van Eyk Blueprint International Shares Fund ARSN 103 447 481 Annual report - 30 June 2017
ARSN 103 447 481 Annual report - 30 June 2017 Contents Page Directors' Report 1 Auditor's Independence Declaration 4 Statement of Comprehensive Income 5 Statement of Financial Position 6 Statement of Changes in Equity 7 Statement of Cash Flows 8 9 Directors' Declaration 24 Independent Auditor's Report 25 This financial report covers as an individual entity. The Responsible Entity of is Macquarie Investment Management Limited (ABN 66 002 867 003). The Responsible Entity's registered office is No. 50 Martin Place, Sydney, NSW 2000.
Directors' Report 30 June 2017 The directors of Macquarie Investment Management Limited ("MIML"), a wholly owned subsidiary of Macquarie Group Limited, the Responsible Entity of, present their report together with the financial report of (the "Trust") for the year ended 30 June 2017. Principal activities The Trust is currently in the process of being wound-up in accordance with the Trust Constitution. The Trust did not have any employees during the year. There were no significant changes in the nature of the Trust s activities during the year as the Trust ceased trading on 15 August 2014. Directors The following persons held office as directors of MIML (the "Responsible Entity") during the year or since the end of the year and up to the date of this report: H Brown M Davis J Edstein I Miller Review and results of operations Results The performance of the Trust, as represented by the results of its operations, was as follows: 2017 2016 Operating profit before finance costs attributable to unitholders () 8 1,352 Distributions Distributions paid and payable () - - Distributions (cents per unit) - - Significant changes in state of affairs On 1 August 2014, the Responsible Entity suspended applications and redemptions for the Trust, after becoming aware that one of the Trust s material assets, its receivable from Artefact Partners Global Opportunities Fund Limited ("Artefact"), was illiquid. The Trust ceased trading on 15 August 2014 and on 16 September 2014, the Responsible Entity terminated van Eyk Research Pty Ltd s ( van Eyk ) appointment as Investment Manager of the Trust. 1
Directors' Report 30 June 2017 Significant changes in state of affairs (continued) The Trust received $19,992,604 of its $30,924,406 receivable from Artefact during the year ended 30 June 2015. On 19 May 2016, the Trust entered into a limited recourse loan deed with MQ Capital Pty Limited ("MQ Capital"), resulting in the Trust receiving an interest free loan of $12,287,672 (the Loan ) from MQ Capital. Repayment of the Loan was limited to any amounts received by the Trust from its receivable from Artefact or from the former Investment Manager of the Trust in connection with Artefact or from proceeds received from certain legal proceedings to which the Responsible Entity was a party. On 20 May 2016, the full amount of the Loan was used by the Trust to pay termination proceeds to unitholders, which included a payment to unitholders of an amount equal to the outstanding balance of the Artefact receivable ($10,931,802). On 11 May 2017, the Responsible Entity entered into a settlement deed with Artefact and parties related to Artefact in order to settle certain legal proceedings to which the Responsible Entity was a party. On 25 May 2017, in accordance with the settlement deed, the Artefact liquidators paid $9,026,218 to the Trust, for final settlement of the Artefact receivable. The remaining balance of the Artefact receivable, $1,905,584 was subsequently written off. On 2 June 2017, the Trust paid final redemption proceeds to unitholders totalling $132,775, an amount equal to $0.001481 per unit. On 28 June 2017, the proceeds received by the Trust from the Artefact receivable were utilised to repay a portion of the Loan from MQ Capital with the remaining balance of the Loan, $1,905,584, written off in accordance with the terms of the Loan agreement. At the date of termination of the Trust, the Trust has paid termination proceeds to unitholders totalling $99,254,558, an amount per unit equal to 102.3% of unit value at the date that the Trust ceased trading. The Trust is in the process of being wound-up in accordance with the Trust Constitution. The wind-up financial statements are presented at 30 June 2017. In the opinion of the directors, there were no other significant changes in the state of affairs of the Trust that occurred during the financial year under review. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect: (i) the operations of the Trust in future financial years, or (ii) the results of those operations in future financial years, or (iii) the state of affairs of the Trust in future financial years. Indemnification and insurance of officers and auditors No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to either the officers of the Responsible Entity or the auditors of the Trust. Under the Trust Constitution, the Responsible Entity of the Trust is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. 2
