliaferro is a Director and beneficial owner of Investors Mutual Limited (IML), the entity appointed to manage the investment
portfolio of QV Equities Limited. In its capacity as the Investment Manager, IML was paid a management fee of 0.90% p.a. (plus GST)
of the portfolio net asset value on the first $150 million and then 0.75% p.a. (plus GST) thereafter, amounting to $2,550,828 (2016:
$2,085,598) inclusive of GST. The amount expensed in the Statement of Comprehensive Income after allowing for the reduced input tax
credit is $2,376,908 (2016: 1,943,398). As at 30 June 2017, the balance payable to the manager was $246,307 (2016: $186,561).
Simon Conn is a Portfolio Manager of the Manager and holds equity interests in the Manager.
No Director has received or become entitled to receive a benefit (other than those detailed above) by reason of a contract made by the
Company or a related Company with the Director or with a firm of which he is a member or with a Company in which he has substantial
financial interest.
Directors’ fees are not directly linked to the Company’s performance. Further details of the Company’s performance are detailed in the
Chairman’s Letter and Investment Manager’s Report.
C. Remuneration of Executives
There are no Executives paid by the Company. IML, the Investment manager remunerated Anton Tagliaferro, Simon Conn and Zac Azzi
as employees of the Company during the financial period. The Manager is appointed to provide the day to day management of the
Company and is remunerated as outlined above.
D. Equity instrument disclosures relating to Directors
As at 30 June 2017 and 30 June 2016, the Company’s Directors and their related parties held the following interests in the Company:
2017 Ordinary shares held
Director
Position
Peter McKillop
Non-executive Director
John McBain
Non-executive Director
Jennifer Horrigan
Non-executive Director
Anton Tagliaferro
Executive Director
Simon Conn
Executive Director
Balance at
1 July 2016
400,000
200,000
–
6,000,000
150,000
6,750,000
Acquisitions
Disposals
Balance at
30 June 2017
18,542
6,247
–
10,000
–
–
–
–
300,000*
–
418,542
206,247
–
5,710,000
150,000
34,789
300,000
6,484,789
* Investors Mutual Limited initial capital contribution reduction.
18 | QV Equities Limited Annual Report 2017
Directors’ Report (continued)
2016 Ordinary shares held
Director
Position
Peter McKillop
Non-executive Director
John McBain
Non-executive Director
Jennifer Horrigan
Non-executive Director
Anton Tagliaferro
Executive Director
Simon Conn
Executive Director
Balance at
1 July 2015
Options
excercised
Disposals
Balance at
30 June 2016
200,000
100,000
–
5,000,000
100,000
5,400,000
200,000
100,000
–
1,000,000
50,000
1,350,000
–
–
–
–
–
–
400,000
200,000
–
6,000,000**
150,000
6,750,000
** Holdings include Investors Mutual Limited holdings as required by Section 608 of the Corporations Act 2001.
Directors and Director-related entities acquired ordinary shares in the Company on the same terms and conditions available to other
shareholders.
2017 Options held
The directors did not hold or exercise any options during the current financial year.
2016 Options held
Director
Position
Balance at
1 July 2015
Options
exercised
Disposals/
Lapsed
Balance at
30 June 2016
Peter McKillop
Non-executive Director
John McBain
Non-executive Director
Jennifer Horrigan
Non-executive Director
200,000
100,000
–
200,000
100,000
–
–
–
–
Anton Tagliaferro
Executive Director
2,500,000
1,000,000
1,500,000
Simon Conn
Executive Director
100,000
50,000
50,000
2,900,000
1,350,000
1,550,000
–
–
–
–
–
–
Directors and Director-related entities acquired options in the Company on the same terms and conditions available to other
shareholders.
The Directors have not, during or since the end of the financial year, been granted options over unissued shares or interests in shares
of the Company as part of their remuneration.
End of Remuneration Report
QV Equities Limited Annual Report 2017 | 19
Directors’ Report (continued)
Insurance and indemnification of Officers and Auditors
During the financial year, the Company paid a premium in respect of a contract to insure the Directors of the Company, the Company
Secretary and any related body corporate against liability incurred as such by a Director or Secretary to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
No indemnities have been given or insurance premiums paid during or since the end of the financial year, for any person who is or has
been an auditor of the Company.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to 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 part of those proceedings.
Non-audit services
The Board of Directors, in accordance with the advice from the Audit Committee, is satisfied that the provision of non-audit services
during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the services disclosed in Note 20 did not compromise the external auditor’s independence for the following
reasons:
• all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of
the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.
This report is made in accordance with a resolution of the Board of Directors.
Peter McKillop, Chairman
16 August 2017
20 | QV Equities Limited Annual Report 2017
Auditor’s Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF QV EQUITIES LIMITED
ABN 64 169 154 858
In relation to the independent audit for the year ended 30 June 2017, to the best of my knowledge and belief there
have been:
(i) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii) no contraventions of any applicable code of professional conduct.
This declaration is in respect of QV Equities Limited.
S M Whiddett
Partner
16 August 2017
Pitcher Partners
Sydney
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
QV Equities Limited Annual Report 2017 | 21
Directors’ Report (continued)
Financial Statements
22 | QV Equities Limited Annual Report 2017
Financial Statements For the year ended 30 June 2017
Statement of Comprehensive Income
Investment income
Dividend income
Interest income
Realised gains on investments held for trading
Unrealised (losses) on investments held for trading
Other income
Total investment income
Expenses
Management fees
Directors’ fees
ASX fees
Registry fees
Other expenses
Total expenses
Profit before income tax
Income tax expense
Profit after income tax
Notes
30 June 2017
$
30 June 2016
$
10,760,296
941,302
313,419
(22,017)
27,696
7,353,582
1,170,291
486,551
(228,632)
112,893
12,020,696
8,894,685
2,376,908
100,000
88,819
121,618
111,195
1,943,398
100,000
66,312
89,926
227,501
2,798,540
2,427,137
9,222,156
6,467,548
5
724,754
749,607
8,497,402
5,717,941
Other comprehensive income
Items that will not be reclassified to profit and loss
Movement in fair value of long term equity investments, net of tax
17,960,106
9,986,252
Total comprehensive income for the year, net of tax
26,457,508
15,704,193
Earnings per share
Basic and diluted earnings per share (cents per share)
13
3.61
2.77
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
QV Equities Limited Annual Report 2017 | 23
Financial Statements (continued) For the year ended 30 June 2017
Statement of Financial Position
Assets
Current assets
Cash and cash equivalents
Receivables
Prepayments
Total current assets
Non-current assets
Long-term equity investments
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade creditors and other payables
Current tax liabilities
Financial liabilities held at fair value
Total current liabilities
Non-current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Asset revaluation reserve
Capital profits reserve
Profit reserves
Total equity
Notes
30 June 2017
$
30 June 2016
$
6
7
8
5
10
5
9
75,657,537
33,161,728
814,228
33,375
980,456
41,807
76,505,140
34,183,991
259,247,833
216,791,950
564,565
540,750
259,812,398
217,332,700
336,317,538
251,516,691
2,359,882
3,262,102
374,650
4,842,574
703,492
451,975
5,996,634
5,998,041
5
9,919,253
7,933,898
9,919,253
7,933,898
15,915,887
13,931,939
320,401,651
237,584,752
11
12
12
281,113,681
216,339,116
24,595,350
17,252,345
10,294,914
4,397,706
1,216,678
2,776,613
320,401,651
237,584,752
The Statement of Financial Position should be read in conjunction with the accompanying notes.
