More annual reports from QV Equities Limited:
2023 ReportPeers and competitors of QV Equities Limited:
Wisdomtree Investment Level 24, 25 Bligh Street, SYDNEY NSW 2000
PO Box H104, Australia Square, SYDNEY NSW 1215
1300 552 895 Ph +61 2 9232 7500 Fax +61 2 9232 7511
ACN: 169 154 858
www.qvequities.com
22 September 2023
Company Announcements
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney NSW 2000
QV Equities Limited
Notice of Annual General Meeting 2023 & 2023 Annual Report
Dear Sir / Madam
Please find the following documents attached:
• Notice of Annual General Meeting (AGM) 2023
• Sample Proxy Form
• 2023 Annual Report
Yours faithfully
Zac Azzi
Company Secretary
Authorised for release by the Company Secretary
Notice of Annual General Meeting
Notice is given that the Annual General Meeting of Shareholders of QV Equities Limited
(the Company) will be held as follows:
Date:
Time:
Venue:
Wednesday 25 October 2023
10.00 am (AEDT)
Dexus Place, Auditorium, Level 5, 1 Margaret Street, Sydney NSW
ABN 64 169 154 858
Business
1. Financial statements and reports
To receive and consider the Company’s Financial Report,
Directors’ Report and Auditor’s Report for the year ended
30 June 2023.
Note: This item of ordinary business is for discussion only and
is not a resolution. However, pursuant to the Corporations
Act, Shareholders will be given a reasonable opportunity at the
Meeting to ask questions about, or make comments in relation
to, these reports.
2. Adoption of Remuneration Report
To consider, and if thought fit, to pass the following resolution
as an ordinary resolution:
“That, for the purposes of Section 250R(2) of the Corporations Act,
the Company’s Remuneration Report for the year ended 30 June
2023 be adopted.”
Notes:
(a) The vote on this resolution is advisory only and does not
bind the Directors or the Company.
(b) The Company must disregard votes cast by or on
behalf of certain persons on this resolution. See “Voting
exclusions” below.
(c) The Chairman will vote all undirected proxies in favour
of this resolution.
3. Re-election of Director
To consider, and if thought fit, to pass the following resolution
as an ordinary resolution:
“That Anton Tagliaferro, a Director who retires by rotation
in accordance with the Company’s constitution and ASX Listing
Rule 14.4 and who, being eligible, offers himself for re-election,
be re-elected as a Director of the Company.”
Note: The Chairman will vote all undirected proxies in favour
of this resolution.
4. Re-election of Director
To consider, and if thought fit, to pass the following resolution
as an ordinary resolution:
“That Linda Fox, a Director who was appointed to fill a casual
vacancy in accordance with the Company’s constitution and
retires at the Meeting in accordance with the Company’s
constitution and ASX Listing Rule 14.4 and who, being eligible,
offers herself for re-election, be re-elected as a Director of the
Company.”
Note: The Chairman will vote all undirected proxies in favour
of this resolution.
Other business
The Meeting may also consider other business that may lawfully
be brought forward in accordance with the constitution of the
Company or the law.
Voting exclusion
The resolution to be considered in item 2 is indirectly connected
with the remuneration of members of the key management
personnel of the Company (including the Directors), whose
remuneration details are included in the Remuneration Report
(KMP Members). In accordance with the requirements of the
Corporations Act 2001 (Cth) (Corporations Act) votes on this
resolution may not be cast (in any capacity) by or on behalf of:
•
•
a KMP Member; or
a Closely Related Party (as defined in the Glossary) of any
KMP Member,
except where the vote is cast by such person as proxy for
a person who is entitled to vote the resolution and either:
•
•
the vote is cast in accordance with a direction on the
Proxy Form specifying the way the proxy is to vote
on the resolution; or
the vote is cast by the Chairman, and the Proxy Form
expressly authorises the Chairman to exercise the
proxy even though the resolution is connected directly
or indirectly with the remuneration of KMP Members.
QV Equities Limited Notice of Annual General Meeting
|
1
If you intend to appoint a KMP Member (such as one of the
Directors) as your proxy, please ensure that you direct them
how to vote on item 2. If you appoint the Chairman as your
proxy using the enclosed proxy form, and you do not direct your
proxy how to vote on item 2, you will be expressly authorising
the Chairman to exercise the proxy even though the resolution
is connected, directly or indirectly, with the remuneration
of KMP Members.
The Chairman intends to vote undirected proxies in favour of the
resolution to be considered in item 2.
Other information
An Explanatory Memorandum accompanies and forms part
of this Notice of Meeting. All Shareholders should read the
Explanatory Memorandum carefully and in its entirety.
Resolutions to be decided on a poll
Voting on all resolutions at the Meeting will be decided by a poll,
rather than on a show of hands. On a poll, each Shareholder
has one vote for each fully paid ordinary Share held as at the
Entitlement Time.
Voting by proxy
Any Shareholder entitled to attend and vote at this Meeting
is entitled to appoint a proxy to attend and vote instead of that
Shareholder. The proxy does not need to be a Shareholder
of the Company.
A Shareholder who is entitled to cast 2 or more votes may
appoint 2 proxies and may specify the proportion or number
of votes each proxy is appointed to exercise. If no proportion
or number is specified, each proxy may exercise half of the
Shareholder’s votes.
Online voting
Shareholders may lodge a proxy vote online ahead of the
Meeting at https://investorcentre.linkgroup.com.
Online votes must be lodged not later than 10.00 am (AEDT)
on Monday 23 October 2023.
Corporate representatives
A body corporate which is a shareholder, or which has been
appointed as a proxy, is entitled to appoint any person to
act as its representative at the Meeting. The appointment
of the representative must comply with the requirements
of section 250D of the Corporations Act. The representative
should lodge a properly executed letter or other document
confirming its authority to act as the company’s representative.
A Certificate of Appointment of Corporate Representative form
may be obtained from the Company’s share registry online
at www.linkmarketservices.com.au.
Entitlement to vote
In accordance with Section 1074E(2)(g)(i) of the Corporations
Act and Regulation 7.11.37 of the Corporations Regulations, the
Company has determined that for the purposes of the Meeting
all Shares will be taken to be held by the persons who held them
as registered Shareholders at 7.00 pm (AEDT) on Monday 23
October 2023 (Entitlement Time). Accordingly, Share transfers
registered after that time will be disregarded in determining
entitlements to attend and vote at the Meeting.
Voting intentions
Subject to any voting restrictions and exclusions, the Chairman
intends to vote all undirected proxies in favour of all resolutions
at the Meeting.
A proxy form is enclosed. Please read all instructions carefully
before completing the proxy form.
By order of the Board,
Proxies must be hand delivered or posted to the Company’s
share registry, Link Market Services Limited at the relevant
address specified below or faxed to the fax number specified
below, in each case so that they are received not later than
10.00 am (AEDT) on Monday 23 October 2023.
Address for hand
deliveries:
Link Market Services Limited
Parramatta Square, Level 22, Tower 6,
10 Darcy Street, Parramatta NSW 2150
Address for postal
deliveries:
QV Equities Limited
c/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Fax number for
lodgment:
From within Australia (02) 9287 0309
From outside Australia +61 2 9287 0309
Zac Azzi
Company Secretary
2
|
QV Equities Limited Notice of Annual General Meeting
Explanatory Memorandum
This Explanatory Memorandum sets out further information
regarding the proposed resolutions to be considered by
Shareholders of QV Equities Limited (the Company) at the
Annual General Meeting to be held commencing at 10.00 am
(AEDT) on Wednesday 25 October 2023 at Dexus Place,
Auditorium, Level 5, 1 Margaret Street, NSW.
The Directors recommend that Shareholders read this
Explanatory Memorandum before determining whether or not to
support the resolutions.
If you are in doubt about what to do in relation to the
resolutions contemplated in the Notice of Meeting and
this Explanatory Memorandum, it is recommended that
you seek advice from an accountant, solicitor or other
professional adviser.
Item 1 – Financial statements
and reports
Under Section 317 of the Corporations Act, the Company
is required to lay its Annual Financial Report, Directors’
Report and Auditor’s Report before its Shareholders at its
Annual General Meeting. These reports are submitted for
Shareholders’ consideration and discussion at the Meeting as
required. No resolution is required for this item, but meeting
attendees are invited to direct questions to the Chairman in
respect of any aspect of the reports they wish to discuss.
Representatives of the Company’s auditor, Pitcher Partners,
will be present for discussion purposes on matters of relevance
to the audit.
Item 2 – Remuneration Report
The Remuneration Report is set out at pages 15 to 17 of the
Annual Report. Under Section 250R(2) of the Corporations Act,
the Company must put the adoption of the Remuneration Report
to a vote at this Meeting.
This vote is advisory only and does not bind the Directors
or the Company.
The Board will consider the outcome of the vote and comments
made by Shareholders on the Remuneration Report at this
Meeting when reviewing the Company’s remuneration policies.
If 25% or more of the votes that are cast are cast against the
adoption of the Remuneration Report, the Company’s next
Remuneration Report must explain the Board’s proposed
action in response or explain why no action has been taken.
If 25% or more of the votes that are cast are voted against
the adoption of the Remuneration Report at two consecutive
Annual General Meetings, Shareholders will be required to vote
at the second of those Annual General Meetings on a resolution
(a “spill resolution”) that another Meeting be held within
90 days at which all of the Company’s Directors other than the
Managing Director must be offered up for election.
Board recommendation and undirected proxies.
The Board recommends that Shareholders vote in favour of this
item. The Chairman of the Meeting intends to vote undirected
proxies in favour of this item.
Item 3 – Re-election of Anton Tagliaferro
as a Director
Item 3 provides for the re-election of Anton Tagliaferro as a
Director of the Company. Anton Tagliaferro joined the Board
on 30 April 2014 and has over 30 years’ experience in the
financial services industry.
Under Rule 15.6 of the Company’s constitution, at each annual
general meeting one third of the Company’s Directors (except for
the managing director), or the whole number nearest to but not
exceeding one third, must retire unless re-elected.
Under ASX Listing Rule 14.4 and Rule 15.5 of the Company’s
constitution a director (excluding the managing director) must
not hold office without re-election past the third annual general
meeting following the director’s appointment or three years,
whichever is longer. Anton Tagliaferro is required to stand for
re-election pursuant to these provisions because he was last
re-elected in 2020.
Board recommendation and undirected proxies.
The Board (with Anton Tagliaferro abstaining) recommends that
Shareholders vote in favour of this item. The Chairman of the
Meeting intends to vote undirected proxies in favour of this item.
Item 4 – Re-election of Linda Fox
as a Director
Item 4 provides for the re-election of Linda Fox as Director
of the Company. Linda Fox joined the Board on 31 March 2023
to fill a casual vacancy. Ms. Fox has over 25 years’ experience
across wealth management, banking and professional
services. She is the Chairman of the Nomination and
Governance Committee.
Under ASX Listing Rule 14.4 and Rule 15.10 of the Company’s
constitution any director appointed because of a casual vacancy
or in addition to existing Directors will hold office until the
end of the next Annual General Meeting of the Company when
the director may be re-elected. Linda Fox is required to stand
for re-election pursuant to these provisions because she was
appointed because of a casual vacancy.
Board recommendation and undirected proxies.
The Board (with Linda Fox abstaining) recommends that
Shareholders vote in favour of this item. The Chairman of the
Meeting intends to vote undirected proxies in favour of this item.
QV Equities Limited Notice of Annual General Meeting
|
3
Questions and comments by
Shareholders at the meeting
In accordance with the Corporations Act, at the Meeting
Shareholders as a whole will be given a reasonable opportunity
to ask questions or make comments on the management of the
Company and on the Remuneration Report.
Shareholders as a whole will also be given a reasonable
opportunity to ask questions to the Company’s external auditor,
Pitcher Partners, relevant to:
(a) the conduct of the audit;
(b) the preparation and contents of the audit;
(c) the accounting policies adopted by the Company in relation
to the preparation of its financial statements; and
(d) the independence of the auditor in relation to the conduct
of the audit.