Directors' Report 30 June 2017 Fees paid to and interests held in the Trust by the Responsible Entity or its associates Fees paid to the Responsible Entity and its associates out of Trust property during the year are disclosed in note 7 of the financial statements. No fees were paid out of Trust property to the directors of the Responsible Entity during the year (2016: Nil). The number of interests in the Trust held by the Responsible Entity, its directors or its associates as at the end of the financial year are disclosed in note 7 of the financial statements. Interests in the Trust The movement in units on issue in the Trust during the year is disclosed in note 5 of the financial statements. The value of the Trust s assets and liabilities is disclosed on the statement of financial position and derived using the basis set out in note 2 of the financial statements. Environmental regulation The operations of the Trust are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law. Rounding of amounts to the nearest thousand dollars Pursuant to ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report, amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars, unless otherwise indicated. 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 4. This report is made in accordance with a resolution of the directors. Director:... I Miller Sydney 12 September 2017 3
Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Auditor s Independence Declaration to the Directors of Macquarie Investment Management Limited As lead auditor for the audit of for the financial year ended 30 June 2017, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. Ernst & Young Darren Handley-Greaves Partner 12 September 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation
Statement of Comprehensive Income Notes 2017 2016 Income Discount on loan payable to MQ Capital 1,906 1,356 Other operating income 8 - Total income 1,914 1,356 Expenses Responsible Entity fees 7 - (4) Amounts due from underlying investments written off (1,906) - Total operating expenses (1,906) (4) Operating profit 8 1,352 Finance costs attributable to unitholders Distributions to unitholders - - Increase in net assets attributable to unitholders 5 (8) (1,352) Profit/(loss) for the year - - Other comprehensive income for the year - - Total comprehensive income for the year - - The above statement of comprehensive income should be read in conjunction with the accompanying notes. 5
Statement of Financial Position As at 30 June 2017 Notes 2017 2016 Assets Receivable from Responsible Entity 7-125 Due from underlying investments 6-10,932 Total assets - 11,057 Liabilities Loan from MQ Capital - 10,932 Total liabilities (excluding net assets attributable to unitholders) - 10,932 Net assets attributable to unitholders - liability 5-125 The above statement of financial position should be read in conjunction with the accompanying notes. 6
Statement of Changes in Equity 2017 2016 Total equity at the beginning of the year - - Total comprehensive income for the year - - Transactions with owners in their capacity as owners - - Total equity at the end of the year - - Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end of the year. The above statement of changes in equity should be read in conjunction with the accompanying notes. 7
Statement of Cash Flows Notes 2017 2016 Cash flows from operating activities: Proceeds from sale of financial instruments held at fair value through profit or loss - 15 Purchase of financial instruments held at fair value through profit or loss - (7) Amounts received from underlying investments 9,026 - Other income received 133 565 Payment of Responsible Entity fees - (18) Payment of other expenses - (7) Net cash inflow from operating activities 8(a) 9,159 548 Cash flows from financing activities: Proceeds from loan received from MQ Capital - 12,288 Repayment of loan received from MQ Capital (9,026) - Payment of termination proceeds to unitholders (133) (12,842) Net cash outflow from financing activities (9,159) (554) Net decrease in cash and cash equivalents - (6) Cash and cash equivalents at the beginning of the year - 6 Cash and cash equivalents at the end of the year - - Non-cash financing activities 8(b) - - The above statement of cash flows should be read in conjunction with the accompanying notes. 8
1 General information This financial report covers (the "Trust") as an individual entity. The Trust was constituted on 17 January 2003 and it ceased trading on 15 August 2014. The Trust is a registered managed investment scheme domiciled in Australia. The financial report is presented in Australian dollars. The Responsible Entity of the Trust is Macquarie Investment Management Limited (the "Responsible Entity''). The Responsible Entity s registered office is No. 50 Martin Place, Sydney, NSW 2000. On 1 August 2014, the Responsible Entity suspended applications and redemptions for the Trust, after becoming aware that one of the Trust s material assets, its receivable from Artefact Partners Global Opportunities Fund Limited ("Artefact"), was illiquid. The Trust ceased trading on 15 August 2014 and on 16 September 2014, the Responsible Entity terminated van Eyk Research Pty Ltd s ( van Eyk ) appointment as Investment Manager of the Trust. The Trust received $19,992,604 of its $30,924,406 receivable from Artefact during the year ended 30 June 2015. On 19 May 2016, the Trust entered into a limited recourse loan deed with MQ Capital Pty Limited ("MQ Capital"), resulting in the Trust receiving an interest free loan of $12,287,672 (the Loan ) from MQ Capital. Repayment of the Loan was limited to any amounts received by the Trust from its receivable from Artefact or from the former Investment Manager of the Trust in connection with Artefact or from proceeds received from certain legal proceedings to which the Responsible Entity was