24 | QV Equities Limited Annual Report 2017
Financial Statements (continued) For the year ended 30 June 2017
Statement of Changes in Equity
For the year ended 30 June 2017
Notes
Issued capital
$
Profit
reserve
$
Asset
revaluation
reserve
$
Capital
profits
reserve
$
Retained
profits
$
Total
$
Balance at 1 July 2016
216,339,116
2,776,613
17,252,345
1,216,678
–
237,584,752
–
–
–
8,497,402
8,497,402
Profit for the year
Other comprehensive
income
Net revaluation
of investments
Total other
comprehensive
income for the year
Transactions with equity
holders in their capacity
as owners
–
–
–
Costs of issued capital
(719,863)
Shares issued
11
65,160,968
Shares issued from
dividend reinvestment
plan
Dividends provided
for or paid
Other
Realised profits on sale of
investments transferred
to reserves
Transfer to profits reserve
11
14
12
12
–
–
–
333,460
–
(6,876,309)
–
17,960,106
–
17,960,106
–
17,960,106
8,497,402
26,457,508
–
–
–
–
–
(1,538,865)
–
–
–
–
–
–
–
–
–
(719,863)
65,160,968
333,460
(8,415,174)
–
–
–
–
–
(10,617,101)
10,617,101
8,497,402
–
–
(8,497,402)
Balance at 30 June 2017
281,113,681
4,397,706
24,595,350
10,294,914
–
320,401,651
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
QV Equities Limited Annual Report 2017 | 25
Financial Statements (continued) For the year ended 30 June 2017
Statement of Changes in Equity
For the year ended 30 June 2016
Issued
capital
$
Profit
reserve
$
Asset
revaluation
reserve
$
Notes
Capital
profits
reserve
$
Retained
profits
$
Total
$
Balance at 1 July 2015
188,469,807
2,809,550
8,781,011
274,565
–
200,334,933
–
–
–
5,717,941
5,717,941
–
9,986,252
–
–
9,986,252
–
9,986,252
–
5,717,941
15,704,193
–
–
–
(5,750,878)
–
–
–
–
–
–
–
–
27,869,309
(572,805)
–
(6,323,683)
Profit for the period
Other comprehensive
income
Net revaluation
of investments
Total other
comprehensive
income for the period
Transactions with equity
holders in their capacity
as owners
Costs of issued capital
Shares issued on
options exercised
Dividends provided
for or paid
Other
Realised profit on sale of
investments transferred
to reserves
Transfer to profits reserve
–
–
–
–
11
27,869,309
14
12
12
–
–
–
(1,514,918)
1,514,918
–
5,717,941
–
–
(5,717,941)
–
-
Balance at 30 June 2016
216,339,116
2,776,613
17,252,345
1,216,678
–
237,584,752
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
26 | QV Equities Limited Annual Report 2017
Financial Statements (continued) For the year ended 30 June 2017
Statement of Cash Flow
Cash flows from operating activities
Dividends/distributions received
Interest received
Net realised gains on exchange traded options
Payments for other expenses
Other income
Income tax paid
Notes
30 June 2017
$
30 June 2016
$
10,990,770
1,039,069
214,077
7,124,548
1,245,251
418,563
(2,801,611)
(2,592,946)
31,384
109,205
(2,545,194)
(992,186)
Net cash inflow from operating activities
6
6,928,495
5,312,435
Cash flows from investing activities
Payments for investments
Proceeds from sale of investments
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid
Proceeds from issue of ordinary shares
Shares issued on options exercised
Share issue transaction costs
Net cash inflow from financing activities
(93,186,066)
(76,562,091)
72,702,502
30,467,914
(20,483,564)
(46,094,177)
(8,081,715)
(6,323,683)
65,160,968
–
-
27,869,309
(1,028,375)
–
56,050,878
21,545,626
Net increase/(decrease) in cash and cash equivalents
42,495,809
(19,236,116)
Cash and cash equivalents held at the beginning of the year
33,161,728
52,397,844
Cash and cash equivalents at the end of the year
6
75,657,537
33,161,728
The Statement of Cash Flow should be read in conjunction with the accompanying notes.
QV Equities Limited Annual Report 2017 | 27
Notes to the Financial Statements For the year ended 30 June 2017
1 General Information
QV Equities Limited (“the Company”) is a listed investment company domiciled in Australia. The Company was established with the
primary objective of providing long term capital growth and income, through a diversified portfolio of the ASX listed entities outside of
the S&P/ASX 20 Index. The portfolio is managed by Investors Mutual Limited.
The Company was registered with the Australian Securities Commission (ASIC) on 17 April 2014 and commenced operations on 22
August 2014.
The financial statements were authorised for issue by the Board on 16 August 2017.
2 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. The annual financial
statements are for the entity QV Equities Limited.
(a) Basis of preparation
These general purpose annual financial statements for the year ended 30 June 2017 have been prepared in accordance with the
Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. QV Equities Limited is a for-profit entity for financial reporting purposes under the Australian Accounting Standards.
(i) Compliance with IFRS
The financial statements of the QV Equities Limited also comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
(ii) New accounting standards and Interpretations
The Australian Accounting Standards Board has issued new accounting standards and interpretations that have mandatory
application for future reporting periods, some of which are relevant to the Company. The Directors have assessed these new
standards and interpretations.
The Company has elected to early adopt AASB 9 Financial Instruments Standard which applies to annual reporting periods
beginning from 1 January 2018. AASB 9 Financial Instruments addresses the classification, measurement and derecognition of
financial assets and liabilities. These requirements improve and simplify the approach for the classification and measurement of
financial assets and liabilities compared to the requirements of AASB 139 Financial Instruments: Recognition and Measurement.