Shareholders may also submit a written question to Pitcher
Partners if the question is relevant to the content of the Auditor’s
Report or the conduct of its audit of the Financial Report.
Shareholders are asked to submit written questions
to Pitcher Partners by no later than 7.00 pm (AEDT) on
Wednesday 18 October 2023. A list of those questions will
be made available to Shareholders attending the Meeting.
Pitcher Partners will either answer questions at the Meeting
or table written answers to them at the Meeting. If written
answers are tabled at the Meeting, they will be made available to
Shareholders as soon as practicable after the Meeting.
Please send written questions for Pitcher Partners to:
info@qvequities.com
By e-mail:
By facsimile: +61 2 9232 7511
By post to:
QV Equities Limited, PO Box H104, Australia
Square, Sydney NSW 1215
by no later than 7.00 pm (AEDT) on Wednesday
18 October 2023.
Glossary
In this Explanatory Memorandum, and the Notice of Meeting:
AEDT means Australian Eastern Daylight Time as observed
in Sydney, New South Wales.
Annual Report means the 2023 Annual Report to Shareholders
as lodged by the Company with ASX on 16 August 2023.
ASX means ASX Limited ACN 008 624 691 or the financial market
operated by it, as the context requires.
Auditor’s Report means the auditor’s report of 16 August 2023
as included in the Annual Report.
Board means the board of directors of the Company.
Chairman means the person chairing the Meeting.
Closely Related Party of a KMP Member means:
(a) a spouse or child of the KMP Member;
(b) a child of the KMP Member’s spouse;
(c) a dependant of the KMP Member or of the ;
(d) anyone else who is one of the KMP Member’s family
and may be expected to influence the KMP Member,
or be influenced by the KMP Member, in the KMP Member’s
dealings with the Company; and
(e) a company the KMP Member controls.
Company means QV Equities Limited.
Constitution means the constitution of the Company.
Corporations Act means the Corporations Act 2001 (Cth)
as amended or replaced from time to time.
Director means a director of the Company.
Directors’ Report means the report of Directors as included
in the Annual Report.
Entitlement Time has the meaning given on page 2 of this
Notice of Meeting.
Explanatory Memorandum means the explanatory
memorandum accompanying this Notice of Meeting.
Financial Report means the financial report for the financial
year ended 30 June 2023 as included in the Annual Report.
KMP Members means Company’s key management personnel
(including the Directors), whose remuneration details are
included in the Remuneration Report.
Listing Rules means the listing rules of the ASX.
Meeting means the Annual General Meeting of the Company
the subject of this Notice of Meeting scheduled to occur
on Wednesday 25 October 2023.
Notice of Meeting means this notice of annual general meeting
including the Explanatory Memorandum.
Remuneration Report means the Remuneration Report set out
at pages 15 to 17 of the Annual Report and which forms part
of the Directors’ Report.
Resolution means the resolutions set out in this Notice
of Meeting, or any of them, as the context requires.
Share means an ordinary share in the capital of the Company.
Shareholder means a holder of a Share.
4
|
QV Equities Limited Notice of Annual General Meeting
ABN 64 169 154 858
LODGE YOUR VOTE
ONLINE
https://investorcentre.linkgroup.com
BY MAIL
QV Equities Limited
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
BY FAX
+61 2 9287 0309
BY HAND
Link Market Services Limited
Parramatta Square, Level 22, Tower 6,
10 Darcy Street, Parramatta NSW 2150
ALL ENQUIRIES TO
Telephone: +61 1300 554 474
*X99999999999*
X99999999999
PROXY FORM
I/We being a member(s) of QV Equities Limited and entitled to participate in and vote hereby appoint:
APPOINT A PROXY
the Chairman of the
Meeting (mark box)
OR if you are NOT appointing the Chairman of the Meeting
as your proxy, please write the name of the person or
body corporate you are appointing as your proxy
1 or failing the person or body corporate named, or if no person or body corporate is named, the Chairman of the Meeting, as my/our proxy to
act on my/our behalf (including to vote in accordance with the following directions or, if no directions have been given and to the extent
P
permitted by the law, as the proxy sees fit) at the Annual General Meeting of the Company to be held at 10:00am (AEDT) on Wednesday,
E
25 October 2023 at Dexus Place, Auditorium, Level 5, 1 Margaret Street, Sydney NSW (the Meeting) and at any postponement or
T
S
adjournment of the Meeting.
Important for Resolution 2: If the Chairman of the Meeting is your proxy, either by appointment or by default, and you have not indicated
your voting intention below, you expressly authorise the Chairman of the Meeting to exercise the proxy in respect of Resolution 2, even though
the Resolution is connected directly or indirectly with the remuneration of a member of the Company’s Key Management Personnel (KMP).
The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.
VOTING DIRECTIONS
Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the Meeting.
Please read the voting instructions overleaf before marking any boxes with an T
2
P
E
T
S
3
P
E
T
S
Resolutions
For Against Abstain*
2 Adoption of Remuneration Report
3 Re-election of Director -
Anton Tagliaferro
4 Re-election of Director -
Linda Fox
* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your
votes will not be counted in computing the required majority on a poll.
SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED
Shareholder 1 (Individual)
Joint Shareholder 2 (Individual)
Joint Shareholder 3 (Individual)
Sole Director and Sole Company Secretary
Director/Company Secretary (Delete one)
Director
This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the
power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the
form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).
QVE PRX2301C
*
Q
V
E
P
R
X
2
2
0
1
C
*
SAMPLE
LODGEMENT OF A PROXY FORM
This Proxy Form (and any Power of Attorney under which it is signed)
must be received at an address given below by 10:00am (AEDT) on
Monday, 23 October 2023, being not later than 48 hours before the
commencement of the Meeting. Any Proxy Form received after that
time will not be valid for the scheduled Meeting.
Proxy Forms may be lodged using the reply paid envelope or:
ONLINE
https://investorcentre.linkgroup.com
Login to the Link website using the holding details as shown
on the Proxy Form. Select ‘Voting’ and follow the prompts to
lodge your vote. To use the online lodgement facility,
shareholders will need their “Holder Identifier” - Securityholder
Reference Number (SRN) or Holder Identification Number (HIN).
QR Code
BY MOBILE DEVICE
Our voting website is designed specifically
for voting online. You can now lodge
your proxy by scanning the QR code
adjacent or enter t he voting link
https://investorcentre.linkgroup.com
into your mobile device. Log in using the
Holder Identifier and postcode for your
shareholding.
To scan the code you will need a QR code reader application
which can be downloaded for free on your mobile device.
BY MAIL
QV Equities Limited
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
BY FAX
+61 2 9287 0309
BY HAND
delivering it to Link Market Services Limited*
Parramatta Square
Level 22, Tower 6
10 Darcy Street
Parramatta NSW 2150
*During business hours Monday to Friday (9:00am - 5:00pm)
YOUR NAME AND ADDRESS
This is your name and address as it appears on the Company’s share
register. If this information is incorrect, please make the correction on
the form. Shareholders sponsored by a broker should advise their broker
of any changes. Please note: you cannot change ownership of your
shares using this form.
APPOINTMENT OF PROXY
If you wish to appoint the Chairman of the Meeting as your proxy, mark
the box in Step 1. If you wish to appoint someone other than the Chairman
of the Meeting as your proxy, please write the name of that individual or
body corporate in Step 1. A proxy need not be a shareholder of the
Company.
DEFAULT TO CHAIRMAN OF THE MEETING
Any directed proxies that are not voted on a poll at the Meeting will default
to the Chairman of the Meeting, who is required to vote those proxies as
directed. Any undirected proxies that default to the Chairman of the
Meeting will be voted according to the instructions set out in this Proxy
Form, including where the Resolution is connected directly or indirectly
with the remuneration of KMP.
VOTES ON ITEMS OF BUSINESS – PROXY APPOINTMENT
You may direct your proxy how to vote by placing a mark in one of the
boxes opposite each item of business. All your shares will be voted in
accordance with such a direction unless you indicate only a portion of
voting rights are to be voted on any item by inserting the percentage or
number of shares you wish to vote in the appropriate box or boxes. If you
do not mark any of the boxes on the items of business, your proxy may
vote as he or she chooses. If you mark more than one box on an item your
vote on that item will be invalid.
APPOINTMENT OF A SECOND PROXY
You are entitled to appoint up to two persons as proxies to participate in
the Meeting and vote on a poll. If you wish to appoint a second proxy, an
additional Proxy Form may be obtained by telephoning the Company’s
share registry or you may copy this form and return them both together.
To appoint a second proxy you must:
(a) on each of the first Proxy Form and the second Proxy Form state the
percentage of your voting rights or number of shares applicable to that
form. If the appointments do not specify the percentage or number of
votes that each proxy may exercise, each proxy may exercise half your
votes. Fractions of votes will be disregarded; and
(b) return both forms together.
SIGNING INSTRUCTIONS
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must sign.
Joint Holding: where the holding is in more than one name, either
shareholder may sign.
Power of Attorney: to sign under Power of Attorney, you must lodge the
Power of Attorney with the registry. If you have not previously lodged this
document for notation, please attach a certified photocopy of the Power
of Attorney to this form when you return it.
Companies: where the company has a Sole Director who is also the Sole
Company Secretary, this form must be signed by that person. If the
company (pursuant to section 204A of the Corporations Act 2001) does
not have a Company Secretary, a Sole Director can also sign alone.
Otherwise this form must be signed by a Director jointly with either another
Director or a Company Secretary. Please indicate the office held by signing
in the appropriate place.
CORPORATE REPRESENTATIVES
If a representative of the corporation is to participate in the Meeting the
appropriate “Certificate of Appointment of Corporate Representative”
must be produced prior to admission in accordance with the Notice of
Meeting. A form of the certificate may be obtained from the Company’s
share registry or online at www.linkmarketservices.com.au.
IF YOU WOULD LIKE TO PARTICIPATE IN AND VOTE AT THE ANNUAL GENERAL MEETING, PLEASE BRING THIS FORM WITH YOU.
THIS WILL ASSIST IN REGISTERING YOUR ATTENDANCE.
HOW TO COMPLETE THIS SHAREHOLDER PROXY FORMSAMPLE 2023
Annual Report
Year ended 30 June 2023
ABN 64 169 154 858
2
| QV Equities Limited Annual Report 2023
Contents
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
12
21
22
22
23
24
25
26
44
45
49
Corporate Governance Statement
The Board of Directors of QV Equities Limited (‘the Company’) is responsible for corporate governance.
The Board has chosen to prepare the Corporate Governance Statement (‘CGS’) in accordance with the
fourth 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: www.qvequities.com.
QV Equities Limited Annual Report 2023
| 3
Financial Highlights
Year in Summary FY2023
Profit After Tax
$9,180,337 ($6,148,699 in FY22)
Earnings Per Share (cents)
4.02 Basic (2.64 in FY22)
Dividends 5.2 cps
Fully Franked (declared for FY23)
(4.8 cps in FY22)
Investment
Portfolio Return
(Pre-tax)* +4.2%
Investment
Portfolio Return
(Post-tax)* +3.2%
Benchmark#
14.9%
ASX 300*
14.4%
Net Assets** $239,263,370
($243,126,059 in FY22)
Net Tangible Assets (NTA)
$1.00 (pre-tax cum div) $1.05 (post tax cum div)
All data as at 30 June 2023 unless otherwise specified. * Returns are measured for the 2023 financial year after total expenses. # S&P/ASX300 ex20 Accumulation Index.
** Whilst the portfolio had a positive return of 3.2% the reduction in Net Assets was mainly due to dividends and expense payments.