a party. On 20 May 2016, the full amount of the Loan was used by the Trust to pay termination proceeds to unitholders, which included a payment to unitholders of an amount equal to the outstanding balance of the Artefact receivable ($10,931,802). On 11 May 2017, the Responsible Entity entered into a settlement deed with Artefact and parties related to Artefact in order to settle certain legal proceedings to which the Responsible Entity was a party. On 25 May 2017, in accordance with the settlement deed, the Artefact liquidators paid $9,026,218 to the Trust, for final settlement of the Artefact receivable. The remaining balance of the Artefact receivable, $1,905,584 was subsequently written off. On 2 June 2017, the Trust paid final redemption proceeds to unitholders totalling $132,775, an amount equal to $0.001481 per unit. On 28 June 2017, the proceeds received by the Trust from the Artefact receivable were utilised to repay a portion of the Loan from MQ Capital with the remaining balance of the Loan, $1,905,584, written off in accordance with the terms of the Loan agreement. At the date of termination of the Trust, the Trust has paid termination proceeds to unitholders totalling $99,254,558, an amount per unit equal to 102.3% of unit value at the date that the Trust ceased trading. The Trust is in the process of being wound-up in accordance with the Trust Constitution. The wind-up financial statements are presented at 30 June 2017. The financial statements were authorised for issue by the directors on 12 September 2017. The directors of the Responsible Entity have the power to amend and reissue the financial report. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated in the following text. (a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards and the Corporations Act 2001 in Australia. The financial report is prepared on a liquidation basis as the Trust ceased trading on 15 August 2014. There has been no impact of using the liquidation basis of accounting in the current period. 9
2 Summary of significant accounting policies (continued) (a) Basis of preparation (continued) The statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non-current. The amounts expected to be recovered or settled within twelve months after the end of the reporting period cannot be reliably determined. Where necessary, comparative information has been reclassified to be consistent with current period disclosures. Changes in Australian Accounting Standards The Trust has adopted all mandatory Australian Accounting Standards and Interpretations for the financial year beginning on or after 1 July 2016. The following key Accounting Standards and amendments to Accounting Standards became applicable in the current financial year: (i) AASB 2015-2 Amendments to Australian Accounting Standards Disclosure initiative: AASB 101 Presentation of Financial Statements These amendments clarify the materiality requirements in AASB 101. These amendments also clarify that specific line items in the statement of comprehensive income and the statement of financial position may be disaggregated and that the entities have flexibility as to the order in which they present the notes to financial statements. Application in the current period has not had a material impact on the financial position nor performance of the Trust. (ii) AASB 2015-5 Amendments to Australian Accounting Standards Investment Entities: Applying the Consolidation Exception AASB 2015-5 introduces a choice in application of the equity method by a non-investment entity investor to an investment entity investee. When a non-investment entity investor applies the equity method to an investment entity associate or joint venture, the investor may retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries, or reverse the fair value measurement to conform to the accounting policies of the investor. As the Trust does not have any subsidiary investments, the application of this standard has no impact on the financial position nor performance of the Trust. Compliance with International Financial Reporting Standards The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. 10
2 Summary of significant accounting policies (continued) (b) Financial instruments (i) Classification The Trust's investments are categorised as at fair value through profit or loss. They comprise:! Financial instruments held for trading These include derivative financial instruments such as futures and foreign currency forward contracts. The Trust does not designate any derivatives as hedges in a hedging relationship.! Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These include investments in unlisted unit trusts. Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Trust s documented investment strategy. The Trust s policy is for the Responsible Entity to evaluate the information about these financial assets on a fair value basis together with other related financial information. Loans and receivables comprise amounts due to the Trust. (ii) Recognition/derecognition The Trust recognises financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date. Financial assets are derecognised when the right to receive cash flows from the investments has expired or the Trust has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liabilities are discharged. (iii) Measurement (a) Financial assets and financial liabilities held at fair value through profit or loss Financial assets and financial liabilities held at fair value through profit or loss are measured initially at fair value excluding any transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all financial instruments held at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the statement of comprehensive income.! Fair value in an active market The fair value of financial assets and financial liabilities traded in active markets is based on their quoted market prices at the statement of financial position date without any deduction for estimated future selling costs. Financial assets are priced at current bid prices, while financial liabilities are priced at current asking prices. 11