AASB 9 allows investments in equity instruments, which were previously classified as available for sale financial assets, to be
classified as equity instruments revalued through other comprehensive income. Investments continue to be valued at fair value
with changes in value being recognised in the asset revaluation reserve.
Under AASB 9 there is no recycling of the realised gains and losses to the income statement as was previously required by
AASB 139. There is also no requirement to test the Company’s investments for impairment so there is no transfer of unrealised
impairment losses from the asset revaluation reserve to the income statement.
(iii) Standards issued but not yet effective
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future transactions.
(b)
Investments
Revenue is measured at the fair value of the consideration received or receivable.
(i) Recognition and initial measurement
Long term equity investments and investments held for sale are recognised initially at cost.
(ii) Classification and subsequent measurement
The Company designates all long term equity investments as available for sale financial assets and therefore records
subsequent changes in fair value of equity investments in the Statement of Comprehensive Income through the asset
revaluation reserve, not to be reclassified to profit and loss, after deducting a provision for the potential deferred capital gains
tax liability.
The Company holds call option derivative financial instruments are held for trading which are mandatorily classified as at fair
value through profit and loss, changes in the fair value of options are recognised in profit or loss for the period.
28 | QV Equities Limited Annual Report 2017
2 Summary of significant accounting policies (continued)
(b)
Investments (continued)
(iii) Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
with the asset. Gains or losses on long term equity investments are transferred from the asset revaluation reserve to the capital
profits reserve.
(iv) Valuation
All investments are classified and measured as being at fair value, please refer to note 4 for more information on the Company’s
policy for measuring fair value.
(c) Revenue
(i)
Interest income
Interest income is recognised as it accrues, taking into account the effective yield on the financial asset.
(ii) Dividend income
Dividend income is recognised in the profit or loss on the day on which the relevant investment is first quoted on an
“ex-dividend” basis.
(d) Expenses
All expenses, including management fees, are recognised in the profit and loss on an accruals basis.
(e) Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate, adjusted by changes in the deferred tax assets and liabilities attributable to temporary differences, unused tax
losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying
amount to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends to either to
settle on a net basis, or to realise the asset and settle the liability simultaneously.
(f) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), unless GST incurred is not
recoverable from the Australian Taxation Office (ATO). In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from,
or payable to, the tax authority is included in other receivables or other payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the Australian Taxation Office (ATO), are presented as operating cash flows.
(g) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash which are
subject to an insignificant risk to changes in value.
QV Equities Limited Annual Report 2017 | 29
Notes to the Financial Statements (continued) For the year ended 30 June 2017
2 Summary of significant accounting policies (continued)
(h) Receivables
Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment.
Receivables may include interest and dividends. Interest and dividends are accrued in accordance with the policy note set out in
note 2(c) and note 2(b)(iv).
All receivables, unless otherwise stated are non interest bearing, unsecured and generally received in 30 days of being recorded as
a receivable.
(i) Trade creditors and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the reporting date which was unpaid.
These amounts are unsecured and are usually paid within 30 days of recognition. Purchases of securities and investments that are
unsettled at the reporting date are included in payables and are normally settled within 2 business days of trade dates.
(j) Share Capital
Ordinary shares will be classified as equity. Costs directly attributable to the issue of ordinary shares will be recognised as a
deduction from equity, net of tax effects.
(k) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
It is the Boards’ policy that all dividends paid will be franked to the maximum extent possible.
(l) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares.
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and;
• the weighted average number of ordinary shares that would have been outstanding assuming the conversion of options.
(m) Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/91, the amounts in the directors’
report and in the financial report have been rounded to the nearest dollar unless otherwise stated.
(n) Functional and presentation currency
The functional and presentation currency of the Company is Australian dollars.
30 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017 3 Financial risk management
The Company’s financial instruments consist of deposits with banks, listed and unlisted investments, trade and other receivables and
trade and other payables. The main risks the Company is exposed to through its financial instruments are market risk - consisting of
interest rate risk and other price risk - credit risk and liquidity risk.
Under delegation from the Board, the Manager has the responsibility for assessing and monitoring for the financial market risk of the
Company. The Manager monitors these risks daily.
(a) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. By its nature, as a listed investment company that invests in tradable securities, the Company will always be subject to
market risk as it invests its capital in securities which are not risk free as the market price of these securities can fluctuate.
The Manager seeks to reduce market risk of the Company by diversification of the investment portfolio across numerous stocks
and multiple industry sectors. The relative weightings of the individual securities and market sectors are reviewed daily by the
Investment Manager.
(i) Other price risk
The Company is exposed to equities securities other price risk. This arises from investments held by the Company and classified
in the Statement of Financial Position as financial assets and financial liabilities at fair value through profit and loss.
The Company seeks to manage and constrain other price risk by diversification of the investment portfolio across multiple
stocks and industry sectors. The portfolio is maintained by the Investment Manager within a range of parameters governing the
levels of acceptable exposure to stocks and industry sectors. The relative weightings of the individual securities and relevant
market sectors are reviewed on a daily basis such that risk can be managed by reducing exposure where necessary.
The Company’s industry sector weighting of investments including options as at 30 June 2017 and 30 June 2016 is listed below:
Industry sector
Financials
Materials
Health Care
Utilities
Consumer Discretionary
Industrials
Energy
Listed property trust
Telecommunications
Information Technology
Cash
2017
%
13.8
11.9
10.2
9.7
9.1
8.1
6.7
4.7
-
1.1
75.3
24.7
100.0
2016
%
14.2
10.4
9.1
13.3
9.3
11.2
5.3
5.8
3.5
2.4
84.5
15.5
100.0
As at 30 June 2017, no individual securities represent over 5% of the long term investment portfolio.
QV Equities Limited Annual Report 2017 | 31
Notes to the Financial Statements (continued) For the year ended 30 June 2017
3 Financial risk management (continued)
(a) Market risk (continued)
(i) Other price risk (continued)
Sensitivity analysis
A sensitivity analysis relating to other price risk was performed on investments held by the Company at the end of the
reporting period. This analysis demonstrates the effect on current year equity as a result from a reasonable possible change in
the risk variable. The sensitivity assumes all other variables remain constant.
Investments represent 75% (2016: 85%) of gross assets at year end. The following table illustrates the effect on the Company’s
equity from possible changes in other price risk that were reasonably possible based on the risk the Company was exposed to
at reporting date, assuming a flat tax rate of 30%.