Historical Net Tangible Assets
$1.25
$1.15
$1.05
$0.95
$0.85
$0.75
Aug
14
Apr
15
Dec
15
Aug
16
Apr
15
Dec
17
Aug
18
Apr
19
Dec
19
Aug
20
Apr
21
Dec
21
Aug
22
Jun
23
Source: QV Equities; 30 June 2023
Historical Dividends
6.0
5.0
4.0
3.0
2.0
1.0
0.0
QVE Dividend (Fully franked)
1.0
2.1
2.0
2.2
2.2
2.0
2.1
2.2
2.2
1.8
1.5
1.1
1.1
1.1
1.1
1.2
1.2
1.2
1.2
1.3
1.3
1.3
1.3
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
1.5
0.5
FY15
■ Interim ■ Interim ■ Interim ■ Final ■ Special
4
| QV Equities Limited Annual Report 2023
Source: QVE Annual Reports & QVE ASX Announcements
NTA PER SHARE QVE Pre-tax NTACENTS PER SHARE QV Equities Overview
QV Equities Limited (‘the Company’ or ‘QVE’) is a Listed Investment Company, established to invest in a diversified portfolio
of ASX-listed entities outside the S&P/ASX20 Accumulation 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 quality ASX-listed entities outside the S&P/ASX20 Accumulation
Index. The Company aims to achieve after-fee returns over a five-year-plus investment period higher than the S&P/ASX300
Accumulation Index, excluding that part of the return generated by S&P/ASX20 Accumulation Index securities.
Foundation of the Company’s Investment Strategy
The Australian sharemarket is heavily concentrated in larger entities both in terms of market capitalisation and industry
sector weighting in the broader market’s main index. The S&P/ASX20 Accumulation Index – representing the 20 largest
entities by market capitalisation on the ASX – accounts for 60% of the S&P/ASX300 Accumulation Index by market
capitalisation and had a 45% concentration in the Financial and Resource sectors at 30 June 2023.
Investment Strategy
The Company’s investment strategy is to create a diversified and balanced portfolio of ASX-listed securities outside the
S&P/ASX20 Accumulation 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 undertakes a comprehensive
‘bottom-up’ approach to identifying, researching and valuing companies. IML’s approach to identifying opportunities
for the portfolio is systematic and 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 IML has applied
successfully for more than 25 years.
In addition to long-term capital growth, the Company 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 industries and individual securities.
QV Equities Limited Annual Report 2023
| 5
A letter from the Chairman, Peter McKillop
Dear Shareholders,
Share markets ended the year to June 2023 strongly as investor interest in AI started a rally in technology stocks which
then grew in the belief that interest rates may be nearing their peak. This capped off a good, though tumultuous year for
sharemarkets despite a tense geopolitical environment, a US banking crisis, high inflation and one of the fastest ever
interest rate raising cycles. The MSCI World Index finished up 17% for the year, led by the Nasdaq which soared to a return
of +26% driven by very strong performances from megacap US-based technology stocks.
The Australian sharemarket, as measured by the S&P/ASX 300 Accumulation Index, finished the financial year up 14.4%.
Strength in commodity prices helped the ASX 300 Resources to a return of +22.1% for the year, driven by optimism around
China’s post pandemic re-opening. This optimism extended into the mid-cap range, with a strong rally in the lithium
sector and many highly-priced technology stocks, leading to a return of +14.9% for QVE’s benchmark, the (S&P/ASX300
ex-20 Accumulation Index). It was a more difficult year for small cap stocks, particularly small cap industrials, as concerns
over inflation and high interest rates caused investors to switch to large cap companies in search of greater liquidity and
certainty, a trend that adversely affected the Company’s share portfolio providing a modest return of +4.2% for the year
after fees.
However, the quality of the companies in the portfolio enabled a continuation of the trend of paying higher dividends each
year to shareholders.
Financial Results
The Company earned a net profit after tax of $9.2 million for the year ended 30 June 2023, compared to $6.1 million in the
year ended 30 June 2022, an increase of 49%. This increase in profit was due primarily to an increase in dividends received
combined with higher interest and option income. The Company’s conservative options strategy continues to provide
consistent income throughout sharemarket cycles.
Dividends
Your Board understands the importance of a regular income stream to shareholders and is committed to continuing
its policy of paying quarterly dividends, and where prudent increasing dividend payments. Your Board recognises the
importance of maintaining adequate reserves to allow these regular dividend payments and to this end had $24 million
in combined capital profits and revenue reserves at the end of June 2023.
A final fully-franked dividend for the financial year 2023 of 1.3 cents per share will be paid on 1 September, 2023
(the ex-dividend date for the final dividend will be 15 August 2023). This is in addition to the fully- franked interim dividends
of 1.3 cents that were paid for the September 2022, December 2022 and March 2023 quarters. This takes total dividends
per share to 5.2 cents for the financial year 2023, 8.3% higher than the previous financial year. This is equivalent to a yield
of 5.6% for financial year 2023 (calculated on the closing share price on 30 June, 2023). When franking credits are included
it equates to a gross yield of 7.9%.
On Market Buyback
Your Board continues to attempt to reduce the discount between the net tangible assets (NTA) per share and the
Company’s sharemarket price.
An on-market share buyback has been in place since September 2019. Apart from supporting the Company’s share price,
the main advantage of the buyback is that the shares are being purchased at a discount to NTA, on purchase the shares are
cancelled, thereby increasing the NTA per share for remaining shareholders.
Since the buyback commenced, the Company has purchased 49.1 million shares at a cost of $44.8 million to 31 July, 2023.
6
| QV Equities Limited Annual Report 2023
Chairman’s Letter (continued)
Annual General Meeting
You are invited to attend the Annual General Meeting (‘AGM’) on Wednesday, 25 October 2023 at 10am (AEDT)
at Dexus Place, Auditorium, Level 5, 1 Margaret Street, Sydney, NSW 2000. Following the AGM, IML will provide an update
on the Company’s portfolio. This investment update will also be held the following day via a webinar, for those who are
unable to attend in person. You will receive further information about the AGM in September, including how to register
for attendance.
Shareholder Communication
I trust you continue to find our regular communication informative and engaging. In recent months we have provided
more in-depth information on the performance of the portfolio, and specific stocks within it, through in-depth
‘Stock of the Month’ videos as well as devoting a greater share of the monthly reports to portfolio commentary.
At the same time, we continue to provide regular updates:
y Weekly Net Tangible Assets reports
y Monthly investment commentary
y
y
y
y
Regular investment videos
Portfolio updates and investment insights from IML
Shareholder briefing events
Regular webinars
I encourage you to subscribe to receive these updates and invitations through our website www.qvequities.com.
Your Board continues to believe that a carefully selected holding of ex-20 stocks, managed by IML, will provide you with
reliable income and long-term capital growth. IML remains disciplined and true to label, and as always seeks to invest
in profitable, well-established companies, underpinned by reasonable valuations, with growth potential and sustainable
earnings from a diverse range of sectors. We are particularly focused on paying consistent levels of franked dividends
in these uncertain economic times.
I look forward to discussing the results in this Annual Report further at the Annual General Meeting. Thank you for your
continuing support of QVE.
Yours sincerely
Peter McKillop, Chairman
16 August 2023
QV Equities Limited Annual Report 2023
| 7
Investment Manager’s Report
IML is pleased to deliver its investment report for QV Equities Limited for the financial year ended 30 June 2023.
Market Review
The year to 30 June 2023 was almost a reversal of what we saw in the previous 12-months. There was a broad-based sell off
early in the financial year as investor concern grew about high inflation, rising interest rates, and growing fears of recession.
Markets then consolidated somewhat before climbing strongly as investors took comfort in moderating inflation in the
US and dovish commentary by central banks that interest rate hikes were closer to the end, as well as government fiscal
initiatives that supported economic growth. In particular for the Australian market, policies targeting a move towards
electric vehicles saw elevated demand for commodities required to facilitate this transition.
In the early part of the calendar year we witnessed a narrow-based rally in sharemarkets, with the Technology and
Resources sectors pushing the market higher, despite extended valuations in these sectors. As the year progressed,
and economic data out of the US remained resilient around employment and growth, a broader rally developed.
This is despite a deterioration of economic data in China and evidence that higher interest rates and cost of living pressures
are starting to bite in Australia and other economies around the globe.
Portfolio Allocation at 30 June 2023
The Company’s portfolio at 30 June 2023 was made up of 48 listed securities spread across various ASX sectors.
The top holdings include well-known, good quality companies such as Aurizon, Orica, Ampol, Amcor and Sonic Healthcare.
I.T.
2%
Cash
14%
Consumer
Staples
8%
Utilities
3%
Communication
Services
6%
Energy
8%
Real
Estate
8%
Materials
13%
Financials
10%
Health
Care
9%
Consumer
Discretionary
9%
Industrials
10%
Source: Investors Mutual
8
| QV Equities Limited Annual Report 2023
Investment Manager’s Report (continued)
Key Equity Investments
Principal activity
Holding weight*
Aurizon
Orica
Ampol
Amcor
Coles
Australian rail company
Global manufacturer of commercial grade explosives and chemicals
Importer, retailer and refiner of petroleum products
Global packaging company
Australian supermarket retailer
Lottery Corporation
Lotteries company
Sonic Healthcare
Global pathology company
Skycity Entertainment
New Zealand/Australian casino operator
Suncorp
IAG
Medibank
Metcash
Brambles
APA
Australian insurance, banking and finance operator
General insurance provider
Health insurance provider
Distributor of food, liquor and hardware
Global supplier of reusable pallets and containers
Australian energy infrastructure business
Charter Hall REIT
Australian REIT focused on Daily Needs retailers
G.U.D.
TPG Telecom
Manufactures and distributes automotive products and water pressure systems
Telecommunications company
Virgin Money UK
Provides personal, business banking and mortgage services
Santos
Oil and gas producer
Australian Clinical Labs
Pathology service provider
6.2%
5.2%
4.6%
3.3%
3.2%
3.1%
3.0%
2.8%
2.7%
2.3%
2.2%
2.2%
2.2%
2.1%
2.1%
1.9%
1.8%
1.8%
1.7%
1.7%
* Holding weight as at 30 June 2023
The complete portfolio is shown on pages 49–50 of the Financial Report.
Portfolio Performance
The QVE portfolio returned +4.2% before tax and after fees for the 12 months to 30 June 2023, compared to the benchmark
S&P/ASX300 ex-20 Accumulation Index’s return of +14.9%.
While this was a disappointing result, it was a tale of two halves for the QVE portfolio. The portfolio’s disciplined preference
for good quality, resilient and cash generative companies, instead of speculative and over- priced technology stocks,
as well as IML’s caution around the Resources sector given slowing economic growth, saw many of QVE’s holdings lag in the
first half of the year. However, as markets moved more towards quality and value stocks over the second half of the year,
the relative performance of the QVE portfolio improved significantly.
Over 25 years, IML has always invested in well-established companies which possess the following clear characteristics:
y
y
y
y
y
a competitive advantage over their peers;
a recurring earnings stream;
a capable management team;
the ability to grow earnings and dividends over time; and
an attractive entry price.
QV Equities Limited Annual Report 2023
| 9
Investment Manager’s Report (continued)
The portfolio benefited over the year from its exposure to holdings such as Origin, A2B, Brambles, Virgin Money UK and
New Hope, which all performed strongly. The share prices of financial companies including Suncorp, IAG and Virgin Money
UK all improved significantly as rising rates were perceived to be positive for the insurance trading margin and net interest
margins of insurers and banks respectively.
Origin Energy gained +46% over the year as it entered a binding scheme of arrangement to be acquired by a consortium
including asset manager Brookfield at $8.91 a share (assuming a AUD/USD exchange rate of 70c). Origin is a large,
integrated Australian energy company which owns and operates wholesale and retail electricity and gas businesses,
as well as exploration and production businesses of natural gas and electricity generation. QVE was attracted to Origin due
to its resilient, recurring earnings and its ability to grow revenues over time, as well as its hard to replicate asset base.
The bid for Origin is a continuation of the strong momentum in corporate activity that we have seen on the ASX since the
second half of financial year 2021. This has continued despite the increase in interest rates and speaks to the longer-term
confidence in the outlook for Australia’s economy, combined with the attractive valuations of many good quality ASX-listed
companies in the ex-20 part of the market.