2 Summary of significant accounting policies (continued) (b) Financial instruments (continued) (iii) Measurement (continued) (a) Financial assets and financial liabilities held at fair value through profit or loss (continued)! Fair value in an inactive or unquoted market The fair value of financial assets and financial liabilities that are not traded in an active market is determined using valuation techniques. These include the use of recent arm s length market transactions, reference to the current fair value of a substantially similar other instrument, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions. Where discounted cash flow techniques are used, estimated future cash flows are based on management s best estimates and the discount rate used in a market rate at the statement of financial position date applicable for an instrument with similar terms and conditions. For other pricing models, inputs are based on market data at the statement of financial position date. Fair values for unquoted equity investments are estimated, if possible, using applicable pricing/earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer. The fair value of derivatives that are not exchange traded is estimated at the amount that the Trust would receive or pay to terminate the contract at the statement of financial position date taking into account current market conditions (volatility and appropriate yield curve) and the current creditworthiness of the counterparties. Investments in unlisted unit trusts are recorded at the redemption value per unit as reported by the managers of such trusts. Details on how the fair value of financial instruments is determined are disclosed in note 3(e). (b) Loans and receivables Loans and receivables are measured initially at fair value plus transaction costs and subsequently amortised using the effective interest method, less impairment losses if any. Such assets are reviewed at each statement of financial position date to determine whether there is objective evidence of impairment. If any such indication of impairment exists, an impairment calculation is undertaken and any impairment loss is recognised in the statement of comprehensive income as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the statement of comprehensive income. 12
2 Summary of significant accounting policies (continued) (b) Financial instruments (continued) (iv) Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a legally enforceable right to offset the recognised amounts at all times and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. (c) Net assets attributable to unitholders Units are redeemable at the unitholders' option and are therefore classified as financial liabilities. The units can be put back to the Trust at any time for cash based on the redemption price. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the statement of financial position date if unitholders exercised their right to put the units back to the Trust. (d) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash includes cash on hand and deposits held at call with financial institutions. Cash equivalents include other short-term, highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Bank overdrafts, if any, are shown separately on the statement of financial position. Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Trust's main income generating activity. (e) Income Distributions from trusts are recognised on an entitlements basis. (f) Expenses All expenses, including Responsible Entity fees, are recognised in the statement of comprehensive income on an accruals basis. (g) Income tax Under current legislation, the Trust is not subject to income tax as unitholders are presently entitled to the income of the Trust. Financial instruments held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Trust is not subject to capital gains tax. Realised capital losses are not distributed to unitholders but are retained in the Trust to be offset against any realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders. The Trust may incur withholding tax imposed by certain countries on investment income. Such income is recorded gross of withholding tax in the statement of comprehensive income. 13