Impact on total comprehensive income
2017
$
9,060,561
(9,060,561)
18,121,123
2016
$
7,571,899
(7,571,899)
15,143,798
(18,121,123)
(15,143,798)
Increase 5%
Decrease 5%
Increase 10%
Decrease 10%
(ii) Cash flow and fair value interest rate risk
The Company’s interest bearing financial assets expose it to risks associated with the effects of fluctuations in the prevailing
levels of market interest rates on its financial position and cash flows. The risk is measured using sensitivity analysis.
The table below summarises the Company’s exposure to interest rate risks. It includes the Company’s assets and liabilities at fair
value, categorised by the earlier of contractual repricing or maturity dates.
30 June 2017
Financial assets
Cash and cash equivalents
Receivables
Floating interest
rate
$
Non- interest
bearing
$
Total
$
75,657,537
–
75,657,537
–
814,228
814,228
Long-term equity investments
4,038,500
255,209,333
259,247,833
79,696,037
256,023,561
335,719,598
Financial liabilities
Trade creditors and other payables
Financial liabilities held at fair value
–
–
–
(2,359,882)
(2,359,882)
(374,650)
(374,650)
(2,734,532)
(2,734,532)
Net exposure to interest rate risk
79,696,037
253,289,029
332,985,066
32 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017 3 Financial risk management (continued)
(a) Market risk (continued)
(ii) Cash flow and fair value interest rate risk (continued)
30 June 2016
Financial assets
Cash and cash equivalents
Receivables
Floating interest
rate
$
Non- interest rate
$
Total
$
33,161,728
–
33,161,728
–
980,456
980,456
Long-term equity investments
2,396,850
214,395,100
216,791,950
35,558,578
215,375,556
250,934,134
Financial liabilities
Trade creditors and other payables
Financial liabilities held at fair value
–
–
–
(4,842,574)
(4,842,574)
(451,975)
(451,975)
(5,294,549)
(5,294,549)
Net exposure to interest rate risk
35,558,578
210,081,007
245,639,585
Sensitivity analysis
At 30 June 2017, if interest rates had increased/decreased by 75 basis points (2016: 75 basis points) from the period end rates with
all other variables held constant, post-tax profit for the period would have been $253,465 (2016: $225,644) higher/$253,465 (2016:
$225,644) lower, mainly as a result of higher/lower interest income from cash and cash equivalents.
(b) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation.
Market prices generally incorporate credit risk assessments into valuations and risk of loss is implicitly provided for in the carrying
value of assets and liabilities as they are marked to market at balance date.
The total credit risk for assets is therefore limited to the amount carried in the Statement of Financial Position.
The Manager is responsible for ensuring there is appropriate diversification across counterparties and that they are of a sufficient
quality rating. The Manager minimises the Company’s concentration of credit risk by undertaking transactions in ASX listed
securities with a large number of approved brokers. Payment is only made once a broker has received securities and delivery of
securities only occurs once the broker received payment.
Cash
The majority of the Company’s short term deposits are invested with financial institutions that have a Standard and Poor’s AA or A1
credit rating. The majority of maturities are within three months.
The weighted average interest rate of the Company’s cash and cash equivalents at 30 June 2017 is 1.45% (2016: 1.98%).
Receivables
The majority of the Company’s receivables arise from dividends yet to be received.
None of these assets exposed to credit risk are overdue or considered to be impaired.
QV Equities Limited Annual Report 2017 | 33
Notes to the Financial Statements (continued) For the year ended 30 June 2017
3 Financial risk management (continued)
(c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
The Company’s cash receipts depend on the level of dividends and interest received and the exercise of options that may be on
issue. The Company’s cash payments are the purchase of securities and dividend that are paid to shareholders.
The Manager monitors the Company’s cash flow requirements daily by reference to known purchase and sale of securities,
dividends and interest received. Should these decrease by a material amount the Company can alter its cash outflows as
appropriate. The Company also holds a portion of its portfolio in cash and term deposits sufficient to ensure that it has cash readily
available to meet all payments. Finally, the assets of the Company are largely in the form of tradable securities which can be sold on
market if necessary.
The Company is not exposed to material liquidity risk.
4 Fair value measurement
The Company measures and recognises the following assets and liabilities at fair value on a recurring basis:
• Long term equity investments
• Financial liabilities held for trading
Fair value hierarchy
AASB 13: Fair value measurement requires disclosure of fair value measurements by level of the fair value hierarchy:
Level 1 – measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – measurements based on inputs other than quoted prices included in level 1 that are observable for the asset or liability; and
Level 3 – measurements based on unobservable inputs from the asset or liability.
(i) Recurring fair value measurements
The following table presents the Company’s assets measured and recognised at fair value as at 30 June 2017 and 30 June 2016.
Level 1
$
Level 2
$
Level 3
$
Total
$
As at 30 June 2017
Financial assets
Long-term equity investments:
Listed equities
Listed unit trusts
Floating rate notes
Unlisted equities
Total
Financial liabilities
228,362,790
26,272,000
4,038,500
–
258,673,290
–
–
–
574,543
574,543
–
–
–
–
–
–
–
228,362,790
26,272,000
4,038,500
574,543
259,247,833
374,650
374,650
Financial liabilities held for trading:
Options
Total
374,650
374,650
–
–
34 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017
4 Fair value measurement (continued )
(i) Recurring fair value measurements (continued)
Level 1
$
Level 2
$
Level 3
$
Total
$
As at 30 June 2016
Financial assets
Long-term equity investments:
Listed equities
Listed unit trusts
Floating rate notes
Unlisted equities
Total
Financial liabilities
177,647,250
33,566,500
2,396,850
–
213,610,600
–
–
–
3,181,350
3,181,350
–
–
–
–
–
–
–
177,647,250
33,566,500
2,396,850
3,181,350
216,791,950
451,975
451,975
Financial liabilities held for trading:
Options
Total
451,975
451,975
–
–
Included within Level 1 of the hierarchy are listed investments. The fair value of these financial assets and liabilities have been
based on the last close prices at the end of the reporting year.
The investments included in Level 2 of the hierarchy include amounts in relation to entitlement offers and placements to which
the Company has subscribed to during the year. These investments have not listed on the Australian Securities Exchange as at
year end and therefore represent investments in an inactive market. In valuing these unlisted investments, included in Level 2
of the hierarchy, the fair value has been determined using the valuation technique of quoted prices for similar assets and the
amount of securities subscribed for by the Company under the relevant offers.
During the year $3,181,350 has been transfered from level 2 to level 1. There were no transfers in and out of level 3.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting
period.
(ii) Disclosed fair values
The carrying amounts of receivables and payables other than tax items are reasonable approximations of their fair values due
to their short-term nature.
QV Equities Limited Annual Report 2017 | 35
Notes to the Financial Statements (continued) For the year ended 30 June 2017
5 Taxation
(a) Income tax expense
The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax expense as follows:
30 June 2017
$
30 June 2016
$
Prima Facie tax on profit from ordinary activities before income tax of 30% (2016: 30%)
2,766,646
1,940,264
Increase/(decrease) in income tax expense due to:
Gross up of imputation credits received
Imputation credits on dividends received
Gross up of foreign income tax offsets
Foreign income tax offsets
Other
Over provisions in previous year
Tax expense composition:
Current tax expense
Movement in deferred tax liability
Movement in deferred tax asset
(Over)/under provisions in previous year
783,474
425,590
(2,611,579)
(1,418,633)
81,892
(272,975)
-
(22,704)
724,754
436,847
41,356
258,988
(12,437)
724,754
64,824
(216,079)
(46,359)
–
749,607
539,996
35,430
168,405
5,776
749,607
Effective tax rate is:
7.86%
11.59%
The charge for current income tax expense is based on the profit for the year
adjusted for any non-assessable or disallowed items. It is calculated using the tax
rates that have been enacted or are substantially enacted by the end of the current
financial year.
36 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017
5 Taxation (continued)
(b) Deferred tax assets
This balance comprises temporary differences attributable to:
Accruals
Share issue costs capitalised
At reporting date
Movements
Opening balance
Share issue costs capitalised
Charged to statement of comprehensive income
The rate used at 30 June 2017 is 27.5% (30 June 2016: 30%)
(c) Current tax liabilities
Balance at beginning of year
Current year income tax on operating profit
Realised capital gain
Net income tax paid
Over provisions in previous year
Other
At reporting date
(d) Deferred tax liabilities
This balance comprises temporary differences attributable to:
Fair value adjustment on equity investments
Revaluation of investments held for trading
Income receivable not assessable for tax until receipt
Tax deferred distributable income
Prepayments
Other
At reporting date
Movements
Opening balance
Charged to statement of comprehensive income
Other
The rate used at 30 June 2017 is 27.5% (30 June 2016: 30%)
30 June 2017
$
30 June 2016
$
16,539
548,026
564,565
540,750
282,803
14,196
526,554
540,750
709,155
-
(258,988)
(168,405)
564,565
540,750
703,492
436,847
4,678,091
449,441
539,996
692,332
(2,545,194)
(992,186)
(11,134)
–
3,262,102
–
13,909
703,492
9,641,659
7,694,195
(9,866)
26,123
282,474
9,178
(30,315)
(4,158)
49,217
182,102
12,542
–
9,919,253
7,933,898
7,933,898
4,027,733
(41,356)
2,026,711
9,919,253
35,430
3,870,735
7,933,898
QV Equities Limited Annual Report 2017 | 37
Notes to the Financial Statements (continued) For the year ended 30 June 2017
6 Cash and cash equivalents
Cash at bank
Short term deposits
Total cash and cash equivalents
Reconciliation of operating profit after tax to cash inflows from operating activities.
Net profit after income tax
Changes in operating assets and liabilities
Unrealised losses on investments held for trading
Decrease/(Increase) in dividends/distributions receivable
Decrease in interest receivable
Decrease/(Increase) in other receivables
Decrease in prepayments
Decrease in sundry creditors and accruals
Decrease in deferred tax assets
Decrease in current tax provision
Increase/(Decrease) in deferred tax liability
Net cash inflow from operating activities
Prior year comparatives have been restated to conform with current year presentation.
7 Receivables
Interest receivable
Dividends/distributions receivable
Other receivables
Total receivables
None of the receivables above are past the due date and are not impaired.
38 | QV Equities Limited Annual Report 2017
30 June 2017
$
30 June 2016
$
75,657,537
8,161,728
–
25,000,000
75,657,537
33,161,728
30 June 2017
$
30 June 2016
$
8,497,402
5,717,941
22,017
230,474
97,767
3,688
8,432
(112,517)
258,988
(2,119,112)
228,632
(229,033)
74,960
(143,094)
10,450
(219,791)
168,405
(260,605)
41,356
(35,430)
6,928,495
5,312,435
30 June 2017
$
30 June 2016
$
2,990
495,300
315,938
814,228
100,757
725,774
153,925
980,456
Notes to the Financial Statements (continued) For the year ended 30 June 2017 8 Long term equity investments
Financial assets held at fair value through other comprehensive income are all held as long term investments include the following:
Listed equity securities
Fair value
30 June 2017
$
Fair value
30 June 2016
$
259,247,833
216,791,950
The fair value of investments is based on the fair value measurement hierarchy disclosed in note 4(i).
During the year, the total fair value of investments sold in the normal course of the business and to preserve capital were $72,846,961
(2016: $30,561,250), and the total dividends received on these investments sold were $3,035,424 (2016: $549,942) which are included in
the Statement of Profit or Loss and Other Comprehensive Income
9 Financial liabilities held at fair value
Financial liabilities held at fair value through profit or loss are held for trading and include the following:
Exchange traded options
Exchange traded options revaluation
Total financial liabilities held at fair value
10 Trade creditors and other payables
Payable – investment creditors
Payable - other expenses
Total trade creditors and other payables
11 Issued capital
(a) Share capital
Fair value
30 June 2017
$
Fair value
30 June 2016
$
338,774
35,876
374,650
438,116
13,859
451,975
30 June 2017
$
30 June 2016
$
1,889,735
4,380,496
470,147
462,078
2,359,882
4,842,574
30 June 2017
Number of
shares
30 June 2017
Total amount
$
30 June 2016
Number of
shares
30 June 2016
Total amount
$
Fully paid ordinary shares
275,070,493
281,113,681
221,388,859
216,339,116
QV Equities Limited Annual Report 2017 | 39
Notes to the Financial Statements (continued) For the year ended 30 June 2017
11 Issued capital (continued))
(b) Movements in ordinary share capital
2017 Date
Number of
shares
Total amount
Issue price
$
01/07/2016
Opening balance
221,388,859
216,339,116
Ordinary Shares issued under dividend
reinvestment plan- final 2016
Ordinary Shares issued under dividend
reinvestment plan- interim 2017
Ordinary Shares offered under Placement
Ordinary Shares offered under Share Purchase
Plan
119,889
$1.21
145,705
151,656
$1.24
187,756
28,688,524
20,183,778
$1.22
$1.22
34,999,999
24,624,868
Ordinary Shares offered under shortfall
4,537,787
$1.22
5,536,100
Share issue cost
30/06/2017
Closing balance
275,070,493
(719,863)
281,113,681
2016 Date
01/07/2015
Opening balance
Options exercised
30/06/2016
Closing balance
(c) Fully paid ordinary shares
Number of
shares
193,519,550
27,869,309
221,388,859
Issue price
Total amount
$
188,469,807
$1.00
27,869,309
216,339,116
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
(d) Shares issued
The Company issued a Prospectus on 23 June 2014 for the offer of up to 200,000,000 fully paid ordinary shares at an offer price of
$1.00 per share to raise up to $200,000,000, together with 1 option to acquire 1 ordinary share exercisable at $1.00 per option on
or before 15 March 2016. On 21 August 2014, the Company issued 184,620,900 full paid ordinary shares under this initial public
offering at $1.00 per share.
In March, the Company raised $65m before costs through an institutional Placement and Shareholder Purchase Plan (SPP). The
capital raising provided an opportunity for shareholders to increase their shareholding in QVE at a slight discount to the prevailing
market price, but at a premium to the pre-existing NTA.
This was achieved through $35m raised from the institutional Placement, $24.6m though the Share Purchase Plan and $5.5m from
professional and sophisticated investors which represented a portion of the shortfall in the SPP. A combined 53,410,089 shares
were issued through the raising. All shares were offered at $1.22 per share.
40 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017 (e) Options
As part of the IPO the Company issued options to acquire ordinary shares in the Company at an exercise price of $1.00.
(f) Capital management
The Company’s objectives in managing capital is to continue to provide shareholders with dividends and capital appreciation over
the longer term.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
There were no changes in the Company’s approach to capital management during the year. The Company is not subject to any
externally imposed capital requirements.
12 Reserves
(a) Capital profits reserve
The capital profits reserve is made up of amounts transferred from asset revaluation reserve for future dividend payments.
Realised profit on sale of investments transferred to reserves
10,617,101
1,514,918
30 June 2017
$
30 June 2016
$
Movements
Opening balance
Gain on sale of equities
Loss on sale of equities
Dividends provided for or paid
Closing balance
1,216,678
11,446,959
274,565
4,405,918
(829,858)
(2,891,000)
(1,538,865)
10,294,914
(572,805)
1,216,678
(b) Profits reserve
The profits reserve is made up of amounts transferred from retained earnings for future dividend payments.
Profits reserve
Movements
Opening balance
Transfer from retained earnings
Dividends provided for or paid
Closing balance
30 June 2017
$
30 June 2016
$
4,397,706
2,776,613
2,776,613
8,497,402
2,809,550
5,717,941
(6,876,309)
(5,750,878)
4,397,706
2,776,613
QV Equities Limited Annual Report 2017 | 41
Notes to the Financial Statements (continued) For the year ended 30 June 2017
13 Earnings per share
30 June 2017
cents
30 June 2016
cents
(a) Basic and diluted earnings per share
Total earnings per share attributable to the ordinary equity holders of the Company
3.61
2.77
(b) Weighted average number of shares used as denominator
Weighted average number of shares used as the denominator in calculating basic and
diluted earnings per share is based on the average number of shares as at 30 June 2017
and 30 June 2016
235,279,798
206,797,006
Diluted earnings per share and basic earnings per share are the same as there are no potential dilutive ordinary shares.
14 Dividends
(a) Dividends paid during the year
Dividends paid fully franked at 30% tax rate.
Final dividend FY16: 1.8 cents per share fully franked paid 31 October 2016
(final dividend FY15: 1.5 cents)
lnterim dividend FY17: 2.0 cents per share fully franked paid 3 April 2017
(interim dividend FY16: 1.5 cents per share fully franked)
30 June 2017
$
30 June 2016
$
3,984,999
3,002,998
4,430,175
8,415,174
3,320,685
6,323,683
42 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017 14 Dividends (continued)
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since period end the Directors have
recommended the payment of a final dividend of 2.0 cents per fully paid ordinary
share, fully franked based on tax paid at 27.5%. The aggregate amount of the
proposed dividend expected to be paid on 31 October 2017 (2016: 31 October
2016) out of the profits of the Company at 30 June 2017 and 30 June 2016, but not
recognised as a liability at period end is:
30 June 2017
$
30 June 2016
$
5,501,410
3,984,999
(c) Dividends franking account
The fully franked final dividend to be paid on 31 October 2017 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the year ending 30 June 2017.
Opening balance of franking account
Franking credits on dividends received
Tax paid during the period
Franking credits on ordinary dividends paid
Franking credits lost under 45 day rule
Closing balance of franking account
30 June 2017
$
30 June 2016
$
124,683
2,611,579
2,545,194
424,015
1,421,890
992,186
(3,606,503)
(2,710,151)
–
1,674,953
(3,257)
124,683
Adjustment for tax payable on the current period profits
3,262,102
703,492
Adjusted for dividends declared subsequent to reporting period 27.5% (2016: 30%)
(2,086,742)
(1,707,857)
Adjusted franking account balance
2,850,313
(879,682)
The Company’s ability to continue to pay franked dividends is dependent upon the receipt of franked dividends from investments
and the payment of tax.
Under recent changes to the corporate tax legislation, the final dividend must be franked using the expected tax rate for 2017-18
of 27.5%. Franking on dividends paid during the 2016-17 year remains at 30%.
QV Equities Limited Annual Report 2017 | 43
Notes to the Financial Statements (continued) For the year ended 30 June 2017
15 Key management personnel disclosures
The names and position held of the Company’s key management personnel (including Directors) in office at any time during the
financial year are:
Name
Position
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
(a) Remuneration
Independent Director (Chairman)
Independent Director
Independent Director
Non-Independent Director
Non-Independent Director
Detailed remuneration disclosures are provided in the Remuneration Report of the Directors’ Report on page 17.
Short term employee benefits – Directors fees
Post employment benefits – Superannuation
30 June 2017
$
30 June 2016
$
63,926
36,074
100,000
91,324
8,676
100,000
(b) Share and option holdings of Directors
The number of ordinary shares in the Company that were held during the financial year by each Director of the Company including
their personally related parties, are set out below:
2017 Ordinary shares held
Directors
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
Balance as at
30 June 2016
Acquisitions
Disposals
Balance at
30 June 2017
400,000
200,000
-
6,000,000
150,000
6,750,000
18,542
6,247
-
–
–
–
10,000
300,000*
-
–
418,542
206,247
-
5,710,000
150,000
34,789
300,000
6,484,789
* Investors Mutual Limited initial capital contribution reduction.
44 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017 15 Key management personnel disclosures (continued)
(b) Share and option holdings of Directors (continued)
2016 Ordinary shares held
Directors
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
Balance as at
30 June 2015
200,000
100,000
-
5,000,000
100,000
5,400,000
Options
exercised
200,000
100,000
-
1,000,000
50,000
1,350,000
Disposals
Balance at
30 June 2016
–
–
–
–
–
–
400,000
200,000
–
6,000,000**
150,000
6,750,000
** Holdings include Investors Mutual Limited holdings as required by Section 608 of the Corporations Act 2001.
2017 Options held
The directors did not hold or exercise any options during the current financial year.
2016 Options held
Directors
Peter McKillop
John McBain
Jennifer Horrigan
Anton Tagliaferro
Simon Conn
Balance as at
30 June 2015
200,000
100,000
-
2,500,000
100,000
2,900,000
Options
exercised
200,000
100,000
-
1,000,000
50,000
1,350,000
Disposals/
Lapsed
Balance at
30 June 2016
-
-
-
1,500,000
50,000
1,550,000
-
-
-
-
-
-
Directors and Director related entities disposed of and acquired ordinary shares and options in the Company on the same terms
and conditions available to other shareholders. The Directors have not, during or since the end of the financial year, been granted
options over unissued shares or interests in shares of the Company as part of their remuneration.
QV Equities Limited Annual Report 2017 | 45
Notes to the Financial Statements (continued) For the year ended 30 June 2017
16 Related party transactions
All transactions with related entities were made on commercial terms and conditions no more favorable than those available to other
parties unless otherwise stated.
Anton Tagliaferro is a Director and owner of Investors Mutual Limited (IML), the entity appointed to manage the investment portfolio of
QV Equities Limited. In its capacity as Manager, IML was paid a management fee of 0.90% p.a. (plus GST) on the portfolio net asset value
for the first $150 million and then 0.75% (plus GST) thereafter, amounting to $2,550,828 (2016: $2,085,598) inclusive of GST. The amount
expensed in the Statement of Comprehensive Income after allowing for the reduced input tax credit is $2,376,908 (2016: 1,943,398). As
at 30 June 2017, the balance payable to the Manager was $246,307 (2016: $186,561).
No Director has received or become entitled to receive a benefit (other than those detailed above) by reason of a contract made by the
Company or a related Company with the Director or with a firm of which he is a member or with a Company in which he has substantial
financial interest.
17 Segment information
The Company has only one reportable segment. The Company is engaged solely in investment activities conducted in Australia,
deriving revenue from dividend income, interest income, and from the sale of its investments.
18 Contingencies and commitments
The Company had no contingent liabilities as at 30 June 2017 and 30 June 2016.
19 Events occurring after the reporting period
Since the end of the financial year, the Directors declared a fully franked final dividend of 2.0 cents per fully paid ordinary share payable
on 31 October 2017.
No matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the
operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial periods.
20 Remuneration of auditors
Audit and other assurance services
Audit and review of financial report
Non-assurance services
Tax services
30 June 2017
$
30 June 2016
$
41,910
40,590
15,180
57,090
23,100
63,690
The Company’s Audit Committee oversees the relationship with the Company’s external auditors. The Audit Committee reviews the
scope of the audit and the proposed fee. It also reviews the cost and the scope of the other tax compliance services the related entity
of the audit firm, to ensure that they do not compromise independence.
46 | QV Equities Limited Annual Report 2017
Notes to the Financial Statements (continued) For the year ended 30 June 2017
Directors’ declaration
In the Directors’ opinion,
(1) the financial statements and notes set out on pages 23 to 46 are in accordance with the Corporations Act 2001 including:
(a) complying with the Accounting Standards, the Corporations Regulations 2001 and any other mandatory professional reporting
requirements; and
(b) complying with International Financial Reporting Standards as issued by the International Accounting Standards Board as
described in note 2 to the financial statements; and
(c) giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance for the year end on that
date.
(2) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by S295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Peter McKillop, Chairman
16 August 2017
QV Equities Limited Annual Report 2017 | 47
Independent Auditor’s Report to the Shareholders
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF QV EQUITIES LIMITED
ABN 64 169 154 858
Report on the Financial Report
We have audited the accompanying financial report of QV Equities Limited (the Company), which comprises
the statement of financial position as at 30 June 2017, the statement of comprehensive income, the statement
of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information and the directors’ declaration.
Opinion
In our opinion
a)
the financial report of QV Equities Limited 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 2017 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 2
Basis of preparation.
Basis of Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
Our responsibilities under those standards are further described in the Auditor’s Responsibility section of our report.
We are independent of the Company in accordance with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current year. We have communicated the key audit matters to the Audit Committee, but
they are not a comprehensive reflection of all matters that were identified by our audit and that were discussed
with the Committee. 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.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
48 | QV Equities Limited Annual Report 2017
Independent Auditor’s Report to the Shareholders (continued)
Key audit matter
How our audit addressed the matter
Measurement of Financial Instruments
Refer to Note 8: Long Term Equity Investments, Note 9: Financial Liabilities held at fair value
We focused our audit effort on the valuation,
existence and completeness of the Company’s
financial assets and financial liabilities as they are
its largest asset and liability and represent the most
significant driver of the Company’s net tangible
assets and profits.
The quantum of level 1 investments held inherently
makes financial assets and financial liabilities a
key audit matter, in addition however, we focused
on whether the assets and liabilities had been
appropriately valued to market price in an active
market at the period end.
In relation to investments, there can be a risk that
these are not owned by the Company.
We therefore identified the valuation, existence and
completeness of investments as an area of focus.
Our procedures included, amongst others:
• We obtained an understanding of the
investment management process and controls;
• We assessed the Custodian’s report describing
the design, and operation of controls for
custody and administrative services and
reviewed the independent audit report on
internal controls (ASAE 3402 Assurance Reports
on Controls at a Service Organisation) for the
period 1 July 2016 to 31 December 2016 for the
Custodian, and obtained a bridging letter for
the residual 6 months;
• We agreed investment holdings to the external
Custodian’s records;
• We assessed the valuation of individual
investment holdings to independent sources of
information to determine an acceptable range
of valuations of securities held at 30 June 2017,
and compared this to the valuations recorded
by the Company;
• We evaluated the treatment of revaluations
of financial instruments to ensure current
/deferred tax and unrealised gains or
losses arising from revaluations have been
appropriately accounted for;
•
Assessed the adequacy of disclosures in the
financial statements.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
QV Equities Limited Annual Report 2017 | 49
Independent Auditor’s Report to the Shareholders (continued)
Other information
The Directors are responsible for the other information. The other information comprises the information in the
Company’s annual report for the year ended 30 June 2017, but does not include the financial report and the
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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 consistent 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.
Directors’ Responsibility for the Financial Report
The Directors of QV Equities Limited are responsible for the preparation and fair presentation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the Directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Company’s ability to continue as
a going concern, disclosing, as applicable, matters 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 have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. 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 Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
50 | QV Equities Limited Annual Report 2017
Independent Auditor’s Report to the Shareholders (continued)
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair
view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the Company or business
activities within the Company to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
QV Equities Limited Annual Report 2017 | 51
Independent Auditor’s Report to the Shareholders (continued)
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 19 of the Directors’ Report for the year ended
30 June 2017. In our opinion, the Remuneration Report of QV Equities Limited for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of QV Equities Limited 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.
S M Whiddett
Partner
Pitcher Partners
Sydney
Dated in Sydney this 16th day of August 2017.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation.
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Pitcher Partners is an association of independent firms. An independent member of Baker Tilly International.
52 | QV Equities Limited Annual Report 2017
Shareholder Information For the year ended 30 June 2017
The shareholder information set out below was applicable as at 30 June 2017.
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report,
is listed below:
A. Long term equity investments
QV Equities Limited Portfolio as at 30 June 2017.
Ordinary Shares, Trust Units or Stapled Securities
Abacus Property Group
AGL Energy Limited
Amcor Limited*
Ansell Limited
AusNet Services Limited
ASX Limited*
Amaysim Australia Ltd
Aurizon Holdings Limited*
ALS Limited
Asciano Limited
Bank of Queensland Limited
BWP Trust
Cabcharge Australia Limited
Contact Energy Limited
Caltex Australia Limited
Clearview Wealth Limited
Clydesdale Bank
Cybg PLC
Chorus Limited
Duet Group
2017
2016
Holding
units
Fair value
$
Holding
units
Fair value
$
1,000,000
3,240,000
220,000
650,000
440,000
5,610,000
10,536,500
10,441,200
780,000
540,000
130,000
280,000
2,457,000
10,416,600
1,940,900
5,087,600
4,000,000
6,940,000
4,400,000
7,216,000
140,000
7,505,400
175,000
8,008,000
-
-
1,300,000
2,171,000
1,200,000
6,432,000
1,400,000
6,748,000
-
-
-
-
900,000
900,000
10,305,000
2,682,000
1,500,000
3,795,000
800,000
320,000
3,960,000
10,115,200
1,200,000
1,740,000
300,000
600,000
780,000
-
900,000
580,000
130,000
-
1,467,000
5,322,000
8,260,200
-
2,871,000
2,827,500
4,147,000
-
-
-
1,500,000
6,255,000
2,250,000
10,597,500
-
-
-
-
-
-
1,600,000
6,448,000
2,500,000
6,250,000
Event Hospitality and Entertaiment Ltd
280,000
3,743,600
220,000
3,196,600
Fairfax Media Limited
Fletcher Building Limited
3,000,000
3,300,000
3,300,000
3,069,000
1,400,000
10,654,000
1,280,000
10,444,800
Flight Centre Travel Group Limited
100,000
3,830,000
80,000
2,526,400
FlexiGroup Limited
Generation Healthcare REIT
Genesis Energy Limited
GWA Group Limited
1,200,000
2,190,000
-
-
-
-
580,000
1,276,000
2,300,000
5,313,000
1,500,000
3,075,000
2,500,000
7,875,000
3,000,000
6,270,000
QV Equities Limited Annual Report 2017 | 53
Shareholder Information (continued) For the year ended 30 June 2017
Hotel Property Investments
Integral Diagnostics Limited
Integrated Research Limited
Link Administration Holdings Limited
2017
2016
Holding
units
Fair value
$
Holding
units
Fair Value
$
1,100,000
3,300,000
1,100,000
3,421,000
2,400,000
3,984,000
2,000,000
2,900,000
450,000
272,727
1,449,000
2,154,543
450,000
600,000
1,012,500
4,902,000
Mayne Pharma Group Limited
7,000,000
7,595,000
3,320,000
6,324,600
Myer Holdings Limited
4,200,000
3,507,000
2,200,000
2,464,000
MyState Limited
Orica Limited*
Oil Search Limited
480,000
450,000
900,000
2,328,000
9,306,000
6,138,000
480,000
550,000
750,000
1,982,400
6,781,500
5,002,500
Pact Group Holdings Ltd
1,800,000
10,782,000
1,200,000
7,236,000
Pinnacle Investment Management Group Limited
900,000
2,610,000
-
-
Ruralco Holdings Limited
1,445,000
4,262,750
1,000,000
3,400,000
Shopping Centres Australasia Property Group
3,000,000
6,570,000
2,200,000
5,016,000
Steadfast Group Limited
Sonic Healthcare Limited
Skycity Entertainment Group Limited
3,600,000
9,576,000
4,500,000
8,887,500
500,000
900,000
12,110,000
3,492,000
400,000
950,000
8,620,000
4,142,000
Spark Infrastructure Group
4,000,000
10,480,000
2,350,000
5,734,000
360 Capital Group
Salmat Limited
-
-
2,300,000
2,196,500
2,000,000
770,000
1,600,000
704,000
Southern Cross Media Group Limited
4,500,000
5,602,500
-
-
Trade Me Group Limited
Tox Free Solutions Limited
Tatts Group Limited
Wilson Group
Z Energy Limited
Total Equities
Floating Rate Notes
400,000
2,024,000
900,000
3,978,000
4,000,000
9,600,000
2,000,000
5,180,000
173,000
723,140
-
-
-
-
2,000,000
2,900,000
800,000
6,040,000
500,000
3,860,000
255,209,333
214,395,100
Crown Resorts Limited unsecured sub floating rate note
4,100,000
4,038,500
2,850,000
2,396,850
Total Equities
Total Portfolio
4,038,500
259,247,833
2,396,850
216,791,950
* Part or all of the security was subject to call options written by the company.
There were 461 (2016: 394) investment transactions during the financial year. The total brokerage paid on these transactions was
$297,325 (2016: $179,719).
54 | QV Equities Limited Annual Report 2017
Shareholder Information (continued) For the year ended 30 June 2017
B. Distribution of equity securities
Analysis of numbers of shareholders by size of holding as at 30 June 2017:
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
No. of shareholders
Shares
Percentage
149
709
985
4,552
298
6,693
54,184
2,544,962
8,171,945
151,751,606
112,547,796
275,070,493
0.02
0.93
2.97
55.16
40.92
100
There were 80 holders of less than a marketable parcel of ordinary shares holding a total of 3,573 shares.
C. Equity security holders
Twenty largest shareholders - ordinary shares:
Name
Citicorp Nominees Pty Limited
Navigator Australia Ltd
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