QVE also benefited over the year from takeover bids for maltster United Malt Group, from European peer Malteries Soufflet,
and for gold miner Newcrest Mining, from North American peer Newmont. Over IML’s history we have often held companies
which have received takeover bids and we see it as an important part of our role to extract full value in these situations.
This occurs when we identify an opportunity, or see value, where the market does not. We believe there are many other
companies in the QVE portfolio that could be recipients of takeover approaches in the years ahead, particularly given the
discount to fair value.
Brambles, a global leader in pallet pooling through the well-established CHEP brand, performed well, up +38% in financial
year 2023. Its underlying earnings have continued to grow despite the uncertainty of the last three years, highlighting
the resilient end-markets of its portfolio of assets, which are focused on fast moving consumer goods, beverages, retail
and general manufacturing. The company also demonstrated in the year its ability to maintain margins in a rising cost
environment by passing on higher input costs to its customers. The company is generating stronger cashflow than
expected which, together with improved pallet availability, has allowed it to start to pursue new business opportunities.
This is testament to the disciplined approach to pricing and capital expenditure being applied by Brambles’ reinvigorated
management team and Board.
Another very strong performer for QVE was A2B, which increased +35% over financial year 2023. A2B is the leading taxi
payments network operator under the Cabcharge brand and the owner and operator of Australia’s largest taxi network
under the 13Cabs brand. A2B’s strong price performance partly reflected the improving outlook for its core taxi business
coming out of the pandemic lockdowns. The company in March announced the sale of its significant O’Riordan St property
in Alexandria, Sydney for a price of $78m. This was a strong outcome in a softening property market and is in line with the
independent value established in May 2022, which speaks to the strategic location of the property as well as the diligence
by management in maximising the sale price. The sale is expected to result in a sizeable, fully franked special dividend
being paid to shareholders by the end of this calendar year. This outcome is the result of a more focussed strategy under
a new management team, which was installed after agitation by shareholders, including IML on behalf of the QVE portfolio.
Weighing on performance for financial year 2023 were disappointing performances by Pact, SkyCity Entertainment
and Amcor. Pact’s earnings have been impacted by higher costs and slower demand from its consumer and agricultural
customers, with poor weather late in the year also partly to blame. Pact has initiated a comprehensive cost out program
while asset sales remain a focus. Pact’s core plastic rigids business remains at the forefront of plastic resin reuse
initiatives although the market remains focused on the need for it to strengthen its balance sheet through an asset sale.
In June, Pact announced that Aldi had signed a re- use contract for its home brands, following a similar agreement with
Woolworths, validating Pact’s position in the Australian circular economy.
The Amcor share price declined late in the year following its third quarter update which highlighted that customers
were destocking after they had carried elevated inventories through the pandemic, resulting in lower volumes across its
Rigids and Flexibles divisions. While disappointing, the defensive nature of packaging demand means Amcor should be
relatively resilient in a lower economic growth environment, while the valuation remains attractive.
10
| QV Equities Limited Annual Report 2023
Investment Manager’s Report (continued)
With regards to SkyCity, the operator of the Auckland and Adelaide casinos, we believe that investors are excessively
discounting its share price due to potential fines that may be levied around certain regulatory breaches in its Australian
casino operations. The company’s share price is underpinned by a significant property portfolio and strong cash generative
gaming operations.
Outlook
Global share markets, including Australia’s, have moved higher over the last twelve months, despite the greater volatility
we have seen as central banks have wound back stimulus and tightened monetary conditions in the face of high inflation.
At the same time, governments have embarked on debt-driven fiscal policies which have provided near term support to
asset prices.
While the Australian share market now trades at fairer levels, good value remains across a number of quality companies
in the ex-20 part of the market. We continue to be focused on investing in reasonably valued companies which can grow
their long-term earnings through their own initiatives rather than relying on strong economic growth. These initiatives
include companies capable of making accretive bolt-on acquisitions, such as Sonic Healthcare; companies growing market
share, such as Australian Clinical Labs; companies restructuring and recovering from the pandemic headwinds such as
SkyCity Entertainment and A2B; companies that are on track for revenue growth, such as The Lotteries Corporation and
Orica and that can benefit from higher interest rates, such as IAG and Aurizon.
We believe the economic outlook remains uncertain, given consumption softness and higher costs of living. As it stands
today, inflation remains significantly higher than the cash rate, and this means that real interest rates remain negative.
While goods inflation has moderated, services inflation remains high, underpinning inflation at a rate well above the target
range set by the RBA, leaving Australia’s real interest rates in negative territory. This is unsustainable in our view and
suggests that interest rates may need to increase further. In this context, we believe QVE’s focus on resilient companies
with solid fundamentals will hold it in good stead over the coming year.
The QVE portfolio retains a strong focus on generating dividend income from its portfolio holdings, overlaid with a
conservative options strategy which augments this income focus.
It remains a privilege, that we do not take for granted, to apply IML’s quality and value investment philosophy and
approach to the QVE portfolio. This approach has enabled IML to deliver reliable and growing income and long-term capital
growth to our investors over IML’s 25 years of existence, while achieving returns which are less volatile than the overall
sharemarket.
We believe that a portfolio of well-established, profitable companies, with a strong market position and recurring earnings,
in the ex-20 sector of the market, will yield regular income and solid returns in the future, as well as offering investors the
opportunity to diversify their exposure away from the ASX top 20 stocks.
We hope to meet as many of you as possible at QVE’s Annual General Meeting in October. Thank you for your
continued support.
Simon Conn
Senior Portfolio Manager
Investors Mutual Limited
16 August 2023
Marc Whittaker
Portfolio Manager
Investors Mutual Limited
QV Equities Limited Annual Report 2023
| 11
Directors’ Report
The Directors present their report together with the financial report of QV Equities Limited (‘the Company or QVE’) for the
year ended 30 June 2023.
Directors
The following persons were Directors of the Company from their appointment date and up to the date of this report:
Position
Appointment date
Independent Director (Chairman)
17 April 2014
Name
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Linda Fox
Independent Director
Independent Director
Independent Director
Anton Tagliaferro
Non-independent Director
Simon Conn
Non-independent Director
Principal activities
26 April 2016 (Resigned 31 March 2023)
30 August 2019
31 March 2023
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 Accumulation Index. The primary objective is to provide both
long term capital growth and income. No change in this activity took place during the year.
Dividends
Dividends paid to shareholders were as follows:
2023
Ordinary shares – interim 2023
Ordinary shares – interim 2023
Ordinary shares – interim 2023
Ordinary shares – final 2022
2022
Ordinary shares – interim 2022
Ordinary shares – interim 2022
Ordinary shares – interim 2022
Ordinary shares – final 2021
Dividend
per share
Total
amount
Date of
payment
%
Franked
1.3 cents
1.3 cents
1.3 cents
1.2 cents
1.2 cents
1.2 cents
1.2 cents
1.1 cents
$2,961,454
$2,966,648
$2,975,554
$2,747,886
$2,751,554
$2,765,752
$2,798,777
$2,646,839
02/06/2023
03/03/2023
02/12/2022
02/09/2022
03/06/2022
04/03/2022
03/12/2021
03/09/2021
100%
100%
100%
100%
100%
100%
100%
100%
Since year end, the Directors have declared a final fully franked dividend of 1.3 cents per fully paid ordinary share to be
paid on 1 September 2023.
12
| QV Equities Limited Annual Report 2023
Directors’ Report (continued)
Review of operations
Our Investment Manager (‘the Manager’), Investors Mutual Limited (‘IML’) has been diligently building a portfolio of quality
S&P/ASX300 ex20 Accumulation Index shares which IML believe are well placed to deliver the Company’s objectives
of long term capital growth and consistent income.
Listed below is the Company’s performance for the past 6 and 12 months:
Performance
Increase/(Decrease) in QVE’s NTA
Benchmark return
1 January 2023 to 30 June 2023
+2.9% post-tax / +4.2% pre-tax
1 July 2022 to 30 June 2023
+3.2% post-tax / +4.2% pre-tax
+6.0%
+14.9%
Investment operations for the year ended 30 June 2023 resulted in an operating profit before tax of $10,139,780
(2022: $6,903,129) and an operating profit after tax of $9,180,337 (2022: $6,148,699).
Net Tangible Assets (NTA) for each ordinary share as at 30 June 2023 (calculated on market value before applicable
taxes and before provision for dividends) amounted to $1.00 (2022: $1.04) per share. NTA after provision for tax and before
provision for dividends was $1.05 (2022: $1.06) per share.
The slight decrease in the NTA during the financial year was primarily driven by dividends and expense payments
exceeding portfolio returns.
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 2023 was $239,263,370 (2022: $243,126,059).
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 2023.
Matters subsequent to the end of the year
Since the end of the financial year, the Directors declared a fully franked final dividend of 1.3 cents per fully paid ordinary
share payable on 1 September 2023.
Subsequent to 30 June 2023 to the date of this report there has been no other events specific to the Company of which
the Directors are aware which has had a material effect on the Company or its financial position.
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 Accumulation Index.
Further information on the Company’s business strategies and results is contained in the Investment Manager’s Report
on pages 8 to 11 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.
QV Equities Limited Annual Report 2023
| 13
Directors’ Report (continued)
Information on Directors
Peter McKillop
Independent Director, Chairman
Experience and expertise
Other current directorships
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 in-house funds
into the retail area in 1987, including Perpetual’s highly
successful Industrial Share Fund.
Peter is a Fellow of the Chartered Accountants Australia
and New Zealand and holds a Bachelor of Economics from
the University of Sydney.
Peter was appointed as the Chairman of the Board on
14 June 2016.
Eamonn Roles
Independent Director
Experience and expertise
Eamonn Roles has over 25 years’ experience in
the funds management and financial advisory
industries incorporating Product Development &
Management, Marketing, Strategy and Business
Planning, and Operations. He commenced his career
at PricewaterhouseCoopers in Ireland before joining the
Australian firm.
Eamonn is qualified as Chartered Accountant and holds
a Graduate Diploma in Applied Finance and Investment
from the Financial Services Institute of Australasia.
14
| QV Equities Limited Annual Report 2023
Peter McKillop does not hold other directorships of listed
companies.
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 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.
Other current directorships
Eamonn Roles does not hold other directorships of listed
companies.
Former directorships in last 3 years
Eamonn Roles has not held any other directorships of listed
companies.
Special Responsibilities
Eamonn Roles is Chairman of the Audit and Risk Committee
from 1 April 2023. (Chairman of the Nomination and
Corporate Governance Committee to 31 March 2023).
Interests in shares of the Company
Details of Eamonn Roles` interest in shares of the Company
are included later in this report.
Interests in contracts
Eamonn Roles has no interests in contracts of the Company.
Directors’ Report (continued)
Other current directorships
Linda Fox does not hold other directorships of listed
companies.
Former directorships in last 3 years
Linda Fox has not held any other directorships of listed
companies.
Special responsibilities
Chair of the Nomination and Corporate Governance
Committee from 1 April 2023.
Interests in shares of the Company
Linda Fox has no interest in shares of the Company.
Interests in contracts
Linda Fox has no interests in contracts of the Company.
Other current directorships
Anton Tagliaferro does not hold other directorships of listed
companies.
Former directorships in last 3 years
Anton Tagliaferro has not held any other directorships
of listed companies.
Interests in shares 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 in contracts with the
Company are included later in this report.
Information on Directors (continued)
Linda Fox
Independent Director
Experience and expertise
Linda Fox has more than 25 years’ experience across
wealth management, banking and professional services
in organisations including start-ups, global and
multi-billion-dollar enterprises. She was most recently
the Chief Financial Officer of Colonial First State, part of
the Commonwealth Bank of Australia.
Linda holds a Bachelor of Commerce (Accounting)
from the University of Otago, Diploma for Graduates
(Information Systems) from the University of Otago,
a Masters of Business Administration from the Australian
Graduate School of Management, a Graduate member
of the Australian Institute of Company Directors and a
member of the Chartered Accountants Australia and
New Zealand.
Anton Tagliaferro
Non-independent Director
Experience and expertise
Anton Tagliaferro has over 30 years’ experience in the
financial services industry. Anton founded IML in June
1998 and held the position of Investment Director for
25 years until he retired from IML in March 2023.
Anton completed his accounting degree and studies
in London and qualified as a Chartered Accountant
with Deloitte Haskins and Sells in London in 1983.
Anton emigrated to Sydney in 1984 and joined the
funds management industry in 1986 when he joined
Prudential Assurance. Anton went on to successfully
manage Australian equity portfolios for Perpetual,
County Natwest Investment Management and BNP
Investment Management before he established Investors
Mutual as specialist Australian Equities Manager in 1998.
Anton holds a Bachelor of Arts (Honours) in Accountancy
and is a member of the Institute of Chartered Accountants
in England & Wales and of the Financial Services Institute
of Australasia.
QV Equities Limited Annual Report 2023
| 15
Other current directorships
Simon Conn has not held any other directorships of listed
companies.
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 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 with the Company
are included later in this report.
Directors’ Report (continued)
Information on Directors (continued)
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 15 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.
Zac Azzi
Company Secretary
Zac Azzi has over 25 years’ 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 establish and manage
their Australian operations.
Zac subsequently joined SFG Australia Limited where he
helped established their funds management and platform
businesses before joining IML in August 2015 where he was
appointed as COO and Company Secretary.
Zac holds a Bachelor of Commerce from Macquarie
University, a Masters of Business Administration from the
Australian Graduate School of Management and is also
a Certified Practising Accountant.
16
| QV Equities Limited Annual Report 2023
Directors’ Report (continued)
Meeting of Directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the year ended
30 June 2023, and the number of meetings attended by each Director were:
Directors’ meetings
Audit and Risk
Nomination and
Corporate Governance
Meeting of committees
Directors
Peter McKillop
Jennifer Horrigan (resigned 31 March 2023)
Eamonn Roles
Linda Fox (appointed 31 March 2023)
Anton Tagliaferro
Simon Conn
A
7
5
7
2
5
6
B
7
5
7
2
7
7
A
5
5
4
–
–
–
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
(Company Secretary), Anton Tagliaferro (Executive Director to 31 March 2023) and Simon Conn (Executive Director) were
provided to the Company without additional charge as part of the arrangements with IML.
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 currently set at $100,000 per annum. Directors do not receive bonuses nor are they issued options
on securities. Directors’ fees cover all main Board activities and membership of committees. Under the ASX Listing Rules,
the maximum fees payable to Directors set out in the Constitution may not be increased without the approval from the
Company at a general meeting. Directors seek approval from time to time as appropriate.
The following table reflects the Company’s performance and Directors’ remuneration over five years:
Five Year Financial Summary
Profit after tax ($m)
Basic EPS (cents)
Total dividends (cents per share)
NTA per share post-tax at 30 June ($)
Share price at 30 June ($)
Total Directors remuneration ($)
2023
9.2
4.02
5.2
1.05
0.935
100,000
2022
6.1
2.64
4.8
1.06
0.940
100,000
2021
5.6
2.26
4.4
1.08
0.995
100,000
2020
10.5
3.85
4.4
0.98
0.795
100,000
2019
9.4
3.40
4.4
1.13
1.030
100,000
As outlined above, Directors’ fees are not directly linked to the Company’s performance.
QV Equities Limited Annual Report 2023
| 17
Directors’ Report (continued)
Remuneration report (audited) (continued)
(a) Details of remuneration
The following table shows details of the remuneration paid and payable by the Company to the Directors for the year
ended 30 June 2023 and 30 June 2022.
2023
Non-Executive Directors
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Linda Fox
Total key management personnel compensation
2022
Short term employee
benefits Directors’ fees
$
Post-employment
benefits superannuation
$
12,550
20,362
27,119
6,757
66,788
27,450
2,138
2,881
743
33,212
Short term employee
benefits Directors’ fees
$
Post-employment
benefits superannuation
$
Non-Executive Directors
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Total key management personnel compensation
12,501
27,242
27,242
66,985
27,499
2,758
2,758
33,015
Total
$
40,000
22,500
30,000
7,500
100,000
Total
$
40,000
30,000
30,000
100,000
Directors receive a superannuation guarantee contribution required by the government, which was 10.5% of individual
benefits for financial year 2023 and did not receive any other retirement benefits. Directors may also elect to salary
sacrifice their fees into superannuation.
(b) Director related entity remuneration
Anton Tagliaferro resigned as a Director of IML on 5 January 2023 and no longer holds equity interests in IML, the entity
appointed to manage the investment portfolio of the Company. On his retirement from IML on 31 March 2023,
Mr Tagliaferro was retained in a consulting capacity until 30 June 2023. Simon Conn is a Director of IML and holds
equity interests in IML.
Linda Fox is an external member of the IML Compliance Committee for IML’s managed investment schemes and is
remunerated directly by IML for this role.
In its capacity as the 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 $2,181,021 (2022: $2,390,503)
inclusive of GST. The amount expensed in the Statement of Comprehensive Income after allowing for the reduced input
tax credit was $2,032,315 (2022: $2,227,514). As at 30 June 2023, the balance payable to the Manager was $163,413
(2022: $169,565).
All transactions with related entities were made on normal commercial terms and conditions.
No other Director has received or became 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/she is a member
or with a Company in which he/she has substantial financial interest.
18
| QV Equities Limited Annual Report 2023
Directors’ Report (continued)
Remuneration report (audited) (continued)
(b) Director related entity remuneration (continued)
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 payments made to the Executives by the Company. IML remunerated Anton Tagliaferro, Simon Conn
and Zac Azzi as employees of the Manager during the financial year. Anton Tagliaferro ceased employment with
IML on 31 March 2023. The Manager is appointed to provide the day to day management of the Company and
is remunerated as outlined on page 18.
(d) Equity instrument disclosures relating to Directors
As at 30 June 2023, the Company’s Directors and their related parties held the following interests in the Company:
Ordinary shares held
2023
Directors
Peter McKillop
Jennifer Horrigan**
Eamonn Roles
Balance as at
30 June 2022
537,060
29,200
155,000
Acquisitions
Disposals
Other
Balance as at
30 June 2023*
Anton Tagliaferro***
8,500,000
760,000
Linda Fox****
Simon Conn
–
400,000
9,621,260
–
–
760,000
–
–
–
–
–
–
–
–
–
–
–
537,060
(29,200)
–
–
155,000
(1,000,000)
8,260,000
–
–
–
400,000
(1,029,200)
9,352,060
The Directors’ shareholding balances as at 30 June 2023 were the same at the date of the report.
Jenniger Horrigan resigned from the Company effective 31 March 2023 and her shareholding balance as at 30 June 2023 is not included.
*
**
*** Anton Tagliaferro no longer has a relevant interest in the 1,000,000 shares owned by IML.
**** Linda Fox was appointed as a director on 31 March 2023.
2022
Directors
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Anton Tagliaferro
Simon Conn
Balance as at
30 June 2021
537,060
29,200
155,000
8,050,000
400,000
9,171,260
Acquisitions
Disposals
Other
–
–
–
450,000
–
450,000
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at
30 June 2022
537,060
29,200
155,000
8,500,000
400,000
9,621,260
Directors and Director-related entities acquired ordinary shares in the Company on the same terms and conditions
available to other shareholders.
End of Remuneration Report
QV Equities Limited Annual Report 2023
| 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:
y
y
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 (including Independence Standards).
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Report) Instrument 2016/191,
issued by the Australian Securities and Investment Commission, relating to ‘rounding off’. Amounts in this report have been
rounded off in accordance with that Corporation Instrument to the nearest dollars unless otherwise stated.
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 2023
20
| QV Equities Limited Annual Report 2023
Auditor’s Independence Declaration
QV Equities Limited Annual Report 2023
| 21
Pitcher Partners Sydney Partnership Level 16, Tower 2 Darling Park201 Sussex StreetSydney NSW 2000Postal AddressGPO Box 1615Sydney NSW 2001p.+612 9221 2099e.sydneypartners@pitcher.com.auAdelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms.Pitcher Partners Sydney Partnership. ABN 17 795 780 962.Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the membersof which are separate and independent legal entities.pitcher.com.auAuditor’s Independence DeclarationTo the Directors of QV EquitiesLimitedABN64 169 154 858In relation to the independent auditof QV Equities Limited for the year ended 30 June 2023,Ideclare that to the best of my knowledge and belief there have been:(i)no contraventions of the auditor’s independence requirements of the Corporations Act2001; and(ii)no contraventions of APES 110 Code of Ethics for Professional Accountants (includingIndependence Standards).C IChandranPartnerPitcher PartnersSydney16 August 2023 Financial Statements for the year ended 30 June 2023
Statement of Comprehensive Income
Notes
30 June 2023
$
30 June 2022
$
Investment Income
Dividend and distribution income
Interest income
Realised gains on options and futures
Unrealised gains/(losses) on options
Other income
Total investment income
Expenses
Management fees
Directors’ fees
ASX fees
Registry fees
Insurance fees
Other expenses
Total expenses
Profit before income tax
Income tax expense
Profit after income tax attributable to owners
Other comprehensive income
Items that will not be recycled to profit and loss
10,023,709
8,089,828
542,627
3,156,944
(844,429)
4,981
144,482
614,754
994,218
23,591
12,883,832
9,866,873
2,032,315
100,000
76,349
70,064
298,614
166,710
2,227,514
100,000
70,312
75,113
308,436
182,369
2,744,052
2,963,744
10,139,780
959,443
9,180,337
6,903,129
754,430
6,148,699
15
5
Movement in fair value of long term equity investments, net of tax
(111,265)
(1,947,403)
Items that will be recycled to profit and loss
Movement in fair value of floating rate notes, net of tax
Other comprehensive (loss), net of tax
–
138,454
(111,265)
(1,808,949)
Total comprehensive income for the year, net of tax attributable to owners
9,069,072
4,339,750
Earnings per share
Basic and diluted earnings per share (cents per share)
13
4.02
2.64
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
22
| QV Equities Limited Annual Report 2023
Financial Statements (continued)
Statement of Financial Position
Notes
30 June2023
$
30 June2022
$
Assets
Current assets
Cash and cash equivalents
Receivables
Prepayments
Total current assets
Non-current assets
Financial assets at fair value
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade creditors and other payables
Current tax liabilities
Financial liabilities at fair value
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Asset revaluation reserve
Capital profits reserve
Profits reserve
Total equity
The Statement of Financial Position should be read in conjunction with the accompanying notes.
6
7
8
5
10
5
9
11
12
12
12
17,118,574
32,092,735
867,071
137,695
2,089,625
143,890
18,123,340
34,326,250
212,495,010
206,870,930
11,258,560
10,667,089
223,753,570
217,538,019
241,876,910
251,864,269
647,947
441,143
1,524,450
2,613,540
2,613,540
1,892,072
5,719,638
1,126,500
8,738,210
8,738,210
239,263,370
243,126,059
238,169,259
239,449,478
(22,886,047)
(25,545,039)
19,817,693
25,549,403
4,162,465
3,672,217
239,263,370
243,126,059
QV Equities Limited Annual Report 2023
| 23
Financial Statements (continued)
Statement of Changes in Equity
Issued
capital
$
Asset
revaluation
reserve
$
Capital
profits
reserve
$
Notes
Profits
reserve
$
Retained
profits
$
Total
$
Balance at 1 July 2022
239,449,478
(25,545,039)
25,549,403
3,672,217
–
243,126,059
–
–
–
–
–
–
9,180,337
9,180,337
–
(111,265)
9,180,337
9,069,072
Profit for the year
Other comprehensive income:
Net revaluation of investments
Total comprehensive income
for the year
Transactions with equity
holders in their capacity
as owners:
Dividends provided for or paid
Share buyback – redemptions
Other:
Realised profits/(losses) on sale
of investments transferred to
capital profits reserve
Transfer to profits reserve
14
11
12
–
–
–
–
(1,280,219)
–
–
–
(111,265)
(111,265)
–
–
(2,961,453)
(8,690,089)
2,770,257
(2,770,257)
–
–
9,180,337
(9,180,337)
Balance at 30 June 2023
238,169,259 (22,886,047)
19,817,693
4,162,465
–
239,263,370
Issued
capital
$
Asset
revaluation
reserve
$
Capital
profits
reserve
$
Notes
Profits
reserve
$
Retained
profits
$
Total
$
Balance at 1 July 2021
253,069,464
(9,730,977)
17,094,620
2,936,110
–
263,369,217
–
(1,808,949)
(1,808,949)
–
–
–
–
–
–
6,148,699
6,148,699
–
(1,808,949)
6,148,699
4,339,750
–
–
–
–
(13,619,986)
Profit for the year
Other comprehensive income:
Net revaluation of investments
Total comprehensive income
for the year
Transactions with equity
holders in their capacity
as owners:
Dividends provided for or paid
Share buyback – redemptions
Other:
Realised profits/(losses) on sale
of investments transferred to
capital profits reserve
14
11
12
(5,550,330)
(5,412,592)
–
–
–
(14,005,113)
14,005,113
–
–
–
–
–
–
–
–
–
–
–
–
(11,651,542)
(1,280,219)
–
–
(10,962,922)
(13,619,986)
–
–
Transfer to profits reserve
–
–
–
6,148,699
(6,148,699)
Balance at 30 June 2022
239,449,478
(25,545,039)
25,549,403
3,672,217
–
243,126,059
The Statement of Changes in Equity should be read in conjunction with the accompanying note.
24
| QV Equities Limited Annual Report 2023
Statement of Cash Flow
Cash flows from operating activities
Dividends/distributions received
Interest received
Net realised gains on exchange traded options
Other income
Payments for other expenses
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for investments
Proceeds from sale of investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Dividends paid
Payments for share buyback
Net cash (outflow) from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
The above Statement of Cash Flow should be read in conjunction with the accompanying notes.
Notes
30 June 2023
$
30 June 2022
$
9,850,669
626,973
2,674,672
14,588
(2,756,659)
(6,368,269)
4,041,974
7,758,337
60,137
1,571,905
20,056
(2,941,650)
(5,568,789)
899,996
(35,322,712)
(85,773,519)
29,314,815
122,450,935
(6,007,897)
36,677,416
(11,651,542)
(10,962,922)
(1,356,696)
(13,549,188)
(13,008,238)
(24,512,110)
(14,974,161)
13,065,302
32,092,735
17,118,574
19,027,433
32,092,735
6
6
QV Equities Limited Annual Report 2023
| 25
Financial Statements (continued) Notes to the Financial Statements
for the year ended 30 June 2023
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 Accumulation 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 2023.
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 2023 have been prepared in accordance
with the Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board
and the Corporations Act 2001. The Company is a for-profit entity for financial reporting purposes under the Australian
Accounting Standards.
(i) Compliance with IFRS
The financial statements of the Company also comply with International Financial Reporting Standards (‘IFRS’)
as issued by the International Accounting Standards Board (‘IASB’).
(ii) New accounting standards and Interpretations
There are no new standards or interpreations applicable that would have a material impact on the financial
statements of the Company.
(iii) Standards issued but not yet effective
There are no other accounting standards that have been issued but not yet effective and that would be expected
to have a material impact on the Company in the current or future reporting periods and on foreseeable
future transactions.
(b) Financial assets and financial liabilities
(i) Recognition and initial measurement
Financial assets are recognised initially at fair value including transaction costs. Financial liabilities are recognised
initially at fair value.
(ii) Classification and subsequent measurement
The Company classifies its financial assets based on its business model for managing those financial assets and
the contractual cash flow characteristics of the financial assets.
For financial assets, the contractual cash flows do not represent solely payments of principal and interest and
they are not held for trading. Therefore, the Company has made an irrevocable election to present fair value
movements on these securities in other comprehensive income which accumulates in the asset revaluation
reserve. On decognition the cumulative gain/loss on these securities are transferred to the capital profits reserve.
For floating rate securities, the contractual cash flows are solely payments of principal and interest and the
business model objective is achieved by both collecting contractual cash flows and selling these financial
assets. Therefore, the Company mandatorily presents these securities in other comprehensive income which
accumulates in the asset revaluation reserve. On derecognition the cumulative gain/loss on these securities are
recycled to the profit or loss.
The Company holds call options which are derivative financial instruments classified as financial liabilities at fair
value through profit and loss, changes in the fair value of options are recognised in profit or loss for the year.
26
| QV Equities Limited Annual Report 2023
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
(b) Financial assets and financial liabilities (continued)
(iii) Derecognition
Financial assets and financial liabilities are derecognised where the contractual rights to receipt of cash flows
expires or the asset is transferred to another party whereby the Company no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Realised gains or losses on long term equity
investments are transferred from the asset revaluation reserve to the capital profits reserve.
(iv) Valuation
All financial assets 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.
(iii) Trust distribution income
Trust distribution income is recognised in the profit or loss when the Company’s right to receive payment
is established.
(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 year is the tax payable on the current year’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 ATO, are presented as operating cash flows.
QV Equities Limited Annual Report 2023
| 27
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
(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.
(h) Receivables and unsettled sale of shares
Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less expected credit losses.
Receivables may include interest, dividends and trust distributions. Interest, dividends and trust distributions are
accrued in accordance with the policy note set out in note 2(c).
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
were 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. Shares bought back will be recognised as a reduction to issued capital.
(k) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the Company, 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:
y
y
the profit/(loss) attributable to owners of the Company.
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for shares
bought back 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:
y
y
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 2016/191, the amounts in the
Directors’ report and in the financial report have been rounded to the nearest dollar unless otherwise stated.
28
| QV Equities Limited Annual Report 2023
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
(n) Functional and presentation currency
The functional and presentation currency of the Company is Australian dollars.
(o) Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements.
Apart from the items mentioned below, there are no key judgements, estimates and assumptions that have a risk
of causing material adjustment to the carrying amount of assets and liabilities within the next financial year.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Company considers it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Future taxable amounts
are determined based on the historical performance of the Company. Deferred tax assets are reviewed at each reporting
period. The Company considers that it is probable that future taxable profits will be available to utilise those deferred tax
assets set out in note 5(c).
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 is responsible for the daily monitoring and risk assessment of the
Company’s financial market risk.
(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 for the Company by diversification of the investment portfolio across
numerous stocks and multiple industry sectors. The Manager reviews the relative weightings of the individual
securities and market sectors daily.
(i) Price risk
The Company is exposed to equities securities 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.
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 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.
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Notes to the Financial Statements (continued)
3. Financial risk management (continued)
(a) Market risk (continued)
(i) Price risk (continued)
The Company’s industry sector weighting of investments including options as at 30 June 2023 and 30 June 2022
is listed below:
Industry sector
Financials
Materials
Health Care
Utilities
Consumer Discretionary
Industrials
Energy
Listed Property Trusts
Communication Services
Consumer Staple
Information Technology
Cash
Sensitivity analysis
2023
%
10.2
13.5
8.8
3.2
9.0
9.8
7.9
8.0
5.8
7.9
1.6
85.7
14.3
100.0
2022
%
7.8
16.8
9.2
1.9
9.8
9.6
8.3
7.3
6.0
6.5
1.3
84.5
15.5
100.0
A sensitivity analysis relating to price risk was performed on investments held by the Company at the end of the
reporting year. The sensitivity assumes all other variables remain constant.
Investments represent 87% (2022: 82%) of gross assets at year end. The following table illustrates the effect on
the Company’s equity from possible changes in 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% (2022: 30%).
Increase 5%
Decrease 5%
Increase 10%
Decrease 10%
Impact on Total
Comprehensive income
2023
$
7,383,970
(7,383,970)
14,767,939
2022
$
7,201,055
(7,201,055)
14,402,110
(14,767,939)
(14,402,110)
(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 performance, financial position and cash flows. The risk
is measured using sensitivity analysis.
The table below summarises the Company’s exposure to interest rate risk. It includes the Company’s assets and
liabilities at fair value, categorised by the earlier of contractual repricing or maturity dates.
30
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| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Cash flow and fair value interest rate risk (continued)
30 June 2023
Financial Assets
Floating
interest rate
$
Non-interest
bearing
$
Total
$
Cash and cash equivalents
17,118,574
–
17,118,574
Receivables
Financial assets at fair value
Financial liabilities
Trade creditors and other payables
Financial liabilities at fair value
Total liabilities
–
–
867,071
867,071
212,495,010
212,495,010
17,118,574
213,362,081
230,480,655
–
–
–
(647,947)
(647,947)
(1,524,450)
(1,524,450)
(2,172,397)
(2,172,397)
Net exposure to interest rate risk
17,118,574
211,189,684
228,308,258
30 June 2022
Financial Assets
Cash and cash equivalents
Receivables
Long term investments
Financial liabilities
Trade creditors and other payables
Financial liabilities at fair value
Total liabilities
Floating
interest rate
$
Non-interest
bearing
$
Total
$
32,092,735
–
32,092,735
–
2,089,625
2,089,625
4,179,130
202,691,800
206,870,930
36,271,865
204,781,425
241,053,290
–
–
–
(1,892,072)
(1,126,500)
(3,018,572)
(1,892,072)
(1,126,500)
(3,018,572)
Net exposure to interest rate risk
36,271,865
201,762,853
238,034,718
The weighted average interest rate of the Company’s interest bearing financial assets at 30 June 2023 is 2.34%
(2022: 0.51%).
Sensitivity analysis
At 30 June 2023, if interest rates had increased/decreased by 75 basis points (2022: 75 basis points) from the
year end rates with all other variables held constant, post-tax profit for the year would have been $121,612
(2022: $150,226) higher and $121,612 (2022: $150,226) lower, mainly as a result of higher/lower interest income
from interest bearing financial assets.
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Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
3. Financial risk management (continued)
(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 receives payment.
Cash
The majority of the Company’s short term deposits are invested with financial institutions that have a Standard and
Poor’s A1 credit rating. The majority of maturities are within three months.
Receivables
The majority of the Company’s receivables arise from dividends and distributions yet to be received. None of these
assets exposed to credit risk are overdue or considered to be impaired.
(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. Payables are due within less than 6 months. In the case of call options, there are no contractual cash
flows as if the option is exercised the contract will be settled in the securities over which the option is written.
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. Refer to the table.
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| QV Equities Limited Annual Report 2023
3. Financial risk management (continued)
(c) Liquidity risk (continued)
The Company is not exposed to material liquidity risk.
30 June 2023
Non-Derivative financial liabilities
Contractual
cash flow
$
Less than a
month
$
1–6
months
$
6–12
months
$
1–5
years
$
More than 5
years
$
Investment creditors
348,029
348,029
–
Other payables
Total
Derivative financial liabilities
299,918
647,947
199,915
100,003
547,944
100,003
Exchange traded options
1,524,450
997,200
527,250
Sub total
1,524,450
997,200
527,250
2,172,397
1,545,144
627,253
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30 June 2022
Non-Derivative financial liabilities
Contractual
cash flow
$
Less than a
month
$
1–6
months
$
6–12
months
$
1–5
years
$
More than 5
years
$
Investment creditors
1,496,875
1,496,875
Share buyback
Other payables
Total
Derivative financial liabilities
76,477
318,720
76,477
227,334
1,892,072
1,800,686
–
–
91,386
91,386
Exchange traded options
1,126,500
580,900
545,600
Sub total
1,126,500
580,900
545,600
3,018,572
2,381,586
636,986
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4. Fair value measurement
The Company measures and recognises the following assets and liabilities at fair value on a recurring basis:
y
y
Financial assets
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.
QV Equities Limited Annual Report 2023
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Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
4. Fair value measurement (continued)
(i) Recurring fair value measurements
The following table presents the Company’s assets measured and recognised at fair value as at 30 June 2023 and
30 June 2022.
Level 1
$
Level 2
$
Level 3
$
Total
$
As at 30 June 2023
Financial assets
Financial assets at fair value:
Listed equities
Listed unit trusts
Total
Financial liabilities
Financial liabilities held for trading:
Options
Total
As at 30 June 2022
Financial assets
Financial assets at fair value:
Listed equities
Listed unit trusts
Floating rate notes
Total
Financial liabilities
Financial liabilities held for trading:
Options
Total
189,395,760
23,099,250
212,495,010
1,524,450
1,524,450
185,996,300
16,695,500
4,179,130
206,870,930
1,126,500
1,126,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
189,395,760
23,099,250
212,495,010
1,524,450
1,524,450
185,996,300
16,695,500
4,179,130
206,870,930
1,126,500
1,126,500
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 closing prices at the end of the reporting year.
During the year $nil (2022: $nil) has been transferred from Level 2 to Level 1. There were no transfers in and out of
Level 2 and 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.
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| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
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:
Prima Facie tax on profit from ordinary activities before income tax of 30% (2022:
30%)
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
Franked dividend income receivable
Under/(over) provisions in previous year
Share buyback costs raised directly in equity
Tax expense composition:
Current tax expense
Movement in deferred tax liabilities
Movement in deferred tax assets
Under/(over) provision in previous year
Share buyback costs raised directly in equity
Effective tax rate is:
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.
(b) Current tax liabilities
Balance at the beginning of the period
Current year income tax on taxable income
Realised capital gain
Net income tax paid
Under provision of income tax in previous year
30 June 2023
$
30 June 2022
$
3,041,934
2,070,939
862,946
550,927
(2,876,489)
(1,836,421)
246
(819)
–
(68,375)
–
959,443
1,028,627
(60,791)
59,982
(68,375)
–
959,443
10,162
(33,875)
(10,800)
7,988
(4,490)
754,430
208,459
543,437
(964)
7,988
(4,490)
754,430
9.46%
10.93%
30 June 2023
$
30 June 2022
$
5,719,638
1,028,624
–
4,856,094
203,970
6,215,211
(6,368,269)
(5,568,789)
61,150
441,143
13,152
5,719,638
QV Equities Limited Annual Report 2023
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Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
5 Taxation (continued)
(c) Deferred tax assets/liabilities
This deferred tax assets balance comprises temporary differences attributable to:
Accruals
Share issue costs capitalised
Capital losses
Net revaluation of investments
Unrealised losses on options
Over provision
Deferred tax assets
The deferred tax liabilities balance comprises temporary differences attributable to:
Unrealised gains on options
Income receivable not assessable for tax until receipt
Tax deferred distributable income
Deferred tax liabilities
30 June 2023
$
30 June 2022
$
19,987
9,984
988,908
13,398
15,367
–
10,304,036
11,113,902
39,795
122,707
–
–
11,485,417
11,142,667
–
43,200
183,657
226,857
213,531
34,320
227,727
475,578
Net deferred tax assets adjusted for deferred tax liabilities
11,258,560
10,667,089
The overall movement in deferred tax asset and liabilities account is as follows:
Opening balance
Share issue costs capitalised
Capital losses
Charged to profit or loss
Tax effect of asset revaluation reserve movement
Tax effect of income from distribution
Over/(under) provision
10,667,089
4,202,090
–
990,113
60,791
(797,698)
215,558
122,707
650
965
(543,437)
7,002,306
12,504
(7,989)
The rate used at 30 June 2023 is 30% (2022: 30%)
11,258,560
10,667,089
36
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| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
6. Cash and cash equivalents
Cash at bank
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/(gains) on options
Dividend/distribution income reinvested
Increase in dividends/distributions receivable
Decrease/(increase) in interest receivable
Decrease/(increase) in other income receivable
Decrease in prepayments
(Decrease)/increase in sundry creditors and accruals
Decrease/(increase) in deferred tax assets
Decrease in current tax liabilities
(Decrease)/increase in deferred tax liabilities
Net cash inflow from operating activities
7. Receivables
Receivable – proceeds from investment sales
Interest receivable
Dividends/distributions receivable
Other receivables
Total receivables
None of the receivables are past the due date or impaired.
The expected credit loss assessment on receivables is not material.
30 June 2023
$
30 June 2022
$
17,118,574
17,118,574
32,092,735
32,092,735
30 June 2023
$
30 June 2022
$
9,180,337
6,148,699
844,429
–
(173,040)
84,346
9,608
6,195
(501,075)
(990,115)
(994,218)
(164,296)
(167,195)
(84,346)
(3,535)
8,623
970,623
(1,615)
(4,357,920)
(5,356,181)
(60,791)
543,437
(5,138,363)
(5,248,703)
4,041,974
899,996
30 June 2023
$
50,326
–
777,200
39,545
867,071
30 June 2022
$
1,351,967
84,346
604,160
49,152
2,089,625
QV Equities Limited Annual Report 2023
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| 37
Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
8. Financial assets at fair value
Financial assets held at fair value through other comprehensive income include the following:
Listed securities
30 June 2023
$
30 June 2022
$
212,495,010
206,870,930
The fair value of investments is based on the fair value measurement hierarchy disclosed in note 4(i).
The total dividends received on these investments, included in the Statement of Comprehensive Income were:
Dividend income:
Listed securities held at year-end
Listed securities sold during the year
Total dividend
2023
$
2022
$
9,359,309
664,400
10,023,709
6,520,876
1,568,952
8,089,828
During the year, the total fair value of investments sold in the normal course of the business and to preserve capital
were:
Fair value at disposal date
Listed securities
Gains/(losses) on disposal after tax
Listed securities
2023
$
2022
$
56,438,492
136,297,618
(2,770,257)
14,005,113
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 at fair value
10. Trade creditors and other payables
Payable–unsettled investment purchases
Payable–share buyback
Payable–other expenses
Total trade creditors and other payables
38
38
| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
30 June 2023
$
30 June 2022
$
1,391,800
132,650
1,524,450
1,838,279
(711,779)
1,126,500
30 June 2023
$
30 June 2022
$
348,029
1,496,875
–
299,918
647,947
76,477
318,720
1,892,072
11. Issued capital
(a) Share Capital
30 June 2023
Number of
Shares
30 June 2023
Total amount
$
30 June 2022
Number of
Shares
30 June 2022
Total amount
$
Fully paid ordinary shares
227,660,294
238,169,259
229,049,493
239,449,478
(b) Movement in ordinary share capital
2023
Date
01/07/2022
Opening balance
Share buyback
30/06/2023
Closing balance
2022
Date
01/07/2021
Opening balance
Share buyback
30/06/2022
Closing balance
* Rounded to two decimal places
(c) Fully paid ordinary shares
Number of
shares
229,049,493
(1,389,199)
227,660,294
Number of
shares
242,506,634
(13,457,141)
229,049,493
Share price*
$
Total amount
$
0.92
–
239,449,478
(1,280,219)
238,169,259
Share price*
$
Total amount
$
1.01
–
253,069,464
(13,619,986)
239,449,478
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. There are no separate classes of shares and
each share has the same rights attaching to it as all other shares of the Company.
(d) 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, buyback shares or sell assets to reduce debt.
The Company is not subject to any externally imposed capital requirements.
12. Reserves
(a) Asset revaluation reserve
Changes in the fair value of long term investments are presented in other comprehensive income through the assets
revaluation reserve. Upon disposal of long term investment the realised gain or loss is transferred from the asset
revaluation reserve to the capital profits reserve.
(b) Capital profits reserve
Realised gains or losses on long term equity investments are transferred from the asset revaluation reserve to the
capital profits reserve for future dividend payments purposes.
(c) Profits reserve
Retained earnings are transferred to the profit reserve for future dividend payments.
QV Equities Limited Annual Report 2023
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| 39
Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
13. Earnings per share
30 June 2023
cents
30 June 2022
cents
(a) Basic and diluted earnings per share
Total earnings per share attributable to the ordinary equity holders of the Company
4.02
2.64
(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 weighted average number of shares on issues during the year.
228,416,565
233,106,211
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% (2022: 30%) tax rate.
Final dividend FY22: 1.2 cents per share fully franked paid 2 September 2022
Final dividend FY21: 1.1 cents per share fully franked paid 3 September 2021
Interim dividend FY23: 1.3 cents per share fully franked paid 2 December 2022
2,975,554
Interim dividend FY22: 1.2 cents per share fully franked paid 3 December 2021
Interim dividend FY23: 1.3 cents per share fully franked paid 3 March 2023
2,966,648
Interim dividend FY22: 1.2 cents per share fully franked paid 4 March 2022
Interim dividend FY23: 1.3 cents per share fully franked paid 2 June 2023
2,961,454
Interim dividend FY22: 1.2 cents per share fully franked paid 3 June 2022
11,651,542
(b) Dividends not recognised at the end of the reporting period
30 June 2023
$
2,747,886
30 June 2022
$
2,646,839
2,798,777
2,765,752
2,751,554
10,962,922
In addition to the above dividends, since year end the Directors have recommended
the payment of a final dividend of 1.3 cents per fully paid ordinary share, fully
franked based on tax paid at 30%. The aggregate amount of the proposed dividend
expected to be paid on 1 September 2023 (2022: 2 September 2022) out of the
profits of the Company at 30 June 2023 and 30 June 2022, but not recognised as a
liability at year end is:
30 June 2023
$
30 June 2022
$
2,959,584
2,748,594
40
40
| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
14. Dividends (continued)
(c) Dividends franking account
The fully franked final dividend to be paid on 1 September 2023 will be franked out of existing franking credits or out
of franking credits arising from the payment of income tax in relation to the year ended 30 June 2023.
Opening balance of franking account
Franking credits on dividends received
Tax paid during the period
30 June 2023
$
30 June 2022
$
4,116,506
2,876,489
6,368,269
1,311,938
1,836,421
5,568,789
Franking credits on ordinary dividends paid
(4,993,518)
(4,698,395)
Closing balance of franking account
Adjustment for tax payable on the current period profits
Franking credits available for use in subsequent reporting periods
Adjusted for dividends declared subsequent to reporting period 30% (2022: 30%)
Adjusted franking account balance
8,367,746
441,143
8,808,889
(1,268,393)
7,540,496
4,018,753
5,719,638
9,738,391
(1,177,969)
8,560,422
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.
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:
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Linda Fox
Anton Tagliaferro
Simon Conn
(a) Remuneration
Independent Director (Chairman)
Independent Director (Resigned 31 March 2023)
Independent Director
Independent Director (Appointed 31 March 2023)
Non-Independent Director
Non-Independent Director
Detailed remuneration disclosures are provided in the Remuneration Report of the Directors’ Report on pages 17 to 19.
Short term employee benefits–Directors fees
Post employment benefits–Superannuation
30 June 2023
$
30 June 2022
$
66,787
33,213
100,000
66,985
33,015
100,000
QV Equities Limited Annual Report 2023
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| 41
Notes to the Financial Statements (continued) Notes to the Financial Statements (continued)
15. Key management personnel disclosures (continued)
(b) Share 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 related parties, are set out below:
Ordinary shares held
2023
Directors
Peter McKillop
Jennifer Horrigan**
Eamonn Roles
Balance as at
30 June 2022
537,060
29,200
155,000
Acquisitions
Disposals
–
–
–
Anton Tagliaferro***
8,500,000
760,000
Linda Fox****
Simon Conn
–
400,000
–
–
9,621,260
760,000
Other
–
(29,200)
Balance as at
30 June 2023
537,060
–
–
155,000
(1,000,000)
8,260,000
–
–
–
400,000
(1,029,200)
9,352,060
–
–
–
–
–
–
–
Jennifer Horrigan resigned from the Company effective 31 March 2023 and her shareholding balance as at 30 June 2023 is not included.
**
*** Anton Tagliaferro no longer has a relevant interest in the 1,000,000 shares held by IML.
**** Linda Fox was appointed as a director on 31 March 2023.
2022
Directors
Peter McKillop
Jennifer Horrigan
Eamonn Roles
Anton Tagliaferro
Simon Conn
Balance as at
30 June 2021
537,060
29,200
155,000
8,050,000
400,000
9,171,260
Acquisitions
Disposals
Other
–
–
–
450,000
–
450,000
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at
30 June 2022
537,060
29,200
155,000
8,500,000
400,000
9,621,260
16. Related party transactions
Anton Tagliaferro resigned as a Director of IML on 5 January 2023 and no longer holds equity interests in IML, the entity
appointed to manage the investment portfolio of the Company. On his retirement from IML on 31 March 2023,
Mr Tagliaferro was retained in a consulting capacity until 30 June 2023. Simon Conn is a Director of IML and holds equity
interests in IML.
Linda Fox is an external member of the IML Compliance Committee for IML’s managed investment schemes and
is remunerated directly by IML for this role.
In its capacity as the 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 $2,181,021 (2022: $2,390,503)
inclusive of GST. The amount expensed in the Statement of Comprehensive Income after allowing for the reduced input
tax credit was $2,032,315 (2022: $2,227,514). As at 30 June 2023, the balance payable to the Manager was $163,413
(2022: $169,565).
All transactions with related entities were made on commercial terms and conditions no more favorable than those
available to other parties unless otherwise stated.
42
42
| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
16. Related party transactions (continued)
No Director has received or became 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/she is a member
or with a Company in which he/she 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 and options.
18. Contingencies and commitments
The Company had no commitments or contingent liabilities as at 30 June 2023 and 30 June 2022.
19. Events occurring after the reporting period
Since the end of the financial year, the Directors declared a fully franked final dividend of 1.3 cents per fully paid
ordinary share payable on 1 September 2023.
Subsequent to 30 June 2023 to the date of this report there has been no other events specific to the Company of which
the Directors are aware which has had a material effect on the Company or its financial position.
20. Remuneration of auditors
Audit and other assurance services:
Audit and review of financial report
Non-assurance services:
Tax services
30 June 2023
$
30 June 2022
$
54,900
47,700
12,200
67,100
11,100
58,800
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 of the related entity of the audit firm, to ensure that they do not compromise independence.
QV Equities Limited Annual Report 2023
QV Equities Limited Annual Report 2023
| 43
| 43
Notes to the Financial Statements (continued) Directors’ Declaration
In the Directors’ opinion,
(1) the financial statements and notes set out on page 22 to 43 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;
(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 2023 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 2023
44
44
| QV Equities Limited Annual Report 2023
| QV Equities Limited Annual Report 2023
Independent Auditor’s Report to the Shareholders
QV Equities Limited Annual Report 2023
| 45
Pitcher Partners Sydney Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. pitcher.com.au Pitcher Partners Sydney Partnership Level 16, Tower 2 Darling Park 201 Sussex Street Sydney NSW 2000 Postal Address GPO Box 1615 Sydney NSW 2001 Independent Auditor’s Report To the Members of QV Equities Limited ABN 64 169 154 858 Report on the Audit of the Financial Report Opinion p. +61 2 9221 2099 e. sydneypartners@pitcher.com.au We have audited the financial report of QV Equities Limited (“the Company”), which comprises the statement of financial position as at 30 June 2023, the statement of comprehensive income, the statement of changes in equity and the statement of cash flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of 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 2023and of its financial performance for the year then ended; andii.complying with Australian Accounting Standards and the CorporationsRegulations 2001.Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of the Company, would be on the same terms if given to the Directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Adelaide Brisbane Melbourne Newcastle Perth Sydney Pitcher Partners is an association of independent firms. Independent Auditor’s Report to the Shareholders (continued)
Independent Auditor’s Report
To the Members of QV Equities Limited
ABN 64 169 154 858
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the matter
Existence and Valuation of Financial Assets
Refer to Note 8: Financial Assets at Fair Value
We focused our audit effort on the
existence and valuation of the
Company’s financial assets as they
represent the most significant driver of
the Company’s Net Tangible Assets and
Profit.
Our procedures included, amongst others:
§ Obtaining an understanding of and
evaluating the design and implementation of
the investment management’s processes
and controls.
The Company’s investments are
considered to be non-complex in nature
with fair value based on readily
observable data from the ASX or other
observable markets. Consequently,
these investments are classified under
Australian Accounting Standards as
“Level 1” (i.e., where the valuation is
based on quoted prices in an active
market).
§ Reviewing and evaluating the independent
auditor’s report on the design and operating
effectiveness of internal controls (ASAE
3402 Assurance Reports on Controls at a
Service Organisation) for the Custodians.
§ Making enquiries as to whether there have
been any changes to these controls or their
effectiveness for the period to which the
auditor’s report relate to and obtaining
bridging letters.
§ Obtaining confirmations of the investment
holdings at balance date directly from the
Custodians.
§
§
§
Assessing and recalculating the Company’s
valuation of individual investment holdings
using independent pricing sources.
Evaluating the accounting treatment of
revaluations of financial assets for
current/deferred tax and unrealised gains or
losses; and
Assessing the adequacy of disclosures in
the financial statements.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
46
| QV Equities Limited Annual Report 2023
Independent Auditor’s Report to the Shareholders (continued)
Independent Auditor’s Report
To the Members of QV Equities Limited
ABN 64 169 154 858
Other Information
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s Annual Report for the year ended 30 June 2023 but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report, or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal controls as the Directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the ability of the
Company to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
QV Equities Limited Annual Report 2023
| 47
Independent Auditor’s Report to the Shareholders (continued)
Independent Auditor’s Report
To the Members of QV Equities Limited
ABN 64 169 154 858
Auditor’s Responsibilities for the Audit of the Financial Report (continued)
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure, and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated 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 the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the 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 2023. In our opinion, the Remuneration Report of QV Equities
Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act
2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Pitcher Partners
Sydney
C I Chandran
Partner
16 August 2023
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
48
| QV Equities Limited Annual Report 2023
Shareholder Information
Shareholder Information
The shareholder information set out below was applicable as at 30 June 2023.
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 2023:
Ordinary shares, trust units or stapled securities
A2B Australia Limited
Abacus Property Group
Alumina Ltd
Amcor Limited*
Ampol Limited*
APA Group
Aurizon Holdings Limited
Australian Clinical Labs Ltd
Bank of Queensland Limited
Bega Cheese Ltd
Brambles Ltd*
Charter Hall Retail REIT
Clearview Wealth Limited
Codan Ltd
Coles Group Limited*
G.U.D. Holdings Limited
Healthco REIT
Hipages Group Holdings Ltd
HMC Capital Ltd
Home Consortium
Homeco Daily Needs REIT
2,800,000
3,290,000
Incitec Pivot Limited
Informedia Limited
Insurance Australia Group*
Integral Diagnostics Limited
Lottery Corporation*
Mayne Pharma Group Limited**
Medibank Private Ltd
Metcash Limited*
500,000
700,000
1,000,000
850,000
1,600,000
800,000
1,425,000
1,400,000
1,370,000
1,120,000
5,700,000
2,788,000
8,208,000
3,520,000
5,016,000
5,264,000
2023
2022
Holding
units
Fair value
$
Holding
units
Fair value
$
2,200,000
1,000,000
2,000,000
580,000
350,000
500,000
3,267,000
2,690,000
2,770,000
8,618,800
10,479,000
4,845,000
2,100,000
1,000,000
1,200,000
800,000
330,000
–
2,310,000
2,570,000
1,758,000
14,432,000
11,295,900
–
3,600,000
14,112,000
3,600,000
13,680,000
1,100,000
400,000
800,000
740,000
1,300,000
1,600,000
300,000
500,000
500,000
1,750,000
1,900,000
550,000
–
3,784,000
2,196,000
2,280,000
10,663,400
4,693,000
776,000
2,409,000
9,210,000
4,410,000
2,301,250
1,434,500
2,783,000
–
480,000
370,000
600,000
600,000
1,300,000
1,600,000
300,000
500,000
400,000
–
2,203,200
2,467,900
2,292,000
6,426,000
4,901,000
1,088,000
2,088,000
8,905,000
3,196,000
–
1,600,000
1,584,000
–
300,000
2,800,000
500,000
600,000
1,300,000
1,100,000
1,800,000
16,000,000
425,000
1,300,000
–
1,353,000
3,584,000
1,655,000
1,002,000
5,668,000
3,333,000
8,136,000
4,000,000
1,381,250
5,512,000
QV Equities Limited Annual Report 2023
| 49
Shareholder Information (continued)
Shareholder Information (continued)
Ordinary shares, trust units or stapled securities (continued)
2023
2022
Holding
units
Fair value
$
Holding
units
Fair value
$
Mirvac Group
New Hope Corporation Limited*
Newcrest Mining Limited
Nine Entertainment Co. Holdings Limited
Ooh Media Limited
Orica Limited*
Origin Energy Limited
Pact Group Holdings Ltd
Pro-Pac Packaging Limited
Ramsay Health Care Ltd (preference shares)
Region Group
Regis Healthcare Limited
Santos Ltd*
Shopping Centres Australasia Property Group
Skycity Entertainment Group Limited
Sonic Healthcare Limited*
Southern Cross Media Group Limited
Suncorp Group Ltd*
Tabcorp Holding Limited
TPG Telecom Ltd
United Malt Group Ltd
Virgin Money UK PLC
Floating rate notes
–
800,000
100,000
1,900,000
1,500,000
800,000
300,000
5,000,000
5,936,000
20,000
1,100,000
440,000
700,000
–
3,050,000
270,000
2,500,000
600,000
2,500,000
850,000
800,000
1,400,000
–
3,880,000
2,642,000
3,733,500
1,770,000
11,864,000
2,523,000
3,300,000
1,246,560
2,079,800
2,497,000
976,800
5,264,000
–
6,435,500
9,603,900
2,162,500
8,094,000
2,775,000
4,139,500
3,520,000
3,990,000
500,000
1,000,000
100,000
1,900,000
1,500,000
830,000
900,000
4,900,000
2,650,000
20,000
–
900,000
700,000
1,200,000
3,000,000
220,000
3,500,000
400,000
–
700,000
900,000
1,500,000
987,500
3,460,000
2,089,000
3,467,500
1,815,000
13,089,100
5,157,000
8,844,500
1,285,250
1,993,000
–
1,665,000
5,194,000
3,300,000
7,950,000
7,262,200
3,482,500
4,392,000
–
4,179,000
2,943,000
3,315,000
Crown Resorts Limited unsecured sub floating rate note
–
–
41,000
4,179,130
Total equities
Cash
Total portfolio
212,495,010
206,870,930
17,118,574
32,092,735
229,613,584
238,963,665
* Part or all of the security was subject to call options written by the Company as at 30 June 2023.
** Mayne Pharma Group Limited had a one for 20 share consolidation during the year ended 30 June 2023.
There were 342 (2022: 677) investment transactions during the financial year. The total brokerage paid on these
transactions was $92,899 (2022: $261,919).
50
| QV Equities Limited Annual Report 2023
Shareholder Information (continued)
Shareholder Information (continued)
B. Distribution of equity securities
Analysis of numbers of shareholders by size of holding as at 30 June 2023:
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of shareholders
Ordinary shares
Percentage
285
532
592
2,740
306
4,455
90,060
1,746,123
4,869,276
97,799,021
123,155,814
227,660,294
0.04
0.77
2.14
42.95
54.10
100.00
There were 202 holders of less than a marketable parcel of ordinary shares holding a total of 21,522 shares.
C. Equity security holders
Twenty largest shareholders–ordinary shares:
Name
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Kennedy Financement Luxembourg S.A.R.L
AKAT Investments Pty Ltd
Fairview Investments Pty Limited
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