2 Summary of significant accounting policies (continued) (g) Income tax (continued) The benefits of imputation credits and tax paid are generally passed on to unitholders. (h) Foreign currency translation (i) Functional and presentation currency Items included in the Trust s financial statements are measured using the currency of the primary economic environment in which it operates (the functional currency ). This is the Australian dollar, which reflects the currency of the economy in which the Trust competes for funds and is regulated. The Australian dollar is also the Trust s presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at statement of financial position date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. The Trust does not isolate that portion of gains or losses on securities and derivative financial instruments that are measured at fair value through profit or loss and which is due to changes in foreign exchange rates from that which is due to changes in the market price of securities. Such fluctuations are included with the net gains on financial instruments at fair value through profit or loss. Exchange differences on other financial instruments are included in the statement of comprehensive income as net foreign exchange gains or losses. (i) Distributions to unitholders In accordance with the Trust Constitution, the Trust fully distributes its distributable income, and any other amounts determined by the Responsible Entity, to unitholders by cash or reinvestment. The distributions to unitholders are recognised in the statement of comprehensive income as finance costs attributable to unitholders. (j) Movement in net assets attributable to unitholders Income and expenses that are not included in distributable income and not distributed to unitholders are included in net assets attributable to unitholders. Unrealised gains and losses on financial instruments are included in net assets attributable to unitholders as they are not distributed to unitholders until realised. Capital losses are not distributed to unitholders but are retained to be offset against any future realised capital gains. Movements in net assets attributable to unitholders are recognised in the statement of comprehensive income as finance costs attributable to unitholders. (k) Receivables Receivables include assets and accrued income owing to the Trust which have not been received at statement of financial position date and may include such items as distributions and Reduced Input Tax Credits ("RITC"). Distribution income is accrued when the right to receive payment is established. Amounts are generally received within 30 days of being recorded as receivables. 14
2 Summary of significant accounting policies (continued) (l) Due from underlying investments Amounts due from underlying investments may include outstanding redemption proceeds receivable from underlying investments. The amounts are recognised as receivable once a redemption notice has been made by the Trust to the underlying investment and is recognised at the fair value of the underlying investment at the date of redemption. (m) Payables Payables include liabilities and accrued expenses owing by the Trust which are unpaid as at statement of financial position date. (n) Goods and Services Tax ("GST") Income, expenses and assets are recognised net of the amount of GST to the extent that the GST is recoverable from the Australian Taxation Office ("ATO"). Where GST is not recoverable, it is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are recognised inclusive of GST. RITC recoverable by the Trust from the ATO are recognised as receivables in the statement of financial position. Cash flows are disclosed in the statement of cash flows on a gross basis and cash flows relating to GST, recoverable from, or payable to, the ATO are included as cash flows from operating activities. (o) Applications and redemptions Applications received for units in the Trust are recorded net of any entry fees payable prior to the issue of units in the Trust. Redemptions from the Trust are recorded gross of any exit fees payable after the cancellation of units redeemed. (p) Use of estimates The Responsible Entity makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Certain financial instruments, for example, over-the-counter derivatives and unquoted securities are fair valued using valuation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area that created them. Models are calibrated by back-testing to actual transactions to ensure that outputs are reliable. Models use observable data to the extent practicable. However, inputs such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these inputs could affect the reported fair value of financial instruments. For certain other financial instruments, including accounts payable, the carrying amounts approximate fair value due to the immediate or short-term nature of these financial instruments. 15
2 Summary of significant accounting policies (continued) (q) Rounding of amounts Pursuant to ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report, amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars, unless otherwise indicated. 3 Financial risk management (a) Strategy in using financial instruments The Trust s activities exposed it to a variety of financial risks: market risk (which may include price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Responsible Entity s overall risk management programme focuses on ensuring compliance with the Trust s investment guidelines and seeks to maximise the returns derived for the level of risk to which the Trust is exposed. The Trust used derivatives and other instruments for trading purposes and in connection with its risk management activities. The Trust was permitted to use derivative financial instruments:! to gain or reduce the Trust s exposure to a particular security or index! for currency hedging. Derivatives were not used to gear (leverage) the portfolio. Gearing a portfolio would occur if the level of exposure to the markets exceeded the underlying value of the Trust. Financial risk management was monitored by the Responsible Entity's risk management department under policies approved by the Responsible Entity's senior managers or by the board of directors of the Responsible Entity (the "Board"). The Responsible Entity reviews any identified high and medium severity exceptions to internal risk policies and procedures on a quarterly basis. (b) Market risk (i) Price risk The Trust traded in financial instruments such as unlisted unit trusts, exchange traded instruments and overthe-counter instruments, such as derivatives. Price risk was managed by seeking to ensure that the Trust was investing in accordance with its stated objectives. The Trust's unlisted unit trusts and derivatives were susceptible to market price risk arising from uncertainties about future prices of the instruments. At 30 June 2017 and 30 June 2016, the Trust was not affected by changes in market prices as the Trust did not hold any financial instruments. 16
3 Financial risk management (continued) (b) Market risk (continued) (ii) Foreign exchange risk At 30 June 2017, the Trust was not exposed to foreign exchange risk as it did not hold any financial assets and financial liabilities. At 30 June 2016, the Trust was not exposed to foreign exchange risk as all assets and liabilities were denominated in Australian dollars. (iii) Interest rate risk The Trust was not subject to significant amounts of interest rate risk due to fluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents were invested at short-term market interest rates. (c) Credit risk Credit risk arises from cash and cash equivalents, deposits with banks and other financial institutions and counterparties to derivatives. None of these assets were impaired nor past due but not impaired. Credit risk was managed by managing the Trust's exposures to deposit taking institutions, brokers and other counterparties. At 30 June 2017, the Trust was not exposed to credit risk as it did not hold any financial assets. The maximum exposure to credit risk at 30 June 2016 was the carrying amount of unsettled receipts and amounts due from underlying investments. At 30 June 2016, the Trust had outstanding redemption proceeds of $10,931,802 for its investment in Artefact, having received $19,992,604 towards payment of the outstanding redemption since the Trust ceased trading. On 11 May 2017, the Responsible Entity entered into a settlement deed with Artefact and parties related to Artefact in order to settle certain legal proceedings to which the Responsible Entity was a party. On 25 May 2017, in accordance with the settlement deed, the Artefact liquidators paid $9,026,218 to the Trust, for final settlement of the Artefact receivable. The remaining balance of the Artefact receivable, $1,905,584 was subsequently written off. In accordance with the Trust s policy, the Responsible Entity's risk management department monitored the Trust s credit exposure on a daily basis. (d) Liquidity risk Liquidity risk was managed by ensuring that the Trust is invested in unlisted unit trusts that have daily unit pricing and can ordinarily be readily disposed of. Redeemable units were redeemed at the request of unitholders subject to the Trust's offer document and Trust Constitution (as applicable). On 1 August 2014, in accordance with the Trust Constitution, the Responsible Entity suspended applications and redemptions for the Trust, after becoming aware that one of the Trust s material assets, its receivable from Artefact, was illiquid. At 30 June 2017, the Trust was not exposed to liquidity risk as it did not hold any financial liabilities. 17
3 Financial risk management (continued) (d) Liquidity risk (continued) At 30 June 2016, the Trust had a receivable from Artefact of $10,931,802. On 25 May 2017, the Artefact liquidators paid $9,026,218 to the Trust, for final settlement of the Artefact receivable and the remaining balance of the Artefact receivable, $1,905,584 was subsequently written off. (e) Fair value estimation The carrying amounts of all the Trust's financial assets and financial liabilities at the end of each reporting period approximated their fair values as all financial assets and financial liabilities not fair valued are short-term in nature. The Responsible Entity classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels:! Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).! Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).! Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes 'observable' requires significant judgement by the Responsible Entity. The Responsible Entity considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. At 30 June 2017 and 30 June 2016, the Trust did not hold any non-monetary financial assets or financial liabilities. 18
4 Auditor's remuneration During the year, the following fees were paid or payable for services provided by Ernst & Young, auditor of the Trust: 2017 $ 2016 $ Audit services Audit of financial reports 2,744 10,161 Other audit work under the Corporations Act 2001 467 1,954 Non-audit services Taxation 620 600 Total remuneration paid/payable 3,831 12,715 The audit fees are paid or payable by the Responsible Entity or Investment Manager of the Trust. 5 Net assets attributable to unitholders As stipulated within the Trust Constitution, each unit represents an undivided share in the beneficial interest in the Trust. There are no separate classes of units and each unit has the same rights attaching to it as all other units of the Trust. Movements in number of units and net assets attributable to unitholders during the year were as follows: 2017 No. '000 2016 No. '000 2017 2016 Opening balance 89,653 89,653 125 11,615 Applications - - - - Redemptions (89,653) - (133) - Termination proceeds paid to unitholders - - - (12,842) Increase in net assets attributable to unitholders - - 8 1,352 Closing balance - 89,653-125 The Trust managed its net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Trust was subject to daily applications and redemptions at the discretion of unitholders. The Responsible Entity monitored the impact of applications and redemptions relative to the liquid assets in the Trust. On 1 August 2014, the Responsible Entity suspended applications and redemptions for the Trust, after becoming aware that one of the Trust s material assets, its receivable from Artefact, was illiquid. The Trust ceased trading on 15 August 2014 and is in the process of being wound-up in accordance with the Trust Constitution. 19
6 Due from underlying investments 2017 2016 Redemption proceeds receivable from underlying investments - 10,932 Total due from underlying investments - 10,932 On 11 May 2017, the Responsible Entity entered into a settlement deed with Artefact and parties related to Artefact in order to settle certain legal proceedings to which the Responsible Entity was a party. On 25 May 2017, in accordance with the settlement deed, the Artefact liquidators paid $9,026,218 to the Trust, for final settlement of the Artefact receivable. The remaining balance of the Artefact receivable, $1,905,584 was subsequently written off. 7 Related party disclosures (a) Responsible Entity The Responsible Entity of the Trust was Macquarie Investment Management Limited ("MIML"), a wholly owned subsidiary of Macquarie Group Limited ("MGL"). (b) Key management personnel The following persons held office as directors of MIML from 1 July 2015 to the date of this report: H Brown M Davis (appointed 01/11/2015) J Edstein I Miller No amount is paid by the Trust directly to the directors of the Responsible Entity. Consequently, no compensation as defined in AASB 124 Related Party Disclosures is paid by the Trust to the directors as key management personnel. (c) Key management personnel unitholdings No key management personnel held units in the Trust at any time during the year (2016: Nil). (d) Key management personnel loan disclosures The Trust has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personally related entities at any time during the reporting period (2016: Nil). (e) Receivable from Responsible Entity At 30 June 2017, no amounts were receivable from Responsible Entity. At 30 June 2016, receivable from Responsible Entity of $125,051 included legal and other professional fees of the Trust that the Responsible Entity paid to the Trust during the year ended 30 June 2017. 20
7 Related party disclosures (continued) (f) Responsible Entity fees and other transactions No Responsible Entity fees were charged to the Trust during the year. For the year ended 30 June 2016, in accordance with the Trust Constitution, the Responsible Entity was entitled to a total fee of 1.09% of net asset value (inclusive of GST, net of RITC available to the Trust) per annum. The total fee included the fees that were charged directly in the underlying funds of the Trust. For the period 1 July 2015 to 19 May 2016, MIML reduced the fee it charged to the Trust by 75%, from 0.15% to 0.04% of the net asset value of the Trust (inclusive of GST, net of RITC available to the Trust). From 20 May 2016, no further fees were charged to the Trust. Following the termination of the Trust on 15 August 2014, the Trust s investments in the underlying funds were redeemed to cash. The Trust ceased paying fees to underlying managers from the date these redemptions were processed. All expenses in connection with the preparation of accounting records and the maintenance of the unit register have been fully borne by the Responsible Entity. All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable at statement of financial position date between the Trust and the Responsible Entity were as follows: 2017 $ 2016 $ Management fees charged to the Trust by the Responsible Entity - (3,607) (g) Related party unitholdings Parties related to the Trust (including MIML, its affiliates and other schemes managed by MIML or related parties of MIML) held units in the Trust as follows: 30 June 2017 Unitholders Number of units held opening (Units) Number of units held closing (Units) Interest held % Number of units acquired (Units) Number of units disposed (Units) Distributions declared by the Trust $ Macquarie Life Limited 904,211 - - - 904,211 - van Eyk Blueprint Balanced Fund 31,521,595 - - - 31,521,595 - van Eyk Blueprint Capital Stable Fund 6,421,660 - - - 6,421,660 - van Eyk Blueprint High Growth Fund 23,269,047 - - - 23,269,047-21
7 Related party disclosures (continued) (g) Related party unitholdings (continued) 30 June 2016 Unitholders Number of units held opening (Units) Number of units held closing (Units) Interest held % Number of units acquired (Units) Number of units disposed (Units) Distributions declared by the Trust $ Macquarie Life Limited 904,211 904,211 1.01 - - - van Eyk Blueprint Balanced Fund 31,521,595 31,521,595 35.16 - - - van Eyk Blueprint Capital Stable Fund 6,421,660 6,421,660 7.16 - - - van Eyk Blueprint High Growth Fund 23,269,047 23,269,047 25.95 - - - There are no distributions payable to the above related parties as at 30 June 2017 (2016: Nil). There are no redemptions payable to the above related parties as at 30 June 2017 (2016: Nil). (h) Investments The Trust held no investments in any scheme which is also managed by MIML or related parties of MIML (2016: Nil). (i) Other transactions within the Trust No directors of the Responsible Entity have entered into a material contract with the Trust in the current or previous financial year and there were no material contracts involving directors' interests subsisting at 30 June 2017 or 30 June 2016. The Trust may have held bank accounts with Macquarie Bank Limited ("MBL"), a wholly owned subsidiary of MGL. The Trust may have used Macquarie Securities (Australia) Limited, MBL or other wholly owned subsidiaries of MGL for broking and clearing services respectively. Bond Street Custodians Limited, a wholly owned subsidiary of MGL, was a custodian of the Trust. Fees and expenses were negotiated on an arm's length basis for all transactions with related parties. On 19 May 2016, the Trust entered into a limited recourse loan deed with MQ Capital, resulting in the Trust receiving the loan of $12,287,672 from MQ Capital. Repayment of the Loan was limited to any amounts received by the Trust from its receivable from Artefact or from the former Investment Manager of the Trust in connection with Artefact or from proceeds received from certain legal proceedings to which the Responsible Entity was a party. On 20 May 2016, the full amount of the Loan was used by the Trust to pay termination proceeds to unitholders, which included a payment to unitholders of an amount equal to the outstanding balance of the Artefact receivable ($10,931,802). On 25 May 2017, the Trust received $9,026,218 for its receivable from Artefact. On 28 June 2017, the proceeds received by the Trust from the Artefact receivable were utilised to repay a portion of the Loan from MQ Capital with the remaining balance of the Loan, $1,905,584, written off in accordance with the terms of the Loan agreement. 22
8 Reconciliation of profit/(loss) to net cash inflow from operating activities (a) Reconciliation of profit/(loss) to net cash inflow from operating activities 2017 2016 Profit/(loss) for the year - - Increase in net assets attributable to unitholders 8 1,352 Discount on loan payable to MQ Capital (1,906) (1,356) Amounts due from underlying investments written off 1,906 - Proceeds from sale of financial instruments held at fair value through profit or loss - 15 Purchase of financial instruments held at fair value through profit or loss - (7) Amounts received from underlying investments 9,026 - Net change in receivables and other assets 125 559 Net change in payables and other liabilities - (15) Net cash inflow from operating activities 9,159 548 (b) Non-cash financing activities 2017 2016 Reinvestment of unitholder distributions - - 9 Events occurring after the reporting date No significant events have occurred since the reporting date which would impact on the financial position of the Trust disclosed in the statement of financial position as at 30 June 2017 or on the results and cash flows of the Trust for the year ended on that date. 10 Contingent assets, contingent liabilities and commitments There are no outstanding contingent assets, contingent liabilities or commitments as at 30 June 2017 and 30 June 2016. 23
Directors' Declaration In the opinion of the directors of the Responsible Entity: (a) the financial statements and notes as set out on pages 5 to 23 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Australian Accounting Standards; and giving a true and fair view of the Trust's financial position as at 30 June 2017 and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable. The directors declare that the notes to the financial statements include an explicit and unreserved statement of compliance with the International Financial Reporting Standards (see note 2(a)). This declaration is made in accordance with a resolution of the directors. Director... I Miller Sydney 12 September 2017 24
Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent Auditor's Report to the Unitholders of van Eyk Blueprint International Shares Fund Opinion We have audited the financial report of ( the Trust ), which comprises the statement of financial position as at 30 June 2017, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors declaration. In our opinion, the accompanying financial report of the is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Trust s financial position as at 30 June 2017 and of its financial performance for the year ended on that date; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Trust and the Responsible Entity 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 (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note 2(a) of the financial report, which describes the basis of accounting. It is the Directors intention to wind up the Trust prior to the next year end. As a result, the financial report has been prepared on a liquidation basis. Our opinion is not modified in respect of this matter. Information Other than the Financial Report and Auditor s Report Thereon The Directors are responsible for the other information. The other information is the Directors Report accompanying